Buying a local business?

AspenArbo

AspenArbo

Location
Sioux Falls, SD
So I am interested in buying a local 'business' but have no idea how to value their worth. I live in a rural MN so the loyalty thing is huge with people. This guy has been doing tree trimming around here for years, so basically I'm interested in buying the name and clients. Other than that, they don't have more than a few thousand dollars in equipment (very low tech). I have been in the area providing quality tree care and most people hire me for diagnosis or more technical things, but when it comes to removal, they just call this other guy. Even if I have already been their arborist!
Anyway, the old man is retiring and his son is going to continue. The son has approached me wanting to work together (he wants to learn how to be a quality arborist).
I don't know their annual revenue, but it can't be more than $80,000, maybe even around $50,000.

Thoughts? Anything would be greatly appreciated.
Thanks,
Sam
 
I think about this stuff all the time daydreaming that some big company will decide to buy mine for lots of cash. Probably a long shot.

So the owner of this business is retiring and his son wants to take over but has little training? Can his son take over the business and run it at the same level? If not, you probably shouldn't buy it, just advertise your company and their clients will hopefully come to you.

There's a ton of ways to value a business. Will buying this business for say 40k give you a 5% or greater return on investment over the next 5 to 10 years? Would you have to borrow to finance the purchase?

Sounds like they may not have any good options and you could offer 10k for the phone number and possibly a decent employee. Maybe get the son to sign a non compete agreement so he doesn't simply learn from you then restart his business in a coupla years.

Hope that helps.
 
Good ideas. Thanks. My main concern kinda goes with your second paragraph. The old man is retiring and the son is going to be able to run that business better than the way it is now. If he doesn't learn it from me, he is going to try and learn it on his own. So perhaps what your saying there makes sense. Basically buy his phone number and have him work with me with a non-compete. I like that idea.
This is all very small. The other company is now just the old man and the son (tree cutting, no other services or skills).

Thanks,
Sam
 
My boss dealt with a similar situation when a local Arborist passed away. We confronted his mother about purchasing the building and had considered buying his book but decided not to.

Great move. We ended up getting about 3/4 of his customers anyway with a more aggressive advertising approach and his mom actually refers anyone that asks our way.

It sounds like you have more to lose rather than gain. I'd sink the money it would cost into advertising rather than a business that doesn't have much to offer other than clients
 
Similar thing here where a competitor was going out of business and offered to sell to me and i declined. We ended up getting all their business and referrals from them.

But, had i been able to buy their phone number etc for 5k or less, i would have. It may have also been advantageous to buy their equipment at a low price just to keep the yocal that bought it from starting up with no experience and underbidding me by 50% or more.

You could ask to view their books before making a decision. Maybe your estimate on annual sales is off. If they don't even have books, certainly don't be buying them.
 
That is a good point, because I'm sure they don't have books or anything like that. But my concern is the loyalty factor of the area where I live, and the demographic.
People know that he has been they guy to cut trees around here. They also know that I'm the 'tree guy' but somehow that only applies to advice. I can't tell how many times someone has asked me about their tree, then if I tell them to prune or remove the tree, they will tell that they will call this other guy to get him to do the work. Of course I give them a bid to do the work, but it doesn't seem to matter. They call and/or hire him anyway. Its gone my way a few times, but mostly his, and his prices aren't much less than mine either from what I've found out.
Because of this, I don't think sheer advertising will work to get most of the clients. There is a lot of word of mouth and advertising is not very effective.

Thanks for the advice fella's,
Sam
 
Sounds like your bid went in first and he'd come along saying he'd beat it. Too easy.

Now his son wants to be trained and paid, possibly learning how to burn you.

They're called the competition for a reason. It gets real when someone can't feed their family or make the mortgage, then you'd wish you just tended your own store as well as you can. If your good you'll catch on and be busier than you can handle. Have faith. Market hard and give each customer 3 or 4 cards.
 
Sounds like you have your mind made up.

This may be getting a bit off topic but i see many parallels between your situation and my business. Have you through marketing and work practices portrayed yourself as a consulting arborist and less of a commercial arborist? It would seem so from the title of your business. I have a similar situation where i tried to position myself as the guy who knows the most about trees and sometimes people automatically assume that i don't do removals. That's why after our name and logo i put "tree removal- insect and disease control - tree and shrub pruning" It's now clear to most in my market that we do it all. Getting a no nonsense truck and chipper will also let them know that.

I don't know your business or market at all, i'm just looking at your logo and name. But maybe if you want to get more into removals and the bread and butter of commercial arboriculture, you need to rebrand yourself. That logo would look awesome on the side of a white arbortech truck body. Hell, i'll switch logos with you, i like yours better.
 
[ QUOTE ]
Sounds like your bid went in first and he'd come along saying he'd beat it. Too easy.

Now his son wants to be trained and paid, possibly learning how to burn you.

They're called the competition for a reason. It gets real when someone can't feed their family or make the mortgage, then you'd wish you just tended your own store as well as you can. If your good you'll catch on and be busier than you can handle. Have faith. Market hard and give each customer 3 or 4 cards.

[/ QUOTE ]

Yup. I agree 100%.

Sell your beliefs, and believe in what you do, and you will do well.

-Tom
 
[ QUOTE ]
I have a similar situation where i tried to position myself as the guy who knows the most about trees and sometimes people automatically assume that i don't do removals. That's why after our name and logo i put "tree removal- insect and disease control - tree and shrub pruning" It's now clear to most in my market that we do it all. Getting a no nonsense truck and chipper will also let them know that.

