Lawn Care Acquisition Terms

I can help, I've done acquisitions for lawn care/landscaping. If you want a BUSINESS VALUATION, below is a very real formula. If you want a REAL LIFE VALUATION, a lot of times it's two guys over coffee, going over customers and employees, then they agree on a percentage of revenue (20-100%) plus maybe buying out some equipment.
[B]Short Answer:[/B]
[B]I'd start out with a number of mows per client, so I'd offer to pay the previous owner the payments received for the first 2-3 mows. You can do it the week after you mow them, or if you wanna be a nice guy, you could pay them for 2-3 mows once they sign your contract. [/B]If that isn't good enough, below is very valuable information on larger business acquisitions:
[B]Answer that imparts wisdom for this and future transactions:[/B]
A REAL VALUATION, which you should run at least once per year so you know what your business is worth goes like this:
Technically, it's based on EBITDA, which is Earnings Before Interest, Taxes, Depreciation and Amortization. If you would like to know more about that, just reply and I'll give you a better explanation that should be useful.
It's basically a "cash flow" formlula. You take your profits, depreciation, interest expense, and any of your pay that is "excessive" to what you do. So, if you're running a crew and making $80,000, you could put $40,000 back towards cash flow because a new owner would have to hire on a new foreman to run that crew:Formula works like thisProfit $20,000Depreciation $30,000 Interest Expense $8,000Excessive Owners Income $40,000 Total: $98,000. Then you use a multiplier on this EBIT or EBITDA formula. Something like 2.5 to 3.5, so the business would be valued at $250,000 to $350,000. In this sort of equation, the value of the equipment is negotiated. IT can be rolled into the price, or the net value can be added, or the buyer may ask that the equipment be paid off from the $350,000 and be free and clear. The way to keep this clear is to think from the buyers view is:I'm going to buy a business for $300,000. I expect to earn $98,000 per year or get 33% for my money which is a lot better than Wall Street!
Other factors, it's based on:
1. Size of company. I would rather buy companies over $750,000 because there has to be some management or systems in place, but a business broker friend of mine says he finds many many more buyers of businesses of around $200,000-$400,000. We think it's because it's easier for another contractor to add that much service to his present line.
2. Type of billing. Since we're in the Lawn Maintenance forum, I'll assume that we're talking about mowing. "recurring billing" is what brings in a bigger amount. When you have solid monthly billing, this is something that buyers can count on more than one time landscape sales. Commercial usually worth more than Single Family Residential.
3. Spread out customer base. A Customer base that doesn't consist of 3 clients that make up half of the billing is going to scare some people away. A base with 50 clients with no one client making up more than 25% is pretty solid. This is also something that banks financing your company, or financing a sale
4. Growth. Most buyers prefer some decent, but not excessive growth. A 10 year company growing 15% every year sounds pretty solid to me with probably a solid customer base.
5. Gross Profit margins.
Anyway, if you have other questions, let me know,
Best of Luck!
Steve Hoogenakker

Sales Genie - Steve Hoogenakker Showcase Landscape

Sales Genie works for my businesses. THe list is updated daily and they have great charts showing their credit history, any liens, judgments and suggested credit limit, which is usually low, but just one bad credit decision could pay for it for a year. THey wanted $400 per month, but I told them it was for one user only and only for the Minneapolis - St Paul market, so they lowered the price to $150 per month. Steve Hoogenakker Showacse Landscape

