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View Full Version : Customer leads for sale..how much?


backinblack
12-24-2008, 04:02 PM
I have been in business going on now almost 8 years and I am looking to sell off all of my customers as leads to a local competitor. Most of the customers have been around for 5+ years and are good solid customers.

How can I figure out how much all of the leads are worth? Also how can I figure out how much each individual customer is worth?

EasyPro
12-24-2008, 04:51 PM
I have been in business going on now almost 8 years and I am looking to sell off all of my customers as leads to a local competitor. Most of the customers have been around for 5+ years and are good solid customers.

How can I figure out how much all of the leads are worth? Also how can I figure out how much each individual customer is worth?

I would give you 30% to 35% of the gross for the year

backinblack
12-24-2008, 05:31 PM
That is around what I was thinking too, but I have been asking other business leaders and owners, and they say anywhere from 1x to 3x your yearly gross. That just seems like a lot of money with no guarantee that the customer will stick around.

EasyPro
12-24-2008, 06:58 PM
That is around what I was thinking too, but I have been asking other business leaders and owners, and they say anywhere from 1x to 3x your yearly gross. That just seems like a lot of money with no guarantee that the customer will stick around.

That is is for a business you are just selling customers . . .the basic formula is 3x a business' net profit

Steve
12-26-2008, 02:08 PM
I have been in business going on now almost 8 years and I am looking to see off all of my customers as leads to a local competitor. Most of the customers have been around for 5+ years and are good solid customers.

This is interesting. Why are you selling them off as leads? Why not sell them off as customers? Have that new lawn care business owner work with you on the properties for a specific period of time and then introduce him to your customers. I bet most would stay.

Is this what you are planning on doing or are you just looking to sell your customer list and have him take it from there?

backinblack
12-27-2008, 01:28 AM
This is interesting. Why are you selling them off as leads? Why not sell them off as customers? Have that new lawn care business owner work with you on the properties for a specific period of time and then introduce him to your customers. I bet most would stay.

Is this what you are planning on doing or are you just looking to sell your customer list and have him take it from there?

Well, this is the situation. I have had a guy help me out here and there the last year with some of the accounts, subbing them out to him. But he doesn't do the quality of work that I expect, just the price. He is the only one with a flexible schedule and offers me a descent price.

So I plan on using him again this year while I am finishing everything up and the contracts expire in December 2009 even though I can personally get out of the contract, the customer can not. I am in a sense just using the guy to finish up the year for I can spend time doing other stuff. But in the mean time, I do not want to give him the accounts and I know he can not afford buying them off from me. If I had an option, I would sell the accounts before the start of the season even began to a larger local competitor that I know has the money for the accounts.

How you explain it though is that I can not really sell them as customers, because I can not sell the contracts or I should say "I won't sell the contracts" to him. I can only sell the possibility that they will stick around as customers to someone. There is no definite.

Steve
12-27-2008, 07:24 AM
Well, this is the situation. I have had a guy help me out here and there the last year with some of the accounts, subbing them out to him. But he doesn't do the quality of work that I expect, just the price. He is the only one with a flexible schedule and offers me a descent price.

So I plan on using him again this year while I am finishing everything up and the contracts expire in December 2009 even though I can personally get out of the contract, the customer can not. I am in a sense just using the guy to finish up the year for I can spend time doing other stuff. But in the mean time, I do not want to give him the accounts and I know he can not afford buying them off from me. If I had an option, I would sell the accounts before the start of the season even began to a larger local competitor that I know has the money for the accounts.

How you explain it though is that I can not really sell them as customers, because I can not sell the contracts or I should say "I won't sell the contracts" to him. I can only sell the possibility that they will stick around as customers to someone. There is no definite.

Have you considered trying to advertise that you have your accounts for sale and see if anyone else can come in and buy them out right from you? What's your view on that, would that just be better to sell everything?

musician/lawnman
12-27-2008, 09:38 AM
Yeah I'm with Steve on this one, Find someone else to sell the accounts to. If you don't have the time to dedicate to you customers anymore you owe it to them to find a way to get their service to continue at the same or higher quality that YOU'VE been providing. Don't send a 2 bit shlep there just because he's cheap. That's crap. If his work isn't up to your standards then it isn't up to theirs either, but as far as their concerned he now works for you you & it's you doing the lousy job. Sell them off. To buy contracted accounts with a year to go I would sy you should be able to get a month or maybe 2 worth of gross from them. ($100/month account ... $100 sale price) That's a typical account sale. Think about it, How many months will he have to service that account to PROFIT his $100 back? Then he obviously want's to make some money on the deal right? So 1 months gross is fair. More than that & it's not really worth it to the buyer.

