Purchasing an existing lawn care business can seem very tempting for some who want to hit the ground running. There are upsides to it but there are a lot of downsides which you sometimes can’t see at face value. Take for instance this new member of the Gopher Lawn Care Business Forum. He shared with us his story of what happened when he bought a lawn care business.
He wrote “I purchased an existing small business from friends that I have been working with for about 5 years now.
I don’t make any claims of knowing everything but from my experience, which wasn’t the best, I would say look into the business VERY closely. Get ALL of the financial information from the past couple of years, and if you want to keep your friends don’t go into business with them. If you do get into a partnership, one of the partners needs to have a controlling percentage, like 51%. Otherwise you end up with arguments that can’t be resolved because each partner has an equal say in the decisions. It’s a BAD situation to be in especially if it’s a friend!
When I was looking at buying into this business it had contracts with real estate investors, dealerships, etc. The financial situation seemed rosy. What I wasn’t told was they had lost those contracts shortly before I purchased 50% of the business. I ended up paying WAY to much for 5 residential accounts. We now have over 30 residential and several commercial accounts. I now fully own the business and things are finally progressing.”
I am happy he was able to point this pitfall out. Sometimes we go into situations and see what we want to see. If we are all excited about getting into a business we will turn a blind eye to things that may seem shaky. In this instance, it would be very difficult to know with any certainty that the contracts he was presented at the time he was reviewing his purchase were indeed valid. Maybe he should have called each account or visited with each customer to see how the relationships were. Barring that, he would have had no way of knowing.
Don’t get taken for a ride when you look to buy an existing company, keep this story in the back of your head and you will be better off.