Hi there, I hope people on here can help.
We are closing our lawn care business (established for 7 years) and are hoping to sell our client list (with each clients permission) to another lawn care business if we can. We are on a tight time scale (end of June), as we also run a garden maintenance business which are going to focus on instead, due to rising costs, VAT limit cap (most of our clients won't pay VAT) and our main guy moving onto pastures new.
We have 133 clients, most have 4 treatments per year.
I've worked out how many clients are in each round, the cost per round and per annum.
How much would you sell / get a payment for referring the clients for? (Treatments range between £10 and £165).
Should I half each clients annual amount? Ask for the cost of just one treatment? We're not expecting all clients to want to be referred, but you never know....
Also I've worked out how much we made total for those clients in scarifications etc. Should I charge anything towards that? or just per client that agrees to be taken on by the new company, assuming we can find one!
Any quick advice would be greatly appreciated.
PS we are not selling the tools, as we are keeping those for still treating our commercial clients which we are retaining through our other business.
Thanks in Advance.
Also if anyone in the South West is interested, let me know! :)
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I'm in the middle of selling up to retire, happy to have a chat 1:1 but don't want to put anything here yet as the deal is in the final stages.... PM me if you want or email on info@honestservices.co.uk. Mind you there was little science behind my sale as little seems to exist for small company sales.
Good luck
Adam
There are a couple of ways of looking at this - one based on revenue and the other based on marketing costs. Revenue selling parameters tend to be based on selling the whole business as a going concern - eg vans, equipment, systems, staff, website etc etc. The selling price could be anything from 25% to 75% revenue depending on brand, profits, potential... As you're selling just the customer list, then the lower end would be a more likely max price.
Another way of looking at the list is what would it cost someone to gain those customers through their own normal marketing means. Given that it's 130 customers, this is entirely feasible to do in a spring or even an autumn campaign for lawn care.
However, if they gain 130 customers in their marketing, then those new customers will likely need more work (ie better revenue), plus will be at their pricing and have bought into them. So they may spend say £75 to £100 gaining each customer, but will likely be at a higher average revenue than your existing customers whose lawns are hopefully in good shape generally.
So this leads to a discounted price from the £75 figure per customer. Depending on your total revenues vs their expected new customer revenues, then it could end up anywhere from £30 to £50 per customer. They may also assume not all customers will want to to transfer and thus end up at the lower figure as an average.
So the likely lower price would be around £4k. Upper pricing tends to be based on revenue, but its still only the list ie 25%. So if for example you average £200 per customer, then £200x133x25% would be £6.6k. Obviously if your average revenue per customer is more than £200, then this would be higher.
It's not an exact science, it takes 2 to tango and it's all a negotiation. Sorry the above is more around discussion points, but I'd hope it gives some framework for looking at lower and upper bounds for your expectations.
Thanks for your reply Andrew.
I have looked through various threads about this on here, it does seem to vary enormously and ultimately seems to come down to what someone is prepared to pay. As we are in a rush, it does put us at a disadvantage, added to which there are only about 4 other lawn care companies that could work within the areas we service - we may have to split the sales across the 2 counties we straddle.
£75 to £100 per customer is more than I was thinking, so that's good to know.
We have treatemtns ranging from £18 to £165 so I was thinking we'd sell them at either the cost of 1 or 2 treatments (or half their income from weed & feed treatments) for each customer, rather than a blanket price per customer? We live in a warm and moist area of the UK, so although most of the lawns are doing well, some really struggle with leatherjackets and moss, hence the additional earnings from scarifying, nematodes and aerations, which I'm still not sure if I can make any charge towards from the purchasing business?
We have no contracts, just good will. We were going to find a business interested first and then approach our customers individually about whether they'd be happy to transfer over. A lot of our clients are elderly or busy and so we are hoping will trust our judgement. We are starting to phone companies tomorrow to see if anyone is in fact interested, so wish me luck!
Thanks again for your time and advice.
sorry to put a downer on it jonny but i dont think you will get mutch for it you might get a tenner per custermer for a introduction fee thats about it as you are not selling contracts or tools so the cliant can just walk away and get another firm
also the firms you are going to talk to about selling the work to could leaflet that area and get the work for nothing as they will know how mutch you charge and under cut the price
hope i am wrong
Thanks Dave,
I know, it's a worry, but we'll try maybe the cost of one treatment 1st and negotiate from there.....
Then again, they will have the client details, rounds set up for them in each area with historical notes so they can see whats happened and any issues. So maybe that will go in our favour a bit
Leafletting an area still has costs - printing, time to distribution, quoting/assessing and admin to get into the system. For 130 customers it's a significant investment in time - if you've loads of freetime, then sure, small costs, but not many people do, especially those already running a lawn care business.
For lawn care, there is usually a market for such an offering and the buyers will understand what they are getting and how much to pay for it. Keep it simple, and don't get into things like only getting paid for those that swap over and stay for say 6 months. The new business could mess things up and customers leave through no fault of yours. Suggest you offer the list as a fixed price for all existing customers - it's then upto the new business to service them and keep them happy.
For reference, as another data point...we did some door to door marketing several years ago, offering a free assessment and quote. We paid £30 per lead and conversion rate was poor, as quite speculative, but still a good exercise. So someone looking to grow will spend at least that per customer list entry as the conversion rate will likely be significantly better.
I know timescales are tight, but don't just give it away.
Thanks Andrew. Will keep you posted. Not having much luck with our calls so far :(
Selling a list of customers that may or may not carry on their business with the new owner is hit and miss . Ive known people who have just given their whole maintenance round away because it was that difficult to sell... As with anything, its only really worth what someone will pay .. if you got £2000 total I'd bite their hand off... but realistically maybe a little less .. I hope I'm wrong. . Good luck with the sale ..
I know someone that has a lawn care business and they say that you need around 1500 customers to have a reasonable business.
We meet people with different business models along the way .
One such person I met had one mower in the back of a hatchback and cut the lawns his mower would cope with , he didn't edge or remove grass just mulched .
He had a massive amount of customers , stopped work in October and went abroad over Winter .
He gave me details of customers who wanted lawns both cut and edged .
I never imagined it possible to make a living this way due to the volume of customers you would need .
He was in the vat bracket , I did follow up a few of his leads and they were quality customers .
He just knocked on doors and handed them a business card when in the area .
Maybe potential customers don't think too deeply about buying a convenient service such as having their lawn cut .
I think most would prefer not to have the hassle of finding a new gardener or contractor when their present one calls it a day and go with a recommendation as long as the work is satisfactory and price is competitive but comes back to how much is a lead worth to a contractor . ?
Possibly worth more to a new start up than to an established contractor as instant income which is quite valuable in the early stages of business .
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