Mike Andes analyzes a $294,000 lawn care business in Boise and calls it overpriced. With $180,000 in annual revenue and roughly 90 customers, the seller is asking $2,000 per customer. Andes won't pay more than $500 per customer, since his own acquisition cost runs under $100.
About $294,000.
About $60,000.
$2,000 per client per year.
Around 90 clients.
About $180,000 per year.
This lawn care business in Boise, Idaho, is for sale for almost $300,000. I think it's massively overpriced because they almost have a 2x multiple on revenue as the cost of the business, not profit. A 2x multiple on revenue for a lawn care business. Now, if you assume that they're making $2,000 of revenue per client per year, that would mean they're doing around 90 clients right now in order to get about $180,000 of annual revenue. Now, if I take the equipment out of the asking price, so $60,000 equipment out of the $294,000 they're asking, it's about $230,000 that they're charging for the contacts, the contracts, and the business itself. That means I'm paying about $2,000 per customer because if they're only having 90 customers per year, I'm paying $2,000 per customer. I don't want to pay more than $500 per customer in an acquisition knowing that my customer acquisition cost is less than $100. If I go out and just advertise on Google and Facebook.
