# Selling business?



## Drock78 (Sep 22, 2011)

Not sure if this is the right section but, my question is, I'm going to get out of the lawn and snow removal business. When trying to come up with a price, how much do you figure in for the customer base/ contacts?


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## BossPlow2010 (Sep 29, 2010)

When I purchased accounts last year, I bought three cuts worth, that was in the fall


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## Drock78 (Sep 22, 2011)

My stuff is all seasonal and current customers will sign with new owner.


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## Hydromaster (Jun 11, 2018)

3 Years of revenue and the new owner acquires no debt....

How much money did you make in the last three years before taxes, X3
Good luck

Ps How do you know your present customers will sign my contract for the next year
If I buy ?

Be foolish for me to work wseing your contract


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## Drock78 (Sep 22, 2011)

I have a very good relationship with my customers and they are willing to give new owner 1 year trial. It's not a big company by any means, but would make a great addition to someone looking for more. The lots are almost all commercial and open.


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## cwren2472 (Aug 15, 2014)

Hydromaster said:


> Ps How do you know your present customers will sign my contract for the next year
> If I buy ?
> 
> Be foolish for me to work wseing your contract


Yeah, cuz your overhead driving from MT to MI to mow his clients will be _crazy_


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## cwren2472 (Aug 15, 2014)

On a more serious note, I take it you already have a buyer but haven't discussed a price for your business? But have discussed who your customers are, their property details, and how much you are charging?

If yes, why would he need to buy your business now? If no, how could this buyer know that he can maintain the same level of service for the same price that you already have and commit to that?


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## Drock78 (Sep 22, 2011)

No, none of the above. I'm curious as to where or how to price it to begin with. 

The customers aren't high maintenance by any means. Level of service would be on new owner I suppose.


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## Ajlawn1 (Aug 20, 2009)

@Randall Ave


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## Ajlawn1 (Aug 20, 2009)

Are you trying to sell just accounts or equipment etc... too...? Turn key business...?


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## Drock78 (Sep 22, 2011)

Equipment and business with accounts. My regular job is getting too busy to do both.


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## Mr.Markus (Jan 7, 2010)

My first job after selling...

http://www.bali-indonesia.com/top10/6-beachfront-villas-in-bali-you-can-afford.htm


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## Randall Ave (Oct 29, 2014)

Ajlawn1 said:


> @Randall Ave


Huh?


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## BossPlow2010 (Sep 29, 2010)

What kind of equipment are you selling? 
Around here, not many people walking around with 100 G’s in their pocket looking to purchase a business w/ equipment and clients, so you’ll probably be parting many things out.


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## Drock78 (Sep 22, 2011)

Boss poly straight blade with the boss wings and led lights, Omega 16' back blade, 16 ram 2500 ccsb loaded 6.4, new enclosed trailer,


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## LapeerLandscape (Dec 29, 2012)

Mr.Markus said:


> My first job after selling...
> 
> http://www.bali-indonesia.com/top10/6-beachfront-villas-in-bali-you-can-afford.htm


So whats the job?


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## BossPlow2010 (Sep 29, 2010)

LapeerLandscape said:


> So whats the job?


Shot girl


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## Mr.Markus (Jan 7, 2010)

LapeerLandscape said:


> So whats the job?


Eggsactly


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## Ajlawn1 (Aug 20, 2009)

Randall Ave said:


> Huh?


You were wanting to be a lawn monkey...


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## Mark Oomkes (Dec 10, 2000)

Ajlawn1 said:


> You were wanting to be a lawn monkey...


He could moonlight as my mechanic...and I actually pay my bills, on time.


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## Philbilly2 (Aug 25, 2007)

Without signed contracts, selling a book of business is rather impossible to price. 

MOL it is what ever you can get some fool to pay for it.


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## Mark Oomkes (Dec 10, 2000)

If someone offered me 3 years revenue I'd be in Wyoming blowing up sod puppies.


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## Ajlawn1 (Aug 20, 2009)

Philbilly2 said:


> Without signed contracts, selling a book of business is rather impossible to price.
> 
> MOL it is what ever you can get some fool to pay for it.


Agreed, if anything the accounts are a cherry on top to buy the rest...

I paid $500 for a list of accounts at an auction that generated 80k the prior-year. It was a cheap enough gamble... The auctioneers were stunned they thought it was going to bring tens of thousands of dollars...


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## Drock78 (Sep 22, 2011)

I definitely wasn't thinking anywhere close to 3 years. I thought 1 year at 75% would be realistic.


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## cwren2472 (Aug 15, 2014)

Drock78 said:


> I definitely wasn't thinking anywhere close to 3 years. I thought 1 year at 75% would be realistic.


3 years of revenue is exactly what our accountant had quoted as a rule of thumb as well - that was what they used to "value" the business. How often people actually get that, I have no idea. I imagine the industry you are in, how established your client base is, and what kind of market share you control would all have a huge affect on that.


