"HELP Don't Know which Business to choose?"

[vanessa]

hey guys I had a question there are 2 lawn care cmpanies that I am interested in here is the scoop:

1 has 24 accounts and a commercial acc that pays $800/month he says he makes $28,000/year and he wants $10,000 for it, he has a walker brand 42 inch mower with 20 horsepower and it has 1600 hours on it,and will also inlcude an open trailer, backpack blower and alot more equipment. are the walker mowers good? he says he paid $9000 for it. I offered him $7000 and he got upset but he has gotten lower offers, another person offered him $5000


2nd one has 64 accounts and no equipment so I would need to buy the equipment or maybe finance it, he makes $49,000/year and he wants only $15,000 for it.

I am trying to see which one is better for us,I figure with the 1st one if we advertise it we could add more accounts to it and we would not need to invest in equipment, with the 2nd one we would need to buy equipment so I am not sure which one to buy and wanted your opinions since you all have alot of experince and give good advice let me know what you think, Thanks in advance for your help

[sharp]

both sound very high priced, I would only pay 10% or less of annual gross labor no materials and fair market price for equipment, if you look around used equipment is not worth much. I would also make payments 1/3 down and 10 payments. Have you rebid all his jobs? are they all new signed contracts??? How does his quality of work look. It is too easy to start this size business to pay much for one that might be broken already. just my thoughts

[allyardcare]

Don't let someone quote new prices when pricing used equipment. If you wanted those numbers you would be at the dealer, not talking to him. Also I think looking at the accounts would be very worth while. His pricing on accounts might not(probably not) be in sync with your pricing. It's easy to shoot yourself in the foot by taking jobs on someone else's numbers. It seems to me that a used machine looses 25% of its value the minute it goes to work. Additional hours and wear and tear take away more. With that many accounts with the equipment gotta be aware of the reliability issue. My main thought is BE CAREFUL. If the price seems kinda high (and it does to me) maybe you'd be better off pursuing another avenue.

[Keith Jacobi]

As others have suggested, go to several of the properties and see if the prices he is charging are acceptible to you. Also, ask to see his tax papers from the previous year or two. This way you know if he really did make what he said he made. I promise he won't give an inflated price to the IRS. If the tax papers don't support his claim, he will probably give you a line about not reporting all of the income. This may or may not be true, but if it is then realize what kind of person you are dealing with, a liar. Having said all that, I would go with the second business if you think you can handle that many accounts. Buy all new commercial equipment. You'll pay more now but it will be cheaper in the long run.

[SCW]

sharp---you said "I would only pay 10% or less of annual gross labor no materials and fair market price for equipment, if you look around used equipment is not worth much."

Have you bought out any smaller companies with that method? We have a meeting later this week with a guy who has 47 residential accounts, ~ $38,000/year in gross revenue, and little equipment---1 32" Exmark wb, 1 21" resi mower, 1 Echo backpack blower, and weedeater and edger. He's asking $10,000---moving out of state and wants all cash. Has been in business 2 years.

I'm itching to add a 2nd crew, so this is very enticing to me. However...I don't want to overpay either. Half of his accounts are in our current service area; half are in a neighboring town that we've been trying to stay out of simply because we've tried to keep a very small target market (reduce mileage, etc.). So I'm torn. Would appreciate any thoughts on this deal.

[SCW]

comments----please??

[maple city]

Personally, I would rather buy my own brand new equipment and build my own customer base. There are no guarentees that these customers will stay with you. You don't even know about the brand of mower that is being sold. You have no idea if the equipment was taken care of. You don't know how the previous owner ran their business. I assume you are planning to use the same name as the business is currently using. Hopefully they have a good reputation around town, and have bid all their accounts correctly. Otherwise you may be stuck in a bad situation.


You can get yourself some pretty decent new equipment for $10,000.00-$15,000.00 If you have the equipment, you will be able to pick up accounts on your own.

[Phil Nilsson]

"Personally, I would rather buy my own brand new equipment and build my own customer base. There are no guarentees that these customers will stay with you."
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When buying accounts, have the seller give you an aging list of customers. How many accounts less than one year, for 2 years, three, four and so on.