Lawn Care Business Forum Lawn Care Business Book Lawn Care Business Blog Lawn Care Software
Home Forum Contract & Flyer Templates Blog Software Videos Podcast Calculators / Estimators Store Mower Review Design It Yourself Lawn Business School

Go Back   GopherHaul Landscaping & Lawn Care Business Marketing Forum > Business > General Business Discussions

General Business Discussions A place to talk about general business discussions.

Advice on Buying Customers


General Business Discussions

A place to talk about general business discussions.
Reply
 
Thread Tools Search this Thread
  #1  
Old 07-19-2005, 02:04 AM
mowboy mowboy is offline
Lawn Care Business Consultant
 
Join Date: Mar 2005
Location: Vancouver, BC
Age: 47
Posts: 76
Rep Power: 0
mowboy
Default

Bruce from Scott Maintenance Company asked the following question.

Quote:
Originally Posted by [b
Quote[/b] ]I am currently operating a business in which I am buying from another company who is getting out of the business. *The selling price is the value of 1 year on a 2 year service contract in which i perform the service and the seller gets the money for that year. *In return I get the balance of his customer list. *The business gross per year is aprox. $50,000 CDN. *I am quessing that I am paying him about 9,000 for the 1 contract which is aprox 1- large and 4 small properties. This deal is verbal only. *I want to write up some form of " transfer" or "non-compete" agreement. *If you have any comments I would appreicate them.
Hi Bruce,

Excellent question... buying customers is a great way to build your business but there are some important things to consider.

I would use caution proceeding with your deal. Currently your seller is holding all the cards. I am assuming that, for the first year, you are doing the work and he is getting the money? (as opposed to you getting the cheques and then paying him). So he is in control of the money. As well, he has indicated only verbally that he will hand over all of his $50,000 in contracts at the end of the year. Short answer then is that you are smart to demand both a signed agreement regarding the conditions of the sale and a non-competition agreement. Consider these other points too.

- General rule of thumb for buying customers is that they are worth about 1 month revenue. If they are commercial you'll pay a little more and if there is a signed multi-year agreement in place (which you said there is) then this will push the price up too. So it could be worth as much as 2 or 3 months revenue depending on the situation.

- What about the other $40,000 worth of contracts? Are they commercial or residential? Are they long term customers or brand new (the longer that the selling company has served the customer the more likely that the customer will trust that he or she is being treated fairly - and will accept you as the new contractor). The $9,000 you mentioned seems a little steep but it really boils down to the value of the other customers on his list.

- Ask to see his books - you have the right to examine them. Ask him to provide job costing information so that you can see if the customers are profitable. Ask for a complete account history of all his customers. Ask to see them now, not at the end of the year. If he does not want to produce them, be prepared to call off the deal.

- I am leery about going a full year doing the work for him. Working together for a couple of months makes good sense and helps make the transaction smooth for the customer... but a year? If possible offer to reduce this time even if you have to pay some cash. A year is a long time and if things get awkward half way through, you will likely end up with the short end of the stick.

- Having said that put everything in writing whatever you decide to do. Record customer names, addresses, revenue and costs. Make sure the selling company agrees to help you with a smooth transaction (ie by writing letters explaining the situation and assuring customers that quality will not drop) and document this in the signed agreement too. As well, as you mentioned, put that the selling company cannot compete against you (at least for the customers on the list) for 2 years or so.

There is a lot to consider and a lot to lose here so caution and prudence is key. If in any doubt talk to a lawyer and/or an accountant to help you with the deal. If you would like professional and specific consulting for this deal feel free to contact me directly at joel@mowboy.com.

I hope this information helps you and that this works out for you.

