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buying an existing business

Discussion in 'Business Operations' started by hgotti, Mar 21, 2005.

  1. hgotti

    hgotti LawnSite Member
    Messages: 55

    I was wondering if this is a good price he has 49 accounts and he averages about two grand a week just in lawn mowing, and he has a condo that pays 13,000 thousand for the whole year with snowplowing.And he gets about eight thousand for fall cleanup . and he wants 40,000 but i was going to offer him 35,000. let me know if it is a good price i have to make a decision by tommorrow.

  2. jerryrwm

    jerryrwm LawnSite Bronze Member
    Messages: 1,274

    Are all those 49 accounts going to stay with you when you take over? You could lose half of them and then what would you have?

    Not sure how many cuts you can get up your way, but if the cuts average $40.00 per and you can get 30 cuts a season that's roughly $59K. Then add the $13K for the condo and $8K for cleanups you're at $80,000 gross for the year.

    Any equipment included in the sale?

    Have you looked at his P&L sheets? Is the business making any money?

    You'll have to do the math for your situation, but I'm thinking that might be quite a bit high.
  3. Drew Gemma

    Drew Gemma LawnSite Bronze Member
    Messages: 1,508

    I have done that many times to expand. Don't pay a flat rate. Pay a percentage of the gross for the first 2 to 3 months. That way you only pay for the ones who stay. Do some researching in here I have tons of post/replies about this subject. Have had excellent sucess.
  4. lsylvain

    lsylvain LawnSite Senior Member
    Messages: 778

    I sugest running the numbers as best you can. See what the seller is willing to give you for lost accounts.

    the accounts are atleast worth.

    $100 each in saved Adv Cost.
    2 hrs each in estimating time setting up ect.
    Assuming you could add 1 new customer every other day if you got these same customers it would take you 49 days to get all 49 (14 weeks) If you had them all day 1 you would gross $28,000 in that time span getting 1 everyother day you would gross under $15,000. so that is an extra $13,000 they are worth. just on the mowing side of things.

    Basically you save/earn and extra $17,900 right off the top by buying these accounts. Then consider the other factors involved. The time setting up the accounts at only $25.00 and hour is another $2,500.

    So at a min just the mowing accounts are worth at least $20,400 in my mind. Add a used truck at $10,000, a used ZTR at $4,000, a trailer at $1,000, set of trimmers and hand tools $1,000 and you are at $36,400.

    $35,000 sounds like a really good deal to me when you think about cash flow issues starting from scratch and so on.

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