Buying accounts?

Discussion in 'Lawn Mowing' started by dukester, Dec 6, 2002.

  1. dukester

    dukester LawnSite Member
    Messages: 92

    Another outfit wants to sell. They have 40 accounts 6 or commercial. No contracts. Said he grossed 60k last year. I've asked to see his income statement for the year. They want 25K for them. I'm thinking that I should go with him to each account. And pay $100.00 for each $4000.00 total. Or, one months cutting income from them "accounts". After I've done the job and collected from the customers. What do you think would be fair for both of us? I'm open to ideals. I do know I'm not paying 50% of a years income for them without any guarantee. Thanks
  2. Rob T

    Rob T LawnSite Member
    Messages: 165

    Buying accounts from another LCO can be a great way to grow but, be careful!

    First, do you know the accounts, are they the kind of accounts you want to service?

    Did the old LCO do services that you don't offer? This can be problem for the customer.

    Do the accounts generate profits, is the pricing for the services he offers in line with what you would charge? You don't want pay for these accounts then tell your new customers your charging more then the other guy.

    Will you have to buy new equipt and hire more help to service the accounts. Are you large enough to "absorb" the extra work without overloading yourself?

    As far as I know, most LCO's pay about 1 - 2 times gross monthly income for accounts. Remember your only buying Good Will. You need to have a contract with stipulations for customers who don't stay with you. Also insert a No Compete clause in your contract. It's best to talk to your lawer about this.

    From my experience, your new customers will not have the loyalty your regular clients have. If you do things differently then the old LCO did the clients will not like it and will most likely leave you.

    If you do decide to buy, go to EVERY customer in person with the seller and personaly introduce yourself. Talk to the client about what they like done on thier prop. (take notes) and give them a biss card. Tell them to "Feel free to call if they have any problems with your service"

    Good Luck
  3. lawncare3

    lawncare3 LawnSite Bronze Member
    Messages: 1,981

    go by a percentage rate on each lawn. IE:10% each lawn for 4 times and then you dont get F----- if they don't hire you.
    good luck b careful.;)
  4. bluemoon

    bluemoon LawnSite Member
    from Kansas
    Messages: 114

    In this area it is common to pay 1 to 2 weeks worth of revenue. I would suggest a search on this subject, there have been several threads on the subject.
    Good Luck
  5. bob

    bob LawnSite Platinum Member
    from DE
    Messages: 4,260

    I bought some commercial accounts from friend. We decided that 7 weeks worth of income was a fair price. The total was $2750. The first year I grossed over $12k on these lawns. I hear that 7-8 weeks is a good price.
  6. dukester

    dukester LawnSite Member
    Messages: 92

    Thanks for the information. These were great replies. You have all backed up what I thought. The 25K is nuts. Now I have to find a way to bring him down to a fair number. We have taken on a lot of new work in the last 7 weeks. So I was planning on getting some new help to keep up.
  7. bob

    bob LawnSite Platinum Member
    from DE
    Messages: 4,260

    I know of a fellow who bought out a lawn business's accounts for what it grossed in a season- $19K. Over the next year, he lost all of them!
  8. mowngrow

    mowngrow LawnSite Senior Member
    Messages: 275

    first of all, i would pay no more that one months worth of revenue.
    second, talk w/ the customers, tell them the benifits of a contract. how it protects them and you.
    third, if they will not sign a contract you dont need them anyway.
    and finally, get the other lco to sign contract with a no compete clause in it.

    good luck,
  9. yourlawnguy

    yourlawnguy LawnSite Member
    Messages: 228

    I've purchased accounts before, never paid more than 2 months gross. Also the other LCO rode with me for 1 month and personally introduced me to every customer. I've done this twice without any problems, the seller signed a no compete clause in each case.
    These guys weren't getting out of the business just consolidating. I remained friendly with both and they were always there to help out when I had breakdowns and I filled in for them on their accounts.
    I think 6 months gross sounds pretty steep without signed contracts or equipment.
    Good Luck, and be careful.
  10. jason r.

    jason r. LawnSite Senior Member
    Messages: 338

    its been a while...
    so did you buy the other lco's accounts?
    if so, how is it working out?

    check your email.

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