Finding Potential Business Loans for New Businesses

Business Loans: Translating Potential for Financial Success and Independence.
A good entrepreneur knows that the essence of striking gold in business is finding the right opportunity and going after it despite the risks. These opportunities keep on sprouting when you are doing business. Or you might have stumbled upon one and contemplating taking it. Your financial condition may not help you to translate your potential for financial success and independence. Business loans can facilitate this translation.
Obtaining finance is central for starting a new business or making business grow. Financing a business through business loans can be a formidable task. But a good preparation can easily sort out any matter detrimental to getting your business loans approved. Taking a loan for business is an important decision. A business loans borrower must understand that while taking loans can help a business grow, a wrong decision will mean debt and actually damage financial stability of a business. Determine how much loan amount you require as business loans. There are different business loans products to decide from.
A well thought out business plan is the most significant part of getting a business loans approved. The business plan should have projection. Don’t go into details, a concise to the point executive summary which answers all the queries of a business loans, will gain easy acceptance. If you have an established business – financial statement, cash flow for the past three years will be required.
When Business Loans application is reviewed, some of the following questions might come up in one version or the other.
• How much loan do you require?• What about business profits, does it have enough cash flow, to service the debt?• Is there collateral to cover the loan?• Is there a reasonable balance between debt and equity?
Business loans lender would pay much emphasis on your repayment ability. He would like to know if you have invested your own money in the business. He would not be very interested in taking risk in a venture where the business owner has not.
For business loans it is important to know your credit history. The business loans lender will undeniably go through your credit history. Go through your recent credit history and find out faults and recent credit discrepancies. If there are inconsistencies, get them removed. A credit history that is questionable will most likely not get business loans. However, if you attach a letter explaining your credit conduct can evoke a favourable response. The worst mistake will be to hiding your faults. This will most certainly reject an otherwise encouraging business loans application.
Few people realize it but locating a good business loans lender is integral to finding business loans. It is not easy to find business loans lender that abides by your needs. In fact it is an investment in itself. Look for business loans lender who is willing to work with you and for you.
Business loans also depend on your character and your ability to be present yourself, your business details and your confidence. They also count in getting your business loans accepted. In case business loans application is rejected – make sure you know the reason why this happened. This will enable you to rectify mistakes next time you make attempt to get business loans.
Collateral is chief ingredient for business loans. Secured business loans will require collateral and greatly add to the business loans application. Business loans without collateral are unsecured business loans. They are usually difficult to find. But unsecured business loans will only satisfy small financing needs.
Business loans are available for most financing needs. Business loans can be used for starting a business, refinancing, expanding your business, purchase of equipments or any other commercial investment. Insufficient business funds are one of the leading causes of business failure.

About the Author Steve Hoogenakker provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services. Visit: www.Landscape.Pro, or www.MrHomeLoan.com, you can email Steve at Steve@Landscape.Pro or Steve@MrHomeLoan.com. Steve Hoogenakker, Minnesota, Showacse Landscape, MHA, MNLA, CAI, CIC Midwest, Taylor Made Landscape. You may reprint or publish this article as long as Steve Hoogenakker and all links are included.

