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Need opinions on buying accounts:

Discussion in 'Lawn Mowing' started by OMG, Jul 2, 2005.

  1. OMG

    OMG LawnSite Senior Member
    Messages: 275

    I have a friend of a friend that is in the business. He has around 40 residential accounts and 1 huge development account. He is moving out of state and wants to sell his 'business'. He does not have any of them under contract.

    I am interested in taking over his accounts, but I can't see paying him money for accounts he doesn't have under contract.

    I am considering taking over the accounts and paying him a percentage of the gross for his customers for X amount of time. That way, if they cancel and go with someone else, I won't lose.

    Does anyone have any other ideas on how to buy these accounts or another way of making it work?

    If we went with my idea, what percentage would you be willing to give? .....and for how long?

    Again, this is a friend of a friend and I'm not trying to beat him on this deal. I want it to be fair to both of us.

    I have the equipment and manpower to assume his accounts without having to buy any additional equipment or hire additional help, but of course I will have additional labor and expense costs.

    Thanks for the comments.
  2. MMLawn

    MMLawn LawnSite Gold Member
    Messages: 3,569

    They are worth VERY, VERY little then if they are not under contract as there may or may not be anything to buy or even if they go with you they may leave after one cut. I personally would buy them period. Heck, if he is leaving the state and you don't need/want the equipment just go after the accts on your own. If you want to buy them then the only way I would is to get him to go to each acct with you in person and see if you can sign them up and still only pay if anything after they have been with you a while.

    Also if you will do a Search on here there are tons of opinions on this topic as it is ask all the time and you will finds hundreds of very recent threads on it
  3. OMG

    OMG LawnSite Senior Member
    Messages: 275

    Thanks for your reply, but I doubt I will have access to all the customers without a guided tour by the other party.

    These accounts are producing over 8k gross per month in just mowing.....therefore I want to pursue the deal if possible.
  4. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    Ok but the pct or the pay after solution is bs because the friend has Zero guarantee he'll get his money and if it were me, I'd want cash upfront.

    The other idea of just getting them on your own is good and I give a definite plus to the friend walking you through the entire lot, customer by customer, visiting and explaining, converting, etc...
    And ...

    When I first started, I inherited 18 accounts from my best friend and here is what I found:
    IF you are friends, then it is MORE likely those customers will switch to you and stay with you because in business and in the real world, birds of a feather flock (dig that you and your friend are somewhat alike, and his customers are somewhat like him, so if/when they become your customers, you'll have {mostly} decent compatibility). Alas you will NOT be able to keep them all, expect to lose 10 percent right off the bat and likely another 10 pct. before end of year, should leave you 32-36 customers. At least that's what happened to me, thou in my 4th year I still have 5 or 6 of the original 18.

    Far as is it worth anything, I'd use the following formula:
    Figure out how much it costs YOU to acquire ONE customer with your current method of advertising. In my case, it costs around 20 dollars each not considering how long they'll stay with me, so 40 customers might be worth maybe 800 dollars cash. Would I pay 800 for 40? Actually, if my friend was willing to go to each one their houses with me and walk me through the process, I'd pay an easy 1200 for that and maybe 1600 (but only maybe).
    Again this depends, some folk pay as little as 5 dollars/customer (maybe less), others pay 50-100 per customer, all depends.

    That is, of course, if you can handle the new volume.
    just my .000002

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