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: 48
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
Starting a legit...
Hard-Body lawn & garden
Today 08:19 PM
Today 08:42 PM
by CurbAppeal1
1 11
How do YOU charge your...
Hard-Body lawn & garden
03-02-2015 09:28 PM
Today 08:19 PM
by Bradcook21
3 92
Ground Guys
Pattersonllc
Today 07:49 PM
Today 07:49 PM
by Pattersonllc
0 14
Small dovetail truck...
ExtremeLawncareServices
Today 07:47 PM
Today 07:47 PM
by ExtremeLawncareServices
0 12
Beginner Mistakes:...
Steve
01-31-2007 12:45 PM
Today 07:33 PM
by CurbAppeal1
25 7,737
Front page google...
CurbAppeal1
Today 06:04 PM
Today 07:28 PM
by CurbAppeal1
4 40
Opinions on truck wrap
Trupro
02-28-2015 04:21 PM
Today 07:20 PM
by CurbAppeal1
18 343
taking first steps...
sizemorelawncare
11-10-2014 08:24 PM
Today 06:47 PM
by BladesofSteel
14 1,989
Doug With Blades Of...
BladesofSteel
Yesterday 08:40 PM
Today 05:44 PM
by BladesofSteel
2 56
hoa bid
Bradcook21
Today 07:12 AM
Today 04:49 PM
by Steve
2 69
Incentives for potential...
rmccutchan
02-02-2015 12:09 AM
Today 04:06 PM
by Steve
13 844
Kawasaki Control Assembly
rsanchez1203
Yesterday 04:21 PM
Today 04:04 PM
by Steve
10 158
All NEW BRASS Black Rain...
BlackRain75
Yesterday 10:07 PM
Today 02:33 PM
by Sprinkler Buddy
1 46
Moss in grass in the...
tk4454
05-17-2013 12:19 AM
Today 09:08 AM
by Moki
4 1,602
Jesse with Curb Appeal...
CurbAppeal1
Yesterday 01:44 PM
Yesterday 06:48 PM
by CurbAppeal1
12 148
New guy from Columbia, SC
holymoly
Yesterday 05:27 PM
Yesterday 06:10 PM
by Steve
1 46
Diesel conversion?
Just for Cuts
03-02-2015 10:59 AM
Yesterday 06:08 PM
by Just for Cuts
4 118
stubbon people
Bradcook21
02-16-2015 04:25 PM
Yesterday 05:56 PM
by Steve
45 1,505
What's include in a bid?
ppl
03-02-2015 01:19 PM
Yesterday 05:53 PM
by Steve
9 208
New Website
brian'slawncare
03-01-2015 06:35 PM
Yesterday 05:48 PM
by Steve
8 170
New Lawn Care Business
S&Z Lawncare
03-02-2015 04:13 PM
Yesterday 05:39 PM
by Steve
3 125
My Newborn son
avetslawncare
02-27-2015 01:07 PM
Yesterday 05:23 PM
by joshlawncare
7 171
New parking area
ExtremeLawncareServices
11-07-2014 09:47 PM
Yesterday 02:50 PM
by ExtremeLawncareServices
14 2,045
rock salt
Bradcook21
02-24-2015 11:17 AM
Yesterday 01:26 PM
by jrs.landscaping
30 665
tips on creating a...
BLAZIER-1991
01-08-2015 07:22 PM
Yesterday 10:38 AM
by brian'slawncare
9 815
pros and cons on...
Wolf4dk
03-02-2015 12:26 AM
03-02-2015 10:14 PM
by ExtremeLawncareServices
6 150
price for snow clearing?
Bradcook21
02-25-2015 09:11 PM
03-02-2015 08:32 PM
by Bradcook21
7 293
Ugliest lawn contest
Steve
02-23-2015 04:17 PM
03-02-2015 04:57 PM
by Steve
5 380
Hi from the beautiful...
nwgirl
02-07-2015 06:01 AM
03-02-2015 04:45 PM
by Steve
5 666
Online Estimator
acrajchel
03-01-2015 05:58 PM
03-02-2015 03:50 PM
by Steve
3 136
How to obtain more...
winkie61
02-17-2015 08:31 AM
03-02-2015 11:05 AM
by nwgirl
4 607
