Think of buying an exsisting spraying business.

Discussion in 'Pesticide & Herbicide Application' started by Green Up, Aug 6, 2008.

  1. Green Up

    Green Up LawnSite Member
    Posts: 126

    I had a company approach me that wants to sell its spraying accounts. At the present time, the company has 88 lawns to spray. The lawns are being sprayed 4 times per year. Most of them are in very small neighborhoods. The company gross income is around $22,000. Its equipment is not worth buying. I have some very good spraying equipment. What would be a good price for this business?
     
  2. RigglePLC

    RigglePLC LawnSite Fanatic
    Posts: 11,939

    I would say 75 percent of sales, say about 16,500.

    Or maybe 4 times profit (if any).

    But how are you going to finance it? Will your bank loan you money on something they cannot repossess? Probably not. Does he have prepayments? Can you use the prepayments to finance the purchase? Can you pay him $1000 per month during the season until you pay off about 16,000 plus about 2000 interest? How dependent are the sales on the personality of the owner? Are the measurements accurate? Prices steeply discounted?
     
  3. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,046

    I always heard $1.25 x Gross Sales.

    I am sure this where you live and market can affect the formula (whatever it is).
     
  4. turf hokie

    turf hokie LawnSite Silver Member
    Posts: 2,744

    The above numbers a good if the company is larger. 88 accounts is nothing. This is a situation you can take advantage of....they approached you. Ask them what they want and then offer less, your call as to how much less. but base you counter offer on route density, net profit and what you feel is their level of desperation. Sounds bad, but business is business and the economy is a buyers market.

    You are in the drivers seat. I have bought accounts in this situation for 20 cents on the dollar b.c the guy wanted out
     
  5. ashs inc

    ashs inc LawnSite Senior Member
    from alabama
    Posts: 598

    where are the lawns? located? if you dont want them i might them
     
  6. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,046

    I am all for getting a good deal on anything I can...but I can tell you that I have busted my balls for my business, and I wouldn't just give it away.

    Maybe some would....but there is no way I would!

    Why build an awesome business and then give it away?
     
  7. garydale

    garydale LawnSite Senior Member
    Posts: 813

    Counter offer to do the lawns as a subcontractor.
    You could then offer to buy them after you see their true value.

    I say this because 35% of our work is as a sub to the landscaper/ mow guys.
     
  8. Ric

    Ric LawnSite Fanatic
    Posts: 11,946

    GreenUp

    Having both bought and sold accounts there are several consideration and price structures.

    1st Are there actual contracts and when do they expire? Is there a cancellation clause?

    2nd Location and Size are an other factor to consider. Are they in your working area Near or Far?? If they are large, will it take more than one trip.

    3rd Quality of accounts and profitability is very important in today's raising costs of fertilizer. Is there enough margin to cover. You can not rise prices right off the bat or they will drop like flies.

    4th Quality of the Neighborhoods is a major factor in my mind. Can you up sell these accounts or Is this neighborhood a desirable market you can build accounts.

    5th Cullablity or can you profit from more accounts than you resell or just plain quit. In some cases I have bought accounts knowing I would re-sell or give away a certain proportion that were not profitable to me. But I bought the package because a Higher percentage of profit could be made from the good accounts and it gave me entry to a desirable neighborhood market. In some cases Gated Communities that I had limited or no entry too.

    6th While rcreech claims 125% is standard I will agree that is the going price for high margin Contract accounts. But no contract lesser accounts can easily go for 50% or lower. As businessmen we are gamblers who desire the odds in our favor. But we are also gamblers who lose if we make a bad bet.
     

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