* The information presented here is paraphrased from ‘Start and Run a Landscaping Business’ by Joel LaRusic (page 63).
__________________
Joel LaRusic
Consultant/Author, Start & Run a Landscape Business
www.mowboy.com
Reply With Quote

Stop guess-timating. Learn how to estimate and make money! $$$
Mow Time Estimator Lawn Care Price Estimator Mulch and Topsoil Calculator Snow Plow Estimate Calculator


Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Forum Jump

» Recent Threads
  RatingTitle, Username, & Date Last Post Replies Views
Hello from Md
homey
Yesterday 06:55 PM
Today 06:12 PM
by Billy Goat
2 62
Has Obamacare helped or...
Steve
Today 04:37 PM
Today 04:37 PM
by Steve
0 20
Employee job training...
brookline
12-15-2014 08:15 PM
Today 02:09 PM
by SuperiorPower
5 193
I'm BACK!
SuperiorPower
12-16-2014 11:08 PM
Today 02:05 PM
by SuperiorPower
2 106
Repair or replace the...
lxarth
Yesterday 05:07 PM
Today 01:37 PM
by Steve
2 85
what do you "love" to...
calebmoss
07-06-2011 10:05 PM
Yesterday 05:09 PM
by Chilehead
28 8,867
What Fertilizer to Use?
acrajchel
04-07-2014 02:56 PM
Yesterday 01:11 PM
by Steve
23 2,894
Grass hopper mower
ExtremeLawncareServices
12-05-2013 09:51 AM
Yesterday 09:40 AM
by SuperiorPower
34 6,042
Peco Bagger
AGPS
11-18-2014 02:20 PM
Yesterday 09:13 AM
by SuperiorPower
15 1,245
These are the days on...
ExtremeLawncareServices
03-22-2014 10:12 AM
12-15-2014 10:30 PM
by ExtremeLawncareServices
188 16,433
New to Gopher Haul-from...
323k13l
12-12-2014 10:34 PM
12-15-2014 02:58 PM
by Steve
3 236
hi
creteland
12-12-2014 09:06 AM
12-15-2014 01:45 PM
by Steve
5 237
New addition to my small...
googus
12-12-2014 07:36 PM
12-15-2014 07:47 AM
by googus
4 304
Ferris IS700Z
rmccutchan
12-14-2014 01:10 AM
12-14-2014 11:41 PM
by rmccutchan
4 211
Charge what the market...
Billy Goat
12-09-2014 12:39 PM
12-14-2014 06:39 PM
by biglee
20 740
Hi from IL
steveinil
11-25-2014 02:07 PM
12-12-2014 07:18 AM
by steveinil
4 750
Utility Company Right of...
eastsidelandcare
12-11-2014 04:54 PM
12-11-2014 04:54 PM
by eastsidelandcare
0 228
leaf removal
Double J LLC
10-03-2014 05:24 PM
12-11-2014 04:50 PM
by eastsidelandcare
33 3,974
suggestions on full lawn...
Brian3137
12-10-2014 07:18 PM
12-11-2014 03:41 PM
by Steve
6 332
new to me box truck
jrayb39667
03-06-2014 11:20 PM
12-11-2014 09:43 AM
by Sprinkler Buddy
18 3,292
Hello from SW FL!!
5StarLawnscaping
12-05-2014 02:35 PM
12-10-2014 02:45 PM
by WesleySnips
7 567
Echo pb200 blower fuel...
googus
12-06-2014 09:03 PM
12-09-2014 06:35 PM
by Steve
3 414
Facebook
element009
03-23-2011 09:36 AM
12-09-2014 06:24 PM
by Steve
36 9,725
Are you prepared for the...
Steve
12-02-2014 04:13 PM
12-09-2014 06:22 PM
by Steve
7 829
Email Address Name
Just Cuts
12-07-2014 09:49 PM
12-08-2014 03:15 PM
by Steve
3 374
Inspection form
stevef1201
12-07-2014 10:38 AM
12-08-2014 03:10 PM
by Steve
1 371
Truck, Trailer,...
hawthornelawncare
12-23-2011 01:01 AM
12-08-2014 12:37 PM
by jrs.landscaping
108 34,079
Back Pack Blower
Ian Lovejoy
11-09-2014 08:41 AM
12-07-2014 06:35 PM
by stevef1201
24 1,639
Innovation by mandate
bayoubandit
11-29-2014 01:33 PM
