How much would you guys pay?

Discussion in 'Lawn Mowing' started by Frosty_03, Nov 20, 2004.

  1. Frosty_03

    Frosty_03 LawnSite Senior Member
    Posts: 333

    I have a chance to buy out 25 accounts for next spring, fellow LCO here is hanging it up and came by this morning and asked if I want to buy him out. I told him I would buy his accounts but no equipment. I just need to know how much would you all pay for the 25 accounts? The revenue is $2800.00 per month. For 10 month I figure 28 grand per year before expenses, which is a nice add on to my business. I am a solo operator with sons helping in the summer when home from school. I have 52 accounts at present and do all my mowing in three day. I figure I can cut an extra day and half to do the new accounts. Most of them are pretty easy. Giving me Friday afternoon to still do work on equipment. One good thing is most of his accounts are in the same area I do already. Thanks for your response in advance. :cool2:
     
  2. packerbacker

    packerbacker LawnSite Bronze Member
    Posts: 1,433







    Why would you pay money for something you can out and get for free? IF they are in the same area then they will need a new LCO pretty soon so leave some flyers on their doors
     
  3. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    I agree. Who is to say that those people will up and leave and not want you. Then you are out that money
     
  4. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    Depends if they are Contract Accounts or not to know if they really have a buyable value and what that would be. If he has no contract, to ME, they aren't worth much if anything and you may just go after them yourself. If they are under coontract then maybe they have some buyable value.
     
  5. Frosty_03

    Frosty_03 LawnSite Senior Member
    Posts: 333

    I was thinking the same thing, if I paid him and then next season his customers did not want their lawns done I would be out and the money I paid for the accounts. None of the accounts are on contract. I would like to help him out, but I have to care of me and mine first. I knew that I could count on guys here on this site. I kinda feel bad for him, he does this on the side and is a good fellow. He does have a lot of equipment for sale, But I don't need any of it. Once again thanks for those of you that have responded. :cool2:
     
  6. Turf Medic

    Turf Medic LawnSite Bronze Member
    Posts: 1,073

    I have a little different thought on this, but I have purchased other types of business in the past, and I think in certain instances it makes sense to purchase them.

    All fine and good to say "I'll just put out the fliers in the area" however, he may get someone to purchase the accounts, he may give the list to a buddy over a 6 pack. He might even throw them in to sweeten the deal on the equipment, and then you will have another competitor out there putting fliers on your customer's homes. I would ask him how much he is wanting for the accounts, it may be a lot less than you would expect. Then I would offer to pay him a percentage (20 to 35%) of next years revenue on the accounts, paid on a monthly basis, and paid after you collect on the job. That would eliminate having to pay for any accounts that are late payers or general pita's.

    The fact that they are in your area, you don't have to purchase additional equipment, you will be able to add 2800 per month income with very little increase in expense. If you pay him as much as 30%, you will be putting approximately 19600 per year with an extra 60 days of work per year, if you are correct about the 10 months and the extra day and a half to finish the work.

    On a side note I wonder how much some of these guys will think their business accounts will be worth when they get ready to hang it up.
     
  7. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569


    Not much without contracts.
     
  8. Turf Medic

    Turf Medic LawnSite Bronze Member
    Posts: 1,073


    How much are they worth with a contract that can be cancelled at any time with usually a very short notice.
     
  9. cet

    cet LawnSite Member
    from Toronto
    Posts: 89

    I am new to this site. I have been over on Plowsite. I agree with Turf Medic. Here the rule of thumb is 3 months revenue. You buy the client base once they have signed for the coming year. They are on contract so they can't leave unless your work is unsatisfactory. Instead of paying all the money on advertising you are paying for a guaranteed thing. Just my .02. I have enjoyed reading a lot of the posts although you guys seem to fight quite a bit over here compared to Plowsite. :dizzy:
     
  10. Turf Medic

    Turf Medic LawnSite Bronze Member
    Posts: 1,073

    My thought it also helps keep another LCO out of your neighborhoods. What happens if the guy throws them in to another less educated LCO that is willing to cut prices to get the customers and then while mowing one of the properties in question, looks over as thinks, heck I might as well price that yard also, that yard being one that you are doing.

    One way you pay the guy 7000 for 25 acounts that will generate an additional 28000, or you don't pay the guy for the accounts someone else moves in and possibly picks up 4 or 5 of your accounts and your down 6000 in revenue. Seems like a no brainer to me, especially if the guy will allow you to pay him as you collect the money. If he won't go for that then I would take another look at doing some heavy advertising in the area. JMO
     

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