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View Full Version : To buy or not to buy



screwdriverphillips
06-07-2004, 10:39 AM
:i dunno: :Rain: Hello all,
As I am starting my lawnmowing business full time and not buying any customers and relying on advertising ,marketing etc it obviously can be a bit of a financial strain but believe I will build up a customer base in ? so many months.How long I dont know but I would like to know from fellow contracters did you buy customers,buy rounds,start of partime or full time and how quickly you established yourself and the for's and against buying customers.
Regards Screwdriverphillips
Ezy Mowing
Melros,Mandurah WA

Ebony
06-07-2004, 11:07 AM
G'day Screwdriverphillips :)

Firstly, this year has been a lot different to most other years. A quiet year in comparison by no stretch of the imagination.

"A financial strain" you have $10,000 to $60,000 more in your pocket then someone who has purchased a round. You also make immediate profit on every lawn you cut rather then paying off the debt which are those customers.

The following is directly from our website but i would be interested in Everyone elses view. Purchasing customers is essentially a business expense, like advertising etc.

Your Debt
"If you were to purchase a round you would usually pay the amount per cut multiplied by 10 (which does not include machinery). Therefore, if you were to buy a round consisting of 30 customers at a total price of $600 per cut you would pay around $6,000. You would then have to mow the 30 lawns that you have purchase 12 times to brake-even (taking into consideration your expenses). Therefore, you would have to work for 9 months without a cent of profit.

You then have the concern of losing customers as not everyone likes being sold. Quite often customers do not like to be treated as an item to be sold and they don't want the new contractor. Not to mention, you are not an expert and your cut might not be as good as the contractor before. The chance is that you will lose around 30 to 40% when purchasing a round. Out of the $6,000 you spent, you would have paid on around $1,800 to $2,400 for customers that aren't yours."

Expense of Advertising V/s Buying Customers

We recently read on an associations website that due to high advertising costs and competition they recommend the only way to enter this industry is to buy a round. The avg price of advertising in Australia is around $44 per week. How about we keep the 10 to 20 thousand dollars that would be used in buying a round and pay this advertising fee (remembering that you will be invoiced 4 weeks after the first ad appeared then have up to 30 days to pay). Lets say you got only one new regular customer per week, and you cut this lawn every 3 weeks for $25. You don't do any other work but regulars, no big $ clean up jobs. By the end of the year you will have an income of $450 per week with 52 regular customers.

I ask you to look at the graph below and tell me how advertising is expensive? Now I would be EXTREMELY concerned if you only got 1 customer per week.

You can take anywhere from 1 to 20 calls per week. With an industry average conversion rate of around 75% plus once offs, you do the maths.

VERY BASIC COMPARISON EXAMPLE
http://www.indmowing.com.au/truth.3.gif

Profit 1: Working on the above scenario where you pay $44 per week advertising and receive only one regular customer per week.

Profit 2: You buy a round of 45 customers with an annual turnover of $20,000 for $10,000.

(please note that neither of the above include machinery or any other expenses this is merely an example of turnover minus the expense of getting customers)

One Year's Accumulated Profit
Profit 1: $9,637
Profit 2: $10,020

Difference: $383 Once again you need to remember that when advertising you will receive anywhere from 1 to 20 leads per week (depending on time of year and area) with an industry average conversion rate of around 75% you are looking at more then 1 customer per week. Also remember that it is highly unlikely you will keep all the customers you purchased as explained above.

====================

I am pretty simplistic when it comes to this type of thing lol. But I have never purchased customers, infact I don't pay for barely anything lol, I am the "Do it myself" type in business.

I look forward to the other replies

Ebony
06-07-2004, 11:13 AM
Screwdriverphillips did you ever look into the NEIS scheme (New Enterprise Incentive Scheme)??

Is a great government funded scheme to help small business owners build their business.

Ebony

screwdriverphillips
06-07-2004, 11:26 AM
Hi Ebony,
Yes I looked at the Neis program but I had to wait for the application to be assessed and then wait up to 6 weeks with initial training before I could start the business and thought it may be restrictive .In hindsight I probably should had give ago as you get some income.Have alrady got 3 customers sofar from 1 week of advertising surprisingly not from Newspaper advertising but from flyers Its is cold and wet overhear but have been letterdropping the newer areas especially the new rollon lawns.
Regards Screwdriverphillips
Ezy Mowing
:Rain:

Ebony
06-07-2004, 11:36 AM
Yea the waiting period is the hard part and the 6 or 8 week course (I can't remember how long off the top of my head) But then if someone can do mowing on the side of their business and keep it quiet there is always the option there also :)

Great to hear about the 3 customers from one weeks advertising, that is great.

