Buying an established business

matt10486

LawnSite Member
Location
Valley Forge Pa
Ok I know this gets brought up a lot, and I have read a lot of posts on her over the years. I have been looking to buying a business for some time now. I have worked for different companies since graduating high school.

My question is when buying a business, how do you go about seeing if their asking price is accurate? Is it based upon x amount of their monthly income?

Thanks for the help
Happy New Year
Matt
 

CrimsonMaintenance

LawnSite Member
Location
Alabama
Keep in mind something different about the lawn business, YOU CANT BUY CUSTOMERS! They can tell you they have x amount of accounts but who guarantees they are gonna stay with you after the sale, nobody. Also no contracts are valid after a business is sold so the contract customers dont have to use you either. You need to have the business professionally appraised.
 
OP
matt10486

matt10486

LawnSite Member
Location
Valley Forge Pa
So are you saying just go off of the equipment value rather than the equipment and customers?

I have had several side accounts while working for the main landscaping company. I am leaning towards buying so that I don’t have to work 3 jobs and can focus just on the business if that makes sense
 

rcslawncare

LawnSite Bronze Member
Location
Champaign, IL
When I sold my mowing business in the summer, I got good market value for the equipment. Even though I had good clients, there was no guarantee for the new owner from my clients other than we will try them the rest of the season. I know they lost a few through out end of the season. How big of an operation are you talking?
 
OP
matt10486

matt10486

LawnSite Member
Location
Valley Forge Pa
When I sold my mowing business in the summer, I got good market value for the equipment. Even though I had good clients, there was no guarantee for the new owner from my clients other than we will try them the rest of the season. I know they lost a few through out end of the season. How big of an operation are you talking?
I'm not looking for something to big. I'd like to be able to do a majority of the work myself for a while. Then gradually grow to where i would have to hire helpers.
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CrimsonMaintenance

LawnSite Member
Location
Alabama
Take your money and buy good equipment then adapt a good marketing plan. Start next month calling on commercial customers to get bid packages mailed to you. Get professional marketing materials(business cards, choroplast/step stake signs, door hangers, etc) to aid in that marketing. No, dont go buy thousands of each and blow a wad just get minimum quantities to get you started. Place the signs around in march or so. IF you are just getting started pic a large neighborhood of smaller homes and place a sign near the entrance that says "Any home in this neighborhood $XX.xx" . When the grass starts to grow I guarantee you will get calls. Keep a check on your signs as competitors will trash them because they didnt beat you to it. Yes it works if you price it pretty aggressive.
 

MarkintheGarden

LawnSite Bronze Member
Location
St. Louis, MO
Ok I know this gets brought up a lot, and I have read a lot of posts on her over the years. I have been looking to buying a business for some time now. I have worked for different companies since graduating high school.

My question is when buying a business, how do you go about seeing if their asking price is accurate? Is it based upon x amount of their monthly income?

Thanks for the help
Happy New Year
Matt
The value of any business is based on all the complete facts and figures. There must be accurate and thorough bookkeeping for the life of the business. To determine the value or price of the business, you have to be able to verify that the figures are correct and be able to calculate a value or price. Because every business is different (even businesses in the same industry) the formula for calculating a value is on a by case basis.

What it comes down to is a business (or anything that is bought and sold) value is determined by what someone is willing to pay for it.
 

jlouki01

LawnSite Senior Member
There are only a few options to buying an established landscape company.

The company for sale is either setup for sale or it isn't. What I mean by that is if there are not clear contracts, transferrable phone number, transferable website the business isn't setup for sale. A business that is setup can easily be examined by a professional business valuation company. Plenty of them out there hit google.

If they are not setup for sale ( most are not ) you are really just rolling the dice. Work out a deal for a set amount up front and a residual over some amount of time unless the sale price is just so stupid low that it's too good to pass up.

We have bought a few small places and its a mixed bag. Some customers will stay some will leave.. some just flat won't respond to your letters and phone calls.

Retention is almost impossible without a seamless transition. A seamless transition would be you take the name, billing software, employees and contracts over and the customer is none the wiser.

If you come in as a new company and start blasting out letters crossing your fingers that people will just "adopt" you best of luck:)

The 3x monthly mowing, 3x time this or that.. 1.5 this or that.. won't work. You will have 0 idea what to pay unless you can look at 3+ years of financials with a professional.

When you sign on the dotted line you need to be 100% sure how much money you can count on each day / week / month.

When you say business for sale.. Are we talking Jim Bob with 32 accounts that mows on Sat and Sunday or Jim Bob & Sons Inc. with 350k annual revenue?
 
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