Buying into a business

[powerkleen]

I had an offer from a pressure cleaning business. The owner says that the price includes the equipment and accounts. He also said that he can show the books for the last 2 yrs with 75-100k.

Is this worth $25k or is it overpriced.

Thanks,

Anthony

 

[Ronniels]

The equipment may hold up to some of the cash.
But what you need to know is what is their reputation.
Are the accounts happy with the service they are getting.
Does the company have a good or bad name around town already?

With the same 25k you can get yourself started and on a good run.
But there is always a plus if the current owner has already built a good and solid reputation.
The same you could build with time...or you can buy the time they have already spent...

Just some thoughts...

 

[Mike Hughes]

Other thoughts:

1) What is his pricing like.........is he working for dirt?? If so, stay away

2) If involved in wood care.......has he been using quality products?? If not, could be buying into a world of headaches

3) How much money is his equipment really worth? Some people have equipment that I wouldnt pay ten dollars for.

4) Why is he selling?

5) If you dont buy it........who will? Could be generating a new competitor........

6) How are you going to pay for this? Is the seller willing to finance some or all of it? I have bought two businesses in the last four years..........both deals included some seller financing. If it is cash he is looking for, might be less desireable for you.

7) If it is commercial work......does he have contracts for the accounts? If not, they are somewhat worthless, for there is no guarantee that they will stay with you.



If all of these thoughts and questions are making you think twice, turn it down for now, and maybe he will not be able to sell it and come down on his price............

Like was said above, you could do a heck of alot on your own for $25,000.

 

[David Saulque]

One area that I would look into is what he has spent in the past two years to promote this business. What field has he plowed for you? I am speaking of Yellow Pages-print ads, web site, trade groups. All of these items you will find that you must continue or start up. The more he has started the better for you.

Good Luck

David

 

[Dan Flynn]

All great comments so far. But don't get to freaky if he has no contracts. Most contracts are only good for a year anyway, if that. Like Mike said. Check his rep out. He should be willing to take you to jobs and meet people. You really have to look at the whole picture.

I sold my business , 99% had no contracts. Most of the money was commercial, he wasn't even really interested in the residential. He has done some of the larger call back from my old residential customers. He was interested in the consistant weekly money from the commercial.

The guy I sold it to. Has built the company way up in a year with his new energy. But I sold him a great reputation and a foot in the door of over 100 other opportunities with a big company. I trained him how, who and what to say to the right people. I showed him how to kiss butt and drink coffee with the right people. He worked with me for a few weeks. He had his own pressure washing business as well, one or two years old.

At first I introduce him as my partner, telling people he may be taking over while I worked on other projects. He has now told all his contacts he bought me out and he is on his own.

I got money down and gave him a year off before his first payment. Got 6 months worth off payments from him last week. I am excited for him and I am glad he has taking a great opportunity and progressed it.

This is a good story, I am sure there are many just the opposite. Just giving you some idea's to think about. This was my experience. We both ran into the right person at the right time. I sold him something good, and he was a good choice for me. He has taken the company up and not down. Which means he has the money to pay me off. This whole deal went through lawyers, with a signed contract.

Good Luck

 

[Walt Graner]

Looks like everyone has given you some good stuff here. The main things I would look at would be 1. pricing, 2. quality of work (talk to clients) 3. reputation.

Do your homework & use an attorney and good luck

 

[Shawn George]

Not sure of the exact procedures, but you probably want to find out if the company is currently involved in, or has a past of lawsuits, or other litigation.

Also check out if there are leins on any of the equipment.