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Buying Customer List

Discussion in 'Introduce Yourself to the Community' started by XJ1517, May 5, 2015.

  1. XJ1517

    XJ1517 Junior Member
    Messages: 20

    Found out through a friend about a guy who's retiring from snow plowing and I am interested in buying his client list. I'm not certain on how many customers he has yet, but how should I approach him? He does mostly residentials. Do I offer him a set amount of cash? Never bought clients before. Any help would be appreciated.

    Cheers!
     
  2. 1olddogtwo

    1olddogtwo PlowSite Fanatic
    Messages: 11,529

    you can buy his info.....it doesn't mean the clients will retain your services.
     
  3. BUFF

    BUFF PlowSite Fanatic
    from FR NoCo
    Messages: 7,269

    I bought contact info from a guy that got out of the bizz and I used to do sub work for. The contacts I got were the ones I plowed for years so I felt I had a very good chance of signing them on. I paid him the same as one complete round would be worth in invoices.
     
  4. Broncslefty7

    Broncslefty7 Senior Member
    Messages: 645

    i did this a few year ago with about 15 commercial accounts, i lost 3 rite off the bat. if you do this properly he should take you to each customer and personally introduce you to them. it should be as if he knows you very well and is handing the customer to you. if he introduces you to the customers they will feel much more comfortable with you doing the work. also billing and price should stay the same. we lost a couple the first year because i was never able to actually meet the customer, they just went somewhere else. the rest of them i have had for three years now. when it comes to price you only pay Profit for one year. you dont know if you are going to keep them fore more than a year. Good Luck. it could be a could start for you that you can grow off of.
     
  5. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Driveways are a done a dozen. They might not be in the area you work so them you need to rid of them. Also what about his pricing? Could to low for you and then raise the price and they drop you.
     
  6. Banksy

    Banksy PlowSite Veteran
    Messages: 3,113

    I have a phone book for sale if you're interested. It has thousands of possible customers. payup
     
  7. XJ1517

    XJ1517 Junior Member
    Messages: 20

    Thats what I was wondering. Almost want to see if I can look at his clients and pick and choose.

    These ones will be ones I've never done before. I'd be looking to pick the quickest/highest earning ones hopefully.

    I'd probably ask him to come with me. But if he doesn't, I'll do the door-to-door thing sooner than later so they know that I'd be taking over.

    My intent was to see his addresses of his customers. If they're in my area, then it would be nice to keep my route tight and add customers. I'll have to ask him for pricing as well. I'll keep the same if I do get any of the clients.

    lol I know. We're in a town of 50,000 and I'll see about half a dozen plow trucks an hour while I'm out. Everyone and their kid puts a plow on anything around here and goes knocking on doors.
     
  8. Yeh Diab

    Yeh Diab Junior Member
    Messages: 1

    Buying a Route

    I'll second these:
    - if you do this properly he should take you to each customer and personally introduce you to them.
    - also billing and price should stay the same.

    I've purchased two residential snow & ice routes. My experience is this:

    1) As an asset class, plowing routes are greatly undervalued. This is in the Boston market, and a small sampling (<50 accounts), but both routes returned a profit after the second storm ... and I sub'd them! In one case, the seller was moving across the state; in the other, he was switching to commercial exclusively. I've heard similar accounts too, of businesses trying to exit, without much demand. One provider told me of a tight residential route grossing $30K/season (subscription-based), which he tried to sell when retiring (briefly, it turned out), and did eventually sell, for $1K.

    Now, your market may be different, but why so undervalued? Probably because:

    a) there's a fear that customers will leave
    b) there isn't enough market/liquidity for the route asset (usually it's word-of-mouth, or some post on Craigslist).

    2) The fear that customers will leave IMO is greatly exaggerated, IF the right steps are taken (but hey, if you're a buyer, you can play the fear up, or at least, don't diminish it). What are the right steps?

    a) Have the seller accompany you to meet the customers face-to-face. A warm email is a good starter (and actually that's how we did it), but follow-up with a quick intro in person. Position yourself well. Hand out cards. Have a reference or three ready. And make it productive while you're there, by starting to add value: stake the properties.

    b) Go over the pricing, including how he charges, and how long the prices have been the same for each customer. Then if they're reasonable, keep the status quo, at least for Year 1. Don't give customers "a reason" to shop elsewhere by trying for that extra $X/visit (assuming it's minimal). Look at the economics of the route as a whole, especially the density. If 1 or 2 are REALLY underpaying, OK, deal with them individually and explain that and why. If several are underpaying, it's a RED flag on the seller's operations and the deal as a whole IMO.

