1. Missed the live Ask the Expert event?
    Not to worry. Check out the archived thread of the Q&A with Ken Hutcheson, President of U.S. Lawns, and the LawnSite community on the Franchising Forum.

    Dismiss Notice

BUYING LAWN SPRAYING/FERTILIZING ACCOUNTS

Discussion in 'Lawn Mowing' started by TURF PRO, Jan 14, 2000.

  1. TURF PRO

    TURF PRO Guest
    Posts: 0

    I HAVE BEEN IN THE LAWN SPRAYING/FERTILIZING BUSINESS FOR ONE YEAR NOW. I HAVE JUST BEEN DOING IT PART TIME TO SUPPLEMENT WHAT I MAKE WORKING AT A GOLF COURSE (WHICH IS WHAT I WENT TO COLLEGE FOR). CURRENTLY I HAVE 25 ACCOUNTS. I AM INTERESTED IN GETTING INTO LAWN SPRAYING/FERTILIZING FULL TIME SO I NEED TO BUILD UP MY CLIENTAL. I APPROACHED A GUY WHO IS 63 YEARS OLD ABOUT BUYING OUT HIS 90 ACCOUNTS. HE IS ALSO JUST DOING IT PART TIME. HE IS NOT IN GOOD PHYSICAL CONDITION AND WOULD LIKE TO WORK SOMETHING OUT WITH ME, BUT I THINK HE IS GOING TO BE TOO GREEEDY. BASICALLY I THINK THE SIMPLEST WAY TO DO IT IS TO GIVE HIM A PERCENTAGE OF THE PROFITS AFTER EACH APPLICATION FOR THE FIRST YEAR OF THE BUY OUT AND THEN AFTER THE LAST APPLICATION OF THE YEAR THOSE CUSTOMERS ARE MINE. I WOULD THINK THAT HIM GETTING 33% OF THE PROFITS WOULD BE FAIR. HE HAS BEEN MAKING $15,000-$20,000 PROFIT/YEAR. SO HE WOULD GET $5,000-$6,600 FOR JUST GIVING ME THE LIST OF CUSTOMERS. PLEASE GIVE ME ANY IDEAS OR SUGGESTIONS. THANK YOU
     
  2. Lazer

    Lazer LawnSite Bronze Member
    Posts: 1,446

    You're about 67% too low.<p>The going rate (like Nilsson & Associates said) is 70% - 110% of the yearly gross. Some factors might include:<br>1.) Length of time the customers have been with this guy.<br>2.) The prices of the lawns with relationship to the market.<br>3.) The &quot;babysitting&quot; required. Are these the type that will request frequent service calls?<p>TruGreen in my area generally pays 100% of the yearly gross.<p>Lawn Fertilizer/Weed Control accounts are valuable, that's why TruGreen spends Millions of dollars every year aquiring new accounts/keeping existing customers.
     
  3. Eric ELM

    Eric ELM Husband, Father, Friend, Angel
    Posts: 4,831

    I think that you would be a lot better off taking the 100% of what you would be paying, $15,000 and put $14,500 in your pocket, take the other $500 and use it for advertising, like fliers or door hangers. It is sort of hard paying out every thing you make if your just starting out. You could make at least 10,000 fliers for $500 and that should get you 90 customers. :)<p>----------<br>Eric@ELM<br>http://pages.prodigy.net/eric.erickson/index.html
     
  4. jjb51

    jjb51 LawnSite Member
    from IL
    Posts: 18

    Eric, I agree. You can work for anybody for free - plus no guarantee these customers will continue doing business with you. Find your own customers, flyers, newspaper ads and door hangers.<br>How about setting up a program with 70% off first year and a fifteen per cent increase second year and fifteen per cent third year.This way you can tie up you customers with a multi year arrangement and you could figure some way to let them out of contract if they aren't satisfied. This way you pass good will on to your customers and are still able to feather your nest. And for those that don't want a multi year contract you can offer a smaller discount for a single year contract. IMHO much wiser than working for free. You can work these numbers many different ways, and base it on one, two or three year contract, but zero and zero will still be zero. Someone can sell you good will, but what is it really worth?<br>
     
  5. Retro67

    Retro67 Banned
    Posts: 207

    I agree with jjb51. Working for a full year for free is foolish unless you already HAVE a multi- year contract you are buying. An account is worth whatever two individuals can agree upon. Just because someone thinks their list is worth say $10,000 doesn't mean it is. <p>You could knock on a heck of a lot more doors and pass out a lot of flyers with the same effort as you would expend doing those accounts for free the first year, only YOU will fully reap the benefits of the footwork.<p>Also, if you aren't making any money the first year, you will be funneling off valuable capital from the clientel you currently serve.<br> <br>Assuming we are talking a 5 app program, I would do one app for free, maybe two where the revenue goes to the previous operator. Otherwise, as suggested, I'd spend my time and energies pursuing my own client list.<p>My advice may not get you the list, but unless they are under contract for multi years, I would think the thing through carefully and asess my risks accordingly.<br>Good Luck!<p>John <br>
     
  6. Lazer

    Lazer LawnSite Bronze Member
    Posts: 1,446

    How many production hours does it take for him to make $20,000?<p>90 residential accounts should take 200-300 production hours on a 5 app. program.
     
  7. bdemir

    bdemir LawnSite Senior Member
    Posts: 610

    If I were you I would jump on it if the guy gives it to you for 33% for one year. See if he will go for that first then go to the bargaining table and then go up to 40% but that should be tops in my opinion but if you think its worth it then use your best judjment. I am a firm believer in jump starting a business by buying out outhers. Because you will have that much more time to do your foot work and get all the customers that you can and what can you lose if you pay him only 30 or 40 percent not much considering it takes only a few minutes to spray a lawn and your done even if you keep half the customers you will save the amount of footwork it takes to get all those customers and use your time to get more customers. You will also get other work from the 90 accounts also so dont pass it up if you can get away with 30 to 40 percent. Good luck and let us know what happens.<p>Bedros
     
  8. Lazer

    Lazer LawnSite Bronze Member
    Posts: 1,446

    That's some godd advise from bdemir, I think.<p>I really sounds like a good opportunity. I'd be willing to pay that.<p>He obviously has big accounts and/or gets really great money to profit $170-220 per account.<p>
     

Share This Page