ICANN<\/a>\u00a0by doing a WHOIS search. Does the business look well run? Approach this one with caution.<\/p>\n\n\n\nIf they say they are moving out of town, then this is much better<\/em><\/strong>. Don\u2019t take their word for it, either. Do a bit of research. You can usually tell when you are visiting someone\u2019s place if they are getting ready to shift. Look for telltale signs. If they are selling their house and business, then ask them what they plan to do if the house doesn\u2019t sell. If everything is above board, then you might get an excellent business this way.<\/p>\n\n\n\nIf they are retiring after thirty years in the business,<\/em><\/strong> this may seem like a good buy, but when was the last time their price incrested? Are they running on yesteryear\u2019s prices? They can think their business is fantastic and can overvalue it because they have an emotional attachment. Be careful here. Work a day or two with them and mentally note the mow times. The customers will be more loyal, but the profit may be down. <\/p>\n\n\n\nThis could be okay if they have turned 50+ (like me) and want a second career<\/em><\/strong>. This happens, and the work can get hard after 50. That would be an acceptable reason for selling a business. Again you will need to decide how honest you think they are being with you.<\/p>\n\n\n\nHealth reasons<\/strong><\/em> \u2013 If genuine, this can be a great opportunity to get a good business at a good price. If you do go ahead and buy, you may find the seller to be a wealth of knowledge and a great help when you take over the business.<\/p>\n\n\n\nThey need money<\/strong><\/em> \u2013 Not always the best reason. You will need to look closely here.<\/p>\n\n\n\nListen to the reason they give you and decide if it sounds reasonable to you.<\/p>\n\n\n\n
What are they selling?<\/strong><\/h3>\n\n\n\nThe seller needs to be clear on this. You want to know things like<\/p>\n\n\n\n
\nWhat is the weekly turnover<\/li>\n<\/ul>\n\n\n\n\nWhat was the turnover for the last three years? \u2013 is it going up or down?<\/li>\n\n\n\n How much do they pay themselves?<\/li>\n\n\n\n How many hours do they work in the field and admin a week?<\/li>\n<\/ul>\n\n\n\n\nHow many customers do they have?<\/li>\n\n\n\n What area does the business cover?<\/li>\n\n\n\n What equipment is going with the business?<\/li>\n<\/ul>\n\n\n\n\nHow did they arrive at their selling price?<\/li>\n\n\n\n If they are keeping their mobile number, will they be passing quotes through to you?<\/li>\n<\/ul>\n\n\n\nHow long have they been in business?<\/strong><\/h3>\n\n\n\nThat is a good number if they have been working in the business for a couple of years or more. Do make sure you check the information they gave you. You can do the WHOIS search and do a search on their business name to see how long it has been registered.<\/p>\n\n\n\n
If they bought the business six months ago and now want to sell it. then that is a warning signal. You could arrange a pay-as-you-mow buy-out, but I wouldn\u2019t pay this kind of business upfront. If they don\u2019t have a sudden change in family circumstances that have made the change necessary, then it means they are having problems with the business. They may have bought badly or run the business in a haphazard manner and lost customers.<\/p>\n\n\n\n
You might want to offer a deal where you pay as you go and give them a payment each week of the turnover for four to six weeks. If they are struggling and losing business, this could be a win-win for both of you.<\/p>\n\n\n\n
I suggest this method because if a business has changed hands twice a year, the customers are more likely to cancel and move on.<\/p>\n\n\n\n
Ask to see the books or at least bank statements.<\/strong><\/h3>\n\n\n\nDo they have an accountant? Can they produce their books with their taxable income for last year? Have they got a P&L (profit and loss) statement for the last financial year? If not, you will need to see their bank statements at least.<\/p>\n\n\n\n
If they have no real books but can produce bank statements, you can still look at them. You can offer less for the business as they will have fewer possible buyers. Anyone requiring finance (without available equity in their house) cannot look at this business as a bank will not loan without books. Go through the bank statements. Do they make sense? Do they gel with what the seller is telling you?<\/p>\n\n\n\n
If they have no books and little in the way of bank statements because they tell you they do half their work for cash, then I would avoid them. If they are that dishonest in running their business, how honest do you expect them to be with you? The lawns are probably underpriced, and the business is being badly run.<\/p>\n\n\n\n
What has the existing owner told the customers?<\/strong><\/h3>\n\n\n\nThis is good to know. You should never directly tell a lawn maintenance customer that you are selling their lawn. It tends to get them upset as they will feel you have no right to do that. If he has said something like, \u201cI am finishing up mowing lawns and are selling my business\u201d. This is better.<\/p>\n\n\n\n
I found that the best way to sell a lawn care business and retain most of the accounts is not to say anything until I have found a buyer. Then tell the customer you are finishing up, but luckily you have someone who can carry on and do the same job for the same price. This reduces fallout and makes the whole process easier.<\/p>\n\n\n\n
The chances are this is not how they have gone about it, but once they tell you about what they have said to the customers, it will give you a better idea of how the sale might go. The sale process may not go well if they are abrupt and do not seem to have any sense of diplomacy.<\/p>\n\n\n\n <\/figure>\n\n\n\nWill they offer a partial refund if the account is cancelled within eight weeks?<\/strong><\/h3>\n\n\n\nI mainly dealt with selling accounts, so I had a replacement policy for any account lost in the first four weeks (for any reason except bad workmanship or management). Not a lot of sellers will offer this. You could at least ask them about holding back 10% of the sale price and settling this after four to eight weeks after deducting lost accounts from it. Most sellers will not agree to this, but it\u2019s worth a shot. Doing this may also give you insight into how much the seller thinks you might lose in that time.<\/p>\n\n\n\n
What is the ratio of slow payers?<\/h3>\n\n\n\n You will want to buy a business where the owner does not let any debt slide and actively chases overdue accounts. If there are a lot of bad or slow payers on the books, this will affect your cash flow. Once a customer has developed bad payment habits, bringing them back to on-time payments can be tough. Ask the seller how they handle their accounts and how they manage slow payers or bad debt.<\/p>\n\n\n\n
How far apart are the lawns spread?<\/h3>\n\n\n\n Does the lawn care business owner do a lot of travelling? They should not be spending any more than 10 minutes going from job to job. They are losing money if they drive halfway across town to do a lawn. I find that for your average domestic lawn, you should spend 10 minutes every 40 minutes travelling. For example, 12 lawns a day equals 2 hours spent driving. This is a figure from my business; other businesses may be different, so treat this as a ballpark figure.<\/p>\n\n\n\n
Are there a lot of accounts on the peripherals of the area they cover? If this is the case, it may require closer examination. The more time you spend travelling, the less time you spend actually producing income.<\/p>\n\n\n\n
If you want an idea of how travelling affects a lawn care business, then go to \u201cWhat is the Best Way to Plan my Daily Lawn Care Route?\u201d<\/a> and this will give you a bit of background on this topic<\/p>\n\n\n\n