buying lawn accounts

[wilcox_11]

Was wondering what percentage of profit is average for buying lawn account. thanks

[ratchetmaster2]

Lawn care business tips

I'm a little confused what you're asking. You're wondering about profit vs. initial price of buying an account? I guess that would depend on how long you hold the account for, and what services you manage to sell

[wilcox_11]

i'm asking like when someone puts there buisness up for sale. example would be they have 50 clients for $50,000 with a gross of 250,000. how do they calculate what price is right for number of clients?

[dpld]

Originally Posted by wilcox_11

i'm asking like when someone puts there buisness up for sale. example would be they have 50 clients for $50,000 with a gross of 250,000. how do they calculate what price is right for number of clients?

they really are not calculating anything.
they are just pulling numbers out of the @zz. most people selling a landscape business think it is worth far more then it actually is.

equipment is about the only part of a business purchase that can actually be converted into a real world value.

buying accounts on the other hand are completely different and that is where the fictional value comes in.

if the seller has no contracts then the accounts are barely worth a dime and other then a bird dog fee you would be foolish to pay them more.
if they have a signed contract and they have been a steady customer it would give more value in selling them and at that rate might be worth as much as a month and a half to 2 months value of a service contract.

sellers do not realize that they do not own their customers and with or with out him said customer is gonna be having someone cut his lawn and servicing his property and he is the one who decides who works on his property.

in the end it is a crap shoot and ultimately comes down to how much someone is willing to pay for something.

if someone is successful and is making a good living with continuous growth i would see no real logical reason to sell a business other then it is failing or mismanaged.
everyone comes up with a good excuse as to why they are selling but 99.9% of the time is they failed.

i been at it a while and this business will go on until i die even when i am retired and i will either have my children run it when they are older or i will have managers in place to run it.
there is a exception to a very small fraction of a percentage point for the few who are so successful that they have multiple businesses and they want to scale back or put more effort into the remaining businesses.

i am not saying that is the case at what you are considering but truth be told is everyday guys are starting up lawn businesses and they stick it out for a few years and build up a few dozen lawns but can not make any money and eventually sell out.
come time to sell, it is a turn key operation that takes care of itself and is ready and waiting for you to enjoy financial freedom and the american dream and if it were not for my bad back i would continue on living the dream but instead, since i am such a nice guy, i am gonna do the right thing and sell it to you and bestow the gift of financial success to you.

[Steve]

Hi,

I'd suggest you read a lot of the buying lawn care accounts stories on here. Many of them have bought accounts and come back to post what they would have done differently. A lot of great insights and warnings.

If you are going to pay, we have seen prices average at about 1 months income for a lawn. You also better have something in place that they can't go back and market to those customers again.

Also figure a large group of them will leave once you buy it because they are family or friends of that business owner. So there are a lot of things to consider.

[Predator]

Wilcox, great question. Here in the Baltimore area, I have bought out 2 companies. The asking price is usually ridiculously high as all you have is the eequip for sale in one hand and a bunch of promises in the other. We offer the seller fair market value for the pieces of equip. we want. Then we pay them the price of one weekly cut per month for 4 months after the client has paid us. So say a client pays $35 weekly for mowing. End of April, we bill $140 for mowing after the client pays us we pay seller his $35 cut, this goes on for 4 months. Your client and $ are guaranteed, no risk. Anybody else have a way, would love to hear it as our business plan revolves around buying someone out every other year.

[Steve]

That is the first time I had heard of such a method and it sounds very creative.

Have you had any sellers balk at such a deal? If so, how did you sell them on it? Also what % of customers dropped when you bought the businesses? Have you found less dropped when you handle it this way than pay a flat price for all of them?

[ratchetmaster2]

Originally Posted by Steve

Have you found less dropped when you handle it this way than pay a flat price for all of them?

I'm also curious of this aspect. I wonder how some clients would react when suddenly a different crew/company that they are unfamiliar with is mowing their lawn.

[Steve]

I would think part of the process of buying/selling the accounts would be an introduction of the newer business owner to the customers so as to smooth out the transition process and not shock the customer.

[Predator]

Sorry it took so long to get back, gettin pretty busy here. Steve, yes every time we approach a seller with this they balk, we sit back and wait, call them every few days. When they realize they are not going to get their asking price, we usually end up getting a foot in the door and asked for a more detailed explanation. Good point on introductions, have to have them. We usually spend half of Feb. and all of March working on that. It makes people more comfortable with a transition. We have had no problem getting the seller to help because ultimately it means more $ in his pocket. we have never paid a flat fee for a business and will not, ever, there is no assurance the clients will migrate. To answer your question on %, we have had a 90% migration using our method and visiting each client personally. Hope this helps to answer some of everybody's questions, I am glad to tell you what I have experienced and I would be curious to hear about any of your buy-out techniques.