[Nebraska]

Currently my business is at an awkward stage of growth. We're really teetering at the point of needing to bring on an office manager as well as having someone assume more of a managerial, possibly designer / foreman, & account management role. A lot of roles there in one sentence but over time...

The issue that seems to be keeping me from moving forward is that I have continually found ways to streamline operations and reduce the time that I spend on these functions allowing me to focus upon the sales aspect. Yet at the same time these functions, albeit reduced on my part from previous years, take away from my direct influence on positive the growth of the business. As well as my current role being off target from my long term visions and goals.

This year, like the last 3 we are experiencing growth rates in the area of 30-40% over the previous year. In the end what I feel that would give me the piece of mind is something that will increase the amount of revenue that we're bringing in a fairly large "chunk" at once. A large chunk that is spread out among a number of clients is ideal. This has lead me to begin to explore the possibility of an acquisition. Ideally an acquisition of another lawn care company (fertilizer, weed control, fungicide etc...) specializing in servicing residential and small to medium commercial accounts (our current mix). This is our most profitable service among our menu of services (Lawn Care, Lawn Mowing, Landscaping, Snow & Ice).


I realize there will be some loss in an acquisition of this sort and a purchase can be structured so that it compensates for this reality. The formalities of acquiring another business are not a concern at this point.

My questions are:

Anyone out there grown their business in this manner? Successes? Failures? Advice?

Where does one go to find those wanting to sell? I've checked local business brokers, newspapers, etc...but nothing is listed. I plan on calling our suppliers... But aside from suppliers, asking around, and direct solicitation what other methods exist? I'd really like to do this with minimal third party (broker / agent) involvement.

[Nebraska]

No one out there has purchased another business???

[Stuck in NH]

None of this really relates to landscaping business, but then maybe...

Purchased a business? yes, an automotive repair shop.

Failed? almost, most of the customers followed the previous owner back to the dealership he worked for before. Why?, they didn't know me.

Built the business back up? Yes, it took 2 years to draw a paycheck, & 3 years to surpass the customer list I bought.

In 5 years I was doing fine.

But I did notice a few things on the way..

People like SERVICE. I'm sure you already know this.
People like to talk to the person who's name is on the door. After 5 years I ceased to work on cars. Just kept hiring more mechanics as the business grew.

But. there is always a but...
People always wanted to talk to me when they dropped off or picked up the car. I made sure I talked to everyone who came in or out. After a while, talking to them on the boat phone was ok. I call them at work when their car is done, tranfer the shop phone to the boat. As long as l told them how I spent their money. They were happy(er).

Personal service is the key..

I do not think that I would buy another business unless I needed the name. It would have to be an impersonal name as well.
I would not expect most of the clients to stay. IMHO Clients do not like to be bought and sold. traders buy & sell commodities. Personal service is not a commodity.

More on this later if you wanna hear more. I hear the fish calling me..

-Stuck

[cutntrim]

Stuck makes good points. Several years ago, my ex-partner and I bought out a small lawn maintenance company. It was a one (sometimes two-man) show, and came with a customer list of +/- 50 customers & some small maintenance equipment. Well, out of the "fifty or so" customers we were supposedly getting, only half-a-dozen actually stayed onboard for the season. As I write this, I have retained ONE customer from that batch. We paid $5k for the business and equipment, and I suppose we broke even after that first year if you factor in the equipment...sort of.

I've had a few opportunities to buy out other businesses since and turned them down. I'm not saying that you shouldn't do it, but I'd approach it with caution and I wouldn't attach too much value to a customer list. A customer list is termed "goodwill" and a dollar value is not easily placed on it, which makes it tricky when selling or buying a business. Plus there are tax implications to consider as well.

I'd agree with "Stuck" when he says that customers do not like to be bought and sold. I wouldn't either. One of the banks I do business with decided to eliminate their bank MasterCard and sell the service to a U.S. bank. While I still retain that card under the new name, I wouldn't if I hadn't been (and still do unfortunately) carrying a balance. A gas co. that I use for personal fuel purchases has also just cancelled their credit program and sold it to a U.S. credit company. I carry no balance, and therefor I'll be cancelling my account. Looking at it from a customer standpoint I can definately understand why most would bail if their hand-picked maintenance company sold their account. If they signed on with "Joe" way back when, then their not gonna be interested in "ABC Landscaping" if Joe isn't going to be there anymore.