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## Philbilly2 (Aug 25, 2007)

Ajlawn1 said:


> Agreed, if anything the accounts are a cherry on top to buy the rest...
> 
> I paid $500 for a list of accounts at an auction that generated 80k the prior-year. It was a cheap enough gamble... The auctioneers were stunned they thought it was going to bring tens of thousands of dollars...


Exactly my point.

Few years back, a direct competitor was retiring and closing up shop. He tried to sell as a turn key operation for months before deciding to have an auction and split everything up individually and close shop.

I was at an auction I bought some of his tools and a few gang boxes and what not. While I was wandering through the shop and office looking at the items, I snapped a picture of their customer phone number list hanging on a wall.

Next day, I was calling on all of those customers. Got a good chunk of them to jump.

He sold his building, company name, and book of business to another one of my competitors from up north for pretty dang good number... It was already too late, they tried to get all the customers back... building is currently for sale and they have moved operations back be based out of their area.


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## Ajlawn1 (Aug 20, 2009)

Philbilly2 said:


> Exactly my point.
> 
> Few years back, a direct competitor was retiring and closing up shop. He tried to sell as a turn key operation for months before deciding to have an auction and split everything up individually and close shop.
> 
> ...


I'm just spitballing but if it's a 50-100k revenue operation which most likely is a one or two man show... No lawn monkey is going to shell out 37.5-75k... for some accounts... I just think it's either a package deal and they are there to sweeten the pot or if you do split up everything be prepared to cut your accounts asking price way down... And yes I had a @Philbilly2 try the same, but hit the houses he knew were theirs with door hangers immediately after...

We probably need to wait till our ROI guru wakes up to give us a better break down on it...


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## BossPlow2010 (Sep 29, 2010)

Mark Oomkes said:


> If someone offered me 3 years revenue I'd be in Wyoming blowing up sod puppies.


You Could be a consultant


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## cwren2472 (Aug 15, 2014)

Ajlawn1 said:


> We probably need to wait till our ROI guru wakes up to give us a better break down on it...


I'm sure he'd agree that a Wienermobile would be a much better investment


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## Philbilly2 (Aug 25, 2007)

Ajlawn1 said:


> And yes I had a @Philbilly2 try the same, but hit the houses he knew were theirs with door hangers immediately after...


that is not an @Philbilly2 then... door hangers don't work. :laugh:

Got to get out there and shake them babies and kiss them hands... Thumbs Up


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## Drock78 (Sep 22, 2011)

Correct, it's a 1 man show. I started it as an extra income because my job at the time sucked. I changed jobs a couple years ago and am so busy that I don't really have time now. I'll sell it however anyone wants to buy. Doesn't matter to me. Just trying to get some input from others that may have sold or bought.


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## BossPlow2010 (Sep 29, 2010)

Drock78 said:


> Correct, it's a 1 man show. I started it as an extra income because my job at the time sucked. I changed jobs a couple years ago and am so busy that I don't really have time now. I'll sell it however anyone wants to buy. Doesn't matter to me. Just trying to get some input from others that may have sold or bought.


As I mentioned, I bought, a little over 30 accounts for a little more than 3 grand.
Most weren't worth the price the other guy was charging, but there were a few that were and were advantageous for us to purchase because it opens doors for other properties including a nice commercial property which we'll be doing snow for. 
I had the previous owner sign a 60 month non compete/ non disclosure agreement. 
Prior to me purchasing the accounts, he allowed me to view the accounts and what their revenue was for services was.


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## Drock78 (Sep 22, 2011)

All but 1 account are both lawn and snow. Easy, open lots, no curbs or islands.


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## EWSplow (Dec 4, 2012)

I'll throw my 2 pennies in. (Because that's all I have after decades of snow)
I bought a half dozen snow accounts for the income of one typical 2" event on each. 
If you're adding the lawns , I guess one cut on each.
Either sell the truck, trailer and plows separately, or add their value to the above if someone wants a package deal.
JMO.


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## Mark Oomkes (Dec 10, 2000)

Assets and a percentage under 100 of net profit for a year.

Contracts can be broken.


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## Mr.Markus (Jan 7, 2010)

I did $60k on Kijiji last month, an auction would've brought maybe $30k. There is a SBEM put your sale hat on and sell...
People who buy will always downplay your value have you learned nothing from running a business?


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## prezek (Dec 16, 2010)

Drock78 said:


> Correct, it's a 1 man show. I started it as an extra income because my job at the time sucked. I changed jobs a couple years ago and am so busy that I don't really have time now. I'll sell it however anyone wants to buy. Doesn't matter to me. Just trying to get some input from others that may have sold or bought.


Not sure if this helps at all...I took over for 2 smaller lawn maintenance companies that were most likely going out of business this year that were basically selling their customer lists...one wanted 50k that had about 70 regular customers. The other wanted 20k for a lot less customers...told both no chance...I'd offer 20% of gross sales off their customers in year 1 and 10% in year 2...both were in a tough spot and I thought the offer was fair...I think we will end up making out in the long run and both of them get a few $ back on their sweat equity...no assets involved in either...I would never pony up a chunk of cash for any lawn/snow business even with contracts. A few people that are slightly displeased with how you do something vs the old guy, and they're jumping ship...out of the 70 we have retained about 60 I think and he helped transition his customers with a call and letter...


