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Opinions on purchasing this business?

Discussion in 'Commercial Snow Removal' started by prestige10, May 11, 2010.

  1. prestige10

    prestige10 Junior Member
    Messages: 19

    Hey guys, what are your opinions on purchasing an already established business versus growing your own from scratch. I have been running my own business for a while now but am looking for more clients. This morning I was searching online for some used equipment and came across this ad. Tell me what you think. I emailed him asking how many clients were regular and had ongoing service, and stuff like that.

    Anyways, he is asking $80,000 for:

    250 clients
    1 Maza Pickup with trailer
    4 RAKES

    Obviously I will have to check the condition of the equipment and the truck and make sure that the customers are willing to transfer their contract over to me. I might even see if he is willing to sell without the truck. Ive currently got a 3/4 ton and am looking to purchase a second one-ton.

    Just wondering what you guys think of the price and what your opinions are on buying another business. Pros? Cons?
  2. leon

    leon Senior Member
    Messages: 872

    buying an existing business

    An existing enterprise that is for sale is purchased
    on the basis of its assets and any possible existing
    lliabilities in existance at that time only if payment for
    inventories to suppliers is required to be assumed by the
    new owner with the proper sales terms and conditions
    with relation to the existing "Proven Net Cost" of the inventory.

    Is he expecting you to purchase his existing contracts
    on the basis and understanding that you are to be the
    sole owner of the existing contracts in forece and prepaid
    and the transfer of ownership will not nulllify the contracts if in force?

    If the existing contracts are not in force they have no asset value
    if they are seasonal in nature period.

    Unless he is will and able to provide legitimate sales records
    and expense account data, to provide a time line for ALL income and
    expenses for 7 years or less if the business is less than seven years old
    with VERIFIED tax returns examined by your accountant and attorney to
    insure there are no existing outstanding judgerments, defaults in breech
    of any contract, outstanding liabilities,

    The machinery is of little net asset value in the eyes of the Internal Revenue Service
    and is depreciated very quickly under depreciation tables rules in which the actual cost
    of the equipment plus taxes paid at time of purchase is the determining factor for a short or long term assetts value. walk away

    The asset value is not defined, walk away.

    How much is any asset value is left on the contract(s)? if it is unverifiable by you in examing
    the contracts for services rendered versus the contracts value if prepaid it is prepaid by contracted liability
    each contract will have to be reopened and renegotiated , walk away.

    He is obviously attempting to sell his busiensses good will for a substantial
    sum, walk away.

    There is nothing to say his client list has not already been sold and or the clients
    will be retained by you with the conclusion of any and all negotiations and the rewriting of the contracts, walk away.

    Most if not all the machinery comes under the net cost ( meaning worth nothing) with no depreciable asset value, the truck and trailer may also fail under the values due to their age and asset value if they are not fully depreciated.

    walk away
    Last edited: May 11, 2010
  3. Matson Snow

    Matson Snow PlowSite.com Addict
    Messages: 1,985

    Truck and equipment is Worth about $5000 Tops....So $75,000 for 250 clients..WAY OVER PRICED...You will have to check what those accounts are pulling in per week...I have seen Lawn businesses go for one months cutting...That sounds like a craigslist ad...Someone is fishing for a sucker...
  4. prestige10

    prestige10 Junior Member
    Messages: 19

    YEah Im not interested in the truck and not really interested in the equipment either... its more ths contracts im interested in.

    Thanks for the advice guys!
  5. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    there is a rule of thumb that goes as follows, if you buy a client list, you can plan on losing 1/3 of that list based on the transition of the business, so keeping that in mind, i would say this is WAY over priced, i would think about 1/2 of that may be more in line, and even then i would say that was high
  6. prestige10

    prestige10 Junior Member
    Messages: 19

    Yeah thats what I was thinkin too.

    I wonder if I could just purchase his contracts? lol
  7. coldcoffee

    coldcoffee Senior Member
    Messages: 776

    I couldn't have laid it out as well as Leon stated. What's funny to me though, is if he is suggesting that 250 clients could be managed w/ that equipment. It's got stink all over it, and suggests that he doesn't even know how to structure his own con game. Call his bluff if you want to have some fun, but like already mentioned...walk away.
  8. hydro_37

    hydro_37 PlowSite Veteran
    from iowa
    Messages: 3,790

    Way overpriced.
    did you ever see him plowing last year or know anyone that did?
  9. prestige10

    prestige10 Junior Member
    Messages: 19

    Yeah the more and more I thought about it, the more fishy I realized it was.

    And no, I have never seen him out plowing or anything. I tried numerous times to get information from him about his client and equipment and he never got back to me.

    We've had so many douchebags in this industry up here in the past few years.
  10. Wicked500R

    Wicked500R Senior Member
    Messages: 394

    Exactly this ! 250 accounts with that equipment... I wouldn't even have thought about it:laughing: If you got 80 grand to throw around, Invest in some good advertising and some good equipment.. Do good work and the work will come...
  11. leon

    leon Senior Member
    Messages: 872

    landscaping etc.

    Buy a good walk behind flail mower for small areas and a three point hitch flail mower with four rows of knives for a small compact utility tractor which will get you a lot of customers as the lawns look so much better, as the gras is finel;y cut and its will be a safer mower to use-no throwing of hidden objects ever. there are several brands available stateside and can be ordered from europe.

    BCS has 2 Palladino flail mower widths as standard equipment and can be used with a 2 wheel sulky, Hinowa offers a multiple use ride on carrier with rubber track drive and a hydraulic flail mower and Canycom has a ride on rubber track drive flail mower as well There are several other german and italian walk behind flail mowers.

    The nice thing about flail mowers is you dont have to clean them all season due to the design of the cutting system as it lifts the grass and throws it back down over the rotor.

    A flail mower has more total cutting edge length than any rotary mower as well giving a finer cut as rotary mowers tear grass where the flail knife cuts it.

    a properly designed flail mower has a very strong shell and the shell is rolled steel not stamped as the PGF flail mower shell is.

    "In my opinion" the three point hitch mounted PGF flail mowers offered by Northern Tool, amazon, and yahoo are something that are poor in quality with thin steel shell and the rotor bearings are sealed which is a no no and should be avoided.

    My thoughts anyway