Looking at buying accounts?

meets1

LawnSite Gold Member
Location
NW, Iowa
Here is the short of it. Guy is 70 - wants out, almost out that is. He has an in at a local school system - uses there equipment and charges himself out at $12 an hour. He want to keep that - himself, a nephew and part time guy. Roughly 80 acres of mowing.

His list includes: Exmark front runner, gas 27 kohler, 60 inch deck, 950 hours, 2008. Simplicity 42 deck, brear bagger, brig engine, 3000 hours. two (2) 21 inch push mowers - craftsman. Gas hegde trimmer. BlueBird wb power rake. 1 craftsman 28 incn snow blower - new one yr ago.

Mowing list - 43 account - all residential. Gross / week - $1183.00

Snow accounts - 31 accounts - prices range b/t $15 - $30. Some just walks, other everything.

Misc fall clean ups, spring clean up - his figures show around $5k.

He really has nothing else. With the info provided - give me a fair price what ya all think it would be worth.

Routes are tight - soome our next door to yards we service, others are a good in for us. I would hope I can upsell spraying, landscape services as well.

Can we handle the work load - yes. Do I need his equipment NO. But price it to me either way - list only or everything pkg deal.
 

IS500Z

LawnSite Member
Location
Illinois
Evaluating the worth of a business is a fairly straight forward prospect, despite what one might hear, but getting the information needed to do it can be hard. Basically you need to get the book value, in this case the current value of the hard assets (equipment). You should be able to do that in a straight forward manner. Make sure you know what, if any, depreciation has already been claimed for the equipment.

The other piece of information you need is the actual profit of the business, and that can be hard to ascertain at times due to accounting tricks or just poor records keeping. Have the business provide you with their actual profits from last year (tax records or from their accountant).

Once you have these two pieces of information you have a lower end for the value of the business (book value) and a fair market value as well (profits multiplied by a rider which is typically from 2 - 5). Given it is a lawn mowing operation I would probably use a rider of 2 or 3. Remember that all business owners think their business is worth more than it is; also make sure you take into account any liens or loans the business might also be responsible for at the time you make an offer.
 

djagusch

LawnSite Platinum Member
Location
MN
Figure the value of the equipment. I'm don't know that equipment well nor would like to own it so I can't help you there.

Get the last 3 yrs of tax returns and this year's p&l. Pay an accountant $200 to give you a value for the biz. For $200 it is a good value compared to buying it at the wrong price. From a pricing stand point if you show up with a accoutant's value of the biz and he thinks it's worth more it might put him in his place.

Add the two and you will find what it should be valued. Then try to get it down a bit from there.
 

SouthSide Cutter

LawnSite Bronze Member
Location
Washington In
My son wanted to buy a guy out a few years back. He was going to help me. We split the cost 10000 cash. He had a 52" TC with 1000hrs nice shape, nice single axle Corn Pro 14ft trailer with racks and boxes. A hand held blower, LawnBoy self propelled mower and 17 accounts. Lost a few of the accounts from people moving and still have the rest today. Would I do it again no should anybody else do it yes but it depends on price.

This guy doesnt have much equipment which should be worth more than the accounts to me. If you mow all the accounts 26 times thats 30000. I figure his equipment maybe 3000-3500, maybe somewhere around 10 - 12000 if you get all the accounts.
 
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meets1

LawnSite Gold Member
Location
NW, Iowa
Cuts per year. I did 24 cuts this year. It was hot and dry. Now its cold and dry. The last two years I did 30 and 32 cuts per year. His last years were at 23. If I offer next week, only clients. His equipment is worth gold to him and not to me. He said he would use his stuff yet on his lawn, which he has a large lawn but thats it.
 

yardguy28

LawnSite Platinum Member
this might be just a wasted post but i'll say hoping its worth something to this thread.

i would never buy an account or sell my accounts or business.

it's not worth the money since the work isn't guarenteed. just because you purchase the accounts don't not mean they will stick with your services.

i personally don't know the entire in's and out's of buying accounts so maybe the clients are forced to stay with the buyer for a season, i don't know. but i wouldn't want to force anyone to use my services.

i'd much rather earn my clients.

and when i finally do decide to retire from this industy all my clients will be referred to whoever i know that is good and i will sell my equipment to who ever i can and just close up shop.

so my advice on buying accounts? DON'T!!!!!
 
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meets1

LawnSite Gold Member
Location
NW, Iowa
To me though Clients are part of the business equation. Contract or not - i think its all part of the game.
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