Is this a good deal?

[MSL]

I am looking into buying a lawn care service that has
38 accounts and a JD 54" hydro WB and a JD 36" hydro WB
2 commercial grade backpack blowers, Walk behind blower,
Power pruner, 2 stick edger, Garden Tiller, 16' trailer, leaf
vaccum for $10,000.00.

Half of the accounts are under contract and half are verbal agreement. Owner states that with these 38 accounts you
would gross 1000.00 a week. All but 2 accounts are weekly
cuts. He says with his equipment it takes 3 eight hour days to cut.
all agreements are for cuts only, cleanups and prunning is an additional cost as well as leaves and all other cleanups. He has all accounts on a monthly billing cycle.

What do you guys and gals think?
Would it be worth it?

Any input would be appreciated.

Thanks
Mike

[MSL]

28 views and noone has an opinion on this?

[gndhog]

If it ain't on paper, it aint business!

[Gary batho]

You need to meet and talk to all prospective clients and see how things have gone with their service to date and offer them a written contract and service the properties for at least 2 weeks or 4 if posible before getting into such a deal.

[Phil Nilsson]

On the surface it might fly. Of the $10,000 what is the equipment worth? Subtract that from the ten grand , multiply gross sales by 20% to 30% and if that squares with the balance ($10,000 less equip) then a matter of guarantees the work will be there. Now a question of whether the work you're buying is in itself ... profitable. Test the total production hours ... gross sales divided by total production hours required yearly is what (earned) per hour of production? If he doesn't have records, do a drive around and figure out what total production hours will be needed just as if you were bidding the work yourself from scratch.

Phil

[MSL]

Thank you everyone for your input, its much appreciated

[GrassMaster]

Hello MSL:

Try to Get him to work out a deal where if you lose some of the accounts in 30, 60 & 90 days the price goes down, figure a percentage, this can all be worked out with a Lawyer... Phil Nilsson knows a great deal about this & has posted several times about it, here on the forum.

No matter what you will probably lose a few accounts. Some of them will not be Happy with You, no matter what!

Both of these below are Very Important!

Have the Seller sign a Non-Compete within a 25 or so mile radius for at least 3 years. If he will not sign it, do not buy it!

Come up with some kind of deal where he Personally Introduces you to each and every one of the Customers & let them know that you have purchased the business from him. If he will not do it, do not buy it.

These are common practices when Buying & Selling Businesses!

It's very important that he wants you to succeed in the Business takeover & that he lets the Customers Know this Up-Front!

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When I sold my Business, I told all my customers to call me if there was a Problem with the New Guy. I even did a Follow up 30 days later & another 90 days later. I received a very Very Nice Down Payment & got a $1,000 a month for 5 Years. He was late one time 7 days & he sent me a $100 Late fee.

He Dropped everyone of my customers in less than 18 months, all he wanted was the Business Name & the Experience. He Discontinued My Business Name the Day he took over.

He later got a Very Large Contract with Proctor & Gamble, he does both the Janitorial & Grounds Maint. In 1995 his Employee Payroll for Janitorial alone was over $500,000.
==============

The Seller should go with you at least a Couple of times while You Maintain the Properties. Everybody wants a little something different!

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I had a Lady on regular contract & it didn't matter if we let her grass get over 8" tall, but there better not be one pine cone or stick on the lawn!

I had another person that we had to keep the Pool Area very Clean, Year Round, it didn't matter if we cleaned the Drive or Front Porch but that Pool area better be clean!

I had a customer that paid me a Months Salary ($185) to stay off his property because he was sick of seeing us!

Everybody wants something different!
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It's very important to find out what they Want & that you do it!

Good Luck & I Wish You the Best!

[Green Time]

I got this from another msg board

"Here is an example of an "EMPLOYEE NON-COMPETE AGREEMENT"

http://www.ilrg.com/forms/nocompet.html

Here a background article on the legal enforcement of such agreements.
"Courts have traditionally enforced non-competition restrictions that are limited to one to two years in duration and tied to where the employer actually conducted business."
http://www.gigalaw.com/articles/2000...00-08-all.html "

[DMK395]

As far as numbers go, on the surface the deal would work for me.