Buying a local business?

I know your a capable, well rounded arborist Tom.. Your tomthetreeman.

I just get vibes around the arborist community. The latest one has been; "You do mostly removals? Hmm." I say someone has to do it and I enjoy it. Plus the reasons in my last post.

I just thought it was time to defend the all purpose arborist. Total derail.
 
If you are only buying the name and phone number and customer list, you can have a business broker appraise the company based on their last 4-5 years of books. If they kept crappy books, their business value will show it. Sometimes you just have to decide what it is worth to YOU, regardless of what anyone else might think it is worth. 5 years ago I bought a company with a 12 year reputation, that was grossing 140K- 160K over its last 4 years. The appraiser said it was worth $75K without the equipment. I could only come up with $20K, so I offered it, and they took it. Phone was ringing the 1st day, and every day since. The same thing might happen to me when I want to sell the company someday, you never know.
 
I went thru this in the beginning of 2009, after making a big mistake in the beginning of 2007. I went to a lawyer and talked about what I wanted and what I "knew" about the business I wanted to purchase and he wrote up something for me to hand the seller. A few hundred dollars saved me thousands. I didn't buy because of so many issues, most of which were mentioned by people responding here. It is a dog eat dog world out there, like I am sure you know. I was naive and stupid to think some one was going to give me a deal. I would keep talking about it and don't jump into anything you don't feel really good about. Plus it seems like you do well enough alone, partners are tough.
 
Large companies like Davey, Savatree, Almstead, and Bartlett have really grown through purchasing companies. They generally require then following:

1) Non-compete

2) You are paid over a multi-year period based on customer retention. If 30% of the gross leaves you suffer the consequences...

3) The seller normally stays on to ensure clients don't leave and the transition is smooth.

4) They pay very little for tree work only accounts. They like PHC and renewable services.

I made this mistake in 2001. I bought a small local tree company. I locked the guy up in a non-compete, he took a municipal job. His clients didn't like calling his company and getting mine. He was small and had personal relationships with clients. I was larger, more expensive and more structured. His clients disappeared. His son also started his own business a couple years later.


Overall I wasted some coin... In 2005 I was approached by my main competitor to buy him out. I said no. He sold to another guy who sucked... I have the majority of his clients today.
 
I bought a guy's phone number for $1,000 a few years ago.. and I had to pay off his yellwo pages ad, which was under $100/ month for 6-9 months.. first job was $5,000, and that one customer has translated into over 20K in trees and snow over the years. Picked up enough other work to make it well worth the $1,000.

Funny thing is the guy said he had no customer list, which obvioulsy was a lie.. I AM guessing he sold that elsewhere, though I could be wrong...

So I'd start my offer at $1,000.. Get the customer list and send everyone a letter explaining the situtaion and then follow up with a phone call.. IF HE WATS TO SELL.. If the son is just looking for you to train him cause his Dad was old school.. forget that.. Why train the competition?
 
What I meant was-

What company hires a consultant to tell them how they are, or are not being safe? ANSI standards are available to anyone. How did you become such an expert on safety? Correct me if I'm wrong, but you are fairly new to the industry? What can you tell someone that they cant read from the Z?
 
Ok, great question. You are right, most companies can, if they have the time and resources, develop and write their own safety program, train their employees, and follow all the other necessary safety and regulatory issues that tree care companies have to follow in order to comply for their particular area. But, most companies (the small to mid-sized) are way to busy to effectively, or at all, do this as well as they should or want. Would you not agree that most owners are out either climbing or running a crew all day and then have to be in the office to do payroll and all the other things that come with running a business? What we are marketing ourselves to, are the companies that want to grow into larger multi crewed companies and need the properly documented safety program. As well as the companies who don't want to spend their time writing and implementing the necessary documentation that is required by OSHA. Following the laws and regulations are great, but having the documentation that you train and require your employees to do so is also required in some areas of tree work and in some states. We feel there is a need for this and that is who we are marketing ourselves too.

As for me, you are not wrong, I have been an arborist 6 years. But in that short time, I have obtained a Masters degree in Industrial Safety from South Dakota State University where I studied Aerial Rescue and safety for arborists under Dr. Ball. I have also been a certified arborist that entire time along with becoming a TCIA Certified Treecare Safety Professional and certified EHAP instructor and have recently become a Board Certified Master Arborist. The past two TCIA Expo's I have gave presentations on my aerial rescue research along with articles in the Tree Care Industry Magazine. Within the last 4 years, I have been with North American Training Solutions and Arboriculture Canada Training and Education learning and growing as an arborist and trainer from some of the best arborists out there.
I feel there is a great deal of information and experience that I can add to what information is already out there.

Thank you for the inquiry. I think you will agree that one of the bottom lines to any business is efficiency, and we can provide that to a company that is looking for it. Some tree business owners out there are arborists, plain and simple, and do not necessarily want to have to do everything that it takes to run a business. Very understandable. That is why I have an accountant, I'm not good at math. For that same reason, we are lending our expertise of understanding arborist safety.
I hope that answers your question!
Thanks again,
Sam

PS We will be in Pittsburg next week if you care to learn more (at the North American Training Solutions, Arboriculture Canada booth)
 
By the way it sounds, I wouldn't invest a dime.

The mere fact that there will be one less tree company will send some more calls your way. Sure, it would be difficult to measure the increase in calls... But, it would be one less competitor.

If the guy had a detailed list of work completed and contact info, then I'd say pay no more than 5% of gross sales.
 
We are going to discuss what we are going to do this winter. The two of us are becoming closer through him taking my class. I think, at this time, I am going to pass on buying, but at least try and get him to work for/with me starting next year. I agree with most of the statements here that purchasing his call list ect. would not be a wise investment. BUT, not doing anything would only make a stronger competitor, I think. He is motivated to becoming an 'Arborist' and providing quality tree care, so if I don't partner with him in some sort of way, he'll just become stronger and the many loyal customers that they have will only stay and benefit from him.
We'll see, but I like the possibility of the two of us working together to build a strong, quality business up here. Something this area needs badly...

Thanks again for all the input!
 
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