Selling mowing to crew leader

Discussion in 'Business Operations' started by Ros1979, Sep 3, 2018.

  1. Ros1979

    Ros1979 LawnSite Member
    Messages: 1

    my landscape and application side is growing fast and I’d like to get out from the mowing. I have a crew leader who has been with me multiple years... 4+. He has expressed some interest.

    Would be a good turn key operation for him. Anyone sold to a crew leader?

    My thoughts — current clients know him and switch should be easy.
    - would need current equipment most likely.
    - sell completely to him and be done??
    - operate under current company with him as “mowing manager” while he pays off accounts?
    - nice 2 way referral.

    Looking for your experience and thoughts. Pros and cons.
     
  2. Mark Stark

    Mark Stark LawnSite Senior Member
    Messages: 669

    If he has the money for the full purchase price, I'd prefer getting full payment up front. At a minimum, I'd want a substantial down payment. This would show me that the guy is serious.

    I'm not against taking some payments but if taking some of the sale price in payments, as the seller, I'd raise the price to compensate for my additional risk of default.

    I'd have an attorney draw up a proper sales contract. This will take things like tax implications, default options, payment terms, liability issues, etc., into account.

    I successfully sold a business to an employee before getting into landscaping. Having a solid contract made both of us comfortable with the process.

    There are certainly further things to consider so please treat this as a mere starting point. Good luck!
     
    sjessen and AlohaMowing like this.
  3. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,589

    We use 6 different subcontractors for residential/small commercial mowing and 4 of the 6 were mowing production supervisors for us in the past. It works well for us and we are able to get a 20-25% gross margin.
     
    Cam15, Mark Oomkes, sjessen and 2 others like this.
  4. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,589

    Was searching through some older posts on subcontracting. Have made the decision to subcontract all of our mowing moving forward.

    Always thought it was important to have our brand on the higher profile contracts we have - changing my mind. Cost of the equipment needed and trying to staff have made it next to impossible to make money with how we are structured.

    Going to help two of our mowing production supervisors get their own companies off the ground with routes, bank connections, accounting help. Biggest concern is quality control on our end - not sure what the time commitment is going to be for someone to manage the subs?
     
  5. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 16,099

    I would NOT sell the mowing

    Do some looking into the history of our profession and read up as to why

    Also a decent amount of upsells and leads for landscaping are generated from your maintenance clients.

    Work on developing into the full service “yes we do that” kind of company
    Then eventually you can tighten your client base to only full service.

    Look into making your crew leader a maintenance division manager but I wouldn’t drop the service entirely
     
    iand, Cam15 and LPSiowa like this.
  6. tayloro

    tayloro LawnSite Member
    Messages: 10

    I'm interested in seeing how this works for you this upcoming season, as well as the back end setup. My goal this year was to actually minimize our total amount of mowing crews, but it appears we will be at 3 crews for the season. We haven't done subcontracting for mowing yet, but QC was my biggest concern when thinking about that transition, as well as appearance/having our logos on the jobsite.
     
  7. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,589

    Had a good strategy that didn’t get fully executed, but still moving forward with subbed mowing. The two employees we had that were going to start their own companies idea flamed out. Moving one of those employees into a new mow/maintenance hybrid crew that will maintain a group of smaller commercial properties we have and the other has moved on to another industry.

    We interviewed multiple companies to sub mowing and have made an agreement with seven total. Three are solo operations that will be doing residential only - the other four will mow our commercial, aside from the group of smaller ones mentioned above. We tried to group routes in ten hour days, for a 3-4 man crew - little to no pushback on the pricing we offered.

    We have reorganized our commercial maintenance division and now have someone with expanded subcontractor oversight in their job description. They are putting together a calendar for site visits based on the level of property expectations. Also developing some kind of form or contractor portal for submitting invoices. With snow removal, we found that too many subs submitting invoices in all different formats is to much administrative work for our office.

    As long as I was saying no to things, I have also decided to sub out a majority of our sprinkler install work to another company. After walking away from the builder work we did, it has become more and more difficult to staff for the one or two installs we may do a week now. Really trying to focus my companies energy into reoccurring services with high margin and try to keep some of the noise from these other services to a minimum.
     
  8. tonygreek

    tonygreek LawnSite Platinum Member
    Messages: 4,084

    You're not alone on that one. You're the 4th company I know that has dropped irrigation in 2019, for the same reasons. Of those, 1 moved to subbing, 1 to a reciprocating referral, 1 dropped it entirely.

    edit: for geographic context, the three are midwest and northeast
     
    Tara Ann, hort101 and snomaha like this.
  9. J Hisch

    J Hisch LawnSite Bronze Member
    Messages: 1,049

    Go with your gut. I have helped three employees start their own business before in different markets. I owned it for a while and once I got the return I wanted the business went to them.. They were still an employee for a few years but with vision and hope of having their own thing at some point. At the end of the term if I didn't net what I wanted too then a predetermined price was established where they could buy me out.
     
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  10. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,589

    Hey Tony - Do you know what the resoning behind subbing/dropping sprinkler installs with the other companies? margins, staffing or something else? We found a friend of one of our lead techs who is a solo sprinkler repair/install comapny. His overhead is a fraction of ours, so we can keep a healthy margin from selling the install he installs - will still be branded under our name.
     
    Tara Ann likes this.

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