Do you ever see the lady or gent who delivers your local paper? They will generally happily distribute your flyers or business cards with the papers, if you go direct to the walker, they charge very little to distribute them for you. We did it with some business cards we got done 1,000 cards for $69.00. They were more advertising cards then business cards. The lady then disributed them with her newspapers. Not only is it a cheap method, it is compact area close to your area, and you have the opportunity to make it repetetive.

The people delivering appreciate it also (trust me, they don't get paid much for delivering the paper). We got a good response from that.

Take care

Ebony

Pres Lawn
07-07-2004, 06:40 PM
Ive built up 2 lawn rounds with out buying a single customer. But I did have to get a partime job the second time around but for only a few months. But no matter how hard it gets stay positive and good luck :)

WA Idependent Mowing
07-07-2004, 06:50 PM
Hi Screwdriver,
When I purchased my round 3yrs ago I did so for one Important reason. Cash Flow. I wonderd weather I'd made the right choice.I would say at this piont in time it was a good decision
as I was carring debt and a young faimly, there was no way I could risk a cutomer base happening my way! I know what the statisic's say and after all they are a statistic.I do know people who have picked up cutomers 40 to 90 in a hit but you have to be very very lucky and in the right place at the right time.I really think there is a lot more competion at the present moment becuase a lot of people see it as a life style change, to which one I don't know it's still work! I have tripled the income of my round in 3 yrs and changed over every piece of equipment and also offer a lot more services than the last contractor which gernerated 10 000 on its own. So don't be scared to purchase a underserviced round and build it from there. If you scour the papers etc.. you can purchase rounds with equipment and reasonable turnover as forced sales due to ill health etc.. In the end weather you purchase or not you still have to run them efficently or your a has been!

Viceroy
07-07-2004, 10:58 PM
WA Idependent Mowing me 100%
Just purchased a round in Bris with 70 customers. Cash flow right now not in a few months. And me with the bargining power not to pay for it for another 3- 4 months.( I know the owner as a family friend) Recently married (Valintines Day ) so i dont forget and a ready made family and was earning 60-70K per year i need a cash flow.
Yes the "life style change" is me . I was a Sales Rep for a printing company and was stressed to the max, becoming a very angry person (not me).All i want to do is work hard and get paid.
Now I'am working hard getting paid and sweating like a PIG.
AND LOVING IT :aus-flag:

pbm
07-07-2004, 11:40 PM
If you need imediate income and you are prepared to spend the money then I think buying an established round beats going into a franchise in the long term at least there are no ongoing fees.
:p

matthew pitman
08-07-2004, 02:26 PM
i just brought my busniess about four months ago
i spent a long time working out whether to but into a franise or not
once i looked at the on going cost involed and what i could do to expand on that then it was made clear they all say be your own boss but at the end of the day you have to do most if not all the work they give you leads to and its very hard to expand your area and if you wont to sell or leave and go alone their got you sticthed up there now to
i ended up buying a fairly large business i think
i thought it was best to do it that way rather then start from scratch, i am young and have a house and family and couldnt take the risk of no income and thought that if i brought and establised one i can walk straight into the money and do as much or as little as i wont
my outlay for what i got was i think good i paid around 50k and got about 40k in gear and about 90 custemers with about a cut of 5k
the money i used was just put on the house and works out to be about $100 a week , i think thats ok cause if worst comes to worst i can get a secound job to cover that.
at the end of the day it all comes down to personal comitment an what you have to lose.

screwdriverphillips
08-07-2004, 04:11 PM
Hi Screwdriver,
When I purchased my round 3yrs ago I did so for one Important reason. Cash Flow. I wonderd weather I'd made the right choice.I would say at this piont in time it was a good decision
as I was carring debt and a young faimly, there was no way I could risk a cutomer base happening my way! I know what the statisic's say and after all they are a statistic.I do know people who have picked up cutomers 40 to 90 in a hit but you have to be very very lucky and in the right place at the right time.I really think there is a lot more competion at the present moment becuase a lot of people see it as a life style change, to which one I don't know it's still work! I have tripled the income of my round in 3 yrs and changed over every piece of equipment and also offer a lot more services than the last contractor which gernerated 10 000 on its own. So don't be scared to purchase a underserviced round and build it from there. If you scour the papers etc.. you can purchase rounds with equipment and reasonable turnover as forced sales due to ill health etc.. In the end weather you purchase or not you still have to run them efficently or your a has been!
You obviuosly made your round work for you did lose many of your customers you brought and is it because you got customers peoplle see you out their and you were able to expand quicker
Regards Screwdriverphillips

