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Help!!! I need a answer in 3 days...

4K views 25 replies 17 participants last post by  vermonta 
#1 ·
I have been thinking of buying out a business that has been in the biz for three years, I was offered this company for 25,000.00. With this business I would be getting 40 accounts that are all within a 15 mile radius alot are in the same subdivision which brings in ruffly 6000.00 a month in mowing and also includes 60 inch exmark lazer z with 240 hours, 52 exmark turf tracer with 400 hours an older 48 inch exmark belt drive but runs great, 16ft trailer 1992 ford f250 120,000 miles on it, 2 stihl weedeaters bought this year, 1 stihl br340 blower, 1 redmax hedge trimmer, 1 stihl edger bought this year, pull behind aerater, honda push mower, a bunch of misc hand tools, and 3 wheel barrels. All of the equipment is in very good shape and the two newer exmarks are stihl under warranty!! The owner of the company is willing to work with myself and one guy on my crew for 1 month to show us how they run the routes and as well as introduce myself to a the clients and explain that I will be taking over the business. The owner has shown what the gross was for each month as well as gross for the months they did mulching which was around 22,000.00 this year. I know that my company can handle the work and it would be great for my business. I would also be getting the company number which I think is a big plus because they have done alot of advertising this year and are a pretty reputable company.. What would something like this be worth?? I have not bought out any companies before so I don't know what kind of price I should be paying... My company has been in business for a couple of years and all of my equipment is paid for and I have very little overhead.. So if you guys could give me some help I would greatly appreciate it. Thanks The Cutting Edge Landscaping and Lawncare.....

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#2 ·
For being an LCO, I simply don't like the idea of buying another business.

25 THOUSAND dollars. Do you realize how much advertising you can do with even half of that?

Enough to gain more than 40 accounts, I'll bet.

But in my mind, that's not the largest problem. The bigger issue, is will you KEEP all 40 of those accounts? That's what would worry me, there is no guarantee I'd be keeping them all.
 
#3 ·
For being an LCO, I simply don't like the idea of buying another business.

25 THOUSAND dollars. Do you realize how much advertising you can do with even half of that?

Enough to gain more than 40 accounts, I'll bet.

But in my mind, that's not the largest problem. The bigger issue, is will you KEEP all 40 of those accounts? That's what would worry me, there is no guarantee I'd be keeping them all.
You need to research how much it would cost you to increase your business the same size with out buying this guy out. Three years is not a very long time to say that this is an established company. Buying out a lawn care company is never as good as it sounds. My recc. would be to increase size in-house. Good luck.
 
#4 ·
Count on losing at LEAST 25% of the customers within a short period of time. How long has he had these customers? What makes them loyal to him? Can you service them the way he does? Do they improve your route density or hurt it? I bought someones business and quickly got rid of about half of the new customers as they were pita's that doubled my admin time. The half that I did keep added soo much to my route density that they more than made up for the ones I gave up.
 
#5 ·
How does someone gross 6,000 a month just in mowing with 40 accounts and a 3 y.o. business, and why are they getting out if the money's that good, that's the question I would be asking, to myself. Because if things are as slow as they are here, he'll be lucky if someone gives him cash money for all of what the equipment is worth.
The truck's worth 2, maybe 3 grand, and other than the Z that's likely the most expensive thing he owns.
You don't want a Z until you've got 5-8 or more years in, please listen to me, that could be why he can't make it...
It's a luxury few can afford, many think they need one or have to have one, but it's a luxury unless all you have are acre+ lots.

Then, where are you going to get the 25g, see it's just bad news all around.
 
#6 ·
I have bought before and in many cases it is worth it IF....

