should i buy a business for sale with 70 clients or should i spend that $ on adverts.

Discussion in 'Business Operations' started by whippersnipper, Oct 7, 2013.

  1. whippersnipper

    whippersnipper LawnSite Member
    Posts: 18

    Hi Guys.

    a local lawn care company in my area is up for sale. Due to family the guy is selling up and moving to australia at the end of next month.

    He wants $18,000 for the business and that comes with just over 100 clients 70 of witch are 2 weekly regular customers mostly lawns.
    Also included are all his tools , lawn mower weed eater chain saw a toyota hi ace van and some more missulanious items.

    this is his advert.

    http://www.trademe.co.nz/services/domestic-services/outdoor-garden/auction-643441773.htm

    so i rang him to find out more.

    His charge out rate for gardening and how he has priced lawns is based on 30 p/h plus gst of 15% so $35 a hour basically.

    my charge out rate is $45 all inclusive. $10 more expensive but i know for a fact that we do better quality work and we are also a lot faster than he is as he seems to be slow and take his time. Hes about 55 years old as i am 31 and my employe is 29.

    so my thoughts are should i buy him out for his clients keep them at his price for 6 months to show them that we are offering a better quality service then bump up the price. how many will stay and how many will look elsewhere. there are a few guys to choose from that are cheeper than us....

    or

    should i spend that $$$$ on advertising and try to get good quality accounts.

    what would you guys do....?
     
  2. RussellB

    RussellB LawnSite Fanatic
    Posts: 6,141

    Not quite following his pricing. I would find out what he makes mowing each account/month. The most I would offer is one months income (based on mowing only)/account. Whatever that works out too I would offer a couple thousand less to start negotiations. I would not purchase his equipment and he would have to introduce me to each customer and allow me to inspect the properties. good luck
     
  3. whippersnipper

    whippersnipper LawnSite Member
    Posts: 18

    well he recons he is making 40,000 a year so that would be only 3,333 dollers. i agree on meeting the clients and inspecting the properties. also agree not to take his equipment as i am fully set up my self, allough i could have 2 vans running if i did purchase his equipment...
     
  4. whippersnipper

    whippersnipper LawnSite Member
    Posts: 18

    Does no one have any thoughts on this?

    i currently have a well established business and iam looking to grow. should i buy some thing all ready estabished or spend that $$ on marketing?
     
  5. Mikol87

    Mikol87 LawnSite Member
    from Iowa
    Posts: 93

    Hell I'd buy it. Say you loose 20% for what ever reason, one year later you are going to make up that $14,000 asking price and then some. I'm willing to say its going to take you several years to build up another 100 customers.

    Offer him $10,000 cash and charge the customers the same as he did for next year. Year 2 send a nice well written letter explaining the price raise (increasing fuel costs, insurance, equipment prices went up, etc). I bet most people will stay with you (speaking from experience).

    Plus the intangibles- neighbors will see you out mowing their neighbors, people will see you out driving around, more happy customers = more word of mouth referrals. FREE ADVERTISING.

    PS buy a truck and ditch the van. So uncool mowing with a van. lol
     
  6. whippersnipper

    whippersnipper LawnSite Member
    Posts: 18

    So turns out his paper work is all over the show and misleading. Also after some serious thoughts i think it is best to spend that money on advertising and merketing ideas and get to choose my clients. yes it may take more time to build up the numbers but i think that they will be more value able in the future.
     
  7. whippersnipper

    whippersnipper LawnSite Member
    Posts: 18

    and vans are much more use full than a truck. i can carry so much gear with me where ever i go and always prpered for the unexpected. seams more efficiant than a truck.....
     
  8. easy-lift guy

    easy-lift guy LawnSite Gold Member
    Posts: 3,376

    You read like you have done your homework for the most part, your making the best informed decision you can. Seasons and markets are a little different stateside,however business is business.
    Best Regards.
    easy-lift guy
     

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