Thinking of getting into the business-have question

[bas1131]

Hi...I am seriously considering making the leap from the corporate world to a lawn service business. I would be going into business with a friend and we contacted a guy selling part of his landscaping business for $40,000. This includes a 1999 Ford F-150 5 speed truck, a 16ft. trailer, 2 walk behind mowers and one riding (I don't know brands-but all are under 3 years old) 3 Echo weed eaters, and 1 back pack blower - plus 50 accounts that are currently being serviced - lawn care only- for approximately $60/each. My question is --is this a reasonable price for the business?? What questions should I be asking him regarding his business?? I know he is selling because he is getting too busy and wants to concentrate on landscaping. Thanks for any help!!

[GrassMaster]

My Thoughts! (Which ain't much?)

Figure what the fair market value of the equipment is. Then look at what you're paying for the accounts. From what I hear, most accounts sell for 1 to 3 times what you get per cut. Some say per month?

Try to work out a deal where you pay the account part of it every 30 days over 90 days, the reason is he should let you deduct so much per account for 1 month, 2 months & 3 months if you lose them during the first 90 days.

Have him sign a no-compete agreement for so many years & so many mile radius... If he doesn't agree to this part go ahead & walk off!

Have him introduce you to each of his clients, make sure he tells them that you're taking over their Lawn Maintenance, that you purchased his business from him. This way they know & if any funny business starts happening later on down the road that the customer knew up front that he "SOLD YOU" the business.

He should be willing to go with you & maintain the properties at least once or twice each, it would be nice if that's when you meet the clients.

I would seriously consider going with him while servicing the accounts before purchase & see what he's grossing per man hour per job? The only reason I'm saying this is there's people out there working for $20 per man hour & others working for $35 Plus per man hour. I don't know what you get per man hour in your area but hopefully it's $35 plus... Hint Hint!

Do you know this guy, has he had these accounts for a few years?

I'm sure I missed plenty but this be a good start, others here can tell you more.

Just think everything through & take your time. Then when you get those accounts under your belt sell sell sell, market your services & consider buying more accounts!

I know you know this but when you go to buy anything it's worth a fortune & when you go to get rid of it, it ain't worth crap! I've Been there & Done that!

Good Luck to You!

[bas1131]

Thanks for the advice!! Especially the part about the non-compete. That would be awful if he came back in and tried to service those accounts again! He started his business from scratch 4 years ago and has grown quite a bit. He did offer to take me to each of his customers and introduce me. He also suggested that I work a day with him, which I will take advantage of. I guess my main concern was with the price of the business. $40000 sounded a little high but I wasn't sure.

Thanks again!!

[bcg]

Frankly, if you have $40k to invest, you're probably better off starting from scratch. Buy your own equipment (new) so you know the maintenance history and advertise like crazy. $10k - $15k properly spent on advertising will net you far more than 50 customers. I have gotten that many in a week spending less than $2k.

[GrassMaster]

Frankly, if you have $40k to invest, you're probably better off starting from scratch. I have gotten that many in a week spending less than $2k.

You're correct. See I don't know what the equipment is worth? What $15K, $18K? $20K for 50 - $60 accounts, is this $60 once a week or what?

He also suggested that I work a day with him, which I will take advantage of. I guess my main concern was with the price of the business. $40000 sounded a little high but I wasn't sure.

Thanks again!!

(Make sure you track the man hours per job so you can see what he's making)

It does seem high & I bet he will lower that $40K price tag quick. There's a good chance $30K would buy it.

Not too many people are going to drop $40K on a Lawn Service.

I would be watching the paper & be on that phone calling other companies to see if they want to sell off some accounts.

The reason I mentioned the no-compete is, I know a guy that sold his business for over a $100,000 3 times in a 5 year period.

Remember this, a lot of Lawn Guys drop the lawn maintenance for landscaping. Later realizing that they should have kept the maintenance gig going to keep steady income coming in for the crew between landscaping jobs.

That's why you must get him to sign the no-compete.

[bas1131]

Thanks for the input!!

I just wanted to say thanks for the advice. I finally heard back from them this evening and will be going to look at the equipment on Sat. I'll see if they will take less than $40k and make sure that they will sign a no-compete. I'll fill you in on the details then!! Thanks again!!