Figuring My Business Value

Discussion in 'Business Operations' started by Dimple, Nov 9, 2012.

  1. J & D Greens

    J & D Greens LawnSite Senior Member
    Messages: 765

    I often wonder what my Biz could sell for in a few years, also just the idea of what it is as a asset even though it has no weight as collateral (it would just be nice to have an idea).

    But like you, I don't do contracts. Mainly because I feel it is good for either party to be bound to a service contract would be detrimental to both parties. If they couldn't afford my services any longer than so be it. Just pay me for what I'm owed and we are good. If I start working for a PITA customer and they force my hand I don't want some contract binding me to stay working for them. (I am sure everyone has had a few of those huh).

    I would think though as long as you were selling to a reputable person or company that the client list would be worth something to them. As long as the term, no compete clause was included.
  2. ryde307

    ryde307 LawnSite Senior Member
    Messages: 540

    This is your best answer.
    In terms of client lists or existing routes, contracts vs handshakes, vs service agreements. All are about equal. Very rare for many to have Binding contracts in this business. Some in the commercial world but they get tricky when selling the business to a new owner.
    So for this instance we will leave them out because I don't believe you have these or are talking about them. (not a bad thing)

    We have purchased 2 mowing routes from others and have sold our residential plowing route. Short answer is common price is 2-3 months of revenue for the services you are purchasing. Pay x amount (50%) up front and the rest based on customer retention. In almost all cases you will instantly loose some. You can be the best but some people don't like to be traded as a commodity.

    There are still alot of factors but this is a basic start.
    Like stated above a solo op or smaller company where when the owner is pulled out is not worth nearly as much as a business with systems in place to keep it running with out them.
  3. Will P.C.

    Will P.C. LawnSite Senior Member
    Messages: 966

    Keep an eye out for small landscape companies selling there business because it isn't worth much. You will probably end up giving it away in your eyes if you are smaller.

    I remember one guy used to post "cost of equipment and a case of beer" which is surely over simplified, but makes a point.

    It doesn't matter if they have a contract or not. Despite the fact that it probably will not be valid under new ownership, are you really going to spend the money and time taking someone to court over 100/month.

    Can the new owner run the biz from a computer or does he have to load the trailer each morning and wipe his employee's asses?

    One way you make your accounts more profitable is working on site with the new owner for a while. This allows better retention rates.
  4. J & D Greens

    J & D Greens LawnSite Senior Member
    Messages: 765

    I would disagree with the guy about routes being worth a case of beer. Just the opposite if I ever sold out. I would sell my route separate and I do agree that working with the new owner would help a lot if they wanted the help in transition. Then sell all my equipment item by item (I really don't think the equipment has a lot of value unless the new owner was starting fresh). The only positive about buying a solo route is, if it was like mine it would be 35-40 accounts in a one mile radius. (One day’s work for a crew of three or more.) Like I said I'm just curious because no one knows what the future holds. I may do this till I'm in a pine box or sell 5 years or so down the road.

    I like this thread because I am considering expanding also (my youngest is graduating high school and going to college next year, so I will have a lot more time on my hands.) and one way is to buy someone out, in fact I started with 7 accounts that a friend of mine was letting go ‘cause he was tired of doing lawns.

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