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Should I buy this business/equipment?

Discussion in 'Introduce Yourself to the Community' started by XJ1517, Nov 25, 2014.

  1. XJ1517

    XJ1517 Junior Member
    Messages: 20

    Hey Guys. Long time lurker. Don’t post very often.

    Need some opinions. And yes, I’ve been reading countless threads and the newbie page http://www.plowsite.com/showthread.php?t=66279

    I’ve run pickups with plows, tractors with plows, ATV’s & Lawnmowers with plows, snow blowers, etc… So I have adequate experience in the field.

    A guy that my brother works with scored pretty well and is moving out of town because his in-laws bought him and his wife a house. He had a snow plowing business that he started last year, but is trying to offload it before he leaves in 2 weeks. I showed some interest and we’ve been texting briefly. We’re going to meet up for lunch in a couple days. This is what he’s told me thus far:

    - Truck is a Chevy 1998 ¾ ton with 8’ Straight Blade;
    - Has a spare blade;
    - 3 snow blowers (almost brand new);
    - Cap for truck;
    - No sander and never did sanding/salting for customers;
    - Paid $13,000 for everything last year;
    - Did mostly residential, making approx. $29,000;
    - Took home $6,000 in his pocket after paying 4 employees and
    start-up expenses;
    - Had 40 residential driveways and did about 30 snow plowing “events”
    (I looked at historical data for where I live, and it says annually, there’s 83
    snowfall events a year. So cut that in half, and 30-40 seems right to me)

    He was originally selling all of it for $10,000. In the fall, he wanted to sell for $5,000. Now, he’s told my brother he needs it gone and will sell for $2,500. From the sounds of it, it doesn’t look like he actively listed it to sell. He has another job somewhere else, has a wife, kids, and is moving, etc, so it looks like he got pretty busy. I may even be able to talk him down lower, I still don’t know. (Should I?)

    He was planning to go ahead with this year and hopefully add a commercial contract or two, but is leaving and can’t. From the sounds of it, he didn’t even plow yet so the amount of contracts he has is in the air. It seems as though he did this on a “Cash” basis for his customers and wasn’t registered as a business. I’ve read far into how important liability insurance is and what types of insurance to get, so I’ll definitely go that route. What I’m looking for is questions I should be asking him when we meet up. So far, this is what I’ve come up with:

    - How many clients do you have that are ready to go now?
    - What shape is the truck and plow in? (I’ll need to certify and insure the
    truck in my name)
    - I’ll ask about insurance or if he just did everything for cash
    - How much did you charge per driveway? Did you have a set amount for a
    trigger, etc?
    - How did you bill customers?

    I think of a hundred questions daily, but if you guys have any input, I’d greatly appreciate it!

  2. BRL1

    BRL1 Senior Member
    from Wyoming
    Messages: 625

    Sounds like the equipment is worth more than he is asking. Just going on what you have said sounds like a good buy out. I've bought a couple of landscaping businesses Here in my town and within 1 year paid off and tripled customer accounts.
  3. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 7,917

    Your not buying a business,

    your buying a old worn out truck and plow, with the possibility of still having a few customers.

    and who were these "employes" he illegally hired.
    and why would they work for you?

    Your better off to go buy a late model truck, then find a good used plow,
    and knock on some doors.

    you will need to set your self up as a LLC or INC.
    and get INS.

    good luck it's getting late in the season.
  4. Chineau

    Chineau Senior Member
    Messages: 446

    It might be worth it just for the equipment, what kind of snowblowers,how old are they, are they ready to work? What brand of blade on the truck is it commercial duty or home owner is it work ready can he show you it operating? You say spare blade do you mean cutting edge or another unit that can be easily mounted? Can the truck pass safety today, if not what specifically needs to be addressed for that to happen? What mechanical abilities do you have or can hire to check the truck over?
    Customer list included in this deal, are they signed on a contract he can show you, how are they secured? The numbers sound funny 29k and kept 6 can he address what happened to the money, did he have any of the appropriate insurance for the work he was doing? Are they customers in an area you can service( how far away from your home base)? Do you have any business experience now such as bookkeeping, advertising, people management?
    Don't confuse the tools of the business with an actual set of systems to deliver value, there is a real differnce.
    Good luck.
    You in the T-Bay area?
    Does he have a tax number for G.S.T this will tell you straight up how legit he is.
    Last edited: Nov 26, 2014
  5. Broncslefty7

    Broncslefty7 Senior Member
    Messages: 563

    the equipment is most likley worth it. Look at customers average time to pay and weed out the bad ones. it could be a good investment, make sure you have him sign a non compete clause and have him write a letter to contact all of the customers to let them know of the change. then consider if 6k profit for the season is worth the additional head aches. if so buy it up, if not walk away.
  6. andersman02

    andersman02 Senior Member
    Messages: 696

    Some quick math I came up with around $25 per drive per service. Little cheap but maybe they are all tiny with no shoveling? From the sounds of it, with 3 snowblowers he did sidewalks and with 4 guys thats really overkill.

    To me it sounds like these are under priced.

    Equipment could be worth it though. Go take a look, those late model chevys are great plow trucks and last a while. We have one and got it with the plow for around 4k. Starts and runs everyday
  7. Flawless440

    Flawless440 PlowSite.com Addict
    Messages: 1,543

    At $2500 you will make money....

    Never got into driveways so i would work on getting some commercial accounts and a 2nd truck cause the other will break down during a event.