PDA

View Full Version : Selling a lawn route and don't know what to do


lawnbuzz
01-16-2010, 08:30 PM
Hey all,

So I'm 24 years old, and looking to sell a lawn route that I have had through high school and college. I pretty much focused on grass cutting, but also did some bush trimmings as well as leaf cleanup. I have 35 weekly accounts, where I'm charging an average price of $30 per yard. My equipment is also very limited, as I was using a 5x8 trailer, Gravely ZT1734 mower, Stihl FS-90R trimmer and a Stihl BG-55 hand blower. I would actually like to hold onto my blower and trimmer as they are the only ones that I have.

Is it worth selling the route? There is a guy I have talked to who is interested in purchasing it, and I've offered him roughly one month's gross. Although a deal hasn't been made yet, I talked with him about maybe meeting him next weekend to introduce him to my customers, but now I'm starting to think I've jumped into this too fast with too little knowledge. Any suggestions or resources I should look into before moving forward with this decision?

Bob_n_weave
01-16-2010, 09:01 PM
Do not introduce him too your Clients until he has given you a good faith deposit. If he is a dirt bag he will blow you off after meeting them.

Draw up a contract, hand written is ok stating the agreement,deposit, and when payment in full is due by.

That way your covered IF he defaults.

New2TheGreenIndustry
01-16-2010, 09:16 PM
So what is the going rate for accounts. The guy I work for bought his accounts for 7 months of income. He just sold about 80 accounts at 7 months income as well.

MikeKle
01-16-2010, 09:25 PM
You are selling your accounts for one months gross!! The average for this when selling a business is more like the gross for 1.5 years!! So you could be getting much more!

I think you should hold on to your business, if you are bringing in around $1000. week, why sell it, you are making plenty enough to get new equipment, Plus you will probably get more customers this upcoming season and the next, etc. So if yu keep doing quality work, your business should keep growing. Youve obviously done good work since you have kept the 35 customers you have now! I think it is a major mistake to sell it now, but if you do, at least get 1.5 yrs of gross for the sale price, and have a lawyer draw up the paperwork, you should be getting around $50-$60K for your business easily!!

dnc19694339
01-16-2010, 09:25 PM
Do not introduce him too your Clients until he has given you a good faith deposit. If he is a dirt bag he will blow you off after meeting them.

Draw up a contract, hand written is ok stating the agreement,deposit, and when payment in full is due by.

That way your covered IF he defaults.

I agree with bobnweave. I have bought out other companies and have never paid more than 3 months gross. Usually less than that for accounts only. These were companies i bought for $11k, $6k, and $9k, so fairly small companies.

Mimowerman
01-16-2010, 09:25 PM
I had a business dealing about three years ago very similar to the one you are describing. We drew up a contract, stating all the terms, and I wrote the check.
3-6 weeks of revenue is I would feel comfortable paying for accounts, with 25% down , and the rest in three payments over the first few months or even season of service. You should not disclose your list until you have something signed...never know now adays . But once the paper is signed you should both write letters or even introduce him to your customers.

Pm if you have any specific questions I'd be more than happy to share more information just not publicly.

lsylvain
01-16-2010, 09:41 PM
I have purchased 3 sets of accounts. Price wise if you have good long standing accounts you should get at least 3 months gross plus your equip. If your accounts are highly profitable I paid 6 months revenues for 43 accounts but if gave me 30 lawns in 1 subdivision. I also paid 1 months for some crap accounts about a year ago and of those I only have 2 left.

Every time I have bought accounts we worked the deal the same way. I took over service and for the first month I serviced the accounts but the seller was doing the billing and kept all the money. The seller sent letters to all the clients and called the "big" important ones to let them know about the sale. We also sent them letters welcoming them bla bla bla, gave them info about us etc.

The first sale I lost 1 account right out the gate out of 36, just a guy that promised another lawn guy that he would use him.

The 2nd set I lost 3 right out the gate out of 43, 1 of them was a house that was for sale and sold the first month the other 2 were a Father Daughter combo and weird people.

The 3rd set was 12 accounts that I mearly serviced for one month for free. Didn't loose any right out the gate, but I ended up getting rid of all of them except 2 actual accounts for various reason.

