Buying lawn accounts. What's a fair price?

[The Green Man]

Hello everyone. I've started my own Landscaping business and I'm about to go into my 3rd season. I want to purchase some Residential and Commercial accounts and was wondering what you all thought would be a fair price to pay. I saw someone selling 65 accounts with about $12,000 worth of equipment for $30,000. Way more than what I want to get into so what do you think I should spend for like 15 accounts that are in the 35-45 dollar a cut size range? also, What should I be spending for individual accounts? Any help is appreciated. Thanks

[dpld]

Lawn care business tips

buying someone else's accounts is a tricky deal. sometimes it works out great but most of the time it ends up a disaster. most guys that sell their accounts have them valued far higher then they are worth and don't take into consideration that until the work is done and the customer retains them that it is all speculation. like i said, there are some situations that work out well but they are far and few between and the first thing i always say is, if it is doing so good or makes that kind of money then why are you selling? i look all the time at ad's that have businesses up for sale and although i would never buy one i always laugh at the excuses as to why they are selling like " owner is retiring " and the dude is 45 or " pursuing other ventures " and the owner is just getting a job with someone. i have also seen guys that have a gazillion lawns every three years put a list together of all the garbage accounts they want to unload and make up some story as to they are retiring or down sizing. i know the prospects of buying a business may appear to be instant satisfaction but the only true real way to build it up is through traditional means by way of marketing and word of mouth. it may take longer but the results are usually far better.

[Steve]

I saw someone selling 65 accounts with about $12,000 worth of equipment for $30,000.

$30,000 - $12,000 = $18,000

$18,000 / 65 = $276 per customer

Say these are $35 a mow

$276 / $35 = 7.8

So this lawn care business owner is valuing the customers at about 7.8 cuts or two month's income per customer. Would he accept 1 month? (4 x $35) = $140?

If they were decent clients with decent lawns and you felt you could keep them after they were 'sold' to you. Would 1 month's income make it worth while to you?

Do you know what your current cost is to acquire a new customer?

[The Green Man]

For $140 per customer that would be worth it to me. I figured someone would want to sell each individual account for around 150-200 which I think is a fair price especially if you want to look at it like you just gave them a free month of mowing. As of now I can't purchase the guys business but I would like to acquire at least 10 more solid this season. Not trying to be a "big" company. Would like to keep it around 25-30 customers so I can handle it myself with a part time employee.

[stevef1201]

There is a guy around here (I know him), who every year buys some used equipment, signs up a bunk of 'accounts', then sells the business. The poor slob that buys them then has to do them at the rate quoted by the seller. LOSE money with every cut! ( I know he told me he gets these accounts by bidding 4 and 5 dollars per cut for mobile home parks and 10 dollar cuts for residential) He makes great money each year 'selling' the business. You have to be very careful when buying someone else's accounts. Why not just let him go out of business and advertise to his customers?

[Steve]

For $140 per customer that would be worth it to me

How much are you currently spending to acquire customers? Do you know how much you are spending in your marketing and how many customers have come from it? you can divide those figures and find your cost to acquire each customer.

Then you can compare that value with the potential cost to buy these customers.