How to downsize?

[lndscprwife]

Thank you all for giving me such good advice. We have decided downsizing to my husband and 1 employee is the way to go. But we have quite a few accounts that we would cut out that are just too far away to service. Do we just drop these customers or can you sell smaller amounts of accounts to other companies? And if you can sell, what is the quickest way to do that? Do you just call local companies and ask? What is usually the going rate for accounts? Thanks again for your advice. Jennifer

[EZTarget]

Originally posted by lndscprwife
Thank you all for giving me such good advice. We have decided downsizing to my husband and 1 employee is the way to go. But we have quite a few accounts that we would cut out that are just too far away to service. Do we just drop these customers or can you sell smaller amounts of accounts to other companies? And if you can sell, what is the quickest way to do that? Do you just call local companies and ask? What is usually the going rate for accounts? Thanks again for your advice. Jennifer

i had a friend who did this. he started raisin his prices to the ones he didnt want. said he made some really good money in the process!

not that i would do that.

[Team Gopher]

Hi EZTarget,

That is a great idea. Something to consider.

[BCSteel]

Thats what I did. Gets rid of a lot of dead beat places fast.

[ShadyTree]

Ya i agree, when you think of selling, there is a long process that need to take place in the transition period and it could be a big headache for the both of you, raise them and make some money quick.

[lndscprwife]

The problem for us is I don't think raising rates would help us much. If we kept the accounts even at higher prices, we are still getting killed by travel time, gas and payroll expenses. That's why I am leaning towards selling the accounts that are farthest away. Then we could lay off 2 guys and sell our big trucks and work out of my husband's pickup and trailer. Then we would get out of our warehouse rent as well. Jennifer

[BCSteel]

Are these single home residental places? I think that it would be a hard sell on those. Commercial contracts, sure but home owners are usually there for the original owner only.

The reason you would raise the prices is to make the drive time profitable. I have to drive 45 min every day to all of my accounts and then 45 min back again. Its worth it though because they pay for it in the end.

[Tider6972]

'give' those accounts to the guys you're letting go? They'll need work, right?

Just a thought.

Good luck

[tiedeman]

I have just given accounts away before. No hassle at all

[MacLawnCo]

you could look into subbing to companies in those areas who wouldnt have as much window time.

[mtdman]

Just be careful when selling. I sold several accounts this spring, and the person I sold them too ended up deadbeating out on the accounts. I ended up with a couple of them back. Not good. Pick a reputable company if you do sell. Whatever you do, don't just leave them high and dry with no lawn company.

Good Luck.

[AutoKing]

By all means, try to sell those accounts to another company who is as local as possible to those clients. There's money in those residuals. Don't furnish the names and addresses until a deal is actually made. Some folks would say "yeah, I'm interested but I need a list of customers and theri addy's." Don't do that until you know you have a bonafide deal and the company has the ability to pay for those clients. Any deal has to be put in writing - no verbal deals.

[RICHIE K]

I GOT RID OF THE FAR AWAY ACCTS, AND THE ACCTS. WHO PAY LATE OR ALWAYS B---- AND MOAN YOU KNOW THE ONES YOU CANT PLEASE NO MATER WHAT YOU DO. NOW IM VERY HAPPY WITH THE 121 ACCTS. I HAVE NOW. :cool2: :cool2:

[jerryrwm]

The problem for us is I don't think raising rates would help us much. If we kept the accounts even at higher prices, we are still getting killed by travel time, gas and payroll expenses. That's why I am leaning towards selling the accounts that are farthest away. Then we could lay off 2 guys and sell our big trucks and work out of my husband's pickup and trailer. Then we would get out of our warehouse rent as well. Jennifer

Okay, the time distance factor has influenced your decision to get rid of these accounts. Apparently they have been bringing in some sort of revenue up to now, correct? Granted it may not have been as profitable because of the drive time.

These are lost accounts are they not? You don't want them anymore, but you want to get paid for them. How much would you be willing to pay for an account like the ones you are trying to dump? Would you buy those accounts if another was trying out to get from under them?

How many of these accounts are there? You could raise the prices to cover the expenses, change the schedule so that it is an efficient trip - get them all on the same day in the same area, and then not have to find new accounts.

And if you raise the prices and the owners won't pay, then you have solved the problem of traveling that distance. If they do, them you are back in the business of making money.

Or sell the big trucks, get out of the warehouse, buy a pick-up and trailer and get those two guys that you're tryin' to lay off on a route. You've downsized the equipment and overhead expenses, and made the company more lean and mean.

Jerry R

[Ability]

It sounds to me like you are in the awkward size of being too big (too much equipment and employees) for what accounts you have. You may want to reconsider selling those accounts and instead grow the area that they are in to make it profitable to keep your equipment and warehouse space. I say this because making the transition from a company the size of the owner and a helper to three employees, multiple trucks and warehouse space is a hard one. It would be a shame to give that up just to have to do it again in a few years.

But that was not your question was it?

I would put the word out to other LCOs and at the supply stores that you buy at. There might be a company looking to pick up accounts in that area. But, like what was discussed before be very guarded about the info. People will even follow your trucks and try to get your accounts from underneath you.

If all else fails, give it to the laid off guys.

[jerryrwm]

Question... When trying to sell an account how does that work? Mainly for residential properties is my question.

1. Do you have to get it okayed with the property owner?
2. What binds the owner to the new LCO contractually?
3. What is the value of said account? Is it worth more than one or two mowings for the buyer? Is it worth a percentage of the contract balance to the seller? Hard to put a price on a service, especially one that has a high volatility like this business.

Anyone care to tackle this one.

[HOOLIE]

I'm curious as well to learn the best way to price the selling of a contract. Years ago my old boss gave away about a dozen far away accounts to another LCO. Seems like you could at least (and should charge something for this). On a basic level, consider how much in advertising dollars it takes you to acquire one account. And then consider how much revenue each account generates per year. I don't know exactly how much someone would be willing to pay though. On the one hand, you get a bunch of accounts at once for no effort, but on the other hand, at least in my area its not hard to get new customers. So I personally wouldn't be willing to pay much more than a nominal fee for each account.

[LwnmwrMan22]

lndscprwife -

I was in your shoes. Had 7 guys working, 2 full crews plus part-timers, 2 trucks, trailers, yada yada yada.

I kept 30 accounts that had the best net profit margin, not necessarily the closest.

I got rid of everyone, told them that I was no longer employing people and 2 of the guys took unemployment for about 6 months on me, the others just, well, I don't know.

Anyways, the accounts, I just told some of the clients, the PITA's that I was no longer servicing their accounts due to downsizing. The other 80 or so, I gave phone numbers to guys that I thought were reputable.

As for selling the accounts, I didn't bother.

I suppose I could have said for 1-2 months fee, I would "sell" them an account.

No one around here would do such a thing, not the established companies anyways.

Anyways, IMO, you'd be best bet just to let the accounts go, downsize and don't look back.

If you second guess yourself, then life's no fun.

[fourseasonlawns]

I didn't sell. I raised my rates. Some stayed, some left.
Next, I rescheduled to better fit MY needs. Again, some stayed, some left.

I only ended up with one account I could have done without, I sub contracted out. I still spent my time going and checking to see the job was done right.

I think I would have come out ahead just giving it away.