Buying Accounts

[PilotSC]

@ 50 accounts, @ $1350 revenue per week, along my route, mostly 2 to 3 per stop, takes 2 guys 2.5 days to cut, $16,000.00. 28 cuts per year in my area.

These accounts are currently served by a mow and blow guy. I can service the irr., fert., maintenance, landscaping, etc. if they choose.

What are your thoughts???

PilotSC

[lawnrangeralaska]

That seems like a good deal. But it will take you 12 weeks to start making money. And you might have to buy more equipment and more employes to service these new accounts. I personly think that its high but offer like 12000 then work up 2 his asking price.

[AllieLawn]

That would suck if you spent the money for the customers and a month later you lose a third of them. Not tryin to bash ya, just was a thought.

Chris

[PilotSC]

Well,

Went by the accounts today, worked out the deal, backloaded the payment 3 weeks with a subtraction for any accounts not retained.

So my company now has went from 37 accounts to 84 accounts very quickly. No other way to double your size and get that many potential irrigation, landscaping, or fertilization customers.

I feel it was well worth the money and should more than pay for itself. If you want to get larger faster, buying the accounts is the fastest way to get there. I put out 5000 fliers and actually got more irrigation systems from them than lawn accounts.

PilotSC

[Stephen M.]

Lawnranger, since your season is fairly short, how many hours a day do you work in all of that daylight?

I never put alot of faith in buying out the competition unless you also got a non compete clause going with it. The experience of the big lawn guys has been that they bought out profitable big guys who laughed all the way to the bank, and then they went back into the same biz under a diferent name. After 2 years of buying out the other guy, the bigger bigshots were looking at their bottom line and wondering what the problem was. One editorial from a major industry mag last year was poking fun at these guys for not understanding the basic rule of our biz--it is relatively inexpensive to get into this biz, and there is little profit in buying out your competition. It's only profitable for the guy who is selling.

If you want to expand, it's more profitable to you to put in a bigger and bolder word ad into the paper or phone book over your competion.

[PilotSC]

There is a non compete, for 5 years.

82 Accounts in the second year of business is probably impossible without buying some accounts or spending every last minute knocking on doors. The competition is so strong (from the ease of entry) that to get the customers you usually have to price them so low to begin with that your not making that much money any way your first year.

My philosophy is this, to get those 45 accounts would have taken so much that to pay the 10 cuts isn't that unreasonable. It definitely is as high as I would go, 5 cuts would be better, but these accounts were/are untapped in my opinion on selling the "other stuff". I will be surprised if don't end up with at least 10 fertilizer accounts from these customers and probably 5 to 10 irrigation service contracts. Not to mention the shrub trimming, mulching, and maintenance. I will recoup the purchase price easily just doing everything else for these customers.

An example, I purchased 12 accounts last year in the early spring, lost one because he moved, now have 2 of their irrigation service contracts, did a $2,500.00 landscaping job, aerated 8, overseeded 6, and did a $8,300.00 retaining wall that I was the only bidder on (nice profit). Not to mention the shrubs and gutters. I paid 1.5 cuts which was low but nice. But when I look back on it, even at 10 cuts I would have still made good money.

It's all about keeping them happy, the rest all falls into place.

I must be doing something right, I put in 25 irrigation systems last year, already have 6 in the dirt this year, 6 more deposits, too many landscaping projects to bid, 25 fertilizer accounts, 35 irrigation service contracts, and NOW 82 lawn accounts, AND best of all, I provide good wages to 6 employees with benefits for two formen.

PilotSC

[Ericson]

sit and wait

I would just sit and wait and see what happens,.how long have they had these accounts.?If he is just a mow and blow kind-of-person it wont take long before he loses them.
Remember its just my vew.;Ericson

[Elwood]

Pilot SC, good for YOU!!

Everyone is against paying for accounts. Will you keep them all? No. There will be a percentage lost, BUT Pilot has the right idea. UPSELLS!! While NO client is guaranteed, it is up to you to make your INVESTMENT profitable. Just buying them and hoping for the best will end up a loss, but working the clients, exceeding their expectations and upselling them to full service clients CAN and WILL pay off in the end. Some of these clients could be his for 5, 10, 15 or 20 years!! Now, how "expensive" are they??

No compete clauses MUST be worded correctly to be of any worth, be careful there. Nail down the PERSON as well as the company.

Another though, one of these days when YOU are ready to retire, I hope you don't find anyone like yourself to try to sell out too, the "empire" you worked all your life for will be worth "nothing" to them.

Good Luck PilotSC, I will be looking for you on the cover of L&L or Landscape Management in a few years!

[AllieLawn]

Good for you Pilot SC. Cant see much harm in getting bigger.

Chris

[Phil Nilsson]

PilotSC

It's probably not too early to start thinking quality control as you build customer numbers ... some thoughts ... let the crew leaders know that you do a drivearound behind them ... also consider as part of a higher pay differential for a crew leader, keep that diff "open" by calling it a weekly bonus ... that they get if there are no complaints that week from customers ... that instead of a "fixed" higher hourly amount.

[Ericson]

Nice job

PilotSC

It's probably not too early to start thinking quality control as you build customer numbers ... some thoughts ... let the crew leaders know that you do a drivearound behind them ... also consider as part of a higher pay differential for a crew leader, keep that diff "open" by calling it a weekly bonus ... that they get if there are no complaints that week from customers ... that instead of a "fixed" higher hourly amount.

That was well put.Give something extra the help can look forword to.