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1st time post / need advise on buying business

Discussion in 'Starting a Lawn Care Business' started by jessbt11, Nov 19, 2007.

  1. jessbt11

    jessbt11 LawnSite Member
    Messages: 5

    Need some thoughts from you guys..... I'm thinking of getting into the business, have opportunity to purchase an existing business. Here is a summary: All equipment needed, Toro 52' ZTR w/ close to 900 hrs, its in good shape, also echo trimmer,Stihl edger,chainsaw,16ft trailer, Toro 22 trim mower, majority of the equipment is 2yrs old, but in good condition, he also has alot of spare parts, belts, blades, oil, filters, etc..all of this for $7400. My main concern is the fact that it is used, I ve seen /researched some of the equipment and Ive found most 50-$100 cheaper, for the power tools,than what is asking. I ve seen entire packages for sale NEW from
    6500-7500. That's the equipment side of it.

    The customer list is basically 40-45 accts, most being res accts / close friends of his. With the "drought" conditions, he shown income of 22K w another 10K in landscaping, He is asking 13K for the list with
    3 months assistance if needed for next year. For the entire package
    he is asking 21K. In this area we have had 5 companies go under, so it is a risky business, I'm looking at it, as alot of customers that have lost there LC,
    so they will be up for grabs. One thing that is repeated on this site is the "cons" of buying a customer list, which i do agree, Nothing is guaranteed. He has agreed on 1yr, no compete, but I really think he is reluctant to get out of the business.

    My question/concern is I can get the same start, with new equipment, for less to equal cost/ with warrites, but the customer list has my most concern, I want to give a fair price, I was thinking of 15K , this would get all the equipment and give him 2months rate /profit /or 8K for the list. I have 2 wks to make my decisions.

    Any thoughts???
  2. lawnpro724

    lawnpro724 LawnSite Silver Member
    Messages: 2,201

    Thats not a bad price at $7,500 for everything including 45 accounts, you could make that back in a month or so. If its just for equipment shop around or see if he will come down a little. If he is getting out all together ask him if he is willing to go around with you and introduce you to his and your future customers letting them know that you will be taking over for the next season. If he is willing to do this then what he is asking if fair. If he is not willing to just give you his customers then go out and buy the equipment you need to get started and advertise. Since he is getting out of the business 45 people will be looking for another landscaper. $13,000 for a customer list that only brings in $22,000 is to high of a price for that many accounts.
  3. jessbt11

    jessbt11 LawnSite Member
    Messages: 5

    7500 is for the equipment, and it is used, 900 hrs on a 2004 toro 52 ztr, 13000, is for the customer list =21000 for everything. He did state he would introduce me to the cleints and assist for 3 months. The income for 2006 mowing was 22k, under drought conditions.
  4. barefootlawnsandlandscape

    barefootlawnsandlandscape LawnSite Senior Member
    Messages: 296

    Even under drought conditions that amount of income for that many properties is a little low. I would hate to see you buy a business and then have to raise the prices a couple of months in. I would ask to see his route sheets or time sheets to see if you can make money on those properties.
  5. georgiagrass

    georgiagrass LawnSite Senior Member
    Messages: 970

    I would not settle for a mere 1 year on the non compete. If he is not willing to go at least 3 years, look out. You didn't say anythingn about the scope of the non compete.
  6. lawnpro724

    lawnpro724 LawnSite Silver Member
    Messages: 2,201

    I agree, if he is not willing to sign at least a 3yr non compete contract your going to be in a lot of trouble. He will sell you everything including his contracts then use the money to go out and buy new equipment and then in a year he will call all of his old customers that are now yours and tell them he is back in business and if he did a good job before you will lose the customers you bought. I would also advise you not to buy the list unless there under contract for at least 2yrs so you will have a chance to get your money back and have time to show them the kind of work you do.
  7. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    If he's reluctant why is he selling?

    Is this something where you were driving past some place and saw the stuff for sale?
    Or is this someone you know, started to talking and you came up with the idea?
    If it was his thing then it's likely normal, but if you came up with it you might want to leave it alone.

    The other thing is, you got the 20g right?
    I don't think you want to be stuck with payments the first few years, his $33k is actually pretty good, I'm looking at 24-27 myself but then I don't do installs and those involve serious costs as well, there's no telling who did better with just a total gross figure but I do know neither his nor mine was a first year ...

    The one part I do like is the figures sound about right, it's not the usual lofty stuff.
    I don't know about customers, but the equipment isn't a bad deal, those 16" trailers are not cheap, neither is the Z.
    You may not think much about parts, but it can be an easy thousand with those 20-50 dollar belts and what have you, oil could be $5 a quart if it's synthetic, what if he's got 20-odd blades those cost $10 each (ok so they're used), but at the start of the year I had $5,000 just in parts and it sure don't look like all that, so it will fool you.
    It may have been a hard year, but I can't fault the man for asking what it's worth.
  8. jessbt11

    jessbt11 LawnSite Member
    Messages: 5

    1st, Thanks to all you guys for the replys: Topsites: I do have the 20K, He is getting out, because his wife is concerned for his health, I came acroos this deal, due to the fact he was doing my yard while I was in Iraq, and we had the conversation in June while I was home, Im looking to get in, he was looking to get out. I dont fault the man for trying to get the most out of his investment, as I stated before, the equipment list really isnt my concern, the 13K for the client list is, which have no contracts, just verbal agreements. My wife thinks I can get a start with 10K, but thats just equipment & advertising. I would be going into this debt free, the truck 96 Ford f150 & 2006 6X12 trailer is paided for, I have no house payment, just basic monthly living costs, and I have some cash put back for 6 months living expenses. I just want to get the best deal for MY investment. So far , all you guys are comfirming my thoughts on the issue. and I will be checking the site for any more info you guys got. Again Thanks
  9. Rhett

    Rhett LawnSite Bronze Member
    Messages: 1,071

    Doesn't sound like a good deal at all. Figure out the least feasable amount of equipement required to start your business. Thinking back I purchased 36 metro, two stihl combi heads with all attachments, trailer, Stihl blower and threw in an old 21 inch. Door hangers about 50 bucks worked best for targeting the areas I wanted to work in. Total cost about 5500. As far as purchasing those accounts. (NO CONTRACTS) they bring in 1833 profit a month, 488 average per costumer per year. If he is being payed on a 12 month basis figures out to 40 a month per account. I couldn't do it!!!
  10. NC Greenscaper

    NC Greenscaper LawnSite Senior Member
    Messages: 446

    Don't sound real promising to me. 40-45 customers with 22k income. Expenses will eat up 1/3 of that. That leaves about 14,600. I would pay money to make 14,600. You said the income for 2006 was 22K. What about 2007? Thats alot of money for not very profitable accounts. Maybe they are very small. If these are all very close together and small maybe you can do them in 2 days and that wouldn't be bad money. You said you have been to Iraq, "Thank you for you service". Are you getting out of the service? Is this part time? Just my thoughts.

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