1. the numbers line up. have your accountant go over his books with a fine tooth comb.
2. don't let him place a time limit on ANYTHING, he is the seller, and if he wants to sell he needs to give the prospective buyer time to check everything out really well. will it fit with my routes, will I have the help to run all of these accounts, will they stay with me or go to one of his buddies, etc., etc.
3. Are the accounts on contracts? if so that is good, if not that could be disastrous for you.
4. will he sign a 1,2,or3 year no compete clause?
5. have a good accountant and lawyer go over everything!!!
6. always check the accounts yourself, try to imagine what they would be like in the worst conditions and worst time of the year. Anybody can do any accounts in the summer, it is the fall with leaves, and spring with wet lush grass that will make or break you.

last for now, a good rule of thumb for price is usually a couple of weeks up to a couple of months gross for any account. Obviously the higher the price the better the account needs to be. (prime location, great price, contract, and so on)

Another lco who is a very good resource on this whole topic is Rodfather. I know he has talked about this and done it a time or two and has some thoughts on it as do others as well.

overall I would be very cautious, it seems like he is trying to dump and run for some reason. I know it sounds like a good deal but don't let emotions push you, check it out REALLY carefully especially the numbers. Don't let him push you to buy it that quick either, that seems a bit fishy.

good luck,

Jeff
 
#7 ·
I would look at the equipment separate from the accounts determine what its worth. Then look at the accounts as if you were not getting the equipment although gaining 40 accounts sounds good it is doubtful that all will stick with for the long haul. As others have said have an accountant go over the numbers.
Good Luck
 
#8 ·
Hey TOPSITES I have been in business for 3 years and I have 10 good accounts and I bring in 3,500 a month off those accounts with just mowing, I don't see why you think 6,000 a month for 40 accounts is not feasable. I as well have a Z and dont have 5-8 years under my belt in the biz.. I think things in Virginia are a little to slow if your not bringing in these types of numbers.... I have seen the revenue for the past two years broke down on a monthly bases and the numbers are there. As for why he is selling is because he is moving back to California. As far as the $ 25 stacks I have that saved from this year alone. I gross well over 170,000.00 a year but I am a full line Landsaping and Lawn care business, we do everthing from mowing to escavation. The money is not the problem, I was just wondering if you guys thought it was worth it and if any have done it in the past and how it went for them.
 
#9 ·
Hey TOPSITES I have been in business for 3 years and I have 10 good accounts and I bring in 3,500 a month off those accounts with just mowing, I don't see why you think 6,000 a month for 40 accounts is not feasable. I as well have a Z and dont have 5-8 years under my belt in the biz.. I think things in Virginia are a little to slow if your not bringing in these types of numbers.... I have seen the revenue for the past two years broke down on a monthly bases and the numbers are there. As for why he is selling is because he is moving back to California. As far as the $ 25 stacks I have that saved from this year alone. I gross well over 170,000.00 a year but I am a full line Landsaping and Lawn care business, we do everthing from mowing to escavation. The money is not the problem, I was just wondering if you guys thought it was worth it and if any have done it in the past and how it went for them.
Gross means nothing in this business, you should know that. If you have the money in hand then you really should not buy this business. Buy the equipment new yourself, and advertise. It seems like you are pushing to buy this guy out. You need to consider the advice on this forum. Many of us here have purchased companies in the past and are speaking from experience. That's why you posted this thread right?
 
#11 ·
imo, this has the makings of a good deal.


the numbers sound good the equip. is in place the help will stay ?
once you meet with the cust. u will get a feel from them if they will give you a chance to earn their bus. / the goodwill that comes from the purchase.
their are benifits to buying a established route.
versus trying to build one up over time.
 
#13 ·
I agree with fiveoboy on this. For less then 1/2 of his asking price, you can get the work. I was in a similar position earlier this summer but decided against it because I would rather grow something myself.
 
#14 ·
Well Guys I have made my desicion.. I have decided to go out on the limb and buy this guy out. Just by meeting with a few clients today that will be coming with the new biz I have already met with one client that wants a home that they had bought recently for 3.2 million on the Ohio river to have a hole new landscape design on this property.. I am guessing for this project to make my company atleast 25 stacks, so that pays for the business itself. All of the clients I have talked to in the past two days have been fine with the switch of ownership some have been happy due to the fact that I will be offering a few more services. I really think this is a good move for my company it will really improve my routes. I will let you guys know how it plays out for me. I want to thank you guys for all the point of views you had me look at. Thanks The Cutting Edge
 
#17 ·
Yeah, Tell us how it turns out for you. We have all read the good, the bad, and the ugly, on buying people out. I personally thought this was a great venture for you. So far sounds like a great investment. We are all curious to hear your loss rate on customers and how the route is working. So let us know.
 
