Buying accounts, help making offer...

Discussion in 'Starting a Lawn Care Business' started by sancho_man_orlando, Jun 8, 2007.

  1. sancho_man_orlando

    sancho_man_orlando LawnSite Member
    Posts: 216

    I have been contacted by a local gentleman who wants to sell part of his route. What questions should I be asking such as how much the average invoice receipts per month, are they on contract or verbal for an example.

    Also, how do I come up with an amount to offer?

    I was told once 2 x's monthly receipts per signed contract.

    Any advice for a first time contract buyer?
     
  2. KTO Enterprises

    KTO Enterprises LawnSite Bronze Member
    Posts: 1,286

    I would say no more that 10% of the annual revenue of said accounts. Even if they are signed contract customers, they can still ditch you. Figure at least a 10% loss rate.
     
  3. sancho_man_orlando

    sancho_man_orlando LawnSite Member
    Posts: 216

    An example would be that he has a $125 a month customer, the contract is good through Dec 31st so that means 6 months left x 125 x 10% = Offer?
     
  4. KTO Enterprises

    KTO Enterprises LawnSite Bronze Member
    Posts: 1,286

     
  5. Prestige-Lawncare

    Prestige-Lawncare LawnSite Senior Member
    Posts: 753

    In other words:

    6 x 125.00 = $750.00 x 10% = $75.00
     
  6. martinfan06

    martinfan06 LawnSite Senior Member
    Posts: 631

    Yeah im definitely getting those racks there awesome
     
  7. topsites

    topsites LawnSite Fanatic
    Posts: 21,654

    Yeah, and don't forget just over half the season's cuts are done by now, all the fair weather stuff is gone, it gets HOT slow and miserable from here on out, at least until september, then you get another small boost but that's it.
    You can do some core aeration and seeding, but forget mulch, that to me is done, I get a few requests for it late in the year but it doesn't make sense because then the leaves come down right on top of it...
    On that note leaves *might* do ok, but I don't like counting on THAT to make it.

    So, 60% of the yearly revenue is gone, way I see things.
    If you give that man 2x months, you'll hardly double that, might as well put an ad in the paper saying "50% off"

    You need to, at the very least, go look at a good selection of the accounts in question, make sure you can see what you're taking on... You never know what kind of subdivisions, quality of turf, terrain, etc. And, you need to read the contract, to see how the payola is, maybe it's ok, maybe the customers pay the same month to month, but you have to see this for yourself, how is it worked out.

    Then you should be able to make an informed decision.
     
  8. mikecaldwell1204

    mikecaldwell1204 LawnSite Member
    Posts: 185

    Maybe up by you topsites but down here its just getting into full swing, I dont see how he has already lost 60 percent of his income.
     
  9. Bigray

    Bigray LawnSite Member
    Posts: 140

    sancho, rule of thumb here in florida is:
    3 to 4 months of gross service and / or
    up to 50% of yearly if they are really good accounts and PAYING cust.. bus. ledger will show you that
    plus equip.
     
  10. Bigray

    Bigray LawnSite Member
    Posts: 140

    anymore here in florida cust. will not sign agreement's / contract's they are few and far between
     

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