[/ QUOTE ]

Tree removal is in general an unsustainable market sold to people who fear or dislike trees. Tree preservation is so much more rewarding for all involved. If having a big truck and chipper and being 'the big removal guy' is what people in your area think makes a professional tree service, then I would loathe to live where you do. Warick RI ain't the end of the rainbow, but at least I can sell tree preservation without feeling inadequate. Although it seems odd, my competition ARE the big removal companies... I have to educate the public to stay ahead of them!

-Tom
 
[ QUOTE ]


Tree removal is in general an unsustainable market sold to people who fear or dislike trees. Tree preservation is so much more rewarding for all involved. If having a big truck and chipper and being 'the big removal guy' is what people in your area think makes a professional tree service, then I would loathe to live where you do. Warick RI ain't the end of the rainbow, but at least I can sell tree preservation without feeling inadequate. Although it seems odd, my competition ARE the big removal companies... I have to educate the public to stay ahead of them!

-Tom

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Don't be so quick to brand me Tom.

You don't know me, my business or my market and your assessment of me is way off. It would offend me to be known as "the big removal guy" and nothing more.
 
Thanks guys! I will ponder your thoughts and see where it takes me.

Nuthin' - I'm glad you like the logo. I have it being vague since I also do safety consulting... the way I advertise around here is a little different (like you described) so they know. Its just different around here.
Thanks!

Sam
 
Seems like if the son got trained the old man could sway the clients to go with the son regardless if you buy his client list.They are hiring old man because they like him and are loyal to him.If you purchase his client list that doesnt automatically mean they will go with you.No books-no way.You can generate 80 grand of your own just be patient,just sounds like a bad deal.I had a guy hear trying to sale me his client list but he wanted to 20 k up front and he was gonna answer the phone and I would give him a percentage.hed been in buisness for 25 years and wasnt grossing as much as us.I just didnt like the fact that he wanted to control the phone so I said no way.
 
[ QUOTE ]
[ QUOTE ]


Tree removal is in general an unsustainable market sold to people who fear or dislike trees. Tree preservation is so much more rewarding for all involved. If having a big truck and chipper and being 'the big removal guy' is what people in your area think makes a professional tree service, then I would loathe to live where you do. Warick RI ain't the end of the rainbow, but at least I can sell tree preservation without feeling inadequate. Although it seems odd, my competition ARE the big removal companies... I have to educate the public to stay ahead of them!

-Tom

[/ QUOTE ]

Don't be so quick to brand me Tom.

You don't know me, my business or my market and your assessment of me is way off. It would offend me to be known as "the big removal guy" and nothing more.

[/ QUOTE ]

My post wasn't intended as a slight toward you, I was basically speculating about the average client in your area from your post. Sorry, man, my post came off totally wrong. I pretty much always appreciate your input to the forum. Apologies,

-Tom
 
Thanks for clearing that up tom. I totally took it as a slight. Therin lies the problem with forums!

i know what you are talking about and your frustrations are clear and shared by myself and likely everyone else who participates in the buzz.

way easier to be friends than enemies.

I'd like to discuss more what arborists do to position themselves in a market and/or how they try to change the market to better accept tree preservation vs. tree removal.
 
Whoa whoa whoa whoa back that thing up.

Tree removal and tree preservation are part of the same thing. Just correcting poor species selection, placement, and maintenance. The main part of preservation is education. What better way to explain proper tree , proper place than to cut down the wrong one.

If we leave removals to untrained hacks we'd miss alot of exercise, fun and income. Mainly though our collective public image will continue to be tied to these hacks, lowering the perception of the trade.

And don't think the public doesn't ask the hacks for tree care advice while they're onsite. Their answer "uhh green side up?"
 
Bo, I just meant tree removal as a business model is unsustainable. Many companies specialize in tree removal, and by investing in/going down this path, they wind up needing to remove healthy or viable trees to continue to pay for all of the tree removal equipment they accumulate, and they eventually do less and less tree care. There are at least three companies in RI that this has happened to/is happening to.

To your point, yes, I remove dead/hazard/improperly sited/volunteer/invasive trees all the time, often to make room or improve conditions for existing viable trees.

-Tom
 
Based on your website, I couldn't tell whether you are a consulting arborist, contract climber, a company that provides contract climbing or a tree care/service company? I would be hesitant if I were a homeowner too.

Also, it might help to make your credentials and experience visible, but not SO visible; especially in a rural town I would think. Good luck,

jp
grin.gif
 
Thanks treesandsurf, as it happens I am in the middle of changing up my website. After I had it created I saw the issue so I'm working on having it changed. But at the same time I am all of those things you thought. I do safety consulting, contract climbing, provide contract climbers and do local commercial tree care so its hard to have one website and not have a little confusion. Hopefully, with the changes, it will be more clear to the public.
Thanks for the input!

Sam
 
Boreality, you've said it well. I was thinking that too but i was too busy getting steamed at Tom.

There's nothing better to solidify your image than showing up to quote a 3k removal job and instead selling a $450 pruning job. People get really impressed and that word spreads.

I still can't figure out how to deal with the hacks. No matter how much effort i put into education, people's first reaction is still to cut a tree down and that's solidified by any number of dudes lining up to do it for next to nothing.

In reading about New Jersey's licensing laws, are there less hacks in NJ? I worked there for a while 10 years ago and there was no hack shortage then.
 
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