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View Full Version : Buying established accts


Port City Lawncare
06-11-2003, 02:48 PM
So I'm thinking of buying someones business. They've got approximately 45 accts. He says he's bringing home around 3k a month. Any advice?

roscioli
06-13-2003, 11:22 AM
I am in the opposite boat right now, I am selling about 30, pulling in about $4000 a month. What type of advice do you need?

Port City Lawncare
06-13-2003, 11:27 AM
I found out it was only 25, but it's enough to pay the notes while we're out there doing sales and landscape projects. My main concern was the attitude the customers might have about someone other than their usual guy coming along. I've been in the biz for 10 yrs, so there's no doubt in my mind my services won't exceed her current service.

How much emphasis would you put on getting to know these clients? The sooner the better?

BSDeality
06-13-2003, 11:52 AM
if you do decide to buy it make sure you get a non-compete from him, plus go visit every customer with him and have him endorse you. "Hi, I'd just like you to meet the man who purchased my business from me, I have full confidense that he can upkeep or exceed my level of detail in landscape work" or something like that. If people aren't on contract consider that some may drop the service midseason.

As far as price, some people go for 4-8 weeks times weekly take, like if his lawns are generating $1250 weekly (before expenses). somewhere between $5,000 and $10,000 might be right. It also depends how badly he wants out of the business and if they're on contract or not.

Port City Lawncare
06-13-2003, 11:12 PM
We met today and he's been nothing but professional. I was able to view his records from the past 2 years, and he was more than happy to endorse and personally take me to meet each of his clients.

The reason he's selling's because his father (he's 45) is getting old, and they also own a rather large nursery, which will be great when those landscape jobs pop up and I need a plant pronto. So basically he's taking over for his father.

edit- he made a comment about how us young guys (my partner and I are 28) are probably all into that computer stuff,,,in his best jeff foxworthy voice. But the strange thing was he was telling us he's billing on the per cuts per year system someone was talking about in another thread..old timers, i tell ya :dizzy:

cklands
06-14-2003, 10:18 AM
Be carefull. I purchased some accounts from a guy who was getting out of the business. We talked to all the customers and sent them letters explaing what was happening. I still only ended up with half the contracts back signed. Once they found out that he was no longer going to take care of their accounts they started shopping. They didn't know me and had no ties to me so to them there was no harm in shopping around.
I would see if you can buy the accounts on a basis of contracts signed. Good Luck

Clay
06-14-2003, 10:58 AM
You don't give them time to shop... You go and work with the guy on the accounts for at least 2 weeks before transfer... There is no mention of the transfer until the money changes hands and an announcment/endorsment letter sent out.... You will be on the job before they have time to shop....

A non-compete clause is good, but contracts are worthless for keeping accounts and contract renewal time creates an opportunity to shop... only your good work and relationship building ability will keep those or any accounts... He should also guarantee that the customers give you an opportunity to prove your worth (say 30 days minimum)... If they were to quit due to the transfer then he should not be entitled to receive compensation for such account...

BTW... The average cost for an existing "quality" business is 30 - 50% annual gross plus current equipment value...

Good Luck, Clay

Port City Lawncare
06-14-2003, 02:54 PM
I asked if I could go along with him during his last week to meet the customers, he agreed that would be a good idea so he could show me what the current individual customers expect and what they've been receiving from him previously, along with meeting everyone personally.

edit- when you're talking about worth of the company, could you explain that a little better. For instance, if the business is 6k, and the equipment alone's worth 4, and 25 accts go with it, what's your impression?

Clay
06-14-2003, 04:07 PM
Originally posted by Port City Lawncare
I asked if I could go along with him during his last week to meet the customers, he agreed that would be a good idea so he could show me what the current individual customers expect and what they've been receiving from him previously, along with meeting everyone personally.

edit- when you're talking about worth of the company, could you explain that a little better. For instance, if the business is 6k, and the equipment alone's worth 4, and 25 accts go with it, what's your impression?


If the accounts bring in 3 grand a month or 36,000 a year, then the business should be worth at least $10,800 plus the 4 grand of equipment = $14,800.... That is only if they are "quality" accounts that are priced right... That is why you should go with him for a while to make sure they are priced appropriately.... If they are not quality accounts then in my opinion they are worthless because you will lose many trying to raise the prices...

So if it is quality and you are buying it for less... good deal...

Clay

cklands
06-15-2003, 10:17 AM
Yah thats all great. You go with the guy and work and all that. You still can't force them to sign the contract.

LAWNPROzII
06-15-2003, 03:20 PM
I think you guys are thinking about a little to much money here. There is no gaurantee these customers have to stay with you. The going rate for accounts based on this site is 3-4 mows. And it doesn't matter how many quality accounts he's selling it matters how many of these quality accounts you can actually land and be able to take over ON CONTRACT.

Port City Lawncare
06-15-2003, 07:43 PM
Looks like everyone's saying contracts will be the most important issue, even if he's been dealing with these customers for years.??

Clay
06-15-2003, 08:01 PM
Hey PCL,

Ask how many of these guys giving you advice has actually bought or sold a business before??? Is that experience or theory talking???

For keeping accounts, contracts aren't worth the paper they are written on!!! Contracts are good for spelling out exactly what is expected of the lco and proper payment schedule, but all the contracts have a 30 day clause to replace you if desired.... And they really don't need to do that...

Only good service will keep a customer long term... not a contract! What do you do when the annual contract is up??? You try to get another??? Well, guess what... that's a perfect opportunity for the customer to shop around.... Why even put yourself in that position???

I thought long and hard on contracts when starting and decided against them.... And with over 500 accounts served (over 1,000 residents with the associations), and well over a million dollars billed out in labor, I have only had a few hundred in bad debt...

If you have a signed annual contract with these people and don't show up for 30 days will you still get paid??? Of course not... If you show up and do a great job will you get paid... almost certainly....

I've read too many times how important contracts are and how a good business in not worth more than a few weeks or cuts.... Well, that's simply BS.... I've personally started, built and sold 8 "quality" landscape maintenance businesses in 12 years.... Sold them all for 50% annual gross plus equipment value, and out of the over 500 accounts sold, have had only one quit due to the transfer of sale (and that one I replaced for the new buyer with one of greater value)....

Good Luck, Clay