Originally Posted by wilcox_11
i'm asking like when someone puts there buisness up for sale. example would be they have 50 clients for $50,000 with a gross of 250,000. how do they calculate what price is right for number of clients?
they really are not calculating anything.
they are just pulling numbers out of the @zz. most people selling a landscape business think it is worth far more then it actually is.
equipment is about the only part of a business purchase that can actually be converted into a real world value.
buying accounts on the other hand are completely different and that is where the fictional value comes in.
if the seller has no contracts then the accounts are barely worth a dime and other then a bird dog fee you would be foolish to pay them more.
if they have a signed contract and they have been a steady customer it would give more value in selling them and at that rate might be worth as much as a month and a half to 2 months value of a service contract.
sellers do not realize that they do not own their customers and with or with out him said customer is gonna be having someone cut his lawn and servicing his property and he is the one who decides who works on his property.
in the end it is a crap shoot and ultimately comes down to how much someone is willing to pay for something.
if someone is successful and is making a good living with continuous growth i would see no real logical reason to sell a business other then it is failing or mismanaged.
everyone comes up with a good excuse as to why they are selling but 99.9% of the time is they failed.
i been at it a while and this business will go on until i die even when i am retired and i will either have my children run it when they are older or i will have managers in place to run it.
there is a exception to a very small fraction of a percentage point for the few who are so successful that they have multiple businesses and they want to scale back or put more effort into the remaining businesses.
i am not saying that is the case at what you are considering but truth be told is everyday guys are starting up lawn businesses and they stick it out for a few years and build up a few dozen lawns but can not make any money and eventually sell out.
come time to sell, it is a turn key operation that takes care of itself and is ready and waiting for you to enjoy financial freedom and the american dream and if it were not for my bad back i would continue on living the dream but instead, since i am such a nice guy, i am gonna do the right thing and sell it to you and bestow the gift of financial success to you.