Worth buying an established business???

Discussion in 'Lawn Mowing' started by Birddog Lawncare, Mar 31, 2004.

  1. Birddog Lawncare

    Birddog Lawncare LawnSite Member
    from Ohio
    Posts: 73

    I have a local solo operator that has a rather established business that he is trying to sell. He has about 10-12 contracts for this year worth around an estimated $30K. He is asking $12,500 for the deal. Is this worth it or not? ANy help is greatly appreciated.
     
  2. GreenMonster

    GreenMonster LawnSite Silver Member
    from NH
    Posts: 2,702

    I've been trying to buy out 2 small businesses, 36 accounts between the two of them. Both have been a hassle. I'm really starting to think you're better off getting your own customers. $12,500 can buy a lot of advertising.

    30k for 10-12 accounts is a pretty high average. Make sure you see some proof of revenue, and something regarding customer retention.

    I think it's steep.
     
  3. Birddog Lawncare

    Birddog Lawncare LawnSite Member
    from Ohio
    Posts: 73

    I should have added more details. His largest account is $700 every other week. Also he has a few $75 clients. Plus he's saying all new business would be referred to me.
     
  4. thegreenjeansman

    thegreenjeansman LawnSite Member
    Posts: 45

    HEY, I WOULD HAVE TO SEE SOME PAST BOOKWORK PROVING THAT THESE ARE GOOD ACCOUNTS,HAS HE HAD THEM FOR AT LEAST A YEAR? ARE THEY WILLING TO CHANGE LCO'S?IS THERE SOME WRITTEN CONTRACTS THAT WILL KEEP THEM AS CUSTOMERS? HAVE YOU WORKED WITH THE GUY ON THESE JOBS , SO YOU KNOW HOW MUCH WORK IS GOING TO BE INVOLVED?
    12,000 WOULD BUY SOME GOOD EQUIP.AND ALOT OF ADVERTISMENT, I DON'T GO A WEEK WITHOUT HAVING SOMEONE PULL UP AND ASK FOR A CARD WHILE I'M CUTTING A YARD. THERE'S ALWAYS OTHER LCO CUSTOMERS THAT ARN'T HAPPY WITH THE WORK AND ARE LOOKING FOR BETTER. IF THE JOBS ARE ESTABLISHED AND YOU KNOW THE GUY'S CUSTOMERS ARE WILLING TO GIVE YOU THE WORK, SPEND THE MONEY. I WOULD RATHER UPGRADE SOME EQUIPMENT AND LET MY WORK BRING IN NEW CONTRACTS.


    "SHOP SMART-SHOP EXMARK"
     
  5. GrassBustersLawn

    GrassBustersLawn LawnSite Senior Member
    Posts: 983

    I would want to get it (purchase deal) set up on some "pay as you go" plan. If the customer quits you, then you stop paying him. NO WAY I'd pay up front. Too many possibilities for problems.

    When I sold my other business, I sold it on time. A percentage of the sales that the new buyer made off of my old clients (Insurance Agency), with some upfront as a downpayment.

    Mike
     
  6. Rook00

    Rook00 LawnSite Member
    Posts: 73

    Offer $10,000. . . . $5,000 now, $5,000 half-way through the season (write up a contract) and increase gross profits by $20,000
     
  7. impactlandscaping

    impactlandscaping LawnSite Silver Member
    Posts: 2,332

    That's really high w/ no equipment in the deal. Also, make sure you aren't seeing the "second" set of books he may keep. My in-laws were going to buy a restaurant from another family member(other side of family), couldn't get financing for it b/c they showed a negative operating cost for five years straight.The bank wanted 50% down in cash!You can't tell me they didn't have a second set of books for themselves, they both have nice houses and drive nice vehicles. Beware of what you get into, he may be dropping dead weight, giving you a bunch of PITA's for 12K..Also, if he's serious about leaving the industry, he should hvae no problems signing a non-compete agreement for at least three years.
     
  8. amar

    amar LawnSite Member
    Posts: 203

    12K is alot of advertising $$ You should be able to generate 30K in sales off less than half that
     

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