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Author Topic: Question of the weak (mispelling intended).  (Read 3398 times)
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barb helfman
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« on: May 18, 2011, 01:55:41 PM »

In this stupid economy or lack thereof, one of the most strategic and best ways to grow your business is to buy another interiorplantscaper. 

That being said, are you pursuing this?  How are you contacting potential acquisitions?  Phone?  Posting at local nurseries?  Letter? (You remember those, don't you)?  Outside person making inquiries?  Your thoughts please.
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Julie A. Blymire
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« Reply #1 on: May 18, 2011, 04:56:56 PM »

I have a company now who wants to sell me their business, but I'm sitting the fence on the numbers.  I am sure I was approached because of the relationship that I have built with him over the years, but, because of that relationship, his financial expectations and the ensuing discussions are somewhat delicate.  I know, I know, "It's business as usual." is what I'm going to get here, but relationships are important to me too.   Goodwill has gotten me many job referrals over the past 33 years. 

I'm still sorting out what I can live with.  Yup, I still have a conscience.  I try to treat others as I would like to be treated.  I don't throw it out the window when times get tough.

Julie
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smallscaper
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« Reply #2 on: May 18, 2011, 07:44:38 PM »

Who needs someone else's problems???  We've found in the past that acquiring accounts cultivated by others can be very disappointing in the long run.

Clem
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aggaboo
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« Reply #3 on: May 18, 2011, 09:50:28 PM »

Well I suppose there are always several ways to skin a cat Clem!

Several years ago, we acquired most of the accounts of a competitor (actually, the company that I began in the industry with as a Tech) and it was an extremely gratifying and successful acquisition.

We didn't inherit any "baggage" because we only bought the  accounts and not the company. We interviewed the Techs, but none of them made it through our selection process.

Back to Barbs query now, we haven't really explored acquisitions recently, but I do think it's definitely a very viable and quick way to grow ones client base.

That being said, I think if I was going to pursue this, I'd probably make my first contact with a letter.... yeah, I remember those.... unless it was a company that I was directly familiar with and then I'd pick up the phone and call.

OR

I'd hire someone like you to do the "dirty work" for me.

Steve
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Matthew Gardner
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« Reply #4 on: May 19, 2011, 05:10:58 PM »

I've bought a few companies in the past 20 years; it can be an excellent way to fuel growth.  There are many reasons someone seeks to sell:  relocation to another area, burn out, going into another line of work. The benefits to purchase can be to provide "infill" for existing geographic routes or to expand in a new territory altogether.   Most one person (but not all) operations run out of steam.  They get to a point where it's hard to grow without capital or backup staff.  One company we  purchased had existing employees that were a addition to our team and like having benefits, profit sharing and the like.  Not every company for sale will be a good fit for you but many will have a decent client base that can be further marketed.  All of US who are small business owners and don't have a second generation willing to take the reins should be thinking of one day selling when we wish to move on to other pastures or take up permanent residence at Green Acres.  There are many well run small concerns in our industry; most are not "taking on someone else's problems."  But as Julie says, the numbers have to work - both what the seller is asking, and how their service/lease rates may compare to your existing pricing structure.  It needs to be a win for everyone:  the seller, the buyer, the employees, and yes, the clients.

When I bought the first company, I had 2 small accounts in a region I thought had great potential. I had a small core of very local clients but wanted to expand in that upscale suburban area. My "marketing plan" such as it was, consisted of calling every interiorscaper in the Yellow Pages (hey! it was 1991!!) and I did run across someone who had had enough of schlepping plants and servicing them while taking care of her growing family.  I bought that company and recently did a cost analysis of the accounts we acquired so many years ago - we actually doubled the revenue. These clients have long since been "ours: and the relationships have been built.  Since then, we've been approached by others wishing to sell, or have had our plant broker provide a referral.  Growing through acquistion can work and be successful and the savvy interiorscape company owner is wise to at least consider the possibilities.

