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To Buy or Not to Buy

Discussion in 'Lawn Mowing' started by veltenslawncare, Dec 16, 2004.

  1. veltenslawncare

    veltenslawncare LawnSite Member
    Posts: 46

    Basically i have the option of expanding business, regardless of whether or not i can handle it and all that crap, etc.....just want to know what you guys think......

    about 50 lawncare accounts weekly
    from april 1 untill about nov. is cutting season
    about 18-25 cuts average season per account
    gross about 75,000
    net about 45,000

    wants to sell for about 55,000 what do you guys think its worth, what would you pay, etc... thanks
     
  2. out4now

    out4now LawnSite Bronze Member
    from AZ
    Posts: 1,796

    How big are the props, doesn't seem to be charging that much for them now if that is the figures he gave you? Resi. 's mostly?
     
  3. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    Are you buying the equipment as well, or just the client list? I look at it like this. For $55,000 you can get a heck of a lot of equipment, and a heck of a lot of advertising to get your own 50+ accounts. A truck, trailer and minimum equipment will cost you $35 or $40 grand. That leaves $15 grand for advertising at least. If you can't get 50+ customers for $15 grand, then don't bother getting into the business. $55 grand for a customer list and some equipment is too much.
     
  4. work_it

    work_it LawnSite Senior Member
    Posts: 976

    Since you didn't mention him selling you any equipment I'll just have to guess and say that it isn't included.

    Personally, I think the guy is full of crap. 50 accounts and making $75,000 gross...bull crap! Even at 25 cuts/season (that's the high end of what you posted) he would have to average $60/cut.

    You also have to take into consideration that you most likely won't be able to keep all 50 customers. In such a case where you had 100% retention I would figure out a price as such:

    $40/cut average on 50 accounts = $2000 X 8 weeks = $16,000.
    Take it or leave it.
     
  5. apolooza

    apolooza LawnSite Member
    Posts: 7

    I have purchased accounts a few times and have found it a great way to expand. Residential mowing accounts for me are really a dime a dozen; I never get worked up when I lose one or a customer moves because I know I will be able to sell another. I don't know what your market is like, but that is my experience. Therefore the price for purchasing them is low. I have purchased mine for only the price of 1 service. By looking at the number of jobs he has to sell he is probably a solo operator, and if you are looking to expand there will be employee costs involved, which would make your net lower than his (are his numbers accurate? look at his books). Purchased customers also do not have a relationship with you and may find it an easy time to look somewhere else, so retention will not be 100%. Expansion is great, I recomend it and I always keep my eyes open for purchasing accounts, but you may have to work a long time to make those accounts profitable.
     
  6. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    He wants 10 grand MORE than the net??? He's nuts :dizzy: :dizzy: :dizzy:
     
  7. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    I believe I would be laughing the entire time I was telling him NO.
     
  8. veltenslawncare

    veltenslawncare LawnSite Member
    Posts: 46

    thanks for the feedback please leave more
    there is no equipment involved
    i have seen the books, tax returns, etc..., these are the numbers
    he bought it from a guy six years ago when he needed out to get out
    he kept all the clients he has had from that time too, these clients are about from 6-12 years old. me and this guy are the 2 premier lawncare providers in the area, its not that i cant get my own accounts its that these accounts are high dollar accounts becuase he has already weeded out the bad ones.
    basically everything is ligite, and i would not give him the money upfront anyway i would give him a perentage over a certain amount of years in which his old accounts have given me, in case i was too lose them
    i will sit on this for awhile b/c i dont need the accounts, i am the only other big name operator, i net 22,000 in the 4 months of mowing, i am only 18, and go to college so i dont want to be spending 55k anyway when im paying 30,000 a semester. if i sit on it he might leave anyway, in that case i could just go scoup it up. we dont use contracts, so nothing is even close to being guarented. i would basically just be paying him good will, please leave more feedback, questions, etc......lets see some figures
     
  9. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    If there's no equipment, my answer would be a big Fat NO! That's a waste of money. He's selling you the possibility that his customers MIGHT become your customers? For $55 grand? NO WAY! If you want more customers, go out and get them.
     
  10. out4now

    out4now LawnSite Bronze Member
    from AZ
    Posts: 1,796

    Got to agree no equipment, forget it. Guy's trying to play you from the sound of it. Don't be a violin.
     

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