I'm Back With The Best...
aduttonater
02-21-2015 01:41 AM
03-02-2015 10:44 AM
by ExtremeLawncareServices
16 688
How to sell annual...
GroPro
02-17-2015 12:31 PM
03-01-2015 01:46 PM
by Chilehead
8 641
Facebook
element009
03-23-2011 09:36 AM
02-27-2015 11:37 AM
by ExtremeLawncareServices
52 11,882
Blade sharpener
Just for Cuts
07-04-2014 01:31 PM
02-26-2015 03:43 PM
by Mr. Mow
15 1,807
viking cyclon.
uppercut
01-29-2015 09:12 PM
02-26-2015 02:54 PM
by Steve
5 554
Start LIKING FACEBOOK...
rlclawncare123
02-26-2015 01:06 AM
02-26-2015 02:41 PM
by Steve
1 158
Another website update
Chilehead
02-26-2015 11:24 AM
02-26-2015 12:46 PM
by Just for Cuts
3 148
New Lawn Care Service...
rlclawncare123
02-26-2015 12:49 AM
02-26-2015 02:24 AM
by ExtremeLawncareServices
1 178
Finally!
SGL1
02-22-2015 09:46 PM
02-25-2015 10:15 PM
by SGL1
13 508
leaf removal.. mulching...
facework84
08-05-2011 03:26 PM
02-25-2015 08:07 PM
by Steve
5 2,844
How many customers?
SC93
02-25-2015 12:40 AM
02-25-2015 04:59 PM
by SC93
5 285
Irrigation...
charlieallen
02-24-2015 01:16 PM
02-25-2015 02:58 PM
by Steve
6 271
use a small business...
BLAZIER-1991
12-25-2014 12:21 AM
02-25-2015 12:46 AM
by SC93
33 2,902
honest opinion please
uppercut
02-17-2015 02:30 AM
02-24-2015 07:12 PM
by homey
10 726
2nd year advice anyone
Bradcook21
02-18-2015 07:00 PM
02-24-2015 05:15 PM
by Bradcook21
14 709
need help
lawnexpers115
02-23-2015 05:36 PM
02-24-2015 02:49 PM
by Steve
3 316
Hello People
nativikee
02-23-2015 07:17 PM
02-24-2015 02:43 PM
by Steve
4 315
New member
qua ke zik 001
02-23-2015 11:24 AM
02-23-2015 03:40 PM
by Steve
1 267
New Video
Sprinkler Buddy
02-22-2015 09:18 PM
02-23-2015 03:19 PM
by Sprinkler Buddy
2 291
» Popular Tags
2wd 4x4 ad landscaping aerocore apartment bid apartment lawn care estimate applying auger billy goat brushcutter bush contract help curb appeal services deliquentaccounts design ditches door hangers employee problems estimate facebook foreman four wheel drive google gopherhaul gravely growing a lawn care business how to jobs john deere quik trac landscape services lawn lawn care lawn care busines plan lawn care business lawn care business seo lawn care business show lawn care business website lawn care business website seo lawn care seo lawn care website lawn care website seo lawn mowing managing a lawn care business marketing marketing secrets mulch new mower per hour service podcast pricing pto secrets to landscaping seo shell snow plowing sq ft starting a lawn care business steep lawns theft toro toro grand stand tractor auger trailer trailer mate pro up sell employee web design website website design winterization wood wright stander rh
Powered by vBadvanced CMPS v3.1.0

All times are GMT -5. The time now is 09:04 PM.


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

All times are GMT -5. The time now is 09:04 PM.

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