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View Full Version : how to go about purchasing this biz


nlowplacez
07-01-2010, 06:23 PM
whats up everybody first post on hurr.
im a 25 year old college student, have thought many times about starting my own lawn care biz, and came as close as you can to doing it a couple years ago but got to scared of the risk of leaving my job. heres tha deal

acquaintance of mine makes a living with a lawn care biz. he has about 40 clients, none on contract. one employee at 10 an hour and makes about 4k a month for nine months out of the year. this of course is according to him. he will be moving soon and said he was planning on just handing the biz over to his employee when he left minus the 5k in equipment he purchased. at first i had no thoughts about taking it over myself but since have been thinking this could be a great opportunity.

i have no cash on hand to speak of but decent credit. what would be a good offer for something like this that is fair to the both of us. i'm hoping for some kind of payment plan over a year or two due to the cash situation. but it seems like anything would be better for him than just handing the biz over for free. before i had thoughts of obtaining the business i said a few things like "dude are you crazy sell the biz for some start up cash in your new town" and might have got his hopes up on getting a lot of money for the biz like in the 20k to 30k range. which if he could more power to him and i would even help him try to do that, but if i was a last resort i would love to buy it, just don't want to screw the guy over or myself. how would any of you guys go about this.

robgee05
07-01-2010, 07:22 PM
Well you kind of blew it by telling him hes crazy. You could of gave him 5k for the equipment. LOL I would offer say $10k since no one is under contract. And ask the see the books of course. If they look sound and hes actually profiting 4k a month, 15-20 may be worth it if you plan to stay with it.
Remember also with an employee and new business all the other up front costs youll have to pay. Ins, WC, Registration, License. Do you have a truck and trailer?

whats up everybody first post on hurr.
im a 25 year old college student, have thought many times about starting my own lawn care biz, and came as close as you can to doing it a couple years ago but got to scared of the risk of leaving my job. heres tha deal

acquaintance of mine makes a living with a lawn care biz. he has about 40 clients, none on contract. one employee at 10 an hour and makes about 4k a month for nine months out of the year. this of course is according to him. he will be moving soon and said he was planning on just handing the biz over to his employee when he left minus the 5k in equipment he purchased. at first i had no thoughts about taking it over myself but since have been thinking this could be a great opportunity.

i have no cash on hand to speak of but decent credit. what would be a good offer for something like this that is fair to the both of us. i'm hoping for some kind of payment plan over a year or two due to the cash situation. but it seems like anything would be better for him than just handing the biz over for free. before i had thoughts of obtaining the business i said a few things like "dude are you crazy sell the biz for some start up cash in your new town" and might have got his hopes up on getting a lot of money for the biz like in the 20k to 30k range. which if he could more power to him and i would even help him try to do that, but if i was a last resort i would love to buy it, just don't want to screw the guy over or myself. how would any of you guys go about this.

nlowplacez
07-01-2010, 07:46 PM
i have a truck no trailer, but thats part of the equip he has. i dont understand the deal with contracts. why are they worth so much more than non contract customers. if a customer doesn't pay you per the contract does anyone actually take them to court and whatnot (which would probably cost more than the account). just seems like a client wouldnt take a lawn care contract too seriously, so i'm asking what the value is in them.

Steve
07-02-2010, 01:22 PM
Could you buy it for the value of one month of the service plus the equipment?

If you make him an offer at least he would have something to go with versus just giving it away.

nlowplacez
07-02-2010, 03:50 PM
ya steve,
my plan now is to offer him something like this, and i think he'll probably take it because hes still talking to me like he just wants go get something better than giving it away.

4 to 5k for his equipment after i look at it and value it, and then 2 to 3k for his accounts, to be paid out from the time i start to the end of mowing season (not exactly sure when that is) i am going to offer to pay myself 10 dollars an hour and give him EVERYTHING else until the 6 to 8k is paid to him, with a contract and whatnot for him. he might be concerned with not getting the cash for his equipment up front (since he plans to start again in his new town), but that is about the best i can offer. then if he doesn't take it i'll start my own from scratch next season.

anyone heard of an operation being purchased like this or is it silly?

JP Landscaping
07-02-2010, 10:09 PM
If he's making the 4k per month and his equipment is worth 5k. I would be willing to give $12200 for the business. In essence, 4X9=36 so I took 20%
of 36000 = 7200 and add the 5000.

At first some may say 20% is too much. Most would want to pay 10% of gross sales and value of the equipment. But if you think about it and plan on staying at this for some time, then it is well worth it.

At a max of 20% you would be paying $180 for each account. at first glance it may seem high, but you wouldn't have to spend in advertising or the time to go out and get customers or the bidding and all that goes with it. If you spread this over the amount of time you plan on staying in business it seems like nothing. for example, lets say you had plans to stay in this business for the next 5 years. Then the cost of each customer that stayed with you over that time is only $36.

It is also easier to expand if you already have a base of customers. Advertising to the neighbors, friends, or their relatives. Also, you can sell other services like weeding gardens, adding mulch, trimming bushes/trees. The mowing is only the tip of the iceberg.

Don't let this opportunity slip by if it's all legit like he says.

nlowplacez
07-02-2010, 10:34 PM
JP, what about the fact that none are under contract. btw im still wandering what the big deal is with contracts. has anyone on here ever taken a client to court for breech of contract? or would they. but back to my deal. maybe i should make 12k my max offer and start low to see if he wants to negotiate. like i said i'd like to start somewhere in the 6 to 8 range to be paid out over remainder of season. but by what your saying, if he were to take that i would have a hell of a deal. i really like hell of a deals

Steve
07-03-2010, 02:00 PM
First off, if you can make payments over time with the business, that is a great deal for you and you should do that. He might be interested in that because he will be getting money where before he wasnt.

To answer your contracts question, I think there tends to be a higher value placed on customers that are under contract because everything seems to be more legit. You could theoretically take customers to court if they cancel their contract, depending on the contract. But having contracts to prove they are customers is better than your friend calling a whole bunch of family and friends his 'customers' when he may not be servicing them and just using them to make his customer list appear bigger.

Does all this make sense?

Keep us posted on how it goes.

If he's making the 4k per month and his equipment is worth 5k. I would be willing to give $12200 for the business. In essence, 4X9=36 so I took 20%
of 36000 = 7200 and add the 5000.

Why did you go with a 20% figure? Do you feel he could get the business for cheaper since this business was actually going to be given away for free to the employee initially?

JP Landscaping
07-04-2010, 12:03 PM
20% is a personal figure for me. Depending on how long you would be staying with the business you could pay more or less. 20% is just my max.

But you would have to figure out how much you can do witht he money you would be spending on the business. For example of it ends up being $10,000. try to estimate how many customers you think you can get with an investment of that much.. also, what equipment you could buy. If you think you can do better than it's not a good investment to spend that money on buying a business.

Besides, if you buy a business and keep it in good standing, when you are ready to get out of it, you could sell it for what you bought it or perhaps more and end up getting your initial investment back. So in that case your customers didn't cost you anything if you get it back in the end.

I see many people get scared of all the money they spend in the beginning. But you have to understand these are investments and not expenses. The difference is that an expense is used up during the year: like buying gas or trimmer line. But an investment increases the value of the business and you can get it back when you sell the business.