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I'm new to this forum and could use a little help. I've been doing landscaping for the past 12 years but now want to do strictly lawn maintenance. I've been passing out fliers and one of the local companies gave me a call. He said that he has about 30-35 accounts and 25 snow plowing accounts but is getting out of the business and wants to sell them. We're meeting tomorrow to go over the accounts. I only have 5 accounts right now myself and could really use them. The problem is I don't know how many of the accounts will go to a new company or how long they'll stay. His company has a good name in the area but his family inherited a huge trucking company and he's going to help with that so I know he's desperate to get out. I am not sure if I should just offer him a flat amount which I really don't have right now or to maybe give him a percentage of what I make off of them every month. If you have any advice it would be appreciated. Thanks
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I would first do a drive around to see all the properties and the amounts he is charging to make sure it is worth it. If you decide to purchase them for whatever amount (I've heard somewhere between 10-30% of gross sales for the year), I would set it up to where you pay installment payments each month. If any of the clients jump ship, you don't pay that portion from that month on. It is prorated so you don't get hosed.
Example: for easy math I'll say you bought 10 accounts that each gross 1,000 per year. That would be 10,000 gross sales and you paid 20% which would be 2,000. You set it up on 8 monthly payments of $250. Let's say the first month goes good and nobody drops service, you send him $250. The 2nd month you have 2 clients drop, you only pay him $200 (each account is $25 per month) that month and $200 for the remaining 6 payments. If anymore clients drop, it is prorated again. This way you are covered. You may be doing great work, but they won't feel any loyalty since you are just taking over for the other fella.
I'd also get a noncompete agreement for as long as your laws will allow. This ensures that should he have a change of mind and want back in the biz later, he can't try to get back his old customers that you paid for. Hope this helps.
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