1. Welcome to PlowSite. Notice a fresh look and new features? It’s now easier to share photos and videos, find popular topics fast, and enjoy expanded user profiles. If you have any questions, click HELP at the top or bottom of any page, or send an email to help@plowsite.com. We welcome your feedback.

    Dismiss Notice

Approx value of this all skidstear driveway clearing business?

Discussion in 'Business Fundamentals' started by gardenpro, Sep 29, 2015.

  1. gardenpro

    gardenpro Junior Member
    from WA
    Messages: 14

    I'm in talks with a guy who's selling his long time business of 60 regular driveways all within about 3-4 blocks. Most already signed for upcoming season. Many he's had for over 20 years.

    The customers each pay $700 per driveway paid prior to first snowfall. Clean up at every 4". We get a lot of snow so there's likely 25+ days per season but you never know.

    So that's 60 contracts X $700. Total gross $42k contracts only.
    The bobcat with bucket and snowblower priced separately.

    Any ideas what that would be worth? He is asking $100k for the route. I think he's crazy but I have no idea what the going rate is, and would like to make a sound offer for consideration and not low ball or be swindled either!

    Thanks.
     
    Last edited: Sep 29, 2015
  2. dieselss

    dieselss PlowSite Fanatic
    Messages: 10,963

    So just contracts alone...42k. Leaving 58k. No regular skid is worth that money.
    I'd say he needs to recheck his math.
     
  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Since he collected all the money,he would owe you. Give 5% of the contracts and he keeps the skid,
     
  4. 1olddogtwo

    1olddogtwo PlowSite Fanatic
    Messages: 11,521

    So he's already been paid (partially) for this year and wants a 100k?



    700 @ 4in are good numbers but not worth the amount he wants.
     
  5. gardenpro

    gardenpro Junior Member
    from WA
    Messages: 14

    Ok thanks. Is there a formula to figure out the ballpark value? Everyone agrees he's asking too much. What would you sell or buy something like this for?

    I understand how that many clustered contracts is worth more than if scattered, and long term relationships built by the current owner could be valuable. I likely mentioned that many have been over 20 years so as long as you do a similar job there's a very good chance you will around long term.
     
  6. terrapro

    terrapro PlowSite Veteran
    from MI
    Messages: 3,874

    3 months worth of gross plus equipment
     
  7. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,857

    How to say this in a politically correct way: this guy is mathematically and business-savvy challenged.

    If you would like a different term, please PM me.
     
  8. gardenpro

    gardenpro Junior Member
    from WA
    Messages: 14

    Right on thanks.
    Is there a standard in the industry or a number you can personally stomach?
     
  9. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,857

    There's a hundred or more ways of valuing a business.

    The only real way is for the seller and buyer to agree.
     
  10. gardenpro

    gardenpro Junior Member
    from WA
    Messages: 14


    Strangely quite the opposite! He's done incredibly well, has a very large company of other aspects, this is a tiny wing of snow clearing for him.
    It will be (sadly) me educating him on the actual value of this business if I decide to go after it.
     
  11. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 10,857

    Ok, he is clueless when it comes to valuing a business.
     
  12. John_DeereGreen

    John_DeereGreen PlowSite.com Addict
    Messages: 1,889

    Or he's hoping for a really big sucker to come along and just see dollar signs.
     
  13. Turbs3000

    Turbs3000 Junior Member
    from Midwest
    Messages: 20

    When we buy companies we try to scale it based on retention. For example we would pay 20% on the portfolio for the first year. 15% on all that stay in year 2 and 10% on all that stay on year 3 and nothing after that.
     
  14. LapeerLandscape

    LapeerLandscape PlowSite.com Addict
    Messages: 1,597

    The problem is your going to shell out all that money for this years work but there is no guarantee the customers will be back next year.
     
  15. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Correct, I think its more of a personality thing, If they like you they will stay,if they don't like you even if you do a good job they will jump ship.
     
  16. 1olddogtwo

    1olddogtwo PlowSite Fanatic
    Messages: 11,521

    Tell them ur name is Grandview™.....
     
  17. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Hope there's a premium on using my name.
     
  18. TKLAWN

    TKLAWN PlowSite Veteran
    Messages: 3,575

    Equal value of a bills victory!;)