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Question about selling accounts along with equipment

Discussion in 'Commercial Snow Removal' started by Joel B., Feb 28, 2011.

  1. Joel B.

    Joel B. Senior Member
    from MN
    Messages: 233

    I can figure out what to sell equipment for but how about accounts? Is there a formula for what to charge or is it whatever you can get? I've heard of using anywhere from one year's gross to 50% of one year…………..to nothing.

    I know there is no guarantee the customers will stay but I would think that current customers are worth something.

    Thank you

    THEGOLDPRO PlowSite Veteran
    Messages: 3,136

    i never buy or sell accounts.
  3. hydro_37

    hydro_37 PlowSite Veteran
    from iowa
    Messages: 3,790

    I would never buy accounts
    they are worthless to anyone but you
  4. jklawn&Plow

    jklawn&Plow Senior Member
    Messages: 469

    They're only accounts if the new guy gets them to sign on. Seems like it could be worth something for a newby just starting out. He could give you 10% of gross sales, 5% second year etc.
    But If you wanted alot that would just cause his business to fail. Your only saving him advertising and time.
  5. Mdirrigation

    Mdirrigation Senior Member
    Messages: 413

    If you have major accounts locked into an ironclad contract , you may have something to sell , if not the minute word is out you are looking to sell , someone will pass that news to your customers and you will have nothing .
  6. Pennings Garden

    Pennings Garden Senior Member
    from VA
    Messages: 242

    10% of first years billings. I made a deal like that with a member on this board when he took over some of my accounts.
  7. northernsweeper

    northernsweeper Senior Member
    Messages: 397

    If the same guy buying your equipment, is the one your going to sell the accounts to, I would give him the accounts. Take him around and introduce him to your clients, tell them your quitting and ask them if they would be willing to have him take your place. I gave the daughters friend all my driveways when I didn't want to do them anymore, but also talked to my accounts and told them what was going on. I know a guy locally who sold his accounts only, to another guy just starting out. He had over 200 driveways. The buyer actually had to borrow money from the bank to buy the accounts, then lost his shirt when they all dumped him because he was higher priced. The guy that sold him the accounts was only charging 5-10.00 a driveway!?!?!?
  8. jklawn&Plow

    jklawn&Plow Senior Member
    Messages: 469

    At that rate of $10 you'd only bring in 80K for 6 months if you plowed each of them 40 times. LOL

    STIHL GUY Senior Member
    from CT
    Messages: 663

    thats probably why he has to sell all his accounts lol
  10. Rc2505

    Rc2505 PlowSite.com Addict
    Messages: 1,245

    I have to agree with the popular vote. They aren't worth anything unless you have an ironclad contract. Then even with an iron clad contract, the customers are going to feel like they are getting the short straw, cause they have no relationship with the new guy. The worst part is you get yourself a bad name if the new guy isn't as good, or ends up with poor relationship skills.
  11. JTVLandscaping

    JTVLandscaping Senior Member
    Messages: 862

    If your getting out of the business, the accounts mean nothing to you anyway, just throw them in with no guarantee they'll hire the new guy.
  12. 32vld

    32vld Senior Member
    from LI, NY
    Messages: 622

    There is no such thing as good will.

    It doesn't matter who the CEO of GM is or who retired and got replaced on the assembly line. People will still buy a Chevrolet or GMC because of the product.

    My grandpa's 283/4.8, my dad's 327/5.3 my 350/5.7 lasted for ever, never let me down, etc. They don't even know who the CEO's were over the last 50 years, let alone no who actually built their trucks.

    A business were service is being sold it's the person doing the service that the customer that provides the connection. A personal connection. It's just not whether the new guy charges more, same, or, less. It's not even does the job get done the same. They can just not like the way the new guy goes about doing the work. They just may get rubbed the wrong way because they don't like the way the new guy handles himself.

    They do not feel any loyalty to this new guy.
    There's only one GMC/Chevrolet (Ford, Dodge, Jeep). No one else can come along and and start a business making GMC/Chevrolet clones. You want a small block you got to go to GM.

    Plowing, landscaping, are services that anyone can offer. Even illegal aliens. Service providers can be replaced with no problem.
  13. serafii

    serafii Senior Member
    Messages: 287

    Around here contracts are all monthly. So when selling the account, u charge the buyer 3 months worth.
  14. Neige

    Neige Sponsor
    Messages: 2,215

    This is the forth time in 3 years we have bought equipment and accounts. It has really done well for us. Just like Seerafii said 50% value of the seasonal contract. Sometimes you can ask top dollar for your equipment and you give your account. That's how we ended up with our loader and blower. We have been servicing the account for 4 years now.
  15. serafii

    serafii Senior Member
    Messages: 287

    Most guys with older equipment sell some accounts with the old equipment in order to make some money on the equipment. That's what I did with my 86 k30. Truck was maybe worth 2k, through some accounts with it n got about 7k total. Made money because they were accounts I was going to drop anyways.
  16. zabMasonry

    zabMasonry Senior Member
    from vt
    Messages: 101

    Like others have said, unless you are buying/selling a contract to complete the service, you aren't buying/selling the accounts. What you are buying/selling is goodwill, and that does have value, particularly if all the equipment (essentially the whole business) is included in the deal. The seller should be incentives to encourage their clients to use the new owner. How that works out, is up to you. I'd look at the seller's cash flow, records of length of time servicing each customer, any name equity associated with the business, ect. . .

    You can always contact your local SBA or SBDC chapter who generally are willing to give no-fee advice on business topics like this.