Wanting to buy Commercial lawn Biz-need Advice is it worth this much?

Discussion in 'Lawn Mowing' started by Vanessa31, Jun 1, 2005.

  1. Vanessa31

    Vanessa31 LawnSite Member
    Posts: 16

    hello everyone, I wanted as always to know what your advice is regarding a business we are interested in. they have been in business for 3 years, the owner does not work the business he just does the bidding and billing,

    he has 4 employees that work it, he has a manager that he pays $35,000/year, so we are thinking that if we decide to buy this biz, that my husband can work full time in it and get more residential accounts for his to do on his own. Anyway I am not sure what to offer the seller if we decided to buy it, we will meet him in 2 more days so I will check everything out and see if its worth it, what do you all think, the business has seemed to grow a lot in just 3 years.

    they also gave me the last 3 years of tax returns, according to the income tax papers in 2004 he made $267,824 $85,000 owner benefit

    2003 he made $219,137

    2002 he made $116,000

    here are the details, by the way I will have an accountant review all the tax returns

    The biz has 20 accounts total

    Price of business is $130,000 with a downpayment of $60,000 he is willing to do owner financing and get paid within 3 years

    4 big commercial accounts that bring in $15,732

    14 residential bring in $1,425

    TOTAL MONTHLY INCOME $17,157


    says equipment is worth $45,000 belwo is the list of everything included. long list.....

    EQUIPMENT

    2002 ISUZU 4 DOOR TRUCK W/LANDSCAPE DUMP SIDE LOAD DOOR

    24 FT TRAILER W/EXTENDED TUNG

    1-LAZER Z TRACTOR LIQUID COOLED 52" MULCHING DECK

    1- TURF TRACKER HYDRO DRIVE 48" MULCHING DECK

    1- TURF TRACKER HYDRO DRIVE 36" MULCHING DECK

    4- WEED EATERS

    3-EDGERS

    1-HEDGE TRIMMER

    HT-75 SAW

    3- STIHL 16" CHAIN SAWS

    1-STIHL CHAIN SAW

    ASSORTED HAND TOOLS, LADDERS AND MISC ITEMS


    IRRIGATION

    WIRE TRACKER

    MISC TOOLS AND PARTS


    PEST CONTROL

    TRUCK MOUNT 200 GAL SPRAYER W/300 FT HOSE ELECTRIC REWIND

    6X12 ENCLOSED TRAILER

    BR-420 FERTILZER SPREADER

    LESCO FERTILIZER SPREADER

    SPILL KIT


    Let me know what you all Think
     
  2. Vanessa31

    Vanessa31 LawnSite Member
    Posts: 16

    By the way we are supposed to meet with the owner and look at the equipment in a few days I am making a list of questions to ask him, but before we meet I will have an accountant review the tax papers. anyway what questions do you guys think we should ask?
     
  3. Green Pastures

    Green Pastures LawnSite Silver Member
    Posts: 2,457

    I've always wondered......... what guarantee do you have that his current customers will stay with you once you buy the business.

    Without his customers you have $0 in monthly income and a big bill to pay.

    Not trying to be a stick in the mud, but does he have these people under contract. How does selling the business to you effect those contractural obligations?

    Will his employees stay on and work for you?

    Some things to think about.
     
  4. ed2hess

    ed2hess LawnSite Fanatic
    Posts: 13,311

    I think this is very risky because you would have a very high amount of your income coming from those 4 commericial accounts. You better look long and hard at what it is going to take to hold those accounts!!
     
  5. Vanessa31

    Vanessa31 LawnSite Member
    Posts: 16

    Hi, That is a very good point

    I will ask him if he is under contract with them, and if so if the customer has to stay with them till the end of the contract even if he sells the biz,

    the business name will remain the same, so i am not sure f the customers have to know that the company is being sold since we would keep the same employees

    Its a bit tough getting in to this kind of business since we are the new to it, and Thanks to you all for all your help with this Big decision, this sounds a bit risky so we do have to think about it long and hard
     
  6. arkylady

    arkylady LawnSite Member
    Posts: 16

    If I had a business that made me $85,000/year and all I had to do was billing for 20 accounts, I can't think of many things that would motivate me to sell it ... can you? I'd be very careful.
     
  7. old dog

    old dog LawnSite Member
    Posts: 213

    If the employees come with it,if he will help you out for a year(under contract,then maybe).Have a mechanic tell you if the equipment is worth that!
     
  8. nelbuts

    nelbuts LawnSite Bronze Member
    from SW, FL
    Posts: 1,053

    So here is what you have.

    Contracts with condos that will expire in less than a year.

    Condos are a funny breed. If they are stable and the board does not change much from year to year then you are in pretty good shape. However, if the board changes often then you have problems. One year they want one thing then the next it is something else. You may get board members who want to give the condo to a friend of a friend of a friend even though you do good work. They may change property management companies that have a favorite maintenace company they work well with and you will be history.

    So I would be very leary of the purchase.

    Having said that offer him two months worth of the contracts spread out over 6 months for the business. Then offer blue book for the truck and 30% of the retail price for the equipment. If all is correct then he should get about what his net is for one year. Also, have him sign an agreement that he will not contact or divulge information to others on the contracts you purchase. Otherwise walk away and start from scratch.

    Here is an example for you. The 200 gallon sprayer is probably a poly tank and would cost about $2,900 new. Used and in good condition about $1,500 if less than 2 years old.

    BTW I live just up the road in Punta Gorda.
     
  9. CutNLawns

    CutNLawns LawnSite Member
    Posts: 184

    This is exactly what I was thinking.
     
  10. promower

    promower LawnSite Bronze Member
    Posts: 1,232

    I have to agree this is a risky situation, the business relies on 20 accounts. If the 4 big ones alone dont contintue service with you, your out a lot of cash. Personally I would start from scratch, seems very strange this guy wants to sell when all he has to do is send 4 guys out to mow 20 accounts a week and bring in a decent amount of money.
     

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