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In the process of buying accounts.

Discussion in 'Business Operations' started by logjammer, Sep 13, 2006.

  1. logjammer

    logjammer LawnSite Member
    Messages: 22

    I am currently negotiating a deal with a fellow landscaper to buy his maintenance accounts only. He is moving south with his family at the end of this season.

    He is guaranteeing signed contracts for next season for mowing and fertilizing from his customers, all of which understand that he is moving. His customers are mostly residential and in our service area. He brought in $55,000.00 gross from these guaranteed customers last year.

    He also brought in about $30,000.00 gross from commercial snow plowing and salting, but he can not guarantee these contracts for us.

    I guess my question is, what do you, the green industry, feel the fairest price would be to buy this business. The guaranteed gross sales are $55,000.00 with potential for over $80,000.00 gross sales for one year.

    Thank you in advance for your time and advice.

  2. hoskm01

    hoskm01 LawnSite Fanatic
    Messages: 5,690

    $2500 and a case of Beer. Why pay more for customers that are just going to get dumped if he doesnt give them to you. You could pick them up then, but thats not guaranteed. With 2500 bucks, he can buy something nice on his way south. Were he selling you an entire business setup, that would be a different story.

    Are you prepared to grow by that amount? Dont know how big you are now, but thats a fair amount of mowing, you'll probably have to expand your emplyees, equipment etc...
  3. logjammer

    logjammer LawnSite Member
    Messages: 22

    We are prepared for the growth and we are actually trying to setup a third 2-3 man mowing crew. I won't say what our sales are, but these accounts can be done with our current equipment and a extra half an employee. Alot of his accounts will make our routes tighter.
    I understand the theory of just trying to take the accounts, but we have alot of respect for the seller and his long time customers. We want to give him fair market value and grow our business at the same time.

  4. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    The signed contracts are with him, not you, so that means nothing unless they are written so that they are transferable to a new party. As for wanting to pay him something, I find that admirable instead of going after the accounts once he has flown the coop. I would tend to think 1/4 or 1/3 of the estimated revenue for the mowing accounts.

    As for the snowing plowing accounts, I bought out a local outfit last Fall that had 54 and payed them an amount equal to 1 plowing.
  5. J Hisch

    J Hisch LawnSite Senior Member
    Messages: 952

    i am n ever concerned about what to pay someone i never ask anyone, i keep it simple pay what you are willing to risk and can afford to lose. my experience has been even without contracts we have kept 90% of the business that we have bought out. most people are just concerend that the price is going to stay about the same and will the work be as good or better.
  6. Waterscapes By Design

    Waterscapes By Design LawnSite Member
    Messages: 237

    I would make sure you go to each and every house, at least the vast majority and take a look at what is involved with each one.

    I just bought 14 accounts from a girl/lady who was getting out of the business. This chic was charging people in $300,000 homes with flower beds everywhere to edge, and big lots $50 a month to mow them (see why she was getting out..lol).

    Just make sure he is charging what you would be charging or negotiate before hand, why pay for an account that you plan on raising the fee only to have them drop ya and try to get cheaper...not worth the risk
  7. DBL

    DBL LawnSite Silver Member
    Messages: 2,219

    the beer yeah not $2500 i dont know if we got lucky but about a year ago 65 accounts were handed to us along with more snowplowing than we know what to do with but thats our bread and butter,anyway hes going to drop then make him give them to you itll be better for him to give them to a reliable lco then dump his old customers to fend for themselves also like he said thats a jump thats already full time for him then on top of your stuff
  8. Mike33

    Mike33 LawnSite Bronze Member
    Messages: 1,649

    I never believed in that theory of buying accounts. I just had in my area the king of the pecos to retire couldnt sell the business so he had a auction. What am i going to do? Since i have a nice size yellow page add i figure my phone might ring more. He was very expensive with his business but very succesfull. Now people is going to have to call others for prices i dont think i could show up at customers #221 door and say i just bought the contract do do your services when thay know company x just went out of business. I think they might laugh and say you better be cheaper than he was. Am i looking at tis wrong? I just think the customer has the last say of who does there services.

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