Purchase landscape business - HELP

[ProCareLS]

I have an existing lawn care business where I do light landscaping as well, I started negotiations to purchase an existing landscape business, and am wondering if the price is right.

The biz does about $200,000.00 a year in sales with about a 55% profit margin. They only have 1 year round commercial maintenance account (which brings about 45,000.00). The rest of the revenue is from paver patios & walkways, decks, landscape installations, minimal lawn repair/installations and misc spring/fall cleanups and mulching.

His equipment is worth about $30,000.00

Based on this info, what do you think the biz is worth? And what other variables should I look into to determine the business worth?


Thanks,
John

[andersc1]

ProCareLS,
Wwhheeewww.... there are a lot of variables in this equation. First off, I would ask to see his past 5 years sales records to see if the business is consistantly doing 200K a year in sales. Selling price based on expected sales is iffy unless there is a consistant history of the sales being what they are claiming.

You'll hear all sorts of suggestions in regard to how much to ask for a business that is up for sale. Three to six months gross sales plus cost of equipment would be fair in my opinion. The 55% profit margin seems a little high unless he just has a great mark up. It seems like the average is around 30% to 35% for the average business.

I would suggest getting the companies financials together and let an accountant have a look at them prior to actually making an offer to the guy.

Good luck though in whatever you decide. It sounds like a heck of a deal and could certainly put a lawn company on the map in your area.

Curtis

[MGO]

It sounds like most of the $200,000 is in ONE TIME JOBNS that you will have to go out and find.......i.e. the business does not have much in the way of existing contracts (other than the $45,000 COmmercial account)...so don;t base the "value" of the company on the $200,000 in Gross revenue....base it on the TANGIBLES....the equipment, and any contracts you would DEFINATELY get by buying the business.

[Ric]

ProCareLS

Landscape install is an entirely different business than maintenance. Who you know is as important as what you know. $200,000 gross is a very small landscape business and if $ 45,000 is maintenance then $ 150,000 is really small. 55% margin is an industry standard for a Install company. Remember there is a lot of selling to do and you are entering a Feast or Famine Business. You need a lot of reoccurring income to help you get it going.

Now if this is a one man with a helper type operation where the maintenance covers the nut. Then the installs put the butter on the bread. It can in fact be a good thing. However how does that fit into your business plan? How much experience do you have with install? How good are you at selling? There are a whole lot of "HOW" question you must ask your self. We can only give you food for thinking.

I have purchased a few maintenance companies and been successful at it. However their maintenance accounts have been the same type of business that I had a lot of experience with. I culled many accounts and resold thoses that were not perfect for me. However when I made the move from maintenance to install I did so slowly and by upselling my present customers. By moving slowly into an area I was not totally familiar with, I learned from my mistakes. Because I was doing a small volume of installs I had the oppertunity to make the job right even if I lost money. Now I am still learning everyday but doing a higher volume and making money at it. I have since sold off most of my maintenance accounts. However I still keep those high margin accounts to cover the nut.

[Phil Nilsson]

Based on this info, what do you think the biz is worth? And what other variables should I look into to determine the business worth?Thanks,John

John ... you should talk to me first about this ... before doing anything ... I have the expertise to save you money and a lot of heartaches with this.

Best regards

Phil

[ProCareLS]

Phil,

I PM'd you. Let me know when we can talk.


John