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Selling a lawn route and don't know what to do

Discussion in 'Lawn Mowing' started by lawnbuzz, Jan 16, 2010.

  1. lawnbuzz

    lawnbuzz LawnSite Member
    Posts: 7

    Hey all,

    So I'm 24 years old, and looking to sell a lawn route that I have had through high school and college. I pretty much focused on grass cutting, but also did some bush trimmings as well as leaf cleanup. I have 35 weekly accounts, where I'm charging an average price of $30 per yard. My equipment is also very limited, as I was using a 5x8 trailer, Gravely ZT1734 mower, Stihl FS-90R trimmer and a Stihl BG-55 hand blower. I would actually like to hold onto my blower and trimmer as they are the only ones that I have.

    Is it worth selling the route? There is a guy I have talked to who is interested in purchasing it, and I've offered him roughly one month's gross. Although a deal hasn't been made yet, I talked with him about maybe meeting him next weekend to introduce him to my customers, but now I'm starting to think I've jumped into this too fast with too little knowledge. Any suggestions or resources I should look into before moving forward with this decision?
  2. Bob_n_weave

    Bob_n_weave LawnSite Senior Member
    Posts: 375

    Do not introduce him too your Clients until he has given you a good faith deposit. If he is a dirt bag he will blow you off after meeting them.

    Draw up a contract, hand written is ok stating the agreement,deposit, and when payment in full is due by.

    That way your covered IF he defaults.
  3. New2TheGreenIndustry

    New2TheGreenIndustry LawnSite Senior Member
    from GA
    Posts: 861

    So what is the going rate for accounts. The guy I work for bought his accounts for 7 months of income. He just sold about 80 accounts at 7 months income as well.
  4. MikeKle

    MikeKle LawnSite Platinum Member
    Posts: 4,253

    You are selling your accounts for one months gross!! The average for this when selling a business is more like the gross for 1.5 years!! So you could be getting much more!

    I think you should hold on to your business, if you are bringing in around $1000. week, why sell it, you are making plenty enough to get new equipment, Plus you will probably get more customers this upcoming season and the next, etc. So if yu keep doing quality work, your business should keep growing. Youve obviously done good work since you have kept the 35 customers you have now! I think it is a major mistake to sell it now, but if you do, at least get 1.5 yrs of gross for the sale price, and have a lawyer draw up the paperwork, you should be getting around $50-$60K for your business easily!!
  5. dnc19694339

    dnc19694339 LawnSite Member
    Posts: 208

    I agree with bobnweave. I have bought out other companies and have never paid more than 3 months gross. Usually less than that for accounts only. These were companies i bought for $11k, $6k, and $9k, so fairly small companies.
  6. Mimowerman

    Mimowerman LawnSite Senior Member
    Posts: 647

    I had a business dealing about three years ago very similar to the one you are describing. We drew up a contract, stating all the terms, and I wrote the check.
    3-6 weeks of revenue is I would feel comfortable paying for accounts, with 25% down , and the rest in three payments over the first few months or even season of service. You should not disclose your list until you have something signed...never know now adays . But once the paper is signed you should both write letters or even introduce him to your customers.

    Pm if you have any specific questions I'd be more than happy to share more information just not publicly.
  7. lsylvain

    lsylvain LawnSite Senior Member
    Posts: 777

    I have purchased 3 sets of accounts. Price wise if you have good long standing accounts you should get at least 3 months gross plus your equip. If your accounts are highly profitable I paid 6 months revenues for 43 accounts but if gave me 30 lawns in 1 subdivision. I also paid 1 months for some crap accounts about a year ago and of those I only have 2 left.

    Every time I have bought accounts we worked the deal the same way. I took over service and for the first month I serviced the accounts but the seller was doing the billing and kept all the money. The seller sent letters to all the clients and called the "big" important ones to let them know about the sale. We also sent them letters welcoming them bla bla bla, gave them info about us etc.

    The first sale I lost 1 account right out the gate out of 36, just a guy that promised another lawn guy that he would use him.

    The 2nd set I lost 3 right out the gate out of 43, 1 of them was a house that was for sale and sold the first month the other 2 were a Father Daughter combo and weird people.

    The 3rd set was 12 accounts that I mearly serviced for one month for free. Didn't loose any right out the gate, but I ended up getting rid of all of them except 2 actual accounts for various reason.

    As far as working out the deal, just do it simple. Don't really listen to much to all the guys who have read to many business books about how to sell a business. I always just looked somewhere else when I came accross a guy who wanted me to jump through 100 hoops. Just work out the non specifics. ie 10 accounts in this side of town 3 over here. Total this much a month/cut it takes this many hours. If the guy it interested you sit down he gives you the money and you give him the business. No need to take him around to all the accounts. If he can't use mapquest to find them my god. Treat it like a business deal. When verzon buys out another company the ceo doesn't come to your house with the other ceo do they? No you get a letter that says welcome, you are now a verizon customer, go to sprint if you don't like it.

    Another thing is the non-compete. If the guy wants to to sign a non-compete only sign it for those accounts that he is actually buying not a general, non-compete. You may want to get back into the business later down the road.

    Who cares if the guy tries to steal your accounts, do you know how many fliers people get every day from other LCO's trying to get your accounts. If the guy gets some of your accounts you would have lost them anyway to the next guy that knocked on the door, because they were unhappy with your service. For example I do 7 houses on one dead end street. I have been trying to get the last 3 for 2 years offering to nearly do them for free and they will not switch. I know they are paying at least $20.00 a month more than I can charge and I have the best looking lawns on the street. People just don't like change.

    Anyway, I hope this kinda helps.
  8. MikeKle

    MikeKle LawnSite Platinum Member
    Posts: 4,253

    Geez, you all need to move to KY and sell a business! It is pretty much the norm to get 1.5 years of gross for any type of business here! A friend of mine that sold his lawn biz back around 8 years ago, got 1.5yrs plus the money for all the equipment, trucks, tools, etc., as EVERYTHING went in the sale! If you all are only getting around 3-8 months gross, that is NUTS!! Maybe it is a regional thing though?
  9. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Probably the first time I will agree with someone buying or selling accounts,
    the only reason being the length of time these accounts have been maintained.

    As for what they're worth, hard to say but would you be willing to take 10% of annual gross?
    Because that's still an awful lot of cash, $30 x 35 assuming a puny 10 cuts a season still lands you a cool 10 grand.
    Now whether that 10g is the same figure you came up with, that I couldn't tell you.

    But I can tell you they're not worth a whole lot more, in terms of advertising the equalizer here
    is if someone spends 10 or 20 grand on advertising they can get as many customers, I would think.
    On the other hand if the person buying the accounts wants to pay more, I'm done arguing.

    As for you not being sure, the only thing to not be sure about is whether you want to get out, am I correct?
    That you have to decide, at least I can't help you but if it's just the price of the accounts I wouldn't fret too
    long over 10 thousand dollars if it were my customer base, I realize you don't want to sell yourself short but...

    Oh, cash deal, no payments, anyone who thinks they can take on 35 accounts
    also has a large enough business to hand me the check already.

    Now I sure hope I didn't start something.
    Last edited: Jan 16, 2010
  10. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I did want to add...

    I would want to screen the guy to make sure he's straight and good, I don't know what to tell you but
    I wouldn't want to sell my customers to someone giving me the bad vibes so to speak.

    Because my customers trust me, so I would want to feel good about it.

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