Buying mowing accounts

Discussion in 'Business Operations' started by grassmasterswilson, May 19, 2013.

  1. dnc19694339

    dnc19694339 LawnSite Member
    Posts: 208

    Good luck picking up that many accounts with $5 or $10k in advertising. Not to mention the time and estimating involved with selling the work. Ive bought out several smaller companies and its always been worth every penny. These were long term customers not 1 or 2 yr customers. Most people are just happy to have someone to do the work as long as the quality you provide is as good as the seller was giving.
     
  2. BPS##

    BPS## LawnSite Senior Member
    from WY
    Posts: 828





    Thank you for that view point. Its not one that I know any thing about, as I've not bought any other businesses.

    And haven't spent $5000 in advertising to see what it got me.
     
  3. mowing4cash

    mowing4cash LawnSite Member
    from us
    Posts: 188

    I believe accounts are worth 2 months gross depending on the time of year that you buy them. Adding new customers from advertising is alot of work. Lets say you are buying 50 weekly customers at $35 per cut.

    50x35=$1750 x 8 weeks= $14k

    Now lets say you want to get 50 new customers, well you have to have 90 leads from advertising to get 50 customers.

    Lets just say you end up spending $100 per customer = $5000.

    Now you have to estimate them, do the first time cuts which normally takes double the time, they are not going to call all in the same week. Of course they are going to be a tuesday customer but the sign up on Wednesday so now you have to go out of the way to cut them on Thursday and then try to get them on the schedule. And alot of other time just getting a new customer started.

    Then you have to upsell them on other stuff where as with a customer list that you bought hopefully you will already have some of the upselling done and the past history of what that person has bought.

    So you see paying $14k over time seems alot better then spending $5k and hoping to get those 50 new clients.
     
  4. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,515

    All great advice. I've done a few direct mailers and had great success with them. My new additions are coming mostly from Fert and squirt and not mowing. Don't get me wrong, I love to get the Fert and squirt people since this is the side I like and work mostly in. But for someone trying to get out of the mowing truck and on the sprayer and in the office it's been slow getting mowing accounts.

    Unfortunately I've had very little success buying up other companies. Some have been a real headache trying to get the financials and others I was upfront at the terms of the deal I was willing to offer.

    What I'm seeing is everyone thinks there business is gold and won't take a payment deal based on retention.
     
  5. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,536

    In which case, why comment?

    For sake of discussion, my mowing and upsold services are for sale (no fert in this deal). Business without fertilizing services does $300k and has free cash flow of $70k per year. That makes the business worth $140k or better in my mind. (Plus assets) using you 2 months gross of mowing values the company around $50k. Pat, see why you are having a hard time buying account?
     
  6. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,515

    I totally agree with you. The value is in the eye of the beholder!!!

    The two deals I have lost in my mind came down to the method of payment. I'd be happy to pay you the 140k for your business if you were willing to base it off of customer retention and those who were ok with the switch. I also don't have 140k and would like to make payments and be paid off within 12-18 months.

    The two guys I dealt with wanted upfront payment and that is a risk I'm just not going to take. What if half the list does t want my service?

    So in my mind I'd be glad to pay a premium if you would take payments and base it on retention. If you wanted the money upfront then the value drops to me since you should expect a fair amount of customer loss.
     
  7. Stillwater

    Stillwater LawnSite Platinum Member
    Posts: 4,806

    I believe in outright takeing them.... not buying them. Flame away.....
    Posted via Mobile Device
     
  8. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,536

    And how do you accomplish this?
    Posted via Mobile Device
     
  9. BPS##

    BPS## LawnSite Senior Member
    from WY
    Posts: 828






    You answered your own question.


    Besides where in the site terms of service does it say that I must ask your permission before posting?
     
  10. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,536

    See, it means nothing to anyone if you are not sharing personal experiences. What you did is called talking out your arse.

    My "sake of discussion" is a real life situatuon.
    Posted via Mobile Device
     

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