As far as working out the deal, just do it simple. Don't really listen to much to all the guys who have read to many business books about how to sell a business. I always just looked somewhere else when I came accross a guy who wanted me to jump through 100 hoops. Just work out the non specifics. ie 10 accounts in this side of town 3 over here. Total this much a month/cut it takes this many hours. If the guy it interested you sit down he gives you the money and you give him the business. No need to take him around to all the accounts. If he can't use mapquest to find them my god. Treat it like a business deal. When verzon buys out another company the ceo doesn't come to your house with the other ceo do they? No you get a letter that says welcome, you are now a verizon customer, go to sprint if you don't like it.

Another thing is the non-compete. If the guy wants to to sign a non-compete only sign it for those accounts that he is actually buying not a general, non-compete. You may want to get back into the business later down the road.

Who cares if the guy tries to steal your accounts, do you know how many fliers people get every day from other LCO's trying to get your accounts. If the guy gets some of your accounts you would have lost them anyway to the next guy that knocked on the door, because they were unhappy with your service. For example I do 7 houses on one dead end street. I have been trying to get the last 3 for 2 years offering to nearly do them for free and they will not switch. I know they are paying at least $20.00 a month more than I can charge and I have the best looking lawns on the street. People just don't like change.

Anyway, I hope this kinda helps.

MikeKle
01-16-2010, 10:06 PM
Geez, you all need to move to KY and sell a business! It is pretty much the norm to get 1.5 years of gross for any type of business here! A friend of mine that sold his lawn biz back around 8 years ago, got 1.5yrs plus the money for all the equipment, trucks, tools, etc., as EVERYTHING went in the sale! If you all are only getting around 3-8 months gross, that is NUTS!! Maybe it is a regional thing though?

topsites
01-16-2010, 10:35 PM
Probably the first time I will agree with someone buying or selling accounts,
the only reason being the length of time these accounts have been maintained.

As for what they're worth, hard to say but would you be willing to take 10% of annual gross?
Because that's still an awful lot of cash, $30 x 35 assuming a puny 10 cuts a season still lands you a cool 10 grand.
Now whether that 10g is the same figure you came up with, that I couldn't tell you.

But I can tell you they're not worth a whole lot more, in terms of advertising the equalizer here
is if someone spends 10 or 20 grand on advertising they can get as many customers, I would think.
On the other hand if the person buying the accounts wants to pay more, I'm done arguing.

As for you not being sure, the only thing to not be sure about is whether you want to get out, am I correct?
That you have to decide, at least I can't help you but if it's just the price of the accounts I wouldn't fret too
long over 10 thousand dollars if it were my customer base, I realize you don't want to sell yourself short but...

Oh, cash deal, no payments, anyone who thinks they can take on 35 accounts
also has a large enough business to hand me the check already.

Now I sure hope I didn't start something.

topsites
01-16-2010, 10:46 PM
I did want to add...

I would want to screen the guy to make sure he's straight and good, I don't know what to tell you but
I wouldn't want to sell my customers to someone giving me the bad vibes so to speak.

Because my customers trust me, so I would want to feel good about it.

Mahoney3223
01-17-2010, 12:29 AM
I believe the average for MOWING accounts is 6-8 weeks revenue because the turnover is really high. I've bought out two businesses (whole businesses accts and equipt) and I paid 10 weeks for the one (first time i expanded and i overpaid) and the second one I paid three weeks revenue for and it worked out really well...good luck and also if you making say $1000.00 a week I would try for at least $3500.00

lawnbuzz
01-17-2010, 04:23 AM
Thanks a lot everyone for the great advice! Reason for wanting to sell the business was because I was getting tired of doing the same type of work everyday and every year from April to November. Being in my 20's, I was thinking of trying my hand at being an actor in New York City, as a friend of mine has been letting me stay at his place for free since November to try things out. But I have no job here, finding one is hard, acting is not really a great career unless you get lucky, and as the new year begins, I look at having this business that is still doing rather well during a recession to be something too valuable to get rid of at this point in time.

