How do you calculate how much to sell a gardening business for?

Hi Ben

I am at an age where I have wondered if my round will have a transferable value when the time comes and if so how much. My round is mostly lawn mowing and hedge trimming with approx 60 regular clients and similar turnover to yourself. I find that with this amount of clients I am kept going for most of the year.

The work does not require a great deal of skill but it is necessary to be conscientious.

If I was out of work, made redundant etc with limited options and saw that I could earn £24,000 a year for the price of a mower, blower, strimmer, van and cutters +£1000 for the round book (good will) then I think I may be interested.

I would expect to see past sets of accounts and establish for myself the proven worth of the the business.
But yes, I think at least a £1000.

Now i must wait and see who agrees, disagrees or thinks I am barking mad.

I think people will always be (or should be) very cautious when considering the purchase of someone else’s accounts.

One assumes that you bank and account for all monies you receive from your clients? If you don’t it would be even harder to justify your true income.

An account (each client) is only worth at max. 2 times the price of an average visit.

Unfortunately they are never worth what the person is selling them for and there are no guarantees that the client will stay with the new purchaser.

Another factor a potential purchaser would be thinking is what if your aren’t charging a sufficient price for each client visit – It isn’t gong to make it easy for someone to profit from these accounts as any price increase wouldn’t be prudent the day someone just took over the round!

Lets face it why spend £1,000’s to purchase clients when the same money could be spent on advertising and possibly pick up a lot more profitable clients?

Now if you had clients on an annual contract and or some nice commercial contracts then the business as a going concern would be of more interest particularly if you could show scope for improvement on income etc.

Personally at the moment, I think due to your lack of trading history and the type of clients that you have you would be better off selling the equipment at a premium to another local gardener and throwing in the clients for free. Failing that there is always Ebay.

Replies

GORDON September 18, 2009 at 9:40pm

Hi Ben

I am at an age where I have wondered if my round will have a transferable value when the time comes and if so how much. My round is mostly lawn mowing and hedge trimming with approx 60 regular clients and similar turnover to yourself. I find that with this amount of clients I am kept going for most of the year.

The work does not require a great deal of skill but it is necessary to be conscientious.

If I was out of work, made redundant etc with limited options and saw that I could earn £24,000 a year for the price of a mower, blower, strimmer, van and cutters +£1000 for the round book (good will) then I think I may be interested.

I would expect to see past sets of accounts and establish for myself the proven worth of the the business.
But yes, I think at least a £1000.

Now i must wait and see who agrees, disagrees or thinks I am barking mad.
Lawncare-4u.co.uk September 18, 2009 at 11:39pm

£2000 minimum
my mate reckons £5000
Graeme @ BGS September 19, 2009 at 3:54pm

I think people will always be (or should be) very cautious when considering the purchase of someone else’s accounts.

One assumes that you bank and account for all monies you receive from your clients? If you don’t it would be even harder to justify your true income.

An account (each client) is only worth at max. 2 times the price of an average visit.

Unfortunately they are never worth what the person is selling them for and there are no guarantees that the client will stay with the new purchaser.

Another factor a potential purchaser would be thinking is what if your aren’t charging a sufficient price for each client visit – It isn’t gong to make it easy for someone to profit from these accounts as any price increase wouldn’t be prudent the day someone just took over the round!

Lets face it why spend £1,000’s to purchase clients when the same money could be spent on advertising and possibly pick up a lot more profitable clients?

Now if you had clients on an annual contract and or some nice commercial contracts then the business as a going concern would be of more interest particularly if you could show scope for improvement on income etc.

Personally at the moment, I think due to your lack of trading history and the type of clients that you have you would be better off selling the equipment at a premium to another local gardener and throwing in the clients for free. Failing that there is always Ebay.
Neil Petrie BSc Landscape Mgt September 19, 2009 at 5:21pm

I'd agree with Graeme regarding the 2x price per visit for all of your customers. So if, for simplicity, they are all £30/visit and you have 60 of them. 30x2x60 = In theory you could probably sell for £1200. I'd think the potential buyer would want to work the round with you for a month or so and go over a few other details with you too.