Buying accounts?

[bruces]

I'm just starting out part time & working my nine to five full time.
I've come across a fellow who wants to sell . He has about 58 mowing accounts, most residential, generating 39,000 per year . Some are biweekly and others are weekly.

He wants 42,000 with truck & equip or 30,000 for accounts. I don't have a good list of equipment yet, but I probably have equipment to handle the business now.

Is there a rule of thumb for what accounts should be worth?

Percentage of gross, etc?

Any assistance will be appreciated, especially from anyone who has had any experience buying or selling accounts.:confused:

[TotalLawn]

IMAO:

WAY, WAY, WAY, WAY to much!!!!

I have made half that in 3 months (new biz) and didn't buy crap from anyone.

Don't walk, RUN the other way.

[Eric ELM]

Here are a few threads on the same topic that may help you.
http://www.vbulletinhosting.com/customers/lawnsite/search.php?s=&action=showresults&searchid=13094&sortby=lastpost&sortorder=descending

[GreenQuest Lawn]

Unless your desperate for accts. I would advise against it. Sounds like he is trying to make a years pay with no work.

I guess I am just really against this idea of buying and selling accts. I think the customer has the right to decied whether or not to switch LC's.

Ask to check them out, then visit them on your own tell them (the customers) that Jo Blow is giving up the Lawn care and trying to make a quick buck off their account, get the accounts for free and keep the 39 grand.

[Lawnshark]

I would go with the other guys and say STAY AWAY!
If you know the guy is going out of business ask why.
Is his work in a bad area?
Are the customers bad?
You know what I am getting at.
Hope this helps.

[Bob_McNaughton]

58 accounts and only 39k a year? These must be his scrub yards. I'd say forget it.

[lawnboy82]

what is the average cut? cause 39K for 58 lawns for the full season, cut, leaves? leaves are usually a nice chunk of money, those and the spring cleanup. so lets see if the lawns are even worth the money, forget the investment, but if the lawns are even proffitable.

[bruces]

Thanks,
The guy is supposed to be retiring, but it does seem extremely high. When I look at it on an average per account per year, its only $672 per account. If each account gets 30 cuts, that's 22.40 per cut. Defininitely not prime work.

Seems like the smart way to go is to spend money on advertising and keep building from the ground up with decent accounts.

[SLS]

Bruces:

Something else to think about too....

...is there any guarantee that the customers will keep you as their lawn service?

It is the clients choice.

A pal of mine bought a lawn service from a guy who retired after 13 years in the biz with 47 accounts, 1 old Ford E250 van and 22x8 trailer, 1 OLD Dixie Chopper, 2 rough Scag WB's and various blowers, trimmers. I looked at the man's books going back over the last 5 years and it averaged about 60k yearly profit. My friend bought it for 35k. The van was more trouble than it was worth so he got $600 trade-in and got a new truck.

The problem was that about 10 clients dropped him before he even started their service...roughly a 18% to20% loss of customer base that he PAID for. :(

I don't believe there is any way a seller can guarantee that his customers will keep you around.

I won't be buying anyones 'customer list' anytime soon. ;)

[Premo Services]

He has about 58 mowing accounts, most residential, generating 39,000 per year . [bruces]

:mad: BAD IDEA :mad:
When I started out, I was putting flyers out and was not getting many responses. I decided that I should buy an established business. :( WHAT A MISTAKE!!!!!! :(
The lco was about to loose most of the accounts, because he used a large rider on all the lawns. The lawns were tore up,rutted badly.I now believe that the customers thought that I would do the same thing that he done. I could not get to look at accounts until I purchased the business from him. On the day I bought the business we drove to the accounts, and 6 customers said they was going to switch companies and they would find someone else.
The bank, and small business association drug their feet on the loan until it was april, grass was starting to grow pretty good. Three of the accounts he had not done a fall cleanup, and customers were upset that the leaves would kill the lawns. I still have some of the original customers, but through quality work, referrals it has grown with good paying accounts, and the proper money for doing the lawn maintence. I cannot to this day figure out how the he!! he priced the work. If the accounts are priced that low, you will be working for nothing, plus, you will probally need to have help at first, then you will be working for less than nothing!
IMO Don`t buy the accounts, stay at your job, make some flyers and put them out. When you get some customers, you can get a god price for the cutting, and do quality work, then you will get referrals for more better customers.
GOOD LUCK

[lawn and stump]

I have been thinking of letting my lead guy take over my business
I have a hundred lawns within 3-4 miles of the shop that produce $50-90a man hr. they are all creme. I have weeded out the chaff over the last 20 yrs, anybody that didn't treat my guys right was disposed of. they are all set up on Clip software and all services are prepriced and schedualed. He has been onsite of all these propertys and knows many of the cust.he and a helper could
gross 110,000-120,000 the first year working mar1-dec15 taking winters off. what would you think thats worth with no equiptment?

