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Buying existing buisness

Discussion in 'Business Fundamentals' started by ConnerM, Sep 11, 2012.

  1. ConnerM

    ConnerM Member
    Messages: 62

    So i wanna get into subcotracting this year but dont have the plow truck yet and am not suer what to expect topay for a used plow and to have it installed on a truck so i found a snow plow buisness for sale 1990 chevy 3/4 ton trucks that looks good with plow on it and the front leans down alot in the pics but he also has 30 residential accounts that come with his buisness and im just not sure what i should pay for it. Sorry i dont have his numbers right now but ill post them as soon as i get them. Also Im guessing since its a 3/4 tons it would be ok for the driveways he has but probably not for subbing to do parking lots or anything.
  2. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    The truck other than being older is fine for doing small to midsize lots, as well as the residentials. The front end nose dip is pretty normal, put some weight it the rear of the bed, most manufactures have a recommended weight chart. I would look on craigslist for comparables to get an approximate value for the truck, Kbb seems to be high lately. As for his residential accounts, it's tough to put a value there probably 10-25% of gross is fair for any referrals (that go with you) or signed
    contracts you get from him.
  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Your buying a truck only with that deal.No guarantee they will stay with you.
  4. wewille

    wewille Senior Member
    Messages: 311

    Worth nothing but the truck.
  5. ConnerM

    ConnerM Member
    Messages: 62

    Ok well idk how much he wants for the truck yet but I haven't owned a plow business before and I'm not sure I have enough money. I was thinking of offering to have him show me how it's done the first time and then doing all the work this season for the plow and accounts does this sound fair? Would this be something that happens sometimes? Say he wants 7k for business and make on average10k a season I was thinking if I work for the business for 1 the whole season would this b fair trade?
  6. Camden

    Camden PlowSite Fanatic
    Messages: 6,604

    What type of work have you done in the past and what are you currently doing for employment?
  7. ConnerM

    ConnerM Member
    Messages: 62

    I would just have him show me what he does the first time and after that I do all the work and for the season and after that I only call him for questions? Then he getS the money for the first season annd then passes it on to me for free
  8. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    He should probably include some training & signed/paid (at least here residentials are pre-paid) contracts, at the least show you the first run, especially for that kind of money. Your talking a 22 year old truck thats been worked (probably worth 3-4 K tops). If that were me & my market I would say 5K would be fair. Now thats he already has all the money in his bank account & gives you the truck & remaining monies from the contracts.
    Ex.: 30 contracts @ $ 200ea.= $ 6000
    (-)His cut (20%) of $ 6000= $ 1200
    (-)Truck value= $ 3500
    Training ????
    He pays you $ 1300 to do for the year, split it so you get 1/2 up front, other once season is over, however you work it out. If the truck breaks its your problem to make sure it gets repaired, work gets done, etc. By doing it this way you aren't buying a overpriced truck & a bunch of addresses, its an actual business. Otherwise you don't know if the list is real, if clients are happy, etc (and will or will not re-sign).
    Last edited: Sep 13, 2012
  9. ConnerM

    ConnerM Member
    Messages: 62

    Current employment

    Well right now im a crew lead at a local lawncare company that ive only been with for this season but this companies pretty nice, other then that i was a crew lead last year for another company and the year b4 that i was just a crew person. The last 3 winters ive been a shoveling crew lead in the winter for one company but they are small and already have several guys looking to become plow drivers b4 me and my current company seems like it might be the same and ive been working only part time for them right now while i go to school so i think they will question whther i can handle the plowjob or not.
  10. ConnerM

    ConnerM Member
    Messages: 62

    Well im trying to work something out were maybe i can work for him this season and i mean essentially do all the work with just a little training at the start and i do all the rest. At the end of the season he makes 5k profit for doing nothing essentially and if he want 5k for the buisness then it becomes mine or say he wants 5k for the buisness and it only makes 4k then i pay the other 1k at the end of the season and it becomes mine.I was thinking keeping everything in his name the first season and after that it get handed off to me or whenever he makes enough from the buisness to pass it off. Does this sound like a good deal for him?
  11. ConnerM

    ConnerM Member
    Messages: 62


    ok well nvm i talked to the guy yesterday and i was asking what he wanted for the truck and the accounts. He wanted 7k for the truck and idk what he wanted for the accounts but i didnt bother to ask considering his high price for that truck. I was expecting an older guy who wanted to get out but this was a younger dude who moved away like and extra 20 to 30 minutes so his reason for selling was because he didnt wanna drive 40-50 minutes and didnt wanna leave his customers hanging. All the contracts were sign to him and in his name and he was willing to drive me to the places but after i bought it it would become all mine and he would be out scott free with no transition or anything. He said he made like 4k last year and most years averaged like 12k and one really good year he made 16k. I suspect all these numbers are high, once he said he made 4k he sounded like he regreted saying it and quickly went to saying he makes 12k most years. I asked how many miles on the truck and he said he had no idea even though he had been plowing with it for 4 years. This guy wasnt trying to get out of the buisness he was trying to get of crappy customers and a ready to break down truck and upgrade. RIDICULOUS!!!!!!!!!