12-06-2014 03:27 PM
by SGL1
12 895
Trying something new,...
ExtremeLawncareServices
09-21-2014 10:07 PM
12-05-2014 11:06 AM
by Steve
9 2,200
Good help is hard to find
Hanks Lawn Care Services
11-19-2014 03:27 PM
12-04-2014 01:32 PM
by stevef1201
15 1,376
How many hours is too...
Just Cuts
12-04-2014 09:00 AM
12-04-2014 01:02 PM
by Just for Cuts
6 542
Does this sound like a...
googus
12-03-2014 07:47 AM
12-04-2014 12:37 PM
by Steve
5 614
New website
Chilehead
11-20-2014 04:39 PM
12-04-2014 12:27 PM
by Steve
14 1,160
New website
SGL1
12-02-2014 10:55 PM
12-03-2014 11:17 PM
by BLC7
19 789
Websites, how long...
Dan Tanner
03-09-2014 08:29 AM
12-03-2014 11:12 PM
by SGL1
21 3,160
I Want to buy old...
ExtremeLawncareServices
10-10-2014 11:04 PM
12-03-2014 10:36 PM
by ExtremeLawncareServices
8 1,809
GPS trackers for...
Billy Goat
12-02-2014 06:09 PM
12-03-2014 07:17 PM
by Steve
8 644
My site is on fronts page
tbtigers03
11-14-2014 05:58 PM
12-03-2014 06:31 PM
by SGL1
17 1,371
Hiring Subs over Temps
Billy Goat
12-02-2014 06:26 AM
12-03-2014 01:24 PM
by Steve
3 577
Thanksgiving cards
Steve
11-10-2008 11:57 AM
12-02-2014 11:11 PM
by SGL1
11 9,448
New parking area
ExtremeLawncareServices
11-07-2014 09:47 PM
12-02-2014 02:17 PM
by jrs.landscaping
12 1,421
Pressure Washing...
WesleySnips
07-31-2014 07:13 PM
12-02-2014 08:47 AM
by SGL1
6 1,437
old contracts
bayoubandit
11-29-2014 11:10 AM
12-01-2014 11:20 AM
by Steve
3 662
Hi to you NOTHERNERS
stevef1201
11-11-2014 05:56 PM
12-01-2014 10:54 AM
by Steve
9 1,203
Lawn care truck
Steve
10-10-2009 03:40 AM
12-01-2014 10:45 AM
by Steve
32 15,108
Intuit Quickbooks...
CDLAWNCARE
11-30-2014 10:19 AM
11-30-2014 10:19 AM
by CDLAWNCARE
0 557
Say Hello !!!
Steve
03-19-2007 12:18 PM
11-28-2014 01:36 PM
by Just Cuts
1,196 355,363
Hello from Kentucky
TRV
09-30-2014 06:42 PM
11-28-2014 10:49 AM
by Steve
13 2,249
Happy Thanksgiving!
Steve
11-27-2014 09:48 AM
11-27-2014 09:48 AM
by Steve
0 611
» Popular Tags
2wd 4x4 aerocore apartment complex auger bark billy goat brushcutter blades care charge christmas collections edging employee problems equipment rental estimate foreman four wheel drive gopherhaul gravely growing a lawn care business hardscapes hills holiday husqvarna jobs john deere quik trac labor cost landscape services lawn lawn care lawn care business podcast lawn care business seo lawn care business show lawn care business website lawn care business website seo lawn care website lighting lighting brass outdoor lights marketing mowing mr dave mulch mulch estimate new buisness new mower ordinance past due per hour service podcast pto push versus ride running a business savannah scripts search engine optimization seo shreaded small engine repair snow sprayer starting a business toro grand stand trailer trimmer rack truck new used landscape turfgrass consulting up sell employee won't return wood
Powered by vBadvanced CMPS v3.1.0

All times are GMT -5. The time now is 08:53 PM.


(C) 2011 Riggs Publications - Terms of use & Privacy Policy

All times are GMT -5. The time now is 08:53 PM.

(C) 2011 Riggs Publications - Terms of use & Privacy Policy