    3) Get a contract. Yeah, I know, he may not have been using one, and you may think it's going to "scare them off," but you'll need one. Two actually: one with the customer and one with him. Theirs should be basic -- 1 or two pages, that outline the terms. Don't go all legalize. Just get them to YES in writing. If you feel some push back then ... let them push, and note it. You'll know early on who you're tough customers are, and if they're worth servicing at those prices.

    Small hack: Tough customers are expensive. Ask him who is tough and why. Then compare the tough ones with the rest, price-wise. If the tough ones are paying more (relatively), great, these are GOOD, tough customers. Treat them well, and they'll be with you for a long time ... and they're less sensitive to price increases. If they're paying less, this is another red flag, mainly, that they're more trouble than it's worth, and they'll abandon you like a cat at the sniff of fish. (Ask before you do the deal, as part of due diligence.)

    4) Work out payment arrangements to him that are fair and contingent, first, on him doing 2A above, and second, on customer retention. One deal may have you paying a relatively small upfront amount (e.g. 10-15%), then the remainder over the course of the next X weeks/months based on each unit/customer staying with you (better if from income from the route). He should be motivated to help customers stay. Who knows, maybe you don't need any cash upfront. Personally, I paid cash for my routes, but you know what-- the perceived risk was high and they were motivated, that it discounted the prices significantly. It was worth the risk.

    Each situation is different of course. Get as much info. as you can. What are the market conditions? How motivated is the seller? etc. Approach with some idea of how you'll gather info. to determine a price ... and value his time -- past, present and future. Good luck!
     
  9. Wilnip

    Wilnip Senior Member
    Messages: 583

    Great info.
     
  10. XJ1517

    XJ1517 Junior Member
    Messages: 20

    Very late response. Been a busy summer so far.

    I'd like to thank everyone for their input. Very much appreciated!

    - Called the guy. He's an older man who's retiring and doesn't mind helping me out. We met up, talked about it and have a tentative deal in place.
    - He called 12 of his customers. All said they had no problem with me taking over. He said he still had to call about 2-4 more who weren't available when he called.
    - He said when fall comes around, that he could almost guarantee more will call for services. He said he gets an average of around 6.
    - These are all residentials that are mostly driveway as they're all on a lake shoreline. No shovelling.
    - My client base last year was about 20 minutes away in the city and all his are in a smaller town outside of my client base.
    - Based on the quality of customers and route tightness, I'm only going to keep about 8 of my clients from last year. These 8 keep me in a pretty tight group in town and my new set of clients 20 minutes out will keep the route tight there as well.
    - I'm doing strictly plowing. I have 3 customers for shovelling, but that's it. It's too time consuming for me and I just want to plow.
    - He will be giving me a price soon for the list of clients. He said, "dont worry, it wont set you back much". He's not in any major rush either. He seems very confident in me and that the clients won't have any issues. I obviously still have to find out how much he wants, which I'll find out soon.
    - He will be taking me to each individual property and showing me his technique and will be introducing me to clients. When we do this, he will also tell me what the prices were that he charged.

    At this point now, I'm wondering if I should get a second vehicle. Total work for his (roughly) 18 customers will be about 9 hours (average snow fall) and my ~8 that I'm keeping will run me maybe 3 hours. This includes driving between each client.
    He said for the ones that are his old customers, he could back me up if something were to go wrong - which I pray doesn't. Is 12 hours per snow too much for one truck?

    I have a 98 3/4 ton with a 7.5 that did the trick no issues last year. Can I depend on it to do 12 hour days all winter? I have a small blazer that I know is for sale and also my cherokee that i could throw a small plow on as a backup. Should I do this?

    Any tips you guys have would be greatly appreciated!

    Cheers
     
  11. Randall Ave

    Randall Ave PlowSite.com Addict
    Messages: 1,984

    It never hurts to have a spare truck/plow. Its much easier to hop in another truck and go if the main unit goes down.
     
  12. jbsplow

    jbsplow Senior Member
    from -
    Messages: 125

    I did the same thing. I do about 15 driveways and 3 small commercial lots. first year I had about 7 driveways then last year a buddy was getting out of it. He took me around and I met all of his customers, everyone kept me except one guy. I found out a couple of his prices were a little low. I kept my mouth quite and did it for a year. once they see your a decent guy and can do a good job then the following season approach them and ask for 10-15$ extra. it all works out. All my accounts are cash even my commercials. I started with one truck with a Hts plow, don't let any one tell you hts wont push snow. I have pushed some big blizzards with my little 97 1500 just fine. I now have 2 trucks and continue to grow. All word of mouth, not making 40 k year plowing but im making around 10-13 k on about 20 accounts. I only do plowing/landscaping full time since work heavy highway construction all summer