should I buy this business for $60,000

Discussion in 'Business Operations' started by danillac, Feb 6, 2013.

  1. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,472

    If the equiptment is truley worth 37000$ offer him 32000$, play hard for 37000$,,,,,,,,Im sure you can gett the business outright for 47000$.

    All that is based on if you have the cash to do the deal.
     
  2. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,203

    What's the size of your current biz? Can it handle paying for the biz without profit from the new accounts?

    And to be honest a lot of people say this is worth that or this. But have they put down money on a similar deal? I know I have twice in the last 12 months and by the sounds of it zimatic has also.

    Zimatic's offer was what he was asking minus buying his $37k assets. He didn't take it most likely because he new he couldn't sell the equipment for $37k.
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  3. ETPRO

    ETPRO LawnSite Senior Member
    Posts: 311

    A wise man once told me... "If your first offer doesn't embarrass you, you offered too much."
     
  4. danillac

    danillac LawnSite Member
    Posts: 10

    what were the terms your two deals in last 12 months? You think there is truth to equipment + 1 months's accounts equation?
     
  5. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,203

    1 was a set purchase price. 20% down and a payment schedule. My net paid the deal off in less than a year. Most was equipment/inventory. It was a irrigation biz. It worked well. I use to sub my blowouts and some plowing to him and had a good working relationship.

    2 was a lco. no equipment bought. % of sales till xyz amount was paid (will be drawn out for 2.5ys about). Nice thing was I could dump accounts that did pay well and didn't affect my bottom line or his.
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  6. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,203

    The main question you have avoided is saying about your current set up (if any). Do you need the equipment? Can your current biz afford the purchase?
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  7. CowboysLawnCareDelaware

    CowboysLawnCareDelaware LawnSite Senior Member
    from DE
    Posts: 555

    I just bought another companies equipment this off season and any of his 20 accounts he gets me he will receive 10% of the gross income. The previous owner currently has 12 of his accounts re-signed, we knew 2 clients weren't returning. He also has another 3 commercial accounts that he is setting me up with for 10% to him. I offered him 10% of any new accounts he picks up for me as well because this is a new area that I am moving into. This way I can focus on expanding my area, without wearing myself out by trying to expand into new territory all on my own.

    -Michael
     
  8. danillac

    danillac LawnSite Member
    Posts: 10

    I did avoid this question. My current job wants me to move 3 hrs away. I currently work as shipping manager, making decent money $20/hr, yr round, and install docks in spring after work and on weekend and remove in fall on weekends only. Dock install is on largest lake in twin city area, lots of money on lake. Pull in extra $15,000/yr after paying buddies $30/hr to help, to work weekends and after day job every night til dark in spring time and weekends only in fall. Hoping I would have more time to install docks and get more accounts with lawn care biz, as moving 3 hrs away would make dock install a serious pain in ass but still possibly doable. Maybe have dock custies as future lawn care clients.
    I do need the equipment and would take out a $40,000 loan initially to get some extra cash and not dip into savings. Lawn care accounts are 45 minutes away from lake, other side of town, so thinking I would need a full days work on lake (8-12 resi accounts) to make it worth mowing around lake.
    Lawn care's main employee ($17/hr)would hopefully stay with to help out transition.
     
  9. danillac

    danillac LawnSite Member
    Posts: 10

    Do you think lawn care in MN is worth equip + 1 months account is accurate? any idea how likely it is customers would sign contract for monthly rate with a new person?
     
  10. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,203

    I would say some of his equipment you should be able to sell of as it is over kill for $100k in sales. When I was at $100k one 61" ztr, one 48"w/b, and a 21" mower. Just saying his equipment list is overkill or the work isn't priced right.

    Buying the equipment isn't bad if its priced right. Buying accounts without knowing foresure they are following is hard. Hence why paying a % of gross sales makes sense. The one months of sales for buying seems like a decent guide but doesn't always work either if there is no net.

    If your paying people to do the work 20% of gross is a decent number to keep. Some more some get less. So off of $100k you should net over $20k. If you do the work yourself you can save the labor (basically make a job for you). Would those numbers work for your lifestyle after making the $40k loan paymnet? Seems like it would be tight budgeting personally and biz wise. No kids/wife, just rent can it work, sure.
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