As a side note, I would be satisfied with 30%+ growth on an annual basis. Anymore than that, and I'd be concerned about being able to handle the necessary manpower, equipment, and system changes required to keep pace with all that new work.

As a suggestion - what about working at growing from the other way around? What I mean is, instead of "buying" a small company, what about "subcontracting" for a larger company? I know of lots of guys that do that around here. For example, a friend of mine owns an excavating company and he subs himself out to a number of landscapers. Another guy pursued one of the largest companies in our area looking for work, and his company now subs for maintenance at several commercial properties for that larger outfit. Doing something like that would grow your business, without the risks involved in buying another company, and may have an even greater impact on your bottom-line profits.

[HardDaysKnight]

The mistake made with buying a service business is that
the consumer is not obligated in any way to retain you.
I would suggest if your interested in acquiring accounts is
to spend some time introducing yourself with the sellers help
and see how many accounts could be implied. These clients
are in no way obligated to do business with you. I would say
introduce your business to them and offer a free one time
service.

[cutntrim]

When my auto mechanic sold his shop and moved out of the city, he stayed on for over a month and worked for/with the new owners to help customers adjust to the transition in ownership. I continued going to him/them until he left, then I took my business elsewhere.

[GLAN]

Some years ago I purchased accounts from a kid that had 25 accounts on the other side of town. At the time I had basicaly nothing on that side of town and needed to break in.

In the end of it all, I purchased 20 at $100 a piece. He and I both went and met each customer personaly. I was guaranteed a committment that we do the first full year. After that I was able to retain all 20 for several years......that 20 grew to 40 at the beginning of the 3rd year. After that we lost and gained. That was probably about 20 years ago. Today we don't have as much presence on that side of town.

Several years ago. I purchased 5 accounts from a fellow that was down sizing. It started out I was to buy 2 accounts that were within my route. I saw his listing and saw 3 more that were within my route and that were stragelers for him. I purchased the 5......for $150 a piece. After the first season I retained 4 of the 5. I was never able to build on these, though now several years later I still have 2 of the 5. 2 that I lost the home changed hands and no matter how much I pressured to retain them, they hired others.


How I knew that the accounts were for sale? Through the grape vine.......communication. Also my suppliers have cork boards where guys pin up things for sale.....Equipment, trucks, trailers, accounts and whole business's. Also help wanted.

[Nebraska]

Thanks for the input guys...keep them coming as I am reading and absorbing them. I will share some thoughts when time allows.

Stuck in NH.... sounds like you faired well in the end?

[Uncle Albert]

Don't buy someone's mess. If you want more accounts go get um. Want to add a new aspect to your service business ,. Campaign flyers,mailings, handshakes service customers are always willing to change because the truth is alot of guys suck at service. Drop a buck or two, return a phone call, give a gift. this is the crap the public eats up. Besides if you purchase someones route,wonder why their ditching it, and what they did to these poor customers along their road of disinterest.

[Stuck in NH]

Hi Again Nebraska,

Yes, I do ok for myself.

I pin my success on personal service. Maybe that isn't the right phrase. I have an uncanny ability to remember people's voices.

I can connect the voice to the car to the last service performed. Also any issues that were noticed on the last service.

Customers think I keep detailed notes.

Good employees are hard to find, but if when I find them, I pay them so well that they won't leave.

BTW I tell prospective employees I am not hiring your mechanical ability. Monkeys can be trained to do tuneups & oil changes. I am hiring your attitude.

On your growth issues, I would find 25% per year adequate. We could pull out all the old adages like "good things come to those who wait" but that would be silly.

Of course I have no idea of your business size, only you know how big you want to be.

But I do know that customers that come from word of mouth advertising usually stay forever, and they are free.

Glan says he bought a few accounts several years ago for $150 each. How much does your crew cost you for one average lawn service? Pick a nice neighborhood & give some services away via cards in the door or whatever.

Ever looked at dish network's family & friends plan? (encourage word of mouth advertising)

Sell Sell Sell to get yourself over this hump BUT

Make sure the infastructure is in place before you oversell yourself

-Stuck