What is my business worth?

Discussion in 'Lawn Mowing' started by Stateline 1, Jul 16, 2005.

  1. Stateline 1

    Stateline 1 LawnSite Member
    Posts: 4

    I was wondering what my business could sell for. Gross before any expenses and taxes will be about $90,000 this year. I put about 35-40 g in my pocket before income taxes. I figure the equipment to be worth about 14-15G with the truck and trailer. No signed contracts but very loyal customers. Lawn business in this town is very cutthroat so if any of them knew I was selling they would all gather like vultures and try to take any customers a potential buyer would get with the purchase of my business. Some people say a service business such as lawn mowing is worthless because anyone can just come in and take your customers. How do you all feel?
  2. ChadA

    ChadA LawnSite Senior Member
    Posts: 521

    I feel the same. If there not on contract I wouldn't give you a dime for them. Who is to say they won't cancel a week after I buy the business. Or even worse, you sell me the business and a few months down the line you decide to start up again and try to get your old accounts back.
    I would give you money for the equipment and truck and maybe 1 cut value for the accounts.
  3. Baseballer1100

    Baseballer1100 LawnSite Member
    Posts: 220

    im saying about 15 grand
  4. SOMM

    SOMM LawnSite Senior Member
    Posts: 426

    We feel the big-big need for signed agreements friend.

    Something you can file on the public record and/ or keep in the safety deposit box with teeth in it if you need to. Something that you can make a copy of, mail them with your reminder of the $1000 Contract Damage Forfeiture Amount (or at least equal to 3-4 months worth of remittance from them) when they take the low-road with you and don't care to give you 3-4 months cancellation-notice to fully compensate you for your efforts (or equivalent-efforts) to be up to date administratively with all taxes, licenses, permits and full insurance, the greatest employees and equipment, quality shrub trims, mulch, plantings, 16-20 week time-release fertilizers and seed and/ or aeration ....all on paper that your customers have physically-signed and selected their own choices upon (leave them a few options to choose from: economy, mid, hi maintenance levels), .....leaving open the option to take them to small claims court when they try & whipsaw you like the kid down the block - if they up and cancel.

    Signed Agreements are something you can take to the bank when you need the next equipment loan, or "60 days same as cash" credit with a supplier, or in this case from a prospective buyer who may be paying you alot more for signed agreements. You and your customers can also give yourselves another "out" with mutual rights to transfer contract obligations to other owner/tenants or contracting entities.

    You can still do it well - because you've got some well kept equipment, and some bank statements of deposits or tax return sections to show prospective buyers.
    Best success for you on the transfer of your business. Kudos on your timing, because the early-spring (keep 1-2 pictures of previous seasons best efforts on each account) to summer is best time to sell a landscape business!
  5. Likestomow

    Likestomow LawnSite Senior Member
    Posts: 997

    As far as your equipment goes, price it reasonably. Used equipment is really worth less than you might think. Including your pickup truck might not be possible because a lot of people already have them, so I’d just concentrate on the equipment related to the lawn service.

    I think a fair amount to charge for your accounts is an average of one months revenue. You probably will also have to figure out some sort of recourse in the event of some canceling. The new buyer should consider the business as a whole, and not be too worried if a few cancel. But to help off-set this possibility, you should introduce him/her to each customer and reassure them of his good intentions to continue providing good service to them.
  6. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Contracts are simply worthless unless it stipulates in them that they are transferable to a new owner. Other than that, they become null and void Day One with a new owner. Business Law 101 will tell you that. Period
  7. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    if you really want to know what your business is worth, find a company that specializes in A&D (acquistion & divesture).
  8. Sean Adams

    Sean Adams LawnSite Gold Member
    Posts: 3,597

    rodfather said it...if you have a 50 page agreement and it does not contain ownership transfer stipulations the contract is no better than the paper it is written on....

    as far as the value of your business, is all the work repeat work? in other words, is it 90k gross with 40k being one-time installs the new owner will not be able to recreate or is it all maintenance?

    and anyone buying a business who is truly serious will ask to see your numbers and check to see how you service your clients....for example, if you are charging $25 a man hour and he needs $35 it might not even be worth pursuing the business as customers will probably not agree to the price raise...also, as far as how your service your clients anyone who has been doing this long enough knows there are several ways to "mow" a lawn....

    is it in and out, clippings everywhere, minimal trimming, obvious hardscape blown off only, dull blades, same mowing pattern every time, mowed when needed = 20 minutes.... or is it same crew every time, same day of the week every week, sharp blades, proper mowing height, proper trimming and edging, double cut if necessary, bagged if necessary, alternate mowing pattern every visit = 35 minutes

    makes a different in the value of the client and the overall value of the business...

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