Ten Important Tips to Starting a Business

10 Essential Tips for BuddingEntrepreneurs -

1. Do What You LOVE: If you've chosen your business because you read that this niche was the next hot one, or because your favorite uncle (or your best friend) thinks you'd be well-suited for this business, you may as well pack up now and save yourself some time and money. If you don't love what you do, it will show...potential customers will know it and will go elsewhere. Is it possible to be successful anyway? Sure -- but it won't be easy and it won't be fun...and isn't that why you want to be in business for yourself anyway?
Instead, choose what you love. You'll know what that is when you find yourself being incredibly productive, forgetting the time passing by, and not being able to wait to get up in the morning to do more! At Solo-E we call that being juiced...but whether you call it being in the flow, or the zone, or whatever, FIND IT!
2. WRITE DOWN Your Business Plan: As a small or solo business owner, you still need a business plan. Even if you aren't getting a loan! Would you invest thousands of dollars of your own money buying stock in a company that didn't have a written prospectus? (I hope not!) Then why would you spend thousands of dollars AND hours of your precious time on a business that doesn't have a written plan?
Write your plan, get it critiqued by professionals, and most important, BE READY TO CHANGE IT. This may seem counterintuitive...why bother writing it down if it's just going to change? Because writing it down makes it more clear...and helps you get to the next stage of learning and planning and revising. It's critical--67% of businesses that failed had no written business plan. Want to play the odds?
3. Multiply Your Expected Startup Costs by Two--or Maybe Three: When I started my business, an honors MBA grad with 15 years of solid business experience behind me, I figured I was smart enough to estimate my startup costs accurately. I knew all the things I needed and made conservative estimates and I was still WRONG! That's right, I was still off by a factor of almost three. Don't make this mistake! One of the biggest reasons small businesses fail is because of lack of capital. Give yourself the best possible start by saving or acquiring sufficient startup funds NOW. Before you start!
4. Make Your Market Niche as Small as Possible: Again, this is counterintuitive--shouldn't you try to appeal to as many people as possible? The paradox is that the more you try to appeal to EVERYONE, the less you will appeal to ANYONE. Let's say you are selling your house...would you rather list it with the agent who operates in 14 counties, sells both commercial and residential real estate, and sells everything from cottages to estates? Or would you pick the agent who specializes in your community, selling only houses in a well-defined price range that she knows extremely well? Ruthlessly define your niche, make it as small as possible, and stay true to it. You'll thank me later!
5. Do Marketing Your Way: The temptation is to choose all the marketing methods that the competition uses. To stay with tried-and-true marketing channels. To place advertisements that you know nothing about creating, or make cold calls that give you heartburn. Why? Because (all together now) "that's how it's always been done."
It's difficult to stand out among your competitors when you are doing the same kind of marketing! So instead, look to your strengths. What do you like to do? What are you good at? Then choose three marketing methods that play to those strengths. If you need ideas, check out 136 Ways to Market Your Solo Business, another article at www.Solo-E.com.
6. Remember the Most Important Ingredient in Your Business--YOU: Business-owner: know thyself. Spend some time learning about who you are and how you are unique. Then let that uniqueness shine through in your marketing, in how you run your business, in everything you do. Don't hide your quirks--celebrate them!
Customers go to small and solo businesses primarily because they are looking for a personalized experience. They want a relationship with you as the owner of your business. If you try to come off as who you think they want, they'll smell right through that and not come back. Be who you are, and trust that who YOU are is going to be attractive to the right people.
7. Build Your Business by Building Relationships: Being a small or solo business owner isn't about sitting in the corner alone. Actually it can be--and that isolation is what drives many out of business and back into a "job". Build relationships to survive! Start with your colleagues--others you know who are at the same stage of business as you, or are farther along and willing to mentor you.
Next, build relationships with potential customers. Ask them what they want! Then create products and services based on their input and come back and show them what you have done. Get feedback, tweak, and maybe make your first sale. Stay in touch with your customers even after they leave you.
Last but not least, build relationships with your competitors. You might be able to do this right at the beginning, simply by asking them for their advice. Surprisingly, many ARE willing to share their secrets if you just ask. Later on, build cross-referral relationships, co-marketing alliances, and other relationships that are win-win for you, your competitors, and your customers.
8. Don't Accept a Customer Just For the Money: This is probably the hardest advice for new business owners to apply. Especially when there is a job, a project, a potential client, just outside your niche, that could keep your business solvent for the next six months. Don't do it! Taking on a client outside your niche inevitably results in frustration for you, dissatisfaction on the part of the client, and in the end, usually costs you more than you make. Ask any successful business owner and they'll tell you this is true!
9.. Don't Do Everything Yourself: It's so tempting to fall into the self-deception that "it's cheaper for me to do it myself." IT"S NOT! If you aren't good at something, for instance bookkeeping, it will probably take you 2-3 times as long--time you could be spending doing things that are essential for you to be doing personally, like writing your business plan or deciding your marketing strategy. Put sufficient capital into your business upfront so you CAN hire help right from the start. Your business will get off to a quicker start because you aren't distracted by time-consuming tasks that drain your energy.
10. Assemble Your Support Team: Start with the people who will help you do the things you aren't good at. Some examples: bookkeeper, marketing writer, web designer. Then add the people who give you professional business advice: a lawyer, an accountant, a business coach. Finally, include the people who support you personally: your family, friends, and colleagues.
Don't forget to be part of other's support teams, too. Share your expertise at Solo-E, start a networking group where business owners support each other, share a referral with a colleague. Solo Entrepreneurs supporting other Solo Entrepreneurs is what will make us all successful!
Publisher’s Directions: This article may be freely distributed so long as the copyright, author’s information, disclaimer, and an active link (where possible) are included. Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.Steve Hoogenakker provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products.

About the Author Steve Hoogenakker provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services. Visit: www.Landscape.Pro, or www.MrHomeLoan.com, you can email Steve at Steve@Landscape.Pro or Steve@MrHomeLoan.com. Steve Hoogenakker, Minnesota, Showacse Landscape, MHA, MNLA, CAI, CIC Midwest, Taylor Made Landscape