MG
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smallscaper
Guest
« Reply #5 on: May 19, 2011, 05:52:33 PM »

One of the problems we encountered stemmed from the fact that the former owner of the accounts had run her business on the cocktail party circuit...her clients were all social friends and acquaintances, and she had serviced them all personally for awhile before she took on part-time techs to do the dirty work.  As such, she tended to spend WAAAAY too much time on servicing the accounts given what she was billing them (the "friend discount"), so when we acquired the accounts, most of the residentials had been getting loss-leader service...the tech would spend an hour a week servicing a thirty-minute account with six plants that billed $85.00 a month.  It should have been profitable if done correctly, but if the tech was going to have lunch with the lady of the house every Tuesday on our dime, it was going to lose money.  We terminated the tech as well as the account eventually, and that pattern repeated itself with several other accounts from that transaction.  When a business is run more as a hobby than a real business, and the recordkeeping and the financials are not, shall we say, accurate, you can end up with a lot of rubbish for your money.  This is especially true with sole-proprietor companies, owner-operator/one-man/woman-show deals.

Clem
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aggaboo
Guest
« Reply #6 on: May 19, 2011, 06:18:46 PM »

That's why do your dje diligence before you decide to buy.
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smallscaper
Guest
« Reply #7 on: May 19, 2011, 06:49:50 PM »

Which set of books gets the "due diligence" treatment?  Huh

Clem
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aggaboo
Guest
« Reply #8 on: May 19, 2011, 06:55:30 PM »

We wouldn't consider a purchase without reviewing tax returns.

Most people are unlikely to mess with those, but of course, there are no guarantees!

Refusal to provide them though would be a deal-breaker for me.

Steve
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Barb Brixey
Guest
« Reply #9 on: May 20, 2011, 08:18:26 AM »

Many years ago when I was just starting out I bought a small co where the owners wanted to leave town to do something else.  It was the best thing I ever did.  I still have many of those account to this day (lost some these last two years due to cut backs).  did it pay for its self?  It sure did.
Barb B

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Mike Zumwalt
Guest
« Reply #10 on: May 23, 2011, 08:29:39 AM »

I'm not going into the whole merger/acquisition thing but what I heard,you know, from my sources, was that selling is the easy part! What the problem is, is getting people to do the work.

I know there's been talk of getting robots to water or some type of Roomba/Mars rover but until then... Roll Eyes
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Sue
Guest
« Reply #11 on: May 24, 2011, 08:16:05 AM »

I would love to acquire some of the companies in my area (DC, VA, MD). We have made some overtures with vague responses. How would you recommend going about it Barb. This is something that I would like to learn more about.
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Patrice Watine
Guest
« Reply #12 on: May 24, 2011, 09:27:54 AM »

We have recently purchased a small company of 50 accounts or so and so far it has been a very good experience. The 2 employees stayed with us and are doing a fine job. We ended up firing a few very small accounts that didn't make economic sense to service. So far the new clients are just fine with the new ownership. Only 2 clients took advantage of the change to cancel their accounts. (We didn't have to pay for them since they cancelled at the time of the take over).
The first few months are crucial and it is important to not introduce changes. At the beginning you are under scrutiny and providing a similar or better service may not necessarily be seen as such. You have to keep the same tech, the same service day, stay on top of your replacements and actually go out of your way to show the client that he is being well cared for and not just an account being acquired by a corporate merger...
This is not the first time we purchase accounts, in fact Greencare was created by the purchase of accounts.
The key is to buy at the right price otherwise you are better off spending the money on marketing, advertisement and sales staff.
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barb helfman
Guest
« Reply #13 on: May 24, 2011, 09:38:19 PM »

Sue et al.
   Call me and we can discuss your options.  The info others have provided above is great and pertinent but a buy or sale is a one time operation and needs careful strategy.  Call me.
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Robbin Voight
Guest
« Reply #14 on: May 25, 2011, 11:59:44 AM »

Good discussion - I feel like I've been away for so long...things are heating up down here in Texas and I don't just mean the temperature. Our "interior drought: seems to be over. I'm very curious about how one structures what an account is worth when considering buying or selling. Or, for that matter the worth of ones whole company.

I was looking here on interiorscaper.com for any info on insurance recommendations for a small company. Good and bad feedback is welcome.

Thanks !   Robbin
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