Steve
12-27-2008, 10:23 AM
Chuck what suggestions would you have if a lawn care business owner wanted to sell his accounts and business?

Should he sell it as a package deal or separate it? Where should he advertise?

backinblack
12-27-2008, 08:43 PM
Have you considered trying to advertise that you have your accounts for sale and see if anyone else can come in and buy them out right from you? What's your view on that, would that just be better to sell everything?


I thought about advertising the accounts, but then again I am kind of scared that some of the local competition then may try to screw me over, or that my customers may find out that I am trying to sell out and get really mad about the situation

backinblack
12-27-2008, 08:48 PM
Yeah I'm with Steve on this one, Find someone else to sell the accounts to. If you don't have the time to dedicate to you customers anymore you owe it to them to find a way to get their service to continue at the same or higher quality that YOU'VE been providing. Don't send a 2 bit shlep there just because he's cheap. That's crap. If his work isn't up to your standards then it isn't up to theirs either, but as far as their concerned he now works for you you & it's you doing the lousy job. Sell them off. To buy contracted accounts with a year to go I would sy you should be able to get a month or maybe 2 worth of gross from them. ($100/month account ... $100 sale price) That's a typical account sale. Think about it, How many months will he have to service that account to PROFIT his $100 back? Then he obviously want's to make some money on the deal right? So 1 months gross is fair. More than that & it's not really worth it to the buyer.

Please dont misunderstand me in regards to the quality of the work. I should have better explained myself. The work is pretty great, not perfect. I don't think anyone could ever do the type of work that I expect. But what I am worried about in the quality is the personal attention, quick response time, and friendly service. He is just not "there" to that point yet.

Steve
12-28-2008, 02:49 PM
Keep us posted on what you decide to do.

backinblack
12-30-2008, 03:01 PM
I will let you know what I decide. Put of me really wants to hang onto the customers and find a good solid sub. Its just hard to let go of customers that I have taken so much time and energy to build up. While the other part of me feels that its time to move on because the market is becoming completely saturated with fly by nights and new start ups, and with the economy absolutely tanking. A very hard decision to make

Steve
12-30-2008, 03:14 PM
Why not just sell it all outright if you want. Then take the money and look for new investment opportunities or hire someone full time to do the jobs maybe?

backinblack
12-30-2008, 07:43 PM
Why not just sell it all outright if you want. Then take the money and look for new investment opportunities or hire someone full time to do the jobs maybe?

That is one of the things that I am considering. Whether to sell everything off, part of it, or just sub it out.

There are lots of pros and cons to everything, but trying to make the right decision. I think that what will help me make the right decision is whether I can get a good price for the customers if I was to sell them. If someone offers me a good price or accepts my offer, then I will probably bow out from the business totally.

Steve
12-31-2008, 07:26 AM
If someone offers me a good price or accepts my offer, then I will probably bow out from the business totally.

Have you figured out what # times earnings would make you sell? 1x monthly, 2x monthly, 3x monthly? Or what?

backinblack
01-01-2009, 12:05 AM
Have you figured out what # times earnings would make you sell? 1x monthly, 2x monthly, 3x monthly? Or what?

I am going to sell the accounts at 50% of the yearly gross

Steve
01-02-2009, 09:13 AM
How are you going to market the sale? I bet a lot of readers looking to sell their business would love to hear your insight as to this.

backinblack
01-02-2009, 11:06 PM
How are you going to market the sale? I bet a lot of readers looking to sell their business would love to hear your insight as to this.

Well, the company that I plan on selling it to offered to buy my accounts about 4 years ago, so I am going to approach him first before anybody else. I will keep you guys updated on it when it happens. Probably won't be for another few weeks.

Steve
01-03-2009, 09:53 AM
Well I do look forwards to hearing about it. Keep us updated.

I wonder if sending out letters to every lawn care business in the area about a lawn care business being for sale would be helpful. Maybe if it were just generic letter and then if they had more questions on it, to call a certain number or to email a certain address. Then maybe you could have an auction and get the best price available.

What about even on ebay? Could something like that work maybe? Could we even make a post for it on here and find those who are interested from your area to post how much they would bid for it all. You could include the link the post here in your letter. We could have pictures of the equipment and list the number of accounts and the income the accounts generate. An ad could be made on craigslist linking to a post here.

Hmmm, now that I am thinking, I do wonder if making a podcast or a GopherHaul video might help it sell better!

I'd love to see you get top dollar and that might not happen unless you have some kind of bidding for the business.

