Bridge to cross, looking for advice

[mshaffer]

Hi there - this is my first post, though I have been lurking for a few weeks.

Over the last month or so, my husband and I have decided to start a lawn care business. He works FT, but needs a more flexible schedule since he is working on becoming a commercial hot air balloon pilot. We only need to replace his income with the lawn care, but some extra would be great (especially with 5 kids at home). I drive a school bus, and he would do the same in the winter, so that would pay the bills during winter. He has talked for years about wanting to mow in the summer, and I think now is the right time.

The plan WAS for me to get the business going by starting out specializing in edging only (an old friend did that years ago, and she was quite successful at it) and doing the work myself, since my husband still has to keep his job.

We would take on a few mowing jobs for my husband to do after work to get it going. Then, if we build up enough in edging to replace his income, we could add the mowing/maintenance service and try to get 60 or so weekly mowing customers.

Since I am not new to the business arena (having run my own specialty painting/faux finishing business for 7 years) I started networking with some business contacts.

I find out a friend of mine who owns a contracting business had purchased a used lawncare outfit a few years ago (truck, trailer, mowers, equipment, plow, yard vacuum, etc.) to supplement his services, and has decided to get out of it. He found that after the expense of paying someone to do the work, he doesn't make that much.

He's including the client list and will include marketing the business in a newsletter for 1 year to help me out, and will send any calls for business to me. Truck already has nice logo, and I like the name of the business, so we would probably keep that.

I am currently waiting to hear back on cost, but he said it wouldn't be much since all the equipment is good, but used. He even said would take payments since we are friends.

Any words of caution, things I should look for, when considering jumping at this chance? Or, would I be better of starting from scratch, and keep going down the same road I was headed?

Thanks!

[musician/lawnman]

Hi Michelle,

*Well the fact that the guy is willing to take payments implies that he is relatively confident you can make enough to make the payments, That is a plus. *however if he said he's not making enough to make it worth his while, It's probably not enough for you either. *He may be under priced, or be managing it poorly, you need to find out which! *If he's under priced, and you buy the business & jack up the rates you may lose a good percentage of his current customers. *Are his current customers paying per service or contracted monthly?
A big unknown here is the cost like you said, So it's impossible to even weigh out until you know the cost, how much equipment & what it's worth, how many customers & what type of customers he has currently. * You said a plow is included but you said you want extra income in the summer only. *So 1 it's equipment you don't need or want as you'll be driving a school bus. *2) does he include plowing in the winter time for the current customers? *Would you be locked into having to provide those services like it or not?

I looked at other businesses for sale too & ultimatly decided to start from scratch with no loan over my head, but then again I had to start from customer #1 & build it up. *Luckily your just looking to supplement your income. *But I'll tell you, get licensed & insured! * *My line trimmer thru a rock through a plate glass window last week. *Stuff happens!

[mshaffer]

Well, based on your response, I guess I wasn't too clear on a couple things...

This guy has financials for the business and it grosses about $80-100K annually, but he just manages the business - he pays a crew to do the actual work for about $40/hr, which really cuts into his pocketed profits. Not only is there the $40/hr, but the extra insurance (work comp, liability, etc), cost for payroll services, extra uniforms, etc. He told me, and I agree with him, that if we are running the business and doing the work ourselves, we could make some good money.

He has a contracting business which is his bread and butter, and he was looking to fill a void in his services to realtors, mostly, in maintaining properties for sale. He said his crew of 3 people runs 40+ hours/week, but yes, I do need to know what he is charging on each job.

I think, too, with us just focusing on the business of lawncare as our sole business, we could bring more work in. We do have some people who are interested in working as independent contractors for us (meaning we don't have to take out taxes or pay work comp), or on a referral basis.

Problem with the realtor gig, is you get customers that are not long term...but if you have a relationship with the realtor, you can put together a "welcome to the neighborhood deal" for the new buyer to try to keep them as a client since you already know "the lay of the land" so to speak.

My husband has wanted to plow snow for a few years now - we have an ATV with a plow, but he has wanted a plow for his truck. Yes, we would offer the plowing (husband would do that part) if they are accustomed to that, but we also know larger contractors always in need of drivers with plows on their trucks and they pay $70/hr. The school bus thing in the winter is just 3.5 hours/day, and as a sub driver, you work when you can, not necessarily every day.

Other than that, as far as the equipment goes, I think we would/could use everything he has, or if not, sell some of it. I guess the price is going to be what would make or break the deal for us. There is more included in this deal than we would have planned to purchase up front to get started, but if the price is right...

