Buying established accts

Discussion in 'Business Operations' started by Port City Lawncare, Jun 11, 2003.

  1. Port City Lawncare

    Port City Lawncare LawnSite Member
    from Alabama
    Posts: 75

    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?
     
  2. roscioli

    roscioli LawnSite Senior Member
    Posts: 749

    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?
     
  3. Port City Lawncare

    Port City Lawncare LawnSite Member
    from Alabama
    Posts: 75

    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?
     
  4. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    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.
     
  5. Port City Lawncare

    Port City Lawncare LawnSite Member
    from Alabama
    Posts: 75

    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:
     
  6. cklands

    cklands LawnSite Senior Member
    from MA
    Posts: 360

    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
     
  7. Clay

    Clay LawnSite Member
    Posts: 236

    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
     
  8. Port City Lawncare

    Port City Lawncare LawnSite Member
    from Alabama
    Posts: 75

    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?
     
  9. Clay

    Clay LawnSite Member
    Posts: 236


    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
     
  10. cklands

    cklands LawnSite Senior Member
    from MA
    Posts: 360

    Yah thats all great. You go with the guy and work and all that. You still can't force them to sign the contract.
     

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