Based on many of your posts, I feel that my offer of one months gross is way too cheap, and am now weary of this guy because I have never met him face to face and he wants to start right off the bat with meeting customers. I also have not informed them that I am doing this. So I may just drop this proposal right now. However, if I am to sell the business, whether it be now or in the future, when should I notify my customers? Since I have been doing this solo for about 12 years now, I carry a very strong relationship with over half of these folks, so I don't want to just sell them out without knowing that they and myself were getting a great deal. I also know that some of these yards are crap, so should I cut the fat and price it with only the good ones? Also, what is a good way to advertise a business for sale?

delphied
01-17-2010, 07:38 AM
Good luck getting anyone to buy your accounts.

lsylvain
01-17-2010, 09:57 AM
Like I said. don't take him to meet the customers he doesn't need to meet the customers for any reason. It is a pointless venture. I know 35 people that I can get to lie to you that I cut their grass. The buyer gets the list of customers after he gives you your $20,000 or whatever, Just keep it simple, put an add in the paper. So you can get multiple offers.

lsylvain
01-17-2010, 10:05 AM
Thanks a lot everyone for the great advice! Reason for wanting to sell the business was because I was getting tired of doing the same type of work everyday and every year from April to November. Being in my 20's, I was thinking of trying my hand at being an actor in New York City, as a friend of mine has been letting me stay at his place for free since November to try things out. But I have no job here, finding one is hard, acting is not really a great career unless you get lucky, and as the new year begins, I look at having this business that is still doing rather well during a recession to be something too valuable to get rid of at this point in time.

Based on many of your posts, I feel that my offer of one months gross is way too cheap, and am now weary of this guy because I have never met him face to face and he wants to start right off the bat with meeting customers. I also have not informed them that I am doing this. So I may just drop this proposal right now. However, if I am to sell the business, whether it be now or in the future, when should I notify my customers? Since I have been doing this solo for about 12 years now, I carry a very strong relationship with over half of these folks, so I don't want to just sell them out without knowing that they and myself were getting a great deal. I also know that some of these yards are crap, so should I cut the fat and price it with only the good ones? Also, what is a good way to advertise a business for sale?


You have to put your "friend" thoughts out of your head. It is a business, not a "friendness" If you tell your customers before hand they will start to shop around and you may loose some of them before the sale. Word also travels fast so if you tell one customer who tells someone you are selling it would take long before competing lawn guys know you are selling and go in a steal your accounts by watching where you are mowing. I lost an $1,100 per cut job because I let it slip that I was moving to FL and some guy went in bid below me early in the season and told them I was moving so when I got to the office to check in they had already signed a contract with the new guy. Wait until you have a buyer and a done deal before you tell them. It is just safer.

kiefer
01-17-2010, 10:21 AM
Thanks a lot everyone for the great advice! Reason for wanting to sell the business was because I was getting tired of doing the same type of work everyday and every year from April to November. Being in my 20's, I was thinking of trying my hand at being an actor in New York City, as a friend of mine has been letting me stay at his place for free since November to try things out. But I have no job here, finding one is hard, acting is not really a great career unless you get lucky, and as the new year begins, I look at having this business that is still doing rather well during a recession to be something too valuable to get rid of at this point in time.

Based on many of your posts, I feel that my offer of one months gross is way too cheap, and am now weary of this guy because I have never met him face to face and he wants to start right off the bat with meeting customers. I also have not informed them that I am doing this. So I may just drop this proposal right now. However, if I am to sell the business, whether it be now or in the future, when should I notify my customers? Since I have been doing this solo for about 12 years now, I carry a very strong relationship with over half of these folks, so I don't want to just sell them out without knowing that they and myself were getting a great deal. I also know that some of these yards are crap, so should I cut the fat and price it with only the good ones? Also, what is a good way to advertise a business for sale?

By the sound of the post this is Rick. I'm Jasons friend and have met you once before. Jason told me he mentioned to you that I was interested if you were still looking to get out of the biz a while ago. Give me a call and we can talk. I don't think we can put phone #s on here so just google my name and you should find me. Aslo i'm in ballwin so i'm just minutes from your house.

goodfellow
01-17-2010, 10:30 AM
Last season I was offered a lawn care company. 35 accounts plus equipment.
Seems like going rate is 2 to 2.5 times annual plus equipment.
Seems kinda crazy to me.
If I could buy a companies contracts for 1 to 3 months payment. Hook me up I'm all over it.

