Buying contracts??

Discussion in 'Lawn Mowing' started by MR. Nomo, Feb 17, 2004.

  1. MR. Nomo

    MR. Nomo LawnSite Member
    Posts: 54

    Just got off the phone with a friend that has a friend that is getting out of the buisness because of health problems. I dont know the man personally.
    His gross is about $38,000 a year. All are year around contracts except around $5,000. His largest is a 10,800 per/year.

    He is wanting $10,000 for all clients.
    Not sure what the state of the contract are at this time. (renewals)
    I am just a part timer (lco) at best with a full time job. I dont think I could both, my job and all of his contracts, but in "his" words he can service all his client in 2 1/2 days.

    I know this isn't alot of detail info. but what percentage would the contract be worth?

    Thanks for your guy's help!!
     
  2. Rook00

    Rook00 LawnSite Member
    Posts: 73

    Is it $10,000 for clients only? If so, you might have to purchase more equipment. Also take into account how profitable your full-time job is. It is not worth working 75 total hrs a week if you're all beat up afterwards. The deal doesn't sound to bad if you can really gross $38,000 more dollars/yr. Most likely, however, you won't capitalize on all of those clients.
     
  3. qualitylandscaping

    qualitylandscaping LawnSite Bronze Member
    Posts: 1,581

    only give him 1 month gross max. for each account.. I would never pay 1/3 of the entire season unless it was a 3+ year contract..
     
  4. Lux Lawn

    Lux Lawn LawnSite Silver Member
    Posts: 2,267

    Its tough when you try to buy someones contracts if you pay him for all of them and then only receive half then what?Work out a deal if you really want them.Send out all the contacts with your name and info on them explaining the situation and pay him on the ones you receive offer the customer something free for switching over to you.Thats what I would do good luck with whatever you decide.
     
  5. MR. Nomo

    MR. Nomo LawnSite Member
    Posts: 54

    Thanks for all your comments!
    I done a search after I submitted the post and found several threads on this topic.

    Does'nt sound like there's any one way of doing this transaction. There are so many variables and what works out for you may not work for me.

    I will continue to do some searches and let you know what happens latter.

    Thanks for your replies!!!
     
  6. lawnguyland

    lawnguyland LawnSite Bronze Member
    Posts: 1,108

    I hope that all the people that always post answers like "don't pay anything for the accounts", or" pay him two weeks max" get nothing for their business when it's time for them to sell. I'm not talking about anyone in particular, but I've read hundreds of posts on this subject. Especially with contracts I think the accounts are worth a lot. I know that around here businesses are bought and sold each day for more than a year's net. It's in the paper all the time. I just know that when it comes time to sell my business that I won't be selling it on lawn site!
     
  7. qualitylandscaping

    qualitylandscaping LawnSite Bronze Member
    Posts: 1,581

    There isn't a problem with paying more for an account.. But it all depends on how long the contract is for.. A one year contract (April-November) equals out to about 24-28 cuts up here. If I pay for 2-4 cuts, I am a good amount for that customer. If someone is on a 3-year contract, I would be willing to give almost a full year for the account.. It's just not reasonable to dish out a ton of money for an account you might not have next year...
     
  8. J Hisch

    J Hisch LawnSite Senior Member
    Posts: 952

    It worth what your willing to pay....
     
  9. Ryan Lightning

    Ryan Lightning LawnSite Senior Member
    from CA
    Posts: 554

    I dont think the contracts are even transferable unless it was stated in the contracts when the customers signed.
     
  10. Mdirrigation

    Mdirrigation LawnSite Silver Member
    Posts: 2,455

    As long as its stated in the contract that it cans be sold . The terminology would read something like this: This agreement between Joe homeowner and XYZ lawn service , its successors or assignors.

    Written Contracts are the key to the success of your business.
    It gives you leverage , you can borrow against them , and you can sell them.
    If you ever sell your business what are you selling? Well written signed contracts make your business more valuable . If you don't have contracts and go to sell the business all you are selling is equipment and goodwill. I sold the maintenance end of my business 4 years ago and made good money ,only because I was selling the contracts.
     

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