How much is your business worth?

Discussion in 'Lawn Mowing' started by Lawn-Scapes, Nov 11, 2003.

  1. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Messages: 2,810

    Over the years here I have read many replies from people giving advice on how much to pay for accounts. This advice usually was in the 2-4 weeks worth of gross.

    If you spent 10, 15 or 20 long, sweaty years to build a reputable business and wanted to sell right now.. Would you only ask for 2-4 weeks gross? Peanuts?
  2. Clay

    Clay LawnSite Member
    Messages: 236

    6 months gross, plus equipment value... (in a 12 month climate zone)
  3. Richard Martin

    Richard Martin LawnSite Fanatic
    Messages: 14,700

    I'll be moving in about 4-1/2 years. My equipment is going with me. I'm giving one of my best friends pick of my customer list. The rest will be let go the day before I move.
  4. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Messages: 4,040

    Here is a quote I found on this post.

    "10 - 20% of the total annual contract"
  5. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    I think that is way low. I think if you can't get 50% or more of your total revenue, you should be spending time talking with other potential buyers...that or take a course on salesmanship.
  6. sildoc

    sildoc LawnSite Silver Member
    Messages: 2,925

    I would say if you are making, lets say, 75000 a year gross taking 10-20% is only 7500-15000. Now in my mind no matter what I would rather hire a guy to make up pay him 15 an hour to do all the heavy work and sit back in a lazyboy and collect maybe 10000 a year but with minimal work. better than 7500-15000 for a good business that you put many years into. JMO.
  7. KenH

    KenH LawnSite Bronze Member
    from CT
    Messages: 1,622

    IMO, my business is worthless without me, which is not necessarily a good thing. All my money would be in my equipment.
  8. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    One thing I forgot to add is "if" I sold my business, I would try and persuade the new owners to let me stay on a bit to make sure the transition goes smoothly and "their" new customers don't jump ship on them.
  9. DanaMac

    DanaMac LawnSite Fanatic
    Messages: 13,171

    This is a tough question for our industry. I'm a little different being in the irrigation service end of things.

    It is tough to get a high dollar if it is an owner/operator business. If the business has systems in place and can operate on its own or with minimal owner input, businesses tend to sell higher. If it's just a solo owner/operator business, your selling someone a job with a lot of hours and possibly not much return.

    I did kind of buy out someone this spring. This will be different to how you buy or sell with the maintence biz. The guy selling was retiring and did just like myself, all service work, no installs. So all I wanted was his client list. He had been told by a business broker that he should be able to get $40-$50k for it. That's not going to happen and he found out as well after pitching it to others. We agreed I would pay him a fee of $20 for every client of his I worked on in the first year after buying the list. If I went to a home 3 times, I paid him 3 times. This way I'm not paying for a client list where many might jump ship and use someone else. I paid on a per use basis for one year. He sent out a letter explaining his retirement and to use me for future services, to the 260 clients in his list. I also received the names and entered into Quickbooks. This was after weeding out the PITA clients.

    At years end I will have paid him between $3-$5k. That was all it was woth to me anyway. If he'd wanted a flat fee, I would have told him $3k. He does still have his service van and supplies up for sale. I will talk to him soon about the supplies at a reduced rate, but don't want the big van - kind of a moving van.

    I do have one tech and looking to hire another and some office help in the spring. I am trying to get away from doing all the work and "run" a business instead of "being" the business. Hope this helps in some way.
  10. jasond

    jasond LawnSite Member
    Messages: 72

    Anyone sold out to TruG or to ServiceM? That would be the indicator as to what a business is worth.. this formula should be considered: equipment + annual sales + brand recognition + employee worth (knowledge/reputation/quantity) + customer base.

    Whether this business is a LCO or a 7-eleven or a gift card shop, the brand recognition is what is most important.

    A good example would be Perdue Farms (Chicken) or a grocery store chain (Food Lion acquisitions).

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