1. Missed the live Ask the Expert event?
    Catch up on the conversation with Ken Hutcheson, President of U.S. Lawns in the Franchising forum plus sign up to receive a FREE eBook on how to grow your landscape business.

    Dismiss Notice

Irrigation Company worth?

Discussion in 'Irrigation' started by djagusch, Jan 12, 2012.

  1. txirrigation

    txirrigation LawnSite Senior Member
    from Texas
    Messages: 977


    If he was a one man show, the clients are going to be pissed when a tech shows up and they do not get to have a "talk" with the owner.

    You will end up having to go to every job to talk to the customer and pick up your check (that now does not cover time spent).

    I would ONLY buy a company with good employees, relationships with builders, service contracts, and a commitment from the current owner to clean up his messes when they arise (in writing). Also, 10yrs in business and only 12k in inventory/hand tools???

    Sounds like to me your buying a telephone number.... not a good idea. Sometimes I wish I could change mine!
  2. biodale

    biodale LawnSite Member
    Messages: 180

    I don't understand why people think a customer list without the customers under contract is not worth anything. The customer list is the heart of a service business. Anyone can buy a few mowers, trimmers, a blower, and a truck and call it a business. Many do. But they don't have a viable business, they just own a few pounds of iron. Contracts only last a year generally and if the customer is not happy he will not continue to be a customer. Purchasing the customer list when buying a business' equipment is invaluable. Having the customer list saves time. You can walk the streets hanging flyers, knock on doors, take out ads, or whatever it takes to start and grow a business. For sure do these things. A targeted customer list does all that for you.
    Let me give you an example from my own experience. I blew sprinklers out for many years part time and had a customer list of 750 customers. Grossed about $20,000 a year. Lost my job and decided to offer yard services. Bought a mower and 2 trimmers from a guy who was quitting. Sent out postcards to my customer list advising about the new services I was offering. I offered mowing, yard clean ups, and shrub pruning. Myself and 2 part time employees and 2 seasons later I am grossing $127,000 a year. My margins are good and I am making more money than I was at my previous job.
    I now own a 60" mower with vacuum bagger, a Scag v-ride, a new 16 ft. covered trailer (with wrap), a van equipped with inventory for sprinkler repair, 2 diesel trucks, a spare 14 ft mowing trailer, and 2 spray skids. All paid for except one of the trucks.
    I could not have done this without the customer list. I do NO advertising. Just work the customer list. I call the entire list twice a year to communicate my services and offer to help them with any of their yard problems.
    By the way, I am licensed, bonded, insured, pay employment and L&I taxes.
    To succeed is hard work. I work with the crew and then go home and do paperwork til 10:00 at night. If you work this as a business and not a hobby it is a good career. I am 58 and I wish I had started this when I was 30 years old.
  3. mitchgo

    mitchgo LawnSite Silver Member
    Messages: 2,869

    The original post is a different situation from yours . Experience plays a huge role in this too. I know he's learning sprinklers at the moment, but he doesn't know that much- at least not enough to own a business that provides a service to customers. Buying someones business is of course a gamble. I guess it's up to the person buying it on how much time and effort they want to invest into it

    I don't get your post. You had a list of 750 customers and lost your job but still retained the customer list?

    I don't understand why the lawn guys feel the need to tell everyone everything they own.
  4. greenmonster304

    greenmonster304 LawnSite Gold Member
    Messages: 3,428

    I don't think a customer list is worthless it's just not a sure thing. You had success with your list because it was YOUR list and the customers knew you. If I bought your list from you the customers would be like "who the **** is this guy trying to sell me ****, and what happened to Biodale? Half the list will move on to another company.
    Posted via Mobile Device
  5. Mdirrigation

    Mdirrigation LawnSite Gold Member
    Messages: 3,382

    if you blew out 750 systems and only grossed 20k , you were losing money
  6. DanaMac

    DanaMac LawnSite Fanatic
    Messages: 13,166

    Yup. Less that 30$ per. A company that works harder, instead of smarter, for their money. Build a business, not a job. As an owner, there should be high reward for the risk, liability, long hours, sleepless nights. Lots of money left on the table there.

    I'll weigh in later on paying for a customer list.
    Posted via Mobile Device
  7. GreenLight

    GreenLight LawnSite Senior Member
    Messages: 494

    I would be much more concerned about the "value" of the customer list before I had any other questions. The numbers that were presented for the discussed irrigation company that the original poster gave are not very good considering how large the billed customer list is (320).

    Example, let's say he bought the billed customers only and paid $5000.00. Some people would argue that is a no brainer, but it also very well might put you out of business. I would argue that for 320 customers, $60,000 might barely cover overhead and pay one person $25,000 salary. Everything points to these customers "costing" more than any investment made.
  8. DanaMac

    DanaMac LawnSite Fanatic
    Messages: 13,166

    Back in 2001 or so, I paid a retiring guy for his customer list. It was good and bad. We came up with a deal, heavily weighed on him trusting me. I paid $xx.xx for every start up and repair throughout the year when each of his customers called for service, and $zz.zz per blow out. I don't recall the dollar amount, probably $15-$20 for the s/u and repair, $10-$15 for the blowout. This was for one year only. I kept an ongoing spread sheet and paid him three times through the year. I don't recall the number of customers though from the list, or the percentage that we actually worked on. I think it ended up being between $1500 and $2500, but really I don't remember. Doubt it was more than $3000.

    Good issues - Quickly added to my list at a time when I was adding employees. I still have many customers from that list that we service (which is also a bad thing). I did also buy his inventory for not much money, and a snowblower for personal use. He had the same first name as me, so it was easy for them to remember my name. Not many guys named Dana to start with.

    Bad issues - His prices were lower than mine by about 25%-30%, which caused a problem with many folks. Some which I lost due to this after the first service call. Many many older junk systems, and he never pushed to upgrade and make them better. Lots of older aged customers, that preferred him because he was older, and I was 30 at the time.

    I have been considering selling my biz for a few years. And have been changing things the last few years in case that happens. So I am putting together better business systems, writing service manuals, creating procedures for employees to follow. And distancing myself from the business a little. Don't make the business Joe's Sprinklers, if you want it to be a future investment to sell. Make it Sprinklers XYZ and don't personalize it. This may be different for someone like Mike Leary who had higher end folks that wanted hand holding. But for a market where traditionally customers come and go, it's not necessary
  9. Mike Leary

    Mike Leary LawnSite Fanatic
    Messages: 22,731

    Existing systems that I took over had been run by the hubbie and only serviced when something broke. I convinced most of them that it was in their best interest (cost and performance-wise) to have us do regular checks and adjustments with upgrades as budget dictated. A lot of my installs were NOT high-end, but they got the same kind of parts and service as my megas did.
    Irrigation is not only a service-oriented business, it's salesmanship that keeps the clients around and throws the referrals your way. I took on one where the clients said, "the neighbor said you were expensive, but always took good care of them." Bingo! :clapping:

    Messages: 18,668

    I've always liked your company name Dana. Wish I had not used my last name with my biz.

Share This Page