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Thread: Selling Your Lawn Mowing Business

  1. #1
    Translawner administrator's Avatar
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    Default Selling Your Lawn Mowing Business

    SELLING YOUR BUSINESS



    The following is a guide on what needs to be considered when selling your business. Even if you are not thinking of selling your business now, it is a good idea to go through the information provided to ensure that when the time comes you have the necessary paper work to enhance your business in the sale.



    Information Your should Provide

    *

    Vendor's (your) Details e.g. name, contact details, references (if any), Reason for selling business
    *

    Business Details: Business Name (if applicable in sale), Age of business, ABN, Service, Customer Lists
    *

    Documents: Permits, licenses and registrations, equipment leases, contracts & agreements with customers and suppliers
    *

    Equipment: Inventory of all equipment (if applicable)
    *

    Accounting records: Profit & loss statement, debtors, creditors, balance sheet, depreciation schedule, Tax return, Books of account Sales records etc.

    Statutory Requirements

    Section 52 of the Act requires that any person seeking to sell a small business (a vendor) or an estate agent acting for a vendor, must provide to the prospective purchaser a statement in writing as prescribed by the regulations before accepting a deposit or a signature to a document which is intending to bind the purchaser to a Contract of Sale. This statement is referred to as the Vendor's Statement (a section 52 Statement).



    The failure by a vendor to provide the specified statement constitutes an offence. It provides the purchaser with grounds for termination of the contract and a refund of any monies paid provided this right is exercised before taking possession of the business and before the expiration of three months from the date of entering into the Contract.



    What does a Vendor Statement Include:

    Generally, the information to be supplied is as follows:

    *

    the name and address of the business and of the vendor(s)
    *

    Statements by the vendor relating to the trading record of the business
    *

    Statement by a practicing accountant which sets out relevant financial details of the business including a profit & loss statement for the last three financial years or the period that the business has been carried on (if it's less then three years).

    Information Package



    Remember the little information package we would have sent out to you before joining out group? Outlining the advantages and strengths of our business and what we had to offer. Or look at our website, and how we present ourselves to prospective purchasers. Or if you ever enquired to franchises you may recall the information they provided you in order to try and sell their business. These information packages are made up for a reason, and it's not to waste ink, paper and postage but instead to enhance the sale of a business.



    You may want to consider putting together an information package containing some of the above information (don't include information such as client details and addresses, this information should only be divulged after the sale of contract is signed or a deposit is made for obvious reasons)

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  2. #2
    Senior Member chaplain's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    Thanks Admin
    That will help cheers anybody else with some ideas

  3. #3
    member Christine Wharton's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    Just wondering if there is a rule of thumb method for valuing your business...
    I can understand that there is a (depreciated) value you can set on your gear, but what about the customers and goodwill side of things - a bit more intangible...
    Cheers
    Christine

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    Default Re: Selling Your Lawn Mowing Business

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    Default Re: Selling Your Lawn Mowing Business

    See Thread

    Goodwill ( purchasing customers) is not tax dedutable as it is a capital expenditure. Interest on any loans to purchase customers is howerever a tax deduction.

    http://www.indmowing.com.au/forum/sh...light=goodwill

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    Member of forum Sandgroper's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    Having read dozens of ads over the years, the common denominator is that people sell the customers for 3 cuts, so the average residental is worth $100 each.

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    Senior Member kakegc's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    Quote Originally Posted by Christine Wharton
    Just wondering if there is a rule of thumb method for valuing your business...
    I can understand that there is a (depreciated) value you can set on your gear, but what about the customers and goodwill side of things - a bit more intangible...
    Cheers
    Christine
    The franchises use a formula similar to this: the price of the cut, divided by the frequency of the cut, times by 20. I hope that makes sense?

    IE: $30 lawn cut every 3 weeks is worth $200.

    The indy guys in this state just times the price of the cut by 10. Thus the above customer would sell for $300 from an indy, except there's a drought on & it's very hard to sell lawn rounds at the moment

    Building & selling rounds has been a major part of our income. We've sold 4 lawn rounds in the last 5 years, the most recent in may this year. The guy got it for about 2/3 of what it was really worth because of the drought.

    Hope that helps!

  8. #8
    Member of forum Sandgroper's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    Quote Originally Posted by kakegc

    The indy guys in this state just times the price of the cut by 10. Thus the above customer would sell for $300 from an indy, except there's a drought on & it's very hard to sell lawn rounds at the moment

    Building & selling rounds has been a major part of our income.
    You get good money for customers in your state, it would be hard to sell your average 100 customers at @ $35 for $35,000 here , no wonder you buy and sell rounds.