What do you think of these ideas?

palmettoscapes llc
01-04-2009, 05:46 AM
more than one month really isnt fair when the client dont see the same person as befor, the same truck machine, has to send thecheck to a different address ect. the buyer will probably loose 25% of your clients right off the bat. (i lived this, and still tring to get under control)

musician/lawnman
01-04-2009, 09:14 AM
more than one month really isnt fair when the client dont see the same person as befor, the same truck machine, has to send thecheck to a different address ect. the buyer will probably loose 25% of your clients right off the bat. (i lived this, and still tring to get under control)

That's what I said earlier, when he asked for advice on a reasonable price to sell, I've been following this thread & imagine it will go on for a while cause they probably won't sell at 6 months gross for just that reason.
I found it kinda funny. It was like somebody saying hey maybe we could sell these cookies.... What do you think their worth?
Answer: Similar cookies sell for a buck a peice all over town.
Nope, I think I'll sell mine for $6 dollars, that way I'll make more money.
ahhhh, ok then.

Steve
01-04-2009, 10:12 AM
(i lived this, and still tring to get under control)

Can you tell us a little about what happened and how you resolved the issue?

backinblack
01-04-2009, 11:26 PM
That's what I said earlier, when he asked for advice on a reasonable price to sell, I've been following this thread & imagine it will go on for a while cause they probably won't sell at 6 months gross for just that reason.
I found it kinda funny. It was like somebody saying hey maybe we could sell these cookies.... What do you think their worth?
Answer: Similar cookies sell for a buck a peice all over town.
Nope, I think I'll sell mine for $6 dollars, that way I'll make more money.
ahhhh, ok then.

the one main problem with your whole thought process is I am handing these customers to him on a silver platter. You are not taking that into consideration. He will not have to do any marketing at all. You are comparing apples to oranges.

musician/lawnman
01-05-2009, 06:08 PM
Yes, I understand that. That's what it means to "buy the accounts" from someone. I didn't think you were selling someone an opportunity to send your clients a flyer here.... ? Still you honestly think a hundred dollar account is worth $600 to somebody? Come on man? If a business can profit say 20% then a $1200 a year acount only profits $240, Unless your people are locked iron clad into a 5 year deal then the accounts can't be worth much more than $100 in reality. Who's gonna pay $600 to make $240? & that's IF they stay the full 12 months.... As someone stated above he is gonna have a drop off rate just because it's somebody new doing the work & not even from the same company. He'll probably lose 20-30% in the 1st 2 or 3 months. I know it sucks to think the accounts alone are worth so little. The equipment alone is worth what used equipment is worth, together it's a turn key package with training & all! Much better value for a young go getter to step in & buy a "profitable business". That way it's probably worth closer to your annual gross. I don't know how big your business is though so it's hard to say. I know a guy who sold a business grossing $60k a year with a 7x14 enclosed trailer, one 60 inch exmark with like 700+ hours on it, 2 trimmers, 2 blowers, & assorted hand tools for $58,000. including all accounts, books, phone numbers, training etc. I honestly though the price was a little high. I was going to buy that same business almost a year earlier, I gave him a deposit of a $1000! Then I crunched the numbers some more & decided It wasn't worth it. I walked away from my $1000 dollars! These businesses are easy to start & thus they won't sell for 2-3 years worth of gross like many other types of businesses. I built my business from scratch & topped the size of his 12 year old business in my 1st year without the $60,000 dollars in overhead from day one.... Do the math all the way through then put yourself on the other side of the table, what would you pay for it? I' not trying to be a jerk or anything, I just think your expectations for what accounts bring are a bit high bro.

legendlawn
01-06-2009, 11:29 AM
Chuck is right. From a buyers standpoint I have bought accounts before. I paid 6 weeks gross for them and experienced the 25% drop. I also dropped a few more on my own, because they were "problem customers" I think it was a positive experience, but I will never pay more than 4 weeks gross for accounts in the future. 6 months gross is outrageous, and like Chuck says takes all incentive away from the buyer. I had another gentleman that wanted me to buy his accounts at the end of last season due to him moving. He was demanding 8 weeks gross. I offered him 4 firm. He refused and to make a long story short he moved without a buyer and I am mowing some of his accounts next season anyways.

musician/lawnman
01-06-2009, 05:43 PM
Thank you Logan,

Like I said earlier I'm not trying to be an *** or anything. The guy "asked" a question about something he didn't know about & that's fine, this site is great for that kind of thing. But he obviously didn't like my answer... So I've been trying to explain it (as you see) several times.