Buying a existing company: whats the value of this!

[testingthewater]

Hey guys, today i was asked if i was interested in buying a local lawn care business the business is mostly spraying and fert. with the occasional leaf clean up and thatching. its in a town of 3000 ppl about 2 miles from the town i live in. i worked for a local contractor for close to 7 years so ppl in my community know me and i would be able to pick up some local clients as well i will post the letter the current owner has been shopping around and the list of equipment he has to offer as well which is not worth much to me at all. I am considering selling my lawn care business. I have attempted to work out an agreement with my local competitor thinking combining our accounts would make his business model stronger, but we have been unable to come to terms to date. I have compiled and master list of 370+ customers over the years. The master list includes names, addresses, and lawn measurements for my customers. Last year’s performance is as follows: Application #1 Crabgrass preventer plus fertilizer 152 customers for a total of 1,423,300 sq. ft. Application #2 Broadleaf killer plus fertilizer 147 customers for a total of 1,360,200 sq.ft. Application #3 Broadleaf killer plus fertilizer 179 customers for a total of 1,735,000 sq. ft. Total amount sprayed last year was 4,515,500 sq. ft. I also provide aeration and thatching services in the spring. I do provide seeding as time permits. Slice N Rake and Thatcher by Turfco Mfg. Purchased 4-5 years ago for $1000. Like new since only used twice. Snapper Commercial Power Plug Aerator. Purchased about 10 years ago for $1400. Gets used on 4-10 yards per year. Earthway Ev-N-Spread Spreader Purchased about 6 years ago. Prize Lawn CBM IM Spreader with shield and plastic cover. Purchased 3 years ago. FMC Bean 200 gallon sprayer mounted in a 5X8 trailer 200’ hose purchased two years ago. Spray gun purchased two years ago Brand new tires on trailer. Both spreaders are in good shape. Good spreaders are going to run about $200 today. The aerator works well. The thatcher looks brand new. The sprayer is an old dog. It has a metal tank. One small leak at the top where the pipe goes into the filter. There is another leak at the bearing for the agitator. The bearing is available and can be replaced. I just agitate everything to where it is mixed up and take the belt off. Guess I just got too busy to replace the bearing. The motor was replaced some time ago. It was actually stolen. The motor does not use oil and runs well. Some imput on the value of this would be great!

[The Cleaning Doctor]

Lawn care business tips

You can't get a value without looking at his actual numbers. As for the equipment, if he has no use for it, then why would you want to buy it? No sense in paying for a new looking thatcher if it just sits in your garage. It doesn't matter how good something looks, it is only worth the price of scrap metal if it does not get used. In my opinion the only thing of real value that he has is the clients. Even with that, it looks like he has lost 1/2 of them. I am assuming the ones that had the first spraying also got the 2nd and 3rd. So the rest of the clients are old, moved away or just quit using his services. It also seems to me like it is only being worked part time. Either that or he is really slow. I would dig deeper and ask for the financial records. There is a reason that he is selling. If he will not show you the financial records then walk away. There is one more thing of value, the trailer about 3-350 used. If you are serious about getting into this type of business then I would look into the natures lawn products and forget the thatcher and aerator and the spreaders. Also look up the laws in your area for applying the stuff he is using so that you can tell if you need any special licensing. Do NOT believe it if he tells you that you do not need one, he may be operating under the radar. Now the lawn care guys can chime in. LOL

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Pat

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[950thomas]

I agree with the cleaning doctor

[Steve]

Welcome to our forum.

I'd love to hear more on this.

What is he looking for and what do you feel your options are now either with this business or other options?

Which option are you leaning towards and why?

[testingthewater]

This was his part time job. I am already licensed I worked in the industry during high school and college and kept my licence current. He claims it.brings in 30k a year minus 10k for product he says his insurance runs him 1000 a year. He was offered 10k by his competition and he did not take it.c

[Steve]

What has he said he is looking for?

Also what has been your gut opinion on all this so far?

[Golftrick17]

lets look at his numbers!

Based on the numbers he gave, you would have about 45 - 50 hours of lawn time on his 3rd app. 179 stops about 15-20 min. plus or minus per stop (avg. lawn is a hair under 10,000sqft). I can't figure drive time. With drive I would figure 2 weeks.

What he is saying is he makes about $19,000.00 for 6 weeks of work. Minus his equipment. He is charging around $60.00 per app. If I am right on the app price it seems fair.
How many customers are you going to loose? Think half, hope its not that bad.

If I were to make this purchase, There would have to be incentive for him to get his customers to stay with me. What happens if you pay him and your new paid for customers go with the competition, when you take over?

[Steve]

If I were to make this purchase, There would have to be incentive for him to get his customers to stay with me.

What would you suggest when it comes to this?

[Golftrick17]

Originally Posted by Steve

What would you suggest when it comes to this?

I don't know, maybe a lower purchase price, and a % of revenue from the customers retained for the following year.