Purchase of Route

[MGO]

OK everyone.....this is my first year...part-time while holding my full-trime job.

My business plan has me going full-time by Spring 2006....but I may move that up because I have accomplished everything and more in my first year that I had planned on doing in my first 2-years.

Anyway, I was picking up my new 48" Turf Tracer HP last Friday at the dealer and overheard a guy taliking in there about selling of some of his routes.

I approached and told him I would be interested and gave him a card. He has been doing it for 15 years and has a night job and said he is just basically worn out and is reducing his load.

Claims the properties are in specific neighborhoods, 1-2 acres.....rich neighborhoods and said that he gets all the mulching and snow removal for them as well etc. SOunds very good. He said they are $45-$65 yards

Anyway, I told him to give me a call (I got his # as well) and we can discuss.
I would look at the props first and determine if I can mow them for the price he is currently chargeing.......if not then I will just say the heck with it.

To all you veterans out there:

1) What questions should I ask him?
2) How do I determine a fair price for "buying" his customers......AND, how would that noirmally be worked. i.e. I pay him for each customer that signs a yearly contract with me??? Should I pay him based on the value of the lawn ....ie. maybe 2-3 times the price of the cut...etc...

Some insight into this would be very much appreciated...I don't want to lose out on this opportunity but I also don't want to screw myself by going into this with ignorance.

Thanks!

[Woody]

I have to ask...... $45.00 to $65.00 for 1-2 ACRE yards?? Hell man, my CHEAPEST yard is 22,000 square feet mowable at $45.00, and I feel like I need to raise that price. It sounds to me like he is getting out because he is working himself to death for little money. I'll tell you right now, $65.00 isn't going to get me to even show up to mow a 2 acre yard. You need to look at these real carefully, because it sounds like the customers are going to be VERY used to getting their lawn handled ON THE CHEAP! It will be near impossible to raise prices very much at any given time, and still manage to retain those customers.

Woody

[MGO]

Thanks Woody.....my current yards that I have range from $30-$40 and they are all under 1/4 acre....so the price on the lawns he has are definately to low by my pricing standards....

1-acre yard......maybe $65....with my 48" WB....I would of course have to look at each yard on an individual basis....measure and calculate what I need to charge and take it from there.

I am just looking for info on how to handle the "purchase" of yards if I decide they are doable.....

Thanks,
Mike

[GrassMaster]

How about this, if nothing else...

Most Important:
Make sure first that you can make a profit doing the accounts. Don't fool yourself into thinking that you can raise them next year & just because they signed a maintenance agreement for a year, it doesn't really mean that much. Because most contracts can easily be broken & the Main thing to know about contracts is...

They are only designed for 3 functions only, they are to be Obeyed, Broken & Changed. They are only as Good as the People that Sign them. You can figure out the rest yourself!

One more thing about Contracts & Agreements. You can write one that can easily be enforced & if taken to court they will have to pay you no matter what, also probably have to pay you for services you didn't even perform. Then take that same agreement & let me sign it for you to do my property, when I decide to drop you, you will drop me or you will decide that you will never touch lawn equipment as long as you live...

All I'm trying to say is contracts & maintenance agreements are only as good as both parties make them, no more & no less!

OK, here's the Deal...

1. Ask him will he sign a no-compete agreement for say a 50 mile radius for the next 3 to 5 years.

2. Ask him will he personally introduce you to all the Customers as the New Business Owner & tell them that you have purchased his business.

2. Continued Make sure he goes with you on all accounts at least one or 2 times after you make the purchase, showing you how each & everyone of them wants their lawn done.

3. Agree on a fee, pay 1/2 or so down. Then pay the difference over a 3 or 4 month period. If you loose an account, the price drops so much per month per customer.

If he doesn't agree to something very similar to 1, 2, & 3, above go just as fast as you can to your House & send me $200 via Money Order or PayPal account!

Thanking me for giving you this valuable advice & that you didn't decide to purchase the business because he wouldn't agree to the 3 most important parts of the purchase. Because I will be saved you 1,000's of Dollars, Nagging, Heart Ache, Grief & Sorrow!

Been there & done that several times!

[MGO]

Thank you oh might Grassmaster!

Thanks for the advice Grassmaster!

I will take the advice and go with it....

[MGO]

Actually....

Sounds like I should just say the he(( with buying his route and just continue to develop my own customer base on my own...as I have been doing quite successfully...........

[Phil Nilsson]

MGO ... first things first ... you need a decent measurement of each account ... relate that to the time to complete ... make your own assessment about current price being charged as compared to what you would charge for the same work.

For each hour on those lawns what will be the "produced per hour" ?

Also ... sort through the customer list ... you might find some accounts are worth buying and some are not. That's why you need to assess each account for total area ... and relate to the time to complete = billings per invested labor hour.

[BCSteel]

Also ... sort through the customer list ... you might find some accounts are worth buying and some are not. That's why you need to assess each account for total area ... and relate to the time to complete = billings per invested labor hour.

Thats what I would suggest too. High grade the best and leave the rest. Only taking what will fit with your prove methods and work ethics. It may only be one or 2 props but those could lead into more in similar neighbourhoods, or with their friends/family.

[Phil Nilsson]

MGO ... where do you stand with this deal?

[MGO]

Don't Know

I havn't heard from the guy.....he is finishing out the season and said he would call me...

I do have his number.....so I am just hanging low right now....don;t want to seem to anxious.....plus I am not going to be ready to bring on a bunch more jobs until I go full time in the Spring of 2005