    Around here its common to sell 20-30 customers ($2-$3000) at the end of winter, usually the furthest away, this gives you a little winter boost for your wallet and you quickly regain those in summer with the idea being you get the customers closer to home.

    Buying and selling rounds would be a lot of hard work thats for sure but it sounds like theres good money in it, not sure how you get around the no compete clauses.

  9. #9
    Member of forum Sandgroper's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    I cant edit posts on this site, but just wondering if i did my sums right,, is the average customer worth $200 or $300 there ? here is around $100 in most cases i believe.

  10. #10
    Senior Member kakegc's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    Quote Originally Posted by Sandgroper
    You get good money for customers in your state, it would be hard to sell your average 100 customers at @ $35 for $35,000 here , no wonder you buy and sell rounds.

    Around here its common to sell 20-30 customers ($2-$3000) at the end of winter, usually the furthest away, this gives you a little winter boost for your wallet and you quickly regain those in summer with the idea being you get the customers closer to home.

    Buying and selling rounds would be a lot of hard work thats for sure but it sounds like theres good money in it, not sure how you get around the no compete clauses.
    It's been a good little earner for us Sandgroper. The price of mowing is a bit cheaper here than elsewhere though, so 100 customers would get you more like $16,000-$17,000 if you can sell them.

    I usually sell about 60 for $10K. The way we do it is pure business, you can't let emotions get in the way if you're going to do it.

    Obviously the drought has put a hold on it for now, but my best effort to date was to turn $1,800 into $10K in ten months! Not forgetting that we were still earning $$$ by mowing it in that ten months.

    You have to pay capitol gains tax on your earnings, so I off set that by re-investing a percentage on either new equipment or buying more customers.

    We don't have a non-compete clause. The advice I've received is that they're actually illegal as they breach the Trade Practices (fair trading) Act I dunno how the franchises get away with having them in their contracts, maybe nobody polices it ??? Either way, I've been advised that they're not enforceable. What we do is to pledge not to contact the customers we've sold & refer any calls from those customers back to the guy who bought the round. It can get sticky though! We received 37 complaints from customers after selling a round that the guy who bought it was either not answering his phone/ not returning calls/failed to show/ failed to bill for work done (it was an insurance claim & the landlord was still waiting for the bill 2 months later)/ & not providing customers with his contact details. He did not answer any calls I made to him about it, nor did he return any msgs I left or sent. Go figure!

  11. #11
    Senior Member kakegc's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    Quote Originally Posted by Sandgroper
    I cant edit posts on this site, but just wondering if i did my sums right,, is the average customer worth $200 or $300 there ? here is around $100 in most cases i believe.
    They're all different mate, I've sold some for $600

  12. #12
    Member of forum Sandgroper's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    With regards to the no compete clause, folks i know just promise not to contact the customers they have sold like yourself.

    Theres no way i would sign something that i promise not to compete in the same business for two years or what ever,, if i wish to start mowing lawns in 6 months or whatever thats my business i reckon,,,your saying non compete forms are not enforcable anyway ? that interesting,,,,,,,

    Some people start up again in there wifes name to be careful,,,like jims mowing guys (just what i have heard ).

    Anyway hopefully the drought is over soon and you can get back into a bit more,,,,,,,,,oh and if you promise not to contact former customers ,,,what happens if they contact you ? lol take them back i reckon.

  13. #13
    member Christine Wharton's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    I'm not sure about the enforcability of the non-compete clause in a sales contract, but I reckon it's tied in with the goodwill in the handover to some extent. If you have agreed (verbally/in the contract) not to compete for a set time or in a set location, I reckon there should be a moral obligation even if there isn't a legally enforceable one.

  14. #14
    Senior Member kakegc's Avatar
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    Default Re: Selling Your Lawn Mowing Business

    I agree re the moral obligation Christine, but there are HUGE fines for entering into non compete clauses, even verbal ones!

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    Default Re: Selling Your Lawn Mowing Business

    Moral

    I knew of a contractor he would ring the people selling rounds in his area and said to them hey if u cant sell it i can take over the clients for you until you do so you dont lose them etc
    The contractor generally moving to a new job or lost interest etc
    so the contractor cant sell it gets the guy to take over still cant sell it offers it to the guy he says no and on many occasions the guy gets the round for free he then reworks the client base then puts it up for sale makes a killing


    Now is this just business or ** is there a moral for or against


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    Last edited by administrator; 08-11-2007 at 10:03 AM.

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