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View Full Version : Looking at a business for sale?


walkerlawncare09
05-27-2010, 07:56 PM
I found and ad for a business for sale that would be a good way for me to build up my business to where id like to be. I've read some other posts about buying a established lawn care business. But I just wanted some more input.

The main thing id like to know is what types of things should I look for and ask the seller.

Any information would be greatly appreciated.

Thanks,
Eric

JP Landscaping
05-27-2010, 09:58 PM
ask:

What is for sale?
- the customer list and/or equipment

How many of the customers are on contracts and how long are the contracts?

Why is the business up for sale?

what percentage of net income is the sale price of the business?

How much is the owner paying himself?

Steve
05-28-2010, 08:21 PM
Those are good questions to ask. They will give you a better feel for what is going on with the business now.

People don't sell a business unless there is a reason. Sometimes that reason is a bad reason for a future owner.

Keep us posted on what you find out.

walkerlawncare09
05-29-2010, 04:43 AM
Thanks for the advice, im waiting to hear back from the guy I will keep you all posted on what comes of it.

walkerlawncare09
05-30-2010, 05:48 PM
The business is up for sale for $75,000.

Equipment is 2001 dodge 2500 pickup, two hustler 60'' mowers 450-600hrs,walk behind, two push mowers, two blowers, two trimmers. 18ft trailer.

40 accounts with an average of $6,000-$8500 monthly gross. No customers are on contract but says they will stay as long as the job is good and they are easy to work for.

Reason for selling, going on to another career path.

1/3 cost is equipment 2/3 is accounts. Seems high for the equipment at that rate. I figure at 6,000 monthly at 30 weeks mowing accounts bring in 45,000 making the equipment 30,000 worth (way to high)...and at 8500 a month 63,500 which seems alot more reasonable to me.

So i really dont know what to do. It would be a huge leap for myself.

JP Landscaping
05-30-2010, 06:03 PM
this is what I would offer:

Find the market value of the equipment plus up to $15000 for the accounts.

If 1/3 of cost is machines then it comes out to $25000 plus the $15000 for the accounts, I would offer a max of $40,000.

Because none of the accounts are on contract, I would not pay for the accounts in full up front. I would have to ask him to take monthly payments because you are not sure they will stay with you. essentially you would be paying an average of $375 (15000/40) for each account.

In short, I believe you can start up a lawn care business and get 40 accounts for much less than $40,000. More of something like 5-8 grand.

walkerlawncare09
05-30-2010, 07:42 PM
Thanks for the insight.

After doing all the numbers and everything several times over, I had come to the conclusion myself that it would be better to just build up to it myself so I wouldnt have that high amount of overhead lingering over me without assurance that I would keep the accounts. And the profit margin by building it up on my own will come much faster and with much less stress I would imagine.

robgee05
05-30-2010, 09:14 PM
Thanks for the insight.

After doing all the numbers and everything several times over, I had come to the conclusion myself that it would be better to just build up to it myself so I wouldnt have that high amount of overhead lingering over me without assurance that I would keep the accounts. And the profit margin by building it up on my own will come much faster and with much less stress I would imagine.

When he says different career path it definitely sounds like hes not making the money he needs or says. I would ask to see books. He may have went in over his head. How old our these hustlers. Seems odd to have 2 60 inch machines for 40 accounts. For about 20k you should have no problem getting all that equipment (just 1 used hustler) and 40 accounts with a little advertising and some word of mouth with good service. As the saying seems to go from most of the bigger guys here. Buy what you need when u need it. As far as buying customers I would be real leery without a contract on them, unless its someone you know and trust.

Steve
05-30-2010, 09:39 PM
When he says different career path it definitely sounds like hes not making the money he needs or says.

Isn't it fascinating how the answer to this question can be very telling?

I agree with this. Why would you change careers if your business was running smoothly? It be interesting to hear what he was going to try next and what about this industry had turned him off. Also how long he had been running it.

walkerlawncare09
05-31-2010, 09:38 AM
Well I do know the different career path was due to him getting ready to graduate college. I guess to go into the profession he went to school for?!

robgee05
05-31-2010, 10:01 AM
Well that seems legit enough. He may find later that starting his own business is more lucrative then his career path in this economy, depending on his degree. But $75k is still very steep. You have the right idea going it on your on. I hate to sound to sneaky but i would watch and see who hes cutting, then after its sold(if its sold) market to them. Guaranteed at least a few of the customers wont be happy with the new owner. As well he may slack off because he plans on leaving the business.

I myself have a degree in Economics, worked a few years with it in the finance industry, then turned to law enforcement. You cant ever take the experience a degree provides. Entrepreneurship has always called me, and I have had quite a few small online ventures make me money through the years. I never minded getting my hands dirty though and the service industries are always a great may to make a buck. Especially those with residual service.
If he is grossing 6-8500 a month, hes probably seeing 2/3 of that as profit. Unless he has a specified degree in the medical or engineering field or such, he probably wont see much more then 30k a year in an entry level job. Plus the actually business experience he has gained running the business is priceless, and shows deep down he truly wants to be an entrepreneur. Of course the bottom line you must do what makes you happy. You may even try and work a little partnership out with him, since he runs a very established business. If he invests equipment and does some of the billing and you invest time and grow the business from there. You will get to see from the inside how successful it is, and down the road if he wants to sell its still an option.

Steve
05-31-2010, 10:24 PM
The business is up for sale for $75,000.

Equipment is 2001 dodge 2500 pickup, two hustler 60'' mowers 450-600hrs,walk behind, two push mowers, two blowers, two trimmers. 18ft trailer.

40 accounts with an average of $6,000-$8500 monthly gross. No customers are on contract but says they will stay as long as the job is good and they are easy to work for.

How long do you feel it would take to make that money back and be in the black again if you were to spend the $75,000?