Buying Existing Accounts

mxr163 · #1 06-07-2010, 12:14 PM

I ran into a guy who is looking to get out cutting grass. His wife started a busines and she needs his help now. He has been in business for 11 years.He has 45 accounts all located in the same city. He said he sorta shaped it into the best/non hassle customers. He brings in approx. $1,800 a week but he does not have any contracts with them.

Only thing is that he is asking $30,000.

From reading other posts, that seems extremly high.

I feel that this would be a huge jump for me and is worth a shot but don't want to pay that much. Obvioulsy a price of 15,000 or so would be reasonable but don't want to insult him or get turned away.

Any Advice would be Appreciated.

mburse1977 · #2 06-07-2010, 01:01 PM

Lawn care business tips

This depends on how old the accounts are. And how they would take to a new owner. If you lose none of the accounts they would be worth that amount but that is a really big change you would be taken. Over all its over 30,000 in accounts for the year so if you lose none you would break even and leave no cost to fix equipment so i would counter his offer with maybe the 15,000 and see if he takes it. This would give you breezing room Assuming this is just for customers no equipment in that price putting equipment in there changes the game all together.

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Byron3243 · #3 06-07-2010, 07:28 PM

My opinion is their worth almost nothing if their not contracts. Reason being you could buy them and then eveyone stop using you and then the money was just wasted, but this is just my opinion.

JP Landscaping · #4 06-07-2010, 09:13 PM

I would not pay more than $15,000 for the accounts. In fact i wouldn't pay more than about $5000. I think that with $5000 worth of investment in marketing/advertising you could get more than the 45 accounts.

But if you are set on buying them, then $15000 seems to be the top. I've heard people say they pay about 2 months worth of income for the accounts if they are contracts. They pay very little or nothing for non contract accounts.

If equipment is involved, add the fair market value of the equipment to the $15000 and you have a total price. Also, I would place a clause in the purchase contract that if some clients leave then you would be refunded for that client. Or something like you pay 1/2 up front and the rest at the end of 1 year if all clients or a percentage, like 90%, stay with you.

It's a big investment. take your time to think about it.

mxr163 · #5 06-08-2010, 04:03 AM

He agreed to cut with me for 2 weeks just to show the ropes n everything. I would try to meet everone and establish what was going on. I thought about making a contract giving a free cut at the end of this year and around the middle of the season next year that way it would sorta be in their best interest to stay with me.

How does that sound?

Steve · #6 06-08-2010, 06:05 AM

Let me ask you this.

If he reworded this offer and said, I will give you 45 lawn care customers for $666 ($30,000 / 45) a piece and you won't make any money off them until next year some time, would you still be interested?

There is a lot to think about beyond that.

How many customers do you have now? How are you going to scale up to take on another 45 customers.

How much will you have to spend to be able to service those customers that you won't be making any money from until next year?

In the past we have talked about a maximum growth of 20% a year or things seem to spiral out of control.

How much growth would this be for you?

mxr163 · #7 06-08-2010, 03:28 PM

I currently have 14 that i do and it takes me a little over a day to do those, if i did get those i would be at 59. That is a big jump but i believe i can handle it. I do the work by myself but if i was to get those i would hire a buddy to help me out.

I know i can handle the work.

Biggest obstacle for me now is coming up with the money. It is getting very frustrating trying to get a personal/business loan.

MAKLawnCutter · #8 06-08-2010, 07:35 PM

I purchased 15 CONTRACT accounts from a "friend"... i cut differently than he did, i use different eater line than he did... personally i think i had the better cut. He cut with me for 3 weeks, at week 7, i was down to 6 of the 15... not because i did a crap job but because, people dont like change, they would rather CHOOSE whom they have on their property... i wish i would of put that 500$ into advertising...

Matt

procaliper · #9 06-08-2010, 10:17 PM

Id just do it man!

Steve · #10 06-09-2010, 03:59 AM

Quote:

at week 7, i was down to 6 of the 15... not because i did a crap job but because, people dont like change, they would rather CHOOSE whom they have on their property... i wish i would of put that 500$ into advertising...

How did they go about canceling the service? Did they tell you why they were canceling? Were you able to meet with the customers during the switch? Could you get any further information from them at all to be able to learn from this situation?

Quote:

Biggest obstacle for me now is coming up with the money. It is getting very frustrating trying to get a personal/business loan.

It sounds like you still want to do this.

If you are unable to get a loan to do this, do you have a plan B? What will be your alternative?

Buying Existing Accounts

Starting a lawn care business.