would you touch this?

Discussion in 'Business Operations' started by agrostis palustris, Jul 3, 2002.

  1. agrostis palustris

    agrostis palustris Banned
    Posts: 117

    Hello everyone. I was hoping to get some feedback on this issue before I go to my accountant about it.
    I have known this guy for about 7 years now, and he wants to get out of the business.

    He wants: $80K up front, or $10K up front and $2500 a month for 36 months.

    What I get: 60 lawn accounts which bring in about $120,000 - $130,000 a year. No snow or tree work, no digging or large jobs. Can easily boost numbers to over $150,000 a year.

    Lots of stops with 5 - 6 lawns in one place. One account is the largest dealer for Mitsubishi Fuso's in the country. Used to have about 120 accounts but lost most due to either billing or because he didn't want to do the extra work (weeding / planting / mulch / etc) Many customers have been with him for over 10 years.

    2 employees who are paid $11 an hour and $8 an hour, 1 has been on for 2 years, the other has been on for about 6 years.

    Equipment: 1995 Mitsu Fuso FE or FH with about 110,000 on it. Thing needs work. Has 9' fisher plow though.
    About 10 48" walk behinds (belt drive)
    About 7 push blowers
    Several trimmers / blowers / chain saws / couple gas hedge trimmers / and misc equipment.

    So what do you all think??
     
  2. adamc6

    adamc6 LawnSite Member
    Posts: 50

    Sounds good to me. Look into a SBA loan, let me know how it goes.

    adam
     
  3. DaveK

    DaveK LawnSite Member
    Posts: 84

    Whatever you do, make sure there is a non-compete clause in the contract.

    Just wondering, why 10 mowers and only 2 employees?

    Anyway, doesn't sound to bad.
     
  4. yardboyltd

    yardboyltd LawnSite Senior Member
    Posts: 323

    I wouldn't and let me stress I. My strategizing is if he's really get'n out, let someone else buy it and target his old customers right at after the transition..

    My other reason is that in my area a business of that size could be put together in a few years... and hey no debt, and bumpy road of transition... customers saying "well the last guy did it this way" you just never know what ur getting into...
     
  5. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Posts: 2,810

    Maybe... If the route could be done with only 2 people (owner + one employee). IMO.. 2 people should be able to generate those numbers.
     
  6. agrostis palustris

    agrostis palustris Banned
    Posts: 117

    The reason there are 10 machines and only 2 employees is due to the fact that of the 10 machines, only 1 runs and half arsed at that. I ran it Sunday and noticed a lot of problems. I also drove the truck on Sunday. The oil alert alarm was sounding towards the end of the trip. The oil light was on for the whole trip. The truck was crashed over a year ago and was never fixed. The plow itself would need a new A-frame and then the moldboard would have to be re-done. Then the mount on the truck would need to be completely replaced. The 10' bed is all rusted and would need to be sand blasted and painted. The tool box has trouble closing. As far as I could tell, the brake asist light did not go on during the trip. Of the push blowers, only 1 works properly at this time. Of the trimmers only 1 works. Back pack blowers, only 1 works. The owner no longer works, simply sends out 2 employees each day. They actually get the lawns done in about 4 days. The other 2 days they either do work at his house, or they work at customers' houses doing side jobs. The owner will not agree to a non-compete clause, and now has removed the truck from the deal. His accountant informed me otherwise though when this offer was made.
     
  7. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Posts: 2,810

    Walk away.
     
  8. agrostis palustris

    agrostis palustris Banned
    Posts: 117

    If you were to put a price tag on this business; the accounts plus the equipment, what would you say is a good number?
     
  9. Lanelle

    Lanelle LawnSite Bronze Member
    Posts: 1,361

    Not much. The cost and aggravation of fixing his junk would take out a big chunk. The fact that he won't sign a noncompete makes his accounts nearly worthless.....Need I go on?
     
  10. DLS1

    DLS1 LawnSite Bronze Member
    Posts: 1,619

    Sounds like disaster waiting to happen to me. Sounds like he just runned the equipment done into the ground then hoping some sucker (I mean person) would buy it all. You buy old equipment then you have to take out loan to buy better equipment. In the meantime he takes the money you gave him and buys new equipment and gets his old customers back.
    I'm no lawyer but even if he signs a non-compete clause and he steals his old customers from you then you still have to go to court over it. How much will that cost.


    I think your accountant would say the value of the equipment is only a few 1,000 dollars.
     

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