Thinking of buying a lawn business. Need help

[Bigpoppa]

Hi everyone,

I'm thinking of buying a lawn maintenance business (with a little tree trimming).

Here's the basics:
Gross revenue:
2010- 105,000
2011- 135,000
2012- 148,000
2013- on pace for over 150k

Profit on schedule C
2010-40k
2011-66k
2012 -on tax extension.

He has the equipment valued at 15k. I have it around 8,000.

Accounts re 75% commercial.
He's asking 100 k. With an earn out (if any customers leave within 12 months, I subtract tht properties % of revenue and I pay him that amount less than 100,000.

This business is located in the plains states.

Is this reasonable? I'm thinking his price is too much. Thoughts? I don't currently have a lawn business, but I have 8 years exp in residential and commercial mowing.

 

[Carscw]

Hi everyone,

I'm thinking of buying a lawn maintenance business (with a little tree trimming).

Here's the basics:
Gross revenue:
2010- 105,000
2011- 135,000
2012- 148,000
2013- on pace for over 150k

Profit on schedule C
2010-40k
2011-66k
2012 -on tax extension.

He has the equipment valued at 15k. I have it around 8,000.

Accounts re 75% commercial.
He's asking 100 k. With an earn out (if any customers leave within 12 months, I subtract tht properties % of revenue and I pay him that amount less than 100,000.

This business is located in the plains states.

Is this reasonable? I'm thinking his price is too much. Thoughts? I don't currently have a lawn business, but I have 8 years exp in residential and commercial mowing.

Your looking at 2 1/2 to 3 years before you make any money

He is only showing around a 45% profit.
Should be up around 75 to 80.
In 2011 he made 66k. So IMO this is not worth more than 50 to 60 k tops

Then you have to find out why his profit is so low.

(( racing is the only sport that you need two balls ))

 

[Bigpoppa]

Your looking at 2 1/2 to 3 years before you make any money

He is only showing around a 45% profit.
Should be up around 75 to 80.
In 2011 he made 66k. So IMO this is not worth more than 50 to 60 k tops

Then you have to find out why his profit is so low.

(( racing is the only sport that you need two balls ))

That's kind I'd what I was thinking. Possible reasons for low profit margin is he has 1 FT and 1 part time employee (in addition to himself). Also he runs some non business expenses through his business.

I'm thinking of offering him 55k total. That would be 47k for accounts and 8 for equipment. Does this sound about right or am I still too high? I have a feeling he's going to balk. But I also have a feeling that he needs to sell it more than I need to buy it.

Would it make more sense to start from scratch? I've put some numbers into a spreadsheet and they tell me that after 2.5 years it would be much more profitable to buy him out than start from scratch. But then again, I'm pretty conservative in my revenue estimates. What do you guys think?

 

[DonCT]

Bump!

So...did you buy it?

 

[afoulk]

see, this is why I could never own my own business, I started reading these posts, and the numbers, and my mind just begins to go blank and my eyes glase over:laughing: Maybe I should get checked for ADHD or something:wink: I just wanna mow grass, thats all I wanna worry about doing:biggrin:

 

[Bigpoppa]

Bump!

So...did you buy it?

Yes sir I did! Negotiated and landed at 55k (which was as high as I was prepared to go). Been at it for a short time, but I have to say the deal was a success. I think there are several ways to branch out into other services for increased revenue. Very excited about the future and building the company. I think I will be in the black in the spring (unless my Christmas light and snow removal service ad campaigns payout more than expected), and after that, I'll be raking in quite a bit.

 

[Bigpoppa]

see, this is why I could never own my own business, I started reading these posts, and the numbers, and my mind just begins to go blank and my eyes glase over:laughing: Maybe I should get checked for ADHD or something:wink: I just wanna mow grass, thats all I wanna worry about doing:biggrin:

Lol, totally understandable. I'm a numbers guy (graduated with honors in Finance) and pursued other industries to purchase a business. I'm very much into all the aspects that make a business tick. And at the same time, I have the same amount of fun on a ZTR most guys do on a motorcycle/ATV. I just need to expand the crew enough so that I can work on the business, not in it.

There is something to be said about just getting to work, riding around until you get to the yard, getting out and mowing etc. when the day is done, you go relax, play w kids, etc. I check the trimmers for string, fill up all the gas tanks, and go do invoicing on Quickbooks. I'm one of the guys that actually LOVES the business side of it too. Yes, I am a nerd in that way.

 

[lawn mower fanatic]

Yes sir I did! Negotiated and landed at 55k (which was as high as I was prepared to go). Been at it for a short time, but I have to say the deal was a success. I think there are several ways to branch out into other services for increased revenue. Very excited about the future and building the company. I think I will be in the black in the spring (unless my Christmas light and snow removal service ad campaigns payout more than expected), and after that, I'll be raking in quite a bit.

Congrats! :cool2: