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Discussion Starter · #1 ·
Take a look at what I am about to propose to another local LCO for ABOUT 15 RESIDENTIALS. Some things you need to consider are:
1.) I am new and only have 9 accounts.
2.) Since I am new I am cash poor.
3.) As of yet I do not know what he is charging these accounts or whether or not they are on contract (which I consider to be key).

Here ya go.....

Proposed Transfer of Residentials

Customers:
Send individualized letter explaining transition (time frame, why, etc).

§ Letter should be very explanatory and reassuring to the customers. No compromises made on quality or timeliness of service. Both company phone numbers and addresses (maybe business cards) included so customer may call and investigate on their own.

§ Include a ‘No Price Change’ guarantee for the remainder of your contracts duration.

§ Normal day of service may change but only with the customer’s agreement.

§ Advise customers that once the transition period ends they will be asked to sign an Annual Agreement with my company.

Value:
The value of an existing contract(s), when that contract is undergoing a change of ownership by the servicing company, is only worth something IF the customer chooses to stay with the new service. I am assuming your contract has an opt out clause which is why I propose the following:

§ Send letter listed above with transition period of 1 month.

§ During the transition period your company continues billing the customers and receives 70% of all contractually generated proceeds with the other 30% paid to my company at the end of the transition period. My company will not bill your company for labor that takes place during or after the transition period.

§ Once transition period ends my company assumes all service obligations and acquires signed agreements from the customers.




Any suggestions?
 

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Discussion Starter · #2 ·
From: Company
123 Street St
Jacksonville, FL 30000
904-838-6378

To: Mr. Or Mrs. Customer
123 Street St
Jacksonville, FL 30000

Subject: Ownership Transition for Residential Lawn Maintenance Division

[Customer]
I am writing to inform you of a business change that will impact your lawn maintenance. As you may know I am currently involved heavily in commercial services and it is this portion of my business that is requiring more and more of my attention. Finding a reputable lawn care service is something I consider to be my duty as your current service provider. Please be assured that there will be no compromise in quality or timeliness of service.

I am transitioning my residential services to [company name]. The owner, Chris Yagerlener, specializes in residential service and I find him to be worthy of your business. I have included in this mailing one of his business cards. I encourage each of you to speak with him, as he is very interested in meeting all of you and learning of your specific needs. He will be servicing your property on the already established service schedule.

IMPORTANT:
Effective [date] a 30 day transition period will occur during which [company name] will provide your lawn service in accordance with the current agreements you have with [my company]. During this transition period you will still make your payments to [your company] as you always have. This time frame is given so that you may evaluate the new service and decide whether or not to retain his services.

IF YOU CHOOSE TO CONTINUE with [the new company] you will be asked to sign a service agreement with [the new company]. I have made arrangements to provide you with a price guarantee (meaning you will still pay the same monthly price) that will remain in effect for the remaining duration of the agreement you signed with [my company].

IF YOU CHOOSE NOT TO CONTINUE simply do not sign an agreement with [company name] and find one that better suits your needs.

It has been my greatest pleasure to serve you. If you have any questions or concerns please feel free to call or write.

Sincerely,
 

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Not to bad

And your not paying for the accouts? Only working for 30% of the month?

Pretty good deal for you. But what about contracted extras. Like shrub trimming. Did he do them? or are you now responsible to do it.
 

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Discussion Starter · #4 ·
Good question........I don't know if he has contracted extras or not. Will need to find out. See!!!!! This is the kind of stuff I need.

Thanks!

P.S. I haven't presented this to him yet.
 

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Could work... But I would guess you would lose about half of them...

I applaud your effort and deep thought you have put into this process... You are obviously a melancholy/choleric personality to have such deep thought and followthrough.... Unfortunately, your logic is based on theory instead of experience...

First, don't place so much value on contracts...

Second, don't give customers and option or time to find someone else... Most hire services because they don't want to be bothered with it so you notify them that a change of ownership HAS taken place and they need to do nothing as nothing will change except possibly an improvement in their service... Same rate, same day, same billing cycle... same, same, same....

Now they have the option of doing nothing and seeing if you are any good, or calling others and see if they are any good. Which will they most likely choose - Do nothing and see if you work out...
Plus you get to put in there that the new owner is highly motivated to make the customers happier than ever and he has put his money where is mouth is by buying the business...

If you were the customer that would make sense wouldn't it??? Put up money to have me, better service promised, same deal, same time, same equipment, do nothing to find out... SOLD... :)

Good Luck, Clay
 

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Ditto on Clay's comments. Don't rock the boat with any customers and you'll have a better chance of retention.
Would reconsider advising customers up front that day of service "might" change, some may assume that to be fact and not content with it. Consider doing what you can to keep service days as is, if you must change any, deal with that customer personally, 'ask' before 'telling' them it's going to change. Some may not care at all.
After the transition period, just start sending statements with your company name and address, they've already been told to expect a change.

The sellor of these accounts, is he then going to be out of the Lawn Care business?
 

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I absolutely agree. Especially with the automatic transition thing, as opposed to making the customers "jump through hoops".
Also, something that got my attention in the letter: The part about "He is looking forward to meeting all of you." Get rid of the "all of". This ignites a spark of doubt in the customers mind. "All" meaning what? "How many,- combined with how many does he already have? Will he be able to handle "ALL" of us? We will have to really watch and see. I don't know."
Customers like to feel special. Individual. They like to feel as if they are your only customers. Like you are their "personal gardener", if you will. So, if you just were to just say "He is looking forward to meeting with you". This sounds MUCH more personalized. Not so much like "take a number". Just my .02;)
 

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I would be concerned about liability. If he is billing and there is a problem where insurance needs to get involved, whose insurance is going to cover. Unless he is using you as a subcontractor. Or unless you are using him as just a billing service. The problem is, who has the current contract with the customer. And will the customer be able to sue both of you for an incident?

Also, what happens if a customer does not pay? He loses nothing because he didn't do any work. You lose 100% or your 30%.

As stated already, will you bill directly for extras? What about when someone has a referal and they call him because his name is on the bill?

I also agree about overestimating the value of a client that has not signed on with you yet. I would not do any work for any of his accounts until they had signed a new contract with you.
 

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Discussion Starter · #10 ·
I think this might be better.......

New company services the lawns for one month and is paid _______ dollars by the existing company per service visit to each account, then send the letter stating all contracts and agreements are hereby canceled by the old company. Any account that then signs with new company generates a 70% revenue for 1 month for old company? (contractually generated items only).

This liability issue got me thinking about this. I also agree that the letter needs to be more individualized. Rough draft to begin with.

I think this combination would give the customer's time to familiarize themselves with the new service, shelter the new service from liability until the account turns, and pay the old service for the accounts that actually turn into accounts to begin with.

I am meeting with this guy tomorrow at 11am. From the phone conversations he is getting out of the residential service side all together. H e is even selling the equipment he uses for that side of his business (a chopper, sticks, etc.) I'll post the goods when I get em.

Thanks to all that replied.
 

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Must think about the deal from all sides... Buyer, seller and customer... A good business transaction must present a win-win-win situation for all... Try to visualize how it will look and play out if you were in their position... You must always answer the question "what's in it for me???" for each of the participants....

Good Luck, Clay
 

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Discussion Starter · #12 ·
..........and he is a big operation. Much bigger than I can handle on my own. He has about 40 residentials and several very large commercials. Still taking on commercial service accounts.

He grossed around 400k last year and expects to end up around 500k this year. Wants to get out to start a mortgage company.

Bottom line is this. I want to be a big company one day. But......just because I recently got my captains license doesn't mean I am qualified to drive a Carnival Cruise Line.

So......I am trying to convince him to piece meal the residential portion out to me and let someone else take on the other stuff. Don't know if it will work but am giving it my best swing. I can handle about 35-40 accounts on my own with the equipment I have but not any more.

He said today that in speaking with his CPA, he was told to expect to receive atleast 1 year's gross for the business. I didn't bother getting into discussions on what the actual net was etc etc etc. Not sure I buy into that theory about the 1 years gross.

Just in feeling him out I think he wants a cold hard payment for the business, send the letter out to the customers and be done with it.
 

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Originally posted by sniggly
..........

He said today that in speaking with his CPA, he was told to expect to receive atleast 1 year's gross for the business.
His CPA is wrong!!!
 

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I'm sure that's want he wants, but his CPA is wrong or he's shooting b.s. at you wanting to see what reaction you'll have.
Just like any commodity, he'll get what a buyer is willing to pay.

Again, I'm sure he wants to sell these accts. and be done with it, wouldn't you?
Just be careful and very cautious, don't get caught under the wheels of a high roller.

Just a thought, even if you've seen his books, doesn't mean they're reality. Book cooking is an old standard when it comes to business selling.
 
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