screwdriverphillips
08-07-2004, 04:14 PM
i just brought my busniess about four months ago
i spent a long time working out whether to but into a franise or not
once i looked at the on going cost involed and what i could do to expand on that then it was made clear they all say be your own boss but at the end of the day you have to do most if not all the work they give you leads to and its very hard to expand your area and if you wont to sell or leave and go alone their got you sticthed up there now to
i ended up buying a fairly large business i think
i thought it was best to do it that way rather then start from scratch, i am young and have a house and family and couldnt take the risk of no income and thought that if i brought and establised one i can walk straight into the money and do as much or as little as i wont
my outlay for what i got was i think good i paid around 50k and got about 40k in gear and about 90 custemers with about a cut of 5k
the money i used was just put on the house and works out to be about $100 a week , i think thats ok cause if worst comes to worst i can get a secound job to cover that.
at the end of the day it all comes down to personal comitment an what you have to lose.
Matt, Did you find it a shock to the season going from 0 customers to 90 custs overnight and have you lost any customers in the transition period.
Regards Screwdriverphillips

matthew pitman
08-07-2004, 05:35 PM
g'day screwdriverphillips

its was a bit of a shock but i had work it with the previous owner that i would work with him for two weeks and he with me for another two weeks after take over, so i think that it made it a bit more easy.
it also helped that i was going into it going into the quiet season
which was my plan to buy in the quiet season to save a bit of cost on the purchase and make things easy until i got used to it
but dont forget that at the end of the day you get back what ever you put in .
time managment is always good to have, taking that extra time at the end of the day to have things in order to make things easy.
i only have lost two clients , one an investment property ( the owner has since retired and is now doing it himself ) other an industrail site
where some goose wont say who he is, under cut me by $10 to do the job , i already was doing it for nearly nothing anyway so no great lose their.
cheers
matt

Easycareacres
10-07-2004, 05:52 PM
good onya matey, wouldnt worry about someone undercut shrug it off keep going youll do fine.

matthew pitman
12-07-2004, 01:23 PM
i must be doing the right thing cause that buff head follows me every where , watches me do the job must be getting tips or something,
no loss to me got plenty more and getting more every week.
:o

screwdriverphillips
15-07-2004, 04:42 PM
Well in the nine days since i put this thread up how quickly things change.i have been advertising in both local papers and also did a letter drop but I have been picking up customers every day and would have 16 customers I have done some 1 offs but alot to become regulars.Also picked up 38 customers for $2500 which the guy was getting out of it and was wanting to sell and the good I pay back over 3 months.I wasnt going to buy but the price was right and has helped my exposure.One thing Im finding if I answer my phone and turn up to quote on time you 75% got the job Im not quoting cheap which is not what I want to do.So anyone sitting out their and its going a bit slow it can turn around very quickly.Also people have seen my trailer with big Ezy Mowing on it and are remembering it when they look into the paper.Im also getting jobs from other contracters who dont want the work.
So the wifes happy she seeing a bit of cash.
Regards Screwdriverphillips
Ezy Mowing
Melros Mandurah :)

Ebony
15-07-2004, 06:29 PM
That is Brilliant to hear Ezy Mowing, is there anything better then when everything just falls into place. Love it when that happens :) Usually it takes a bit before newspaper ads, or any advertising for that matter kicks in. Repeat repeat, you'll be quite suprised after running adverts etc. for a considerable amount of time, when you pull them out, how long after your continue to get calls. Starting out is never the easy part though :)

Congrats and keep on marching. Thanks for sharing, nothing like the good side!

Ebony

matthew pitman
15-07-2004, 08:26 PM
good on you , great stuff

bradtez
31-07-2004, 09:19 PM
Starting out is ALWAYS the hardest part if you go on your own and decide not to buy customers. Personal choice i decided to build up myself, letterbox drops and shopping centre flyers, in fact last financial year i spent $0 on advertising (apart from some flyer photocopying) and my regular customer base is approx 70. Best form of advertising i know......WORD OF MOUTH.

Do a good job or turn up when you say you are...the job is virtually yours.

Brad

Brad's Backyard mini diggers & landscaping

administrator
19-12-2007, 07:31 AM
Happy Birthday WA Idependent Mowing i know you have sold up and retired lol :russ:
Good on ya Carl

administrator
12-07-2008, 09:34 AM
Screwdriver phillips just logged back on after 12 months hows your round going you must be busy good to talk to you again :)

Guys always forget there password :laughing:

lawn order
12-07-2008, 11:22 PM
[QUOTE=administrator]Screwdriver phillips

=Vodka & OJ Star.

It's just me - others will explain!
Perhaps - Maybe - not ?

holdenhead
17-07-2008, 01:13 AM
Hi, I started from scratch while I was working. I have always had a few lawns here and there as every time I moved I would print some flyers and go for a walk up and down a few streets and presto customers. I started mowing lawns 12 years ago but when I started my round this time (3 years ago) I wanted to jump in and make a living out of it. It was hard at the start with a mortgage and our second daughter was only 2 months old but keep at it and it will come.

Some advice I got once is if you have no customers one day and you really need some you should be out there that entire day delivering flyers and getting seen. Mow your mates lawns and you will get people coming up to you in the street saying do mine next.

cheers Rick