Lessons on buying lawn care accounts.

Have you ever considered purchasing an existing lawn care business to increase your customer base? Some do it and it seems to work out well for them while others can never find the right combination to make the deal work. In this discussion from the Gopher Lawn Care Business Forum, we hear from one landscaper who went through the process and reported back to us his experiences of it all.

One lawn care business owner wrote “I had an opportunity to purchase a lawn care company from a guy who is moving away. He has been in business for around 10 years.

As far as I know right now, he claims to bring in $85,000 a year mowing lawns with him and his partner in the company. He is selling the company for $35,000 and it comes with 14′ enclosed trailer, line trimmers, edgers, zero turn mower, walk behinds and push mowers. I have mowing equipment of my own but more equipment is always a plus. I am not sure about the equipment brands and all that.

My main concern is where does he get the value of $35,000? Maybe that’s what he wants but I don’t know how to calculate a fair price for the mowing accounts which he says are 90% residential. I have read somewhere that people in similar purchasing opportunities will ride with the company for a couple weeks to see the routes, meet the home owners and such. As of right now my mowing accounts keep me busy 60 hours a week so riding with him is not an option.
Meeting him within the next few days

You may be wondering why do I need more mowing accounts? I think anyone in business should always be looking for opportunity to grow. With these extra mowing accounts, I could expand with an entire crew for my commercial side and one for the residential customers. These additional 58 mowing accounts, 12 which are small commercial accounts could really help me grow.

The sellers has tax records for up to 5 years ago. Without asking, he told me he has a list of all equipment with serial numbers and all the customers last names and zip codes they are in. If I sign a confidentiality agreement, he will give me the list of full names and contact information for each customer. He said it takes 2 guys 4 days to mow all the properties.

The business owner said he is willing to take monthly payments to ensure the client base is sticking around. Monthly payments would definitely be a plus since I can make the payments instead of having to spend that much cash up front. It would also put me at ease knowing I am not getting screwed because I am doing the work and making the money.

The way he came up with his asking price is where I am stumped. I figuring instead of $35,000 it should be more in the $7,000 - $8,000 range plus fair market value of the equipment if I even need it.

I figure that some mowing customers in his list will just not be happy with the sale so I figured 5-6 of the customers will leave. That is a big worry that maybe they won’t want my service but then I would not pay the $35k and that’s why I like the fact that he is okay with monthly payments.

Well, after further investigations and meeting with the clients, the paper work is now being done to transfer ownership to me! I will be making payments over the next 6 months to ensure that customers are not just going to all leave with me out all that money. I made an offer with a down payment and the other company who was considering the deal too, backed down! After everything is signed, I will start mowing the 58 new lawn accounts.

After week 2 of doing all the new customers I met a lot of nice people that were happy to have a good service continue. The old company was doing the properties in 4 days with 2 people and we are knocking it out in 1.5 days with 3! So everything is definitely going right! Long hours and hard work will soon pay off. His equipment was a little crappy, one mower’s pump went out.. But I wasn’t really counting on the equipment that much.

Only problem I am having is one of the previous owners is calling behind me and checking to see if customers are happy. I had to call him and let him know that was not ok because it is not his business anymore.

A little update on the accounts I purchased. It was quite frustrating after the first month or two because I did have clients dropping for various reasons. Some were family members, some didn’t pay and some just said they did not need service anymore. My biggest problem was not the people dropping because before buying I assumed at least 10% would drop. My problem was more that the people that did stay on did not match up to the amount of cuts the contract said the customers usually do. Like customers that they said continue every other week service throughout the winter have either cut back to once a month or completely dropped until warmer weather. Overall I feel it was worth the purchase, just a little headache at first. I paid the company off in 5 months and now its all about making the money now.”

A second lawn care business owner responded “I have purchased some mowing accounts in the past, but I will not pay more than 3 times cut value for each, and the jobs have to be priced at least at 1 dollar a minute, and in my service area. I will not pay more than a third of new equipment price for second hand stuff. There area too many unknowns.

Just remember, the purchaser holds all of the aces when negotiating. Not everyone has that kind of money to go off shopping for a business every day of the week.

I would be wary of 10year + old business as far as pricing jobs goes. Many business do not increase their prices with inflation.”

Read more about Lawn Care Business Bidding Tips, Upsells, And Disasters To Avoid. Learn how to improve your bidding process with this lawn care business book and be prepared before hand by knowing what you should be looking out for before a problem occurs.ā€¯

If you need help estimating lawn care or snow plowing jobs, get these lawn care and snow plowing estimation calculators.

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