Wanting to buy New Business-need Advice is it worth this much?

Discussion in 'Starting a Lawn Care Business' 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 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. dvmcmrhp52

    dvmcmrhp52 LawnSite Platinum Member
    from Pa.
    Posts: 4,205

    Just one question.........

    Are these commercial accounts willing to take you as their new service provider or will they be rebidding these accounts when they find out the business has been sold?
     
  4. Scapegoat

    Scapegoat LawnSite Member
    Posts: 249

    That's what I was thinking.
     
  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 teh customers have to know that the company is being sold

    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. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

    <marquee loop="infinite" bgcolor="#DDDDDF"><font color="#000000">Have a tax question? Ask our CPA. Click Here </font></marquee>
    Hi Vanessa31,

    Can you also get the owner to sign a non-compete clause so he doesn't start a new business and take away the customers?
     
  7. Randy J

    Randy J LawnSite Bronze Member
    Posts: 1,124

    Just a couple of points I can think of; first the sale of the business itself isn't as important as most customers probably aren't that familiar with the owner. Losing the manager might make a bigger difference - of course I'm assuming you're going to let the manager go, and that the manager is on site for every job. 2nd, I would look at some kind of payment plan that allows you to make periodic payments based on customer numbers/rentention. That can help protect you if some customers decide to leave because of the sale. Third, it's pretty easy to build a business plan when purchasing an existing business. Get a handle on what his costs are, look at where you might spend more (maybe advertising depending on what he spends, etc.), and look at where you might save. Create a spread sheet showing your income verses your costs and make sure you can pay for the business, and still leave you some profit.
    Good luck with the business.
     

Share This Page