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Local guy selling his business....I think his numbers are off just a tad

Discussion in 'Business Operations' started by justmjc, Feb 23, 2004.

  1. justmjc

    justmjc LawnSite Senior Member
    Posts: 261

    Local guy is looking to sell a 3 year old 60 lazer z, 36" w/b, and a 7x16' open trailer w/edger, trimmer, blower, and about 43 residential/commercial accounts.

    Price tag of $22500

    So, I broke it down just for a rough idea. This equipment all brand new would cost somewhere in the realm of 12,000-13,000. His is 3 years old.

    43 residential/commercial accounts at $5500/month @ approx. 36 hours a week. That's only $38/hour exluding drive time. 3 locations about a good 20-30 mins between cities.

    Anyway, he said he has 2 guys looking at his offer, but I don't see the deal in it. I told him that if he wants to sell me his local accounts, to call me back and we'll talk.

    Although 2 individuals can agree to any price, I find it ironically funny that this gentleman either doesn't realise his pricing is in left field, or the newbies looking into the "package", are actually putting their effort forward with theses lousy numbers involved vs the asking price. It's not my money, but at least it gets them one step closer to being a business owner.

    My fair price estimate is about $17,175 and I think that's generous.
  2. charlies

    charlies LawnSite Senior Member
    from earth
    Posts: 587

    I think the guy is insane, but I also think 43 clients are worth a bit more than $5500 a month.
  3. Avery

    Avery LawnSite Bronze Member
    Posts: 1,389

    I agree with you. That price is high. You can go broke fishing.
  4. mowinmoney

    mowinmoney LawnSite Member
    from Midwest
    Posts: 70

    I was in a similar situation. Just about identical numbers, the guy I was talking to had equipment I valued at 6k, 38 customers, and hourly was just about the same. No contracts just his word that his customers had told him they would give a person who he sold his business to one year to earn their trust. Well he wanted 65K first, he then wanted $45k. He found someone to buy it for 32k. No way was it worth this to me but it must have been for the individual who did. It will be bad for them when the old equipment needs repair in early May when the grass is growing like crazy. I made an offer based on customer retention for the year and that was it. He made off with the loot and the buyer has lost 10 lawns already to another lco. That's the risk. will probably be back to his old job next year.
  5. justmjc

    justmjc LawnSite Senior Member
    Posts: 261

    I kind of see this opportunity like this.....

    The newbie buyer is paying $22,500 to take on a 40 hour job that consists of a salary of $36000/year. That doesn't sound like a good deal to me....
  6. jajwrigh

    jajwrigh LawnSite Bronze Member
    Male, from Martinsville, IN
    Posts: 1,405

    Not a good deal at all!! There is no guarantee that the accounts will want to remain under your care!! Someone's word isn't good enough for that kind of money!!
  7. ksland

    ksland LawnSite Senior Member
    Posts: 927

    It seems everyone will find the right buyer, just depends on how long you have to wait. If someone is looking for a business in that area and there are no others, it could be considered priceless. Don't forget also, we can disect the #'s a new guy may not be able to. Think of how many wrong decisions you make without knowing better. I bet he sells it.
  8. Mack

    Mack LawnSite Member
    Posts: 80

    That is one thing I don t understand. How can you sell your customers when they don t have to go with you if you buy the business. They are just going to get shop they want to mow. I would think they are going to shop around unless there is a contract.
  9. scottt

    scottt LawnSite Senior Member
    Posts: 269

    You wouldn't happen to be from NE Oklahoma would you? Those numbers sound identical to some from around here about a month ago.
  10. charlies

    charlies LawnSite Senior Member
    from earth
    Posts: 587

    If the average property is $50, 43 customers equals $2150. Multiply this by say 28 mows a year here in Maryland, and you get $60,200. If you use $35 per property instead it equals $42,140. Of course, the LCO that calls this his salary is a clown.

    Also, that is assuming that the customers are alright with the old owner selling them like merchandise, which I honestly do not believe would be the case. I think you would be lucky to keep half of them. And I know that you can't transfer a commercial contract w/out consulting with the owner or the leasor of the property.

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