I chose to advertise heavy, have clean professional looking truck and equipment, build a brand, and website. Still way cheaper than 35 x 1000.00 x 2 years+ 20000.00 truck + 20000.00 equipment =110000.00 just my 2 cents worth.

ALC-GregH
01-17-2010, 11:32 AM
There is no way in hell I'd EVER pay 2-2.5 times the annual income. Your working for free during that time frame. I'll be damned if I'm going to work for free over the 2 seasons. Especially if you can go out and market your business and get them for free.

delphied
01-17-2010, 01:15 PM
There is no way in hell I'd EVER pay 2-2.5 times the annual income. Your working for free during that time frame. I'll be damned if I'm going to work for free over the 2 seasons. Especially if you can go out and market your business and get them for free.

I think you are right. Anyone would be a fool to pay what these guys are talking. I dont think I would ever buy accounts because you cant make the customers stay with you anyway.

MikeKle
01-17-2010, 02:17 PM
A business is worth whatever someone is willing to pay for it. That sale my friend had was drawn up by a lawyer, plus the guys buying it had their own lawyer, and all the customers met the new guys and I think it was around 95% agreed to stay with them and not drop them after the sale. It went very smoothly and when there is that much money trading hands, you must have a lawyer involved and some sort of guarantee that the customers are going to stick with you after the sale. But I think its a good idea to wait on selling, just wait a season more and see what happens then. I also have formed personal relationships with alot of my customers over the years, it just happens when you deal with people that long, and those guys who say its not good to become friends with customers are wrong, they will stay loyal to you and also refer their friends to you if they see you as a friend rather than just a service provider.

soloscaperman
01-17-2010, 02:59 PM
All I know is that in CT most guys sell there lawns at either 3 - 6 weeks worth.

freshcut419
01-17-2010, 08:05 PM
you are joking right?


You are selling your accounts for one months gross!! The average for this when selling a business is more like the gross for 1.5 years!! So you could be getting much more!

I think you should hold on to your business, if you are bringing in around $1000. week, why sell it, you are making plenty enough to get new equipment, Plus you will probably get more customers this upcoming season and the next, etc. So if yu keep doing quality work, your business should keep growing. Youve obviously done good work since you have kept the 35 customers you have now! I think it is a major mistake to sell it now, but if you do, at least get 1.5 yrs of gross for the sale price, and have a lawyer draw up the paperwork, you should be getting around $50-$60K for your business easily!!

Groh's Mows
01-17-2010, 10:40 PM
Reading through this thread I did not find any reference to any of these accounts having contracts. If they do and the introduction results in a signed contact between the new lco and the customer, then you have actually purchased a tangible item. If not, all you are buying is a referral or an introduction and that may or may not result in much. I would not pay more than a few mows either way but that is just me, and I am small time I admit. All I can say is some of these yards must be unimaginably profitable if companies can buy them for a full year gross revenue on the account. I can't see an account purchased like that being profitable for 2+ years or more. Like Greg said, better to just go out and find new work yourself.

echeandia
01-18-2010, 11:45 AM
This question is for you guys who bought accounts: How did you find someone willing to sell?

lilweeds
01-18-2010, 04:13 PM
Around here one months worth is all you can get. Some area where you cut year round they may be worth more but in MO I would say one month is a fair price.

lsylvain
01-18-2010, 07:51 PM
Reading through this thread I did not find any reference to any of these accounts having contracts. If they do and the introduction results in a signed contact between the new lco and the customer, then you have actually purchased a tangible item. If not, all you are buying is a referral or an introduction and that may or may not result in much. I would not pay more than a few mows either way but that is just me, and I am small time I admit. All I can say is some of these yards must be unimaginably profitable if companies can buy them for a full year gross revenue on the account. I can't see an account purchased like that being profitable for 2+ years or more. Like Greg said, better to just go out and find new work yourself.

