Anyone ever sold their customer list?

Discussion in 'Lawn Mowing' started by Korn, Dec 13, 2007.

  1. Korn

    Korn LawnSite Member
    Posts: 10

    I am getting out of the business. I have someone who is interested in many of my yards. How do I sell my customers. I have heard of taking a percentage of the following years profit, buy how much? Is 25% too much, too little? Just looking for anyone who is done this before.
  2. barefootlawnsandlandscape

    barefootlawnsandlandscape LawnSite Senior Member
    Posts: 296

    A customer list is worth nothing in my book. A turn key business is worth a lot. Customers are not guarenteed to stay with me if I buy your list. There is no equipment so it would not be attractive for someone looking to get into the business. If I was going to buy a customer list from you I would pay you one months revenue that the list will produce.
  3. Korn

    Korn LawnSite Member
    Posts: 10

    I agree, no guarantee they will stay. There is no equipment involved because they are an established business already. You would pay a months revenue though, even with the risk that some of the customers may go elsewhere.
  4. IN2MOWN

    IN2MOWN LawnSite Platinum Member
    Posts: 4,993

    You arent just buying a list hoping the customer stays with you. The potential purchaser needs to go to each house and speak with the customer. Get an understanding from them about what is going on and make sure they know that you want them to stay with you. Any hint of reluctance would send me on my way.
  5. corey4671

    corey4671 LawnSite Silver Member
    Posts: 2,931

    if you are getting out of the business you aren't expecting to earn anything from these clients anymore. why should I pay for a customer list?
  6. Scagguy

    Scagguy LawnSite Bronze Member
    Posts: 1,522

    The only thing I would add to that is that I would pay nothing for bi-weekly accounts. My experience with bi-weekly accounts has not been good. As a result, I no longer accept them. The few that I have now, we will continue to maintain until they move or get behind in payments.
  7. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I agree with everything they said except in this case the man claims someone is interested in buying it, so why not get something for it?

    You could do it the stupid way... Figure out roughly, how much it cost you in terms of advertising and time spent estimating, about how much it cost you to acquire one customer, then multiply this by the number you wish to sell and there you have your price.

    Might have to add on time spent making up the contracts if that was a part of your routine.

    Likely a few thousand, depends on how many you got thou, then the guy might try and talk you down further...
    You might just be so dumb as to ask the guy how much he'd be willing to pay, too.

    Because as you can see the consensus is none too exciting about this kind of purchase so I would be for getting what you can and take it as a bonus. On that note if you can't get some kind of minimum amount, if by the time you get to a final price it just turns you off then you might be as well off letting them back out into the free market, you gain nothing but no competitor gets a free ride either.
    You have to decide.

    That's just my take on it, but I'm already sorry if I just sold you short.

    other stuff...

    Yup, I heard that.
  8. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    I have sold part of my accounts in the past as I down-sized my service area .... the +230 yards I have presently is more than enough in my 5 mile radius ..... same accounts .... same monthly pay ... year in .... year out .... average customer is 3 years .... though I have many +10 years of service largest HOA services +130 homes n this is my 5th season with them

    That being said ... ie .. I have some experience in this .... the general rule of thumb is 2 months fore resi's n 3 months fore commercial .... so if a resi pays $150 a month I would like $300 fore it .... understand ... down here we get paid ....some $$ each n every month ...n slack time .... I don't resign customer's up each spring as I never stopped service ....we cut 42 weeks each year

    The payment is usually .... the 1st month they continue to pay me..... that's my 1st payment .... so the buyer really has no out of pocket ....beyond labor n equip usuage ...

    The transitional month the customer sends payment to the new lco ...n they pay me within 30 days .... if they lose some ....too bad ... the whole concept is fore a win-win ... I don't want to sell jobs that are not going to hold up .... so I myself must "qualify' the buyer ....what is their experience , present work load, equip .... what is their ability to pay me .... things like this ... of coarse they should work the accounts with the seller atleast 2 weeks the people ....learn the route n the particular .... at this point it gets iffy ..... ie they try to steal the accounts ..... so a good lawyer is in order

    All in all when I SELL ....n I will it will be a turn-key with proven track record .... I don't expect a win fall ...but with the years into it n the equip is worth something ..... after all I would not have qualified fore an SBA loan if not ....n sure n S corp has all the great credit one would like to have fore one's self

    This is KEY your business as if it can survive WITHOUT YOU it to be self reliant an than one day you can walk a way with some $$

    TREEGUARD LawnSite Senior Member
    Posts: 303

    It depends on the account full service accounts are worth more than the mow & go's bi- weekly aren't worth anything. Price any where between $100.00 & $300.00 per account sounds good
  10. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I understand what you're saying, I myself don't re-sign customers (anymore), the service goes on year to year, uninterrupted other than for the winter. Also if I were to sell my business I'd want at least 50g for it, that's for around 20g in equipment but also all the connections (such as where to get supplies for less than dealer price), almost 5000 dollars worth of parts and supplies and extra tools (like the RBG) and really the whole kit and kaboodle. More than likely it would include a 'float' of a few thousand to start off with, the setting up of all the banking accounts and the auto-pay methods (We're talking I only pay 2 bills the old fashioned way (check in the mail) everything else is electronic: Convenience, online banking at its best, free of nickel-and-dime costs and worry too.

    More than just the customer accounts I would offer a full 2 years of training, I am talking I work for that man for free that whole time, if he were to chose to sit at home while I do ALL the work he could do that (but I would not recommend it), and so on.
    Agreed, a lawyer is required at this point.

    But here we're not selling that, we're selling a time limited commodity that has to be sold before spring or it's no good.

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