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Southern Oasis
03-17-2011, 01:10 AM
Hello everyone. My name is John. I am in the New Orleans area. I have been doing Landscaping and Irrigation for a few years now with my main focus being the irrigation. This year I want to move toward the lawn care side of things.
There is a guy here who is getting out of the business. He has approximately 50 clients spread out over three areas around the city and is looking to sell them. I feel this would be a good start for me. However, I have many concerns as I have never participated in a transaction of this sort. I want to protect myself in case his customers don't want to make the transition and drop me. I don't yet know if these customers are under contract or how much he is charging for his services. Most importantly, I don't know what these properties (clients) are worth. Someone told me that I could expect to pay somewhere around 2.5 cuts for each client. Does this sound about right? I was thinking that (whatever I pay for them) I would have a contract drawn up with some sort of non-compete clause and that I would agree to pay for each client that stayed with me for at least a month (or should that be longer).
I'm sure there are things I haven't thought of as well. If anyone has any thoughts/advice for me, I would be most grateful.

Simpkins
03-17-2011, 02:22 AM
I'm not sure the going rate for customers. Surely starting out with that many customers would be awesome! I would definitely have a non-compete clause in the contract, maybe prohibiting him from doing this kind of work within 50 miles from you or whatever. If you are going to pay 2.5 cuts per customer, I would think the 1 month requirement of your would be too short.

I think it would be great to spend the day with the guy you are buying the customers from. The two of you could go to each client and he could introduce you as the company that will be taking over. Is this feasible? I would think you would have a better retention rate this way.

PS Welcome to the forums!

Steve
03-17-2011, 04:19 AM
Welcome to our forum!

You have a lot of great questions to ask the owner of that other business. I would also be interested in knowing why he is getting out of the business.

Have you considered marketing to your current irrigation customers and offering them lawn care services and growing in that manner? I would think since you are already in the industry, it wouldn't be too difficult for you to scale up and build the lawn care side of things.

What's your view on all that?

SpokaneSRC
03-17-2011, 09:45 AM
Sounds like you need a lot more info from the owner. Are his clients under contract? How much is each paying? And so on. If they are under contract, make the purchase contingent upon them signing new contracts with you. Also find out what services each client is currently receiving. You may be able to offer them something new that the current owner doesn't. Just my thoughts on it.

Welcome to the forum.

Southern Oasis
03-18-2011, 12:45 AM
Thank you everyone who has commented so far. I really appreciate and respect your opinions. You have given me some things to think about. One other thing I was thinking about is whether or not to take on a partner. He has a few residential properties, but I'm not sure they are managed in such a way that I would want to keep them. His equipment is limited also. I suppose I am concerned that he just doesn't bring much to the table. I would have to hire a helper, which I know would mean higher profit over having a partner. I do believe that sometimes two heads are better than one, but I do have a couple of guys I can go to for advice. Plus, having this forum to get advice from guys with much more experience than I, will probably keep me from making any horrible mistakes. I actually think this forum is more helpful than the guys I know anyway.

Steve
03-18-2011, 02:55 AM
I have yet to see a single positive story about setting up a partnership on here.

There are a bunch of articles on partnerships (http://lawnchat.com/index.php?s=partner) in my lawnchat.com (http://lawnchat.com/index.php?s=partner) blog. Scanning through some of the stories may make you think about this.

Have you been thinking about the positives and the negatives to adding on a partner? If so, what have you come up with so far about it?

Southern Oasis
03-19-2011, 05:55 PM
Thanks again. I will go over and check out lawnchat.com (Actually, that's where I found this site). Is there any information about purchasing a lawn care business or client list over there?

Steve
03-20-2011, 04:35 PM
There are a lot of articles on purchasing accounts.

You have to really consider the customer acquisition costs. How much is it going to cost to buy each of those customers compared with how much it would cost you to market to them and get them yourself.

Who knows too, how many of the customers you might buy would stick with you, while customers you get through your own marketing tend to be more loyal and stay around longer.

Keep us posted on all this.