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How much is my business worth?

Discussion in 'Lawn Mowing' started by Popper357, Dec 2, 2004.

  1. Popper357

    Popper357 LawnSite Member
    Messages: 217

    I have a residential lawn business that I'd like to sell because I'll be landscaping only next year.
    I have fifty accounts and will certainly be able to add at least a dozen next year through past work and referals alone. These will be passed on as well if LCO can provide quality. How much would a reasonable price be for selling the accounts only? I have recorded the accounts services and payments and have detailed records. I also have tracked my revenue, expenses, job times, revenue per man hour, average job time, drive time, support time, production and office hours per month and a host of other numbers.

    Support time is aprox 30%
    Revenue per hour is $31.80
    Hours sold are 1551
    number of jobs is 1167
    These are 2004 numbers through Dec. 2.:

    # Of Jobs Completed 1167.00
    Field Time 1551.81 hours
    Shop Time 49.82
    Curb Time 1069.85
    Drive Time 432.14
    Support Time 481.96

    Unpred. Shop Time 5.00

    Revenue 49347.50
    Labor 20732.65
    Materials/ Dump Fee 0.00
    Total Direct Costs 20732.65
    Gross 28385.85
    Overhead #REF!
    Net #REF!

    Revenue Per / Hr $31.80
    Materials Per / Hr $-
    Labor Per / Hr 13.36030184
    Direct Per / Hr
    Gross Per / Hr 18.29
    Overhead Per / Hr #REF!
    Net per/ hr #REF!
    Curb Rate Per / Hr 46.13

    Shop Time % 3.21%
    Drive Time % 27.85%
    Support Time % 31.06%
    Curb Time % 68.94%

    So what might be a reasonable price for selling just the accounts? Say I can retain every clients, which I believe is possible. Certainly I can retain a high percentage if the LCO is qualified and can offer a similar service. I extend credit to every customer, most pay off door notice. Other's wait for monthly bill. Some are late, most aren't. All pay thier bill in a reasonable amount of time and I like every one. I always discontinue service for those I don't like.
    Note, two customers are much larger than the average customer. One is a church that pays 220 per service (all accounts are serviced weekly in spring until dormant in summer, and weekly when needed again in fall) another is a resident that pays $140 per service.

    The route took two men working Tuesday thru Friday, rarely working Sat and only because of rain delays. Route is in a very tight radious of ten miles and all are within three except the two larger accounts, route also has built in time for rain. We averaged seventeen lawns a day at eight hours and hit twenty three several times at less than ten. All customer need a qualified LCO and that's what I've been. I don't think many will be concerned about switching LCO's if I recomend them and the LCO provides a good service.

    Ryan Odneal
    Odneal Lawn Care
  2. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Messages: 8,745

    my best advice to you is talk to both an accountant and a lawyer.
  3. Popper357

    Popper357 LawnSite Member
    Messages: 217

    I will talk to my accountant on Monday the sixth, and my Lawyer then too. Wondering what they will say? Are there any potential liabilities for selling these accounts?

    I would certainly only sell to a licensed and insured LCO.

    I've thought that ten grand would be fair but I've heard that this is too high and too low from other LCO's and businessman. Give me your opinions please! :)
  4. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Messages: 8,745

    what debts does the business have? You have to take that into account as well
  5. Popper357

    Popper357 LawnSite Member
    Messages: 217

    Why? These accounts don't have any debts and I'm only selling the accounts. Going to keep the equipment for leaf cleanups next year if I decide to do that. I may change my mind and sell the equipment but for now I'm planning on keeping it. I do have a complete setup for these accounts and have bought almost every peice brand new this year from my dealer. All new encore hydro walks and redmax two cycle.
  6. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Messages: 8,745

    but if you are selling the business, you must take into account the amount of debt the business has.
  7. jsaunders

    jsaunders LawnSite Bronze Member
    Messages: 1,781

    What's being used to cut the lawns? Belt 48'' w/b's or 60'' z's. Are the machines going with the sale? What's the gross/NET per week? I think 10k is to high. 1/3 of net. Joel
  8. Popper357

    Popper357 LawnSite Member
    Messages: 217

    Selling accounts only!
    Using Hydro 32" and 48" to service. Grossing $1700 per week during weekly mowing, depending on weather I did more than $1700 every week in April, May and June. I never had enough time to get work done in the Spring Summer and Fall. Working weekends was for scheduled customers only and for rain delays. You can't work all your life
    We did seven thousand every spring month, slow in July, Aug, and Oct because of lack of rain. I can answer any questions that are pertinent. Thanks
    Ryan Odneal
  9. Popper357

    Popper357 LawnSite Member
    Messages: 217

    If I don't sell, I could be very profitable next year without changing a thing. These clients are used to a good provider and paying for quality and dependablity. Been getting a ton of refferals this year, especially the fall. I was too busy during the spring to take on more work and didn't ask for refferals then.
  10. Gautreaux's LNG

    Gautreaux's LNG LawnSite Senior Member
    Messages: 379

    Accounts only? No equipment?

    You will have to finance some yourself then. I've bought and sold accounts it's no concern about the debt. You are only selling the accounts not the company as a whole. Then the selling contract will have to read as such.

    Are these accounts under written contracts or verbal? Monthly or per-service? This will make a big difference.

    If the accounts only, no equip, no contracts, I'm guessing you can get $10-12K you will probably get half up front and half paid over 6 months if all the accounts stay .

    If all are on contracts I'm guessing it's worth... $15-20K with the same payment plan as before.

    But beauty is in the eye of the buyer! You could get as much as $25K from the right person! If it's all under contract and everyone stays on!

    Would like to see your revenue per hour a little closer to $40.00 / hour

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