[dan deutekom]

When you buy accounts all you a re really buying is good will. You should see what you are buying! If they don't let you see don't buy. You can sign a confidientiality contract with them so that you can see the accounts. I wouldn,t pay any more than about 25% of the years value of them or you work all year for nothing and I would also have a clause that allows for clients dropping thier contract so that these don't need to be paid for. Get legal counsel because when you buy the accounts you might also end up with the liabilities. This was my 2 cents worth

[kris]

Said it before and will say it again...The guy is out to lunch or expecting a sucker to come along.... Would only give it a second look at 10% of contract value...And ...that's a big maybe , with all kinds of clauses in the deal. Not all guys will agree and think that there contracts are worth big bucks...got a couple pain in the a$$ , not great money makers, every 10 day cut, I would like to get rid of..hmm... any takers?;)

[Bassman]

I seriously thought about buying accounts to jump start my new lawn care business when starting out but after browsing thru horror stories on this web site decided against it. Seems that for one reason or another, these type deals usually go very bad. Build your own customer base gradually through advertising. Then it takes off on it's own through word of mouth. You have the discretion of taking on the customers that you have personally met and get good vibes from at the price you have personally set. There will be "bad eggs" in the mix that you will figure out as time goes by that you will want to "weed out", and replace with better customers because we can't always see in advance who will be a good client. However, buying and taking on another operators accounts blind is a real walk in the dark.
Best of luck to you.

[kris]

Originally posted by lawn and stump
I have been thinking of letting my lead guy take over my business
I have a hundred lawns within 3-4 miles of the shop that produce $50-90a man hr. they are all creme. gross 110,000-120,000 the first year working mar1-dec15 taking winters off. what would you think thats worth with no equiptment?

So let me get this straight before I answer... 100 lawns ... 110kgross...probably about 40 cuts per season???( basing on your March to Dec)...That works out to around $27.00 per cut?per place.... if these figures are even close, then... 3 houses per hour to make the gross/per man hour your claiming to make???

[lawn and stump]

Kris- my lawns are very tightly routed - the gross figure is on the conservitive side- most lawns are 27 cuts @35 and 1 guy with a
61 scag hydro can cut 2-3 per hr - some are next to each other and no more than 5 min apart. spring cleanups-mulching-bushes-fall cleanups all all prepriced with a history of time spent and charges dating back to 1992. with my Clip program he would just
print out the route sheet for the day and go do the work. each job has been screened to be sure there are money losers based
on my higher overhead than a owner operator with a helper would have.

[brentsawyer]

Bought 10 this year from a guy going back to school full time. Three were his neighbors and I gained two others the first day I pulled up. From them I have three in a row and two directly across the street. The others are all within a half mile of each other. I paid alot for them '4 cuts but I now have 12 new happy customers. Secret was, introduce yourself to them with previous owner on a Sunday night and take as long as need be to make them feel happy and tell them additional services that you offer. Also letting them know that you know they're not obligated to you and you will do your absolute best to retain them. Also letting them know that what has happened is a business buyout, people like honesty and will respect you for this.

[Albemarle Lawn]

I have heard the going rate around here is to pay for 2-3 cuttings for mowing accounts.

So, 58 accts x $23.00 avg X 2= $2668, or 58 x $23 avg x 3 = $4002.00 for the accounts.

On the high side, he should get $12000.00 for equipt if it is really worth that + $4000.00 accounts = $16,000.00.

On the low side, he should get $2500.00 for accounts and maybe $8,000 for equiptment, or $10,500.00.


If you really want his business, offer him $15,000 firm, and if he doesn't accept that you can walk away without any regrets.

If you sort-of want it, offer him $12,500.

If you barely want it, offer him $10,000.

If you don't want it, offer him $0.

Ken

[Ric]

I bought Two different Companies out. One with very good results. The other I did OK.

The first I bought 12 acc in a upper middle class nieghborhood and the best 1993 20hp walker ever made (3 engines and still kicken). Today 75% of my business is in this nieghborhood. I paid 3 month income sweat. and top dollar for the equip.

The second was 24 cheap acc I paid 1.5 months sweat( I cut he collected) and have only two acc left. I bought them in late Aug and rode them over the winter then raised the price to a reasonable rates at the start of rainy season. They dropped like flies. I was happy cause I made money, but couldn't make money if I didn't raise prices.

Bottom line is Advertisement, chasing leads, and estimates are expensive. To buy acc means you have instant income. A customer base to build from in nieghborhoods that you were not in before. Yes you will lose 20 to 25 % of the Acc. But you also can build from this base. LOL

[LAWNGODFATHER]

About $20 a cut. Like Totallawn said RUN. Don't walk.

It's not even worth looking at.

The only way it's even worth looking at is if they are all on one street in a row. Then you will still have to raise their prices and loose half or more.

If he were to actualy sell them he might get less than $3,000 for the accounts and don't want the equipment no matter what it is.

[Dochere]

Wow, old thread. If it matters anymore, I am with LGF though, don't do it. Remember that if you buy anyone else's accounts you buy everything that comes with them, and there is a good chance there is a reason this person is selling. and gross 39k over a year with 58 permanents? Doesn't sound very good to me...

[smburgess]

I'm with LAWNGODFATHER on this one. Couldn't have said it better myself!

[ron]

Save your self alot of cash get your equipment and hit the pavement there are alot of people with yards. JUST DO IT////

[strickdad]

see the post "first real burn" this should help you on buying accounts

[bruces]

Wow, I posted this almost 4 months ago.

I took the advice here and didn't pursue this.

I've done some advertising, and with what I've picked up I should have a base of about 15,000 to start next year with.

I'll take what I might have spent on buying accounts and invest in better equipment and advertising to get the accounts I want in the area I want to work in.

[Dochere]

Well bruces, I am glad to see the advice given in this forum is well spent. Hope that you made the right decision, but based on the facts I think you have. Good luck next year, and we are always here to help.

[LAWNGODFATHER]

$15 grand will buy you a huge amount of advertising. Lots better customers than the ones you could have paid for.

Pick and choose and your set.