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## FredG (Oct 15, 2012)

Philbilly2 said:


> Without signed contracts, selling a book of business is rather impossible to price.
> 
> MOL it is what ever you can get some fool to pay for it.


 Ditto, It's worth whatever someone will pay. Your level of a good performance could be different then a potential buyer.

Furthermore your going to get the former owner did this and that and the other thing. Besides your equipment you are selling clients that you don't own. Some aggressive lowballer could wipe you out. JMO a finders fee for the clients and whatever your equipment is worth would be fair.

Good luck


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## Hydromaster (Jun 11, 2018)

the multiplier is a subjective number that the buyer or seller pulls out of the air. There is plenty of room for judgment, but by and large, a profitable, reasonably healthy, small business will sell in the 2.0 to 6.0 times EBIT range, with most of those in the 2.5 to 4.5 range. So, if annual cash flow is $200,000, the selling price will likely be between $500,000 and $900,000. But there are many factors that affect the multiplier.

Sell sell sell then go to WY....


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## Mark Oomkes (Dec 10, 2000)

Hydromaster said:


> the multiplier is a subjective number that the buyer or seller pulls out of the air. There is plenty of room for judgment, but by and large, a profitable, reasonably healthy, small business will sell in the 2.0 to 6.0 times EBIT range, with most of those in the 2.5 to 4.5 range. So, if annual cash flow is $200,000, the selling price will likely be between $500,000 and $900,000. But there are many factors that affect the multiplier.
> 
> Sell sell sell then go to WY....


Unfortunately, the OP doesn't really have a business. He has a side job.


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## Drock78 (Sep 22, 2011)

Mark Oomkes said:


> Unfortunately, the OP doesn't really have a business. He has a side job.


Correct. It was a side business that I had planned to grow into a full time business. In the meantime, a couple of promotions at my job has changed that plan. They are great accounts with easy lots and would be great for someone looking to expand their business.


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## cwren2472 (Aug 15, 2014)

Mark Oomkes said:


> Unfortunately, the OP doesn't really have a business. He has a side job.


Hydro and I are haggling over the sell price on my paper route. After he drives from MT to MI to mow lawns, he's going to swing by New England to deliver papers.


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## Hydromaster (Jun 11, 2018)

Mark Oomkes said:


> Unfortunately, the OP doesn't really have a business. He has a side job.


true, some self-employed :terribletowel: get caught up in their everyday tasks, than they become slaves of their business... They lose sight of their goals and their vision. Instead of being a business owner and work on the business, they become an employee in their own company.

i agree, he owns a job...


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## Hydromaster (Jun 11, 2018)

cwren2472 said:


> Hydro and I are haggling over the sell price on my paper route. After he drives from MT to MI to mow lawns, he's going to swing by New England to deliver papers.


I'm not buying a job, I'll hire a sub-contractor to do the work, like a business owner, i mean like a national service provider.


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## cwren2472 (Aug 15, 2014)

Hydromaster said:


> i mean like a national service provider.


When all my neighbors' newspapers end up in the gutter, I'll know your takeover was successful


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## Hydromaster (Jun 11, 2018)

cwren2472 said:


> When all my neighbors' newspapers end up in the gutter, I'll know your takeover was successful


its a propriety service, the paper only ends up in the drive if snow is in the forecast , and if a snowblower is used to clear said drive.

ps, its not my fault they cant train the dog to go get it....


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## framer1901 (Dec 18, 2005)

If someone will buy you lunch for your list of customers, take it.

Just sayin - been there done that.


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## BUFF (Dec 24, 2009)

Mark Oomkes said:


> I'd be in Wyoming blowing up sod puppies.


Your warden won't let you....


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## Mark Oomkes (Dec 10, 2000)

BUFF said:


> Your warden won't let you....


K


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## BUFF (Dec 24, 2009)

Drock78 said:


> Correct, it's a 1 man show. I started it as an extra income because my job at the time sucked. I changed jobs a couple years ago and am so busy that I don't really have time now. I'll sell it however anyone wants to buy. Doesn't matter to me. Just trying to get some input from others that may have sold or bought.


I had side bizz for lawn and snow work for 10yrs and got out aboot 2 yrs ago. I gave my customers notice at the end of the snow season and fulfilled my obligations for the summer. This gave them plenty of time to get another contractor lined up. I gave the "good customers" recommendations for contractors I knew and the PITA customers I let them figure it out on there own.
As a few had said, contracts can be dissolved and they aren't an asset.
I sold the equipment I no longer had a need for and kept what I would use at my place.


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## cwren2472 (Aug 15, 2014)

BUFF said:


> and the PITA customers I *gave to Mark*


Good call


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