Yes, at this point, we are supplementing our income, but my husband is miserable at his job, so we would love to replace it asap (by April or May would be great), so I am thinking the built in clientele is a good deal for us.

You bring up some very good points to think about (value of equipment, services currently offered to customers, how he charges, etc.).

THANK YOU for your response!!!

[musician/lawnman]

No problem at all, I wish you luck with whichever way you go.
I know the business I looked at had about 10k (used value) in equipment, plus about 130 per cut customers & no contrcted customers. I decided against it because he wanted $60k for the biz & I thought well many customers are loyal to a guy who's been servicing them so long, but still when a new owner comes in I figured it was fair to guestimate I might lose 10-15% just because I wouldn't be the same guy they were used to. I also knew most companies on average get lazy & do a lousy job & or become unreliable. So I figured that I could build my business from the ground up by doing a great job everytime, offering competitve rates & better service. & that's what I've done so far & it's working for me. I was able to buy most of the equipment with some cash from savings (used trailer, new trimmers, edgers, blowers, chain saws, pole saw & hedge trimmer) & financed what I couldn't being a new commercial mower. So instead of 60k overhead I only have about 1/8 of that debt & in less than a year my business is about half what his was already. Every situation is different & like I said I wish all the best of luck to you!

[Little's]

Welcome to the forum. I think you understand the things you need to look at before stepping forward with it. I think you can make it work with some careful planning.
On a different note, you mentioned about hiring your workers as independent contractors. I know that here in California (not sure where you are) independent contractors must use their own tools. If they are using your tools, they are considered employees and you must take care of their payroll taxes etc. Good luck with evrything.

[Steve]

Hi Mshaffer,

Welcome to our forum. It's nice to have you here.

A while back I put together this blog post on the topic of purchasing lawn care accounts.

Suggestions on buying lawn care customer accounts. - General rule of thumb for buying customers is that they are worth about 1 month revenue. If they are commercial you’ll pay a little more and if there is a signed multi-year agreement in place ( which you said there is ) then this will push the price up too. So it could be worth as much as 2 or 3 months revenue depending on the situation.

Let me know if this information helps.

[mshaffer]

Well, I think we have some ballpark numbers...about $15-20K for equipment, plus the business itself. Of course, he offered to do a contracted deal where we pay him a percentage of the business income after the first year, and just purchase equipment up front. (I trust this, as I have known this guy for about 6 years). Still, not a bad deal. He's calling me back today or tomorrow with some final numbers, so if they are right, we may consider - but at $15-20K, plus customers, I don't think we can do it.

On the other hand, the more we have thought about it, and like my husband has said, we could build it up and have no overhead, and buy equipment we need as we go. Yes, it may take a little longer, but we won't have that big up front expense. The whole business isn't a bad deal - at all, but I just don't think it's in our budget right now.

Thank you so much to everyone for all the input. Can you tell, I am still on the fence a little?

So, at this point, I think we are back to the original plan...I will push the lawn edging to start, and do that myself, then we'll add a lawncare division for my husband to run, starting weekends and evenings this year, and go for full time with both next year - anyone here doing strictly edging?

Michelle

[Steve]

Quote[/b] ]On the other hand, the more we have thought about it, and like my husband has said, we could build it up and have no overhead, and buy equipment we need as we go. Yes, it may take a little longer, but we won't have that big up front expense.

If this is something you are more comfortable with, I'd say go for it. This should allow you to learn and scale up as you go. It's also a perfect time to get the word out about your business.

Keep us posted on how all this goes.

[robgee05]

Well, I think we have some ballpark numbers...about $15-20K for equipment, plus the business itself. Of course, he offered to do a contracted deal where we pay him a percentage of the business income after the first year, and just purchase equipment up front. (I trust this, as I have known this guy for about 6 years). Still, not a bad deal. He's calling me back today or tomorrow with some final numbers, so if they are right, we may consider - but at $15-20K, plus customers, I don't think we can do it.

On the other hand, the more we have thought about it, and like my husband has said, we could build it up and have no overhead, and buy equipment we need as we go. Yes, it may take a little longer, but we won't have that big up front expense. The whole business isn't a bad deal - at all, but I just don't think it's in our budget right now.

Thank you so much to everyone for all the input. Can you tell, I am still on the fence a little?

So, at this point, I think we are back to the original plan...I will push the lawn edging to start, and do that myself, then we'll add a lawncare division for my husband to run, starting weekends and evenings this year, and go for full time with both next year - anyone here doing strictly edging?

Michelle

So did you guys buy the business?

[Steve]

I don't think she did. I think she started hers from scratch.