Buying accounts questions

[cwt2112]

I have read through the other discussions on this topic but have been unable to find answers to my questions.

I’m looking at buying a handful of accounts to add to the handful I currently have and was wondering how the transaction typically proceeds. In my mind the two most important factors are: Physically seeing each account and retention. Beyond that making sure each customer is aware of the transition and if it all possible talking to each customer personally. However I understand why the seller would be reluctant to let me speak to each client before a deal is made. But as the buyer I’m reluctant to hand over money until I can speak to each customer. Any thoughts on how to move forward? And is there anything else I need to consider beyond proximity to my current location and looking through any financial records? True, I'd prefer to not buy customers but I need more work and it's a fast way to get it.

Thank you!

[Liberty Landscaping LLC]

I haven't done this yet. I came close last season to buying ten but didn't. If it is all of the other persons accounts then buy the business and you can keep the contracts and say the point person is now me for your area to the customers and in a year use your contracts saying you changed business names. If you buy all his accounts have him sign a no compete contract so he can't do business in your area for five years or so. If its just a few accounts make sure there is def income I only would buy accounts with a signed contract no word of mouth purchases but that's me. Good luck and keep us posted.

I am considering buying this guys business of fourty accounts and he wants to stay on to get accounts for commision of one months income. If I do it he is signing a no compete so he can't do this for other people.

[Steve]

And is there anything else I need to consider beyond proximity to my current location and looking through any financial records?

Other issues we have seen is that you need to contractually keep the seller from going back and scooping the customers up from you after he sells them to you.

Have you calculated the cost per customer and compared that with your other marketing and the acquisition costs you had with those methods?

You might find it cheaper and easier to do some more marketing instead.

[cwt2112]

Thank you for the feedback I will take it all under consideration. One thing for sure I'm not finalizing anything until I've had the chance to speak with every account. It's definitely a risky thing buying accounts, however in this case and at the moment the seller is willing to work with the buyer and the customer to do what can be done to ensure retention and on paper these would be some great accounts. At minimum I should be able to get a verbal agreement from the customer to give me a month to earn their business. If it happens, while I always build and maintain a relationship with my customers and give as much as I can... these "purchased" customers are going to get a whole lot of extra stuff and attention. Kind of like... "Oh you need your toilet unstopped?" "no problem!" Make it so they'd be crazy to take back a dishonest scumbag.

Thanks much!

[Steve]

Keep us posted on how all this goes.

Also for others considering doing this, what monthly income multiple should they be looking at to pay per customer?

1 month's income or more?