I think people confuse Revenues/Gross with Income/Profit. Very big difference.

lsylvain
01-18-2010, 07:53 PM
This question is for you guys who bought accounts: How did you find someone willing to sell?

Here in FL accounts for sale fall from the sky. Up in WV and VA where we used to be they were few and far between.

tinman
01-18-2010, 08:03 PM
Would not sell for 1 months gross unless you are just ready to be done with it. Figure a way to make sure he is able to keep 90% + of the clients... Seamless transition is the key. Sell and work on the crew for 1 or 2 months to make sure they do everything the way you did . Gives client time to get used to new guy. My opinion only. Selling a route is tricky & risky for both parties.

Lawn Man Dave
01-18-2010, 08:13 PM
No you get a letter that says welcome, you are now a verizon customer, go to sprint if you don't like it.

When Cingular bought out AT&T (cell phone side of it) they (Cingular) sent out a letter........ :).

As far as I know the bill and all still say's AT&T but the money in the end goes to Cingular......... unless AT&T bought themselves back or something.


1 Month's gross seem's a little low to me also but that may be all you can get...... the more services you provide and the more you make per property the more you can ask for.


I have seen at least one guy buy accounts and paid him X amount for them plus an hourly rate for X amount of month's to help the buyer and property owner with the transition.

lsylvain
01-18-2010, 10:24 PM
Would not sell for 1 months gross unless you are just ready to be done with it. Figure a way to make sure he is able to keep 90% + of the clients... Seamless transition is the key. Sell and work on the crew for 1 or 2 months to make sure they do everything the way you did . Gives client time to get used to new guy. My opinion only. Selling a route is tricky & risky for both parties.

No need to do this really. As the seller, who cares if the new guys looses the accounts. Not your problem. If you do do something like this because the buyer wants it, make sure you get paid for it. If you are going to sell the accounts for say 3 months rev then work for him for 1 of those months it is more or less like selling them for 2 months. So at least make sure you are getting a good crew leader type salary for the time you do work with the new owner if you do do something like that.

Of the 3 businesses that I bought out in 2 of them I just took over on my own and didn't have the seller come with me at all. The other one I "worked" for the seller for about 2 weeks with his employee as a "favor" to the seller since he needed out asap because he had gotten a job and needed to be there, I already paid for the accounts and they were mine it was really just a way to keep from having to split up the money for that month between me and the seller.

Honestly as a buyer I did not want the old owner with me so that when I talked to the "new" customers I could tell them how I do business and what to expect from me and how much better my service would be over the old owner. I found that those customers that I lost from the sale itself (very few) were because they were unhappy with the old guy.

Buying accounts is far cheaper then getting them through advertizing in the long term if you take into account that it took the seller years to get these 35 good accounts, all the PITA's and non payers had already been thinned out so what you are left with is a great set of accounts.

lsylvain
01-18-2010, 10:30 PM
Oh and a little advise for guys that are thinking about buying or have recently bought some accounts. Go for the up sells ASAP I found that many customers from one company I bought wanted better service and were willing to pay for it. I had several accounts that I increased their monthly bills in the first month a couple ever were doubled because they wanted better service, or more services. ie adding hedges, weed control, palm service, irrigation checks, etc.

MLAWCARE
01-20-2010, 01:06 AM
Are the accounts still for sale?

tradeyouraccounts
03-19-2011, 08:55 PM
What was the outcome of this business sell?

TMlawncare
03-19-2011, 10:05 PM
There is no way in hell I'd EVER pay 2-2.5 times the annual income. Your working for free during that time frame. I'll be damned if I'm going to work for free over the 2 seasons. Especially if you can go out and market your business and get them for free.

If you are just starting out you are working for free anyway because you have no accounts. Or you just have one days worth of accounts or maybe only a half day. So yes if you have several years to put together a list of nice accounts to sign with you you can get them for free. However you have to figure in how much you will spend waiting for those accounts, advertising, marketing all in hope of getting them. Remember is all how you look at it. Now selling accounts for one month gross, no way you can do much better. I agree 21/2 years gross is a bit high but 12-18 months is pretty much the norm.