Small business growth strategies

Questions to Ask When Buying Another Lawn or Irrigation Business

Aug 15, 2018

Questions to ask when buying another lawn or irrigation business 

Whether you are taking over to help out a friend, or are acquiring a new business whose owner is selling, there are a number of questions that you should ask and consider before agreeing to take over a lawn service business.

 

Why they are selling?

BP Paragraph Header

If a lawn service business is going bankrupt, it is fair to be skeptical and decide not to buy.  If they could not manage to stay afloat, how will you be able to? You (most likely) cannot afford to take on a whole new customer base who were being charged too little to build a profit.  If the business is still thriving and producing profit each year, they are a better bet. They were able to survive and are not being forced to shut down due to a lack of funds/revenue.

It is important to get the details as to why the owner is selling and if they can’t provide these to you, it is probably in your best interest to walk away.  Shady business isn’t good business.

 

 

What services do they offer?

BP Paragraph Header (1)

Your best bet in keeping the new customers you attain (besides having reasonable pricing) is to provide the same services they were receiving before the switch.  If it turns out you cannot provide many of the customers the services they have been receiving, they are probably not a good fit for your company, and it will not be a good business venture.

 

 

Who are their customers?

BP Paragraph Header (2)

While the business may provide the same services as you, they may charge differently.  If they are charging too little for you to make a profit, they will be harder to keep when you charge them your new price, even if you provide excellent service.  It sucks but sometimes the customer is only looking for the cheapest price, not the best quality.

Find out the area the customers are located in.  Will you be spending any potential profit on gas to get to and from certain locations?  The customer may fit your business in every other way, but if it costs more in gas to get to them then what the job is worth, are you still willing to service them?     

And, if you can obtain a customer list, call some customers. See what they think about the service. See what else they may need. You’ll get a great idea how service-oriented the company is just by calling their customers.

 

 

What’s their employees, equipment & part situation?

BP Paragraph Header (3)

Your newly acquired customers may favor one employee from the previous business over the others and this could offer you an “in” for a good relationship.  Perhaps the business has employees that specialize in fields or services you don’t yet excel in. This could help in potential business growth if you have been thinking about adding on new or broadening your services. With the current labor shortage kinking the production of most green industry businesses, you’ll probably want to take all the help you can get.

 

 

What processes in place?

BP Paragraph Header (4)

Businesses with well-defined processes are easier to manage than those that don’t have well-defined processes. As a lawn care software vendor, we are constantly working with customer who are buying another business and helping them turn their paper processes into paperless, electronic ones. As we’ve found, some businesses’ process is “The owner sets a different price on everything. We don’t have standard pricing.” If you take the owner out of the equation, what happens to pricing?

You usually don’t want to buy a business that is reliant solely on an owner. You want a business with well-defined processes so that the parts of the business can be as interchangeable as possible. This also helps the transition period after you buy. You won’t have to spend a bunch of time training, instead that times spent making money.

 

 

If you decide that taking over another lawn care company seems like a good business move, be aware that you will most likely lose a portion of the customers you originally gained.  Perhaps you didn’t provide all of the services they wanted or needed. Maybe they didn’t want to pay as much as you were charging.

It could be as simple as they had a strong relationship with the last business and just did not click as well with you and yours.  Just be sure that what you end up paying for the business and new customers will not be a waste. Make it worth your business’ time and money.

 Hiring and management tips for a lawn care business

Comments