#18 ·
Hey TOPSITES I have been in business for 3 years and I have 10 good accounts and I bring in 3,500 a month off those accounts with just mowing, I don't see why you think 6,000 a month for 40 accounts is not feasable. I as well have a Z and dont have 5-8 years under my belt in the biz.. I think things in Virginia are a little to slow if your not bringing in these types of numbers.... I have seen the revenue for the past two years broke down on a monthly bases and the numbers are there. As for why he is selling is because he is moving back to California. As far as the $ 25 stacks I have that saved from this year alone. I gross well over 170,000.00 a year but I am a full line Landsaping and Lawn care business, we do everthing from mowing to escavation. The money is not the problem, I was just wondering if you guys thought it was worth it and if any have done it in the past and how it went for them.
Well ok, I see you say you have 4 years in and I have to respect that, the figures still seem lofty but in the end it comes down to cost... I see a lot of Lco's claim lofty figures and maybe they are true but what's the COST?

Because grossing 170k when the cost is 200k isn't very amazing at all, now with 4 years in I would assume you have a firmer grip than that on things, then again why are you asking? Of course I likely would ask too, I really am just trying to help, I did see my note is condescending and I will have to start working on not doting on other Lco's like I always do, for that I'm sorry and I do wish you the best of luck.
 
#20 ·
I don't know. It is said that it "brings in" $6000 a month ("roughly"). "BING IN" is a wide open term...especially with one Z and a wb. If this is gross, by the time you pay a crew and costs of a crew (taxes, payroll, ins., wear and tear, etc.), you are looking at whole different numbers. it is not like at 25 g's, this thing is going to "pay itself off" in 4 months. I am willing to bet the 6000 is gross on a GOOD month...not during July and August's drought season. I am with Topsites on this one....I know it's a done deal, but I would have to advise that on ANY case like this, Look at the books, look at the books, then look at them again...ALL the books.
 
#23 ·
Hey guys things are going great a little more stressful than I thought but areation season is here andthe guys and I have been at it a good 10 hours a day.. As of right now all of the customers are still with me but I know of two that I will be letting go after this season.. One is just a PITA and the other property is just to risky... I know that next spring is going to be insane with all the mowing and mulching that will have to be done but we are looking foward to it!!!! I was thinking of hiring a part time crew for the mulching, I don't know what do you guys think of that? I know that leaves will be falling soon here so we are getting ready for that. I am leaving right now to go buy a 20 horse billy goat leaf loader from a guy up in Columbus. Gotta go for now Jesse
 
#24 ·
Glad to hear it's working out for you.
I ran into an odd situation this year myself. Last fall talked with a guy that talked about getting out of the business. Had 25 accounts reasonably good ones, an 05 2wd tundra, 16' tandem trailer, new Everide Warrior 60", two year old 48" Exmark wb and various samll tools, trimmers etc.
He is very fussy with quality of work and maintains equipment like new but was getting out because he was getting into his wifes business with her.

Anyway, I told him I would be interested if he made the decision, Asking price $30,000

This year I find out he is in fact getting out of the busniness but basically was just selling the equipment if I was interested but wouldn't sell customer list??????????

He just told the customers about a couple of other guys in the business, but didn't recommend anyone in particular.

I told him I was interested in the whole thing if he would write a letter to all customers recommending my co. but he would have nothing to do with it. He figured they could make there own choice but he would sell the equipment.

He sold the pickup and trailer to a good friend of mine and finally sold the Everide for $4,800 (cheap) but still has the Exmark

Does this make sense to any of you? It sure didn't to me
 
#25 ·
Does this make sense to any of you? It sure didn't to me
His reputation.

Same thing happened around here in window cleaning. The guy retired, had money and a co. with a great reputation even though they were expensive. He had the residential part of it and personally phoned.. I think they had about 450 residential customers, he told them he's retiring and good bye.

The guys ex customers told me that he told them, he couldn't recommend anyone as a replacement.

lots of clowns in business, lots of classy people too but which is which?

The other parts of that co., that were commercial ended up in one of the sons hands. 5 years and the best window cleaning co. I ever worked for (i worked there a LONG time ago) were out of business. The son lost his drivers license for DUI and ended up working in Walmart.
 
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