Five Things You Must Know Before Buying a Business

5 Things You Must Do Well When Buying a Business to Not Get Burned
Are you not sure what Business to buy? Need to know what is a fair deal?
Martin Smith thought he was buying an established business with good credit and collectable accounts receivable. The day after settlement the surprises began.
Inventory could not be used because expiration dates had past. Money shown as receivable had already been collected. Vendors that were only willing to ship COD. Over $100,000 of real problems that should have been detected during the business purchase process popped up and almost shut Martin down.
Can you afford to be surprised? Of course not.
You have the power to not end up like Martin.
Owning your own business is part of the American Dream. Buying a business has many advantages over starting one from scratch if you know how. Be prepared and get all the benefits of buying an existing business.
Tangible benefits such as existing cash flow, existing customer base, existing systems, knowledgeable employees, and locations can be obtained cheaper by buying an existing business than starting from scratch.
1. Understand and Know What You do Well and Like
You must really look at the activities you like to do and find a business that allows you to do them. For instance some people want customers to come to them. A retail store may work well for them. On the other hand some owners would loose their minds staying in a store all day; perhaps something with outside sales will work for them.
Are you a people person, a thinker, a leader, or a salesperson? Do you like steady hours, flexibility etc. How much money do you have to purchase with? How much money must you make every week?
Remember the process of buying the business is not the same as running one. Do everything possible to make sure you buy one you will love running.
2. Make a Comprehensive Search for a Business
Make sure you know how to look for a business. Don’t just go to one source but really check multiple reliable sources to find the business that is right for you.
Systematize your notes so you know what you looked at. Make sure you compare your strengths and weaknesses with the day-to-day tasks of running the business.
3. Understand and Value the Business Properly
Understand the basic financial techniques to value a business; it’s cash flow and other assets. Know how to prepare a basic business plan in order to make projections into the future.
Understand how the business is getting its customers. Know how it delivers goods and services. Know the cash flow and how you will keep the current cash flow and then grow the cash flow.
4. Know how to structure and finance a business
Have a basic understanding of how the business valuation and related cash flow tie together. Make sure you know a number of possible ways to put a transaction together to overcome different risks.
Understand what may be financed by a conventional bank loan, a SBA loan or seller take-back. Understand how to take your outline deal and put it into a final enforceable contract.
5. Perform Due Diligence Thoroughly and Correctly
Know what to look for when investigating a company. Know how to tie accounting records into source documents. Understand inventory, equipment, vehicle titling and other problems. Understand what should occur at settlement. Make sure you are getting what you have agreed to pay for.
Bonus Tip
Recognize that the Broker almost always represents the Seller. For most small business purchases you, the buyer, will go through most of the process on your own. Make sure you know enough to get select the right business and negotiate a fair deal.
Publisher’s Directions: This article may be freely distributed so long as the copyright, author’s information, disclaimer, and an active link (where possible) are included. Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.
About the Author Steve Hoogenakker provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services. Visit: www.Landscape.Pro, or www.MrHomeLoan.com, you can email Steve at Steve@Landscape.Pro or Steve@MrHomeLoan.com. Steve Hoogenakker, Minnesota, Showacse Landscape, MHA, MNLA, CAI, CIC Midwest, Taylor Made Landscape

Magnetize Your Business Success

* Magnetize Your Business Success *
Our brain is a marvelous creation. It receive and transmit information like a wireless phone. Our thought are made of wave. We call that brain wave. It is around 10 to 40 cycle per second when we are awake. In fact our thought are MAGNETIC. Like a magnet we attract circumstances and opportunities. We litterally ATTRACT the life we want with our POWERFUL thought like a magnet ! You might say :" But Michel i have been thinking about wealth all my life and the only thing i got is 5 cents in the banks !" Do you think about wealth or the lack of wealth ? This is different my friend. When you think about not having enough money what do you attract ? Not enough money of course ! This is a spiritual law ! It's the law of attraction or sameness or harmony. You cannot have, what you don't think you can have. Like attracts like. Like criminals with criminals and saints with saints. We join a group because they share the same ideas as ours (the law of sameness). We won't join people who doesn't thing the same as us ! Like attracts like - you get the point ! I'm sure you do now. We have to replace our old thinking if we want to succeed. Think about success and wealth and not: " Not enough money " or " I cannot succeed " . Replace this with : " I will succeed litlle by little, day by day ". Our action follows our thinking. If we don't believe we can start a business we won't start a business. Period. But if we believe we can start a business here is what happen : First our thought will attract information on how to start a business. So we first learn how to start and grow a business. After that we start taking action like maybe getting a loan, finding a location (if we have a physical business). After that finding good employee, good marketing, good products etc. We do what we think. Everything we do comes from our thought. Our thought form our belief. We have to believe to succeed. We act from our belief. It's not diificult to believe in wealth ! Look at all the people who succeed and have succeeded. There are not different from you. There are flesh and bones and not some space alien ! To become wealthy you have to think like them. Learn from them. If they have done it. You can do it too. You don't need to have come from a rich family or to be a crook to be wealthy. The crook will one day get caught. The simple formula to succeed is this. The ultimate truth of all ages and all the universe is : " Your Thought Create Youre Reality "Taught your way to success. Think and act. Act and think. Use your crative thought to create wealth or anything you like in your life. What you like you attract easily. Remember like atract like. Copyright © Michel Richer PERMISSIONS TO REPUBLISH: This article may be republished in its entirety free of charge, electronically or in print, provided it appears with the included copyright and author’s resource box with LIVE website link.
Publisher’s Directions: This article may be freely distributed so long as the copyright, author’s information, disclaimer, and an active link (where possible) are included. Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.
About the Author
Steve Hoogenakker provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services. Visit: www.Landscape.Pro, or www.MrHomeLoan.com, you can email Steve at Steve@Landscape.Pro or Steve@MrHomeLoan.com
Steve Hoogenakker, Minnesota, Showacse Landscape, MHA, MNLA, CAI, CIC Midwest, Taylor Made Landscape