One panelist shares her experience doing both
Swim Carefree, LLC
Pool Cleaning, Repair and Maintenance
Renovations, Remodels and Inspections
We purchased a route in 2010 or 2011. We were brand new into the business and we had one route, but my husband wanted to get out of where he was working and come onto our business full time. To do that, we had to purchase the route so we could sustain our income. That’s the Catch 22: I don’t like buying routes, but when you’re starting out, that’s the quickest way to have a sustainable business.
We didn’t go through a broker, and the guy we purchased it from did not do it correctly. The clients were upset because he didn’t do the proper communication. We did our due diligence to give [the clients] a courtesy call the first service time so they could meet the technician. Most of them were like, “What are you talking about?” Our prices were different, and even though we tried to honor it, his stuff was way too cheap. We did a guarantee of three months, and anybody who dropped us in that time period we got our money back.
I would not purchase a route again. If it’s not done properly, it becomes a headache and clients don’t like to feel like they’re goods sold — that was the major issue when we purchased the route. You need to be open and honest with the clients and say, “Hey, I’m getting out of this area, I’m giving this [route] to this other company or they’re purchasing your account.”
If you’re going to buy a route, I suggest to not use a broker if you can help it. [The broker] is going to take anywhere from three to four times the amount, so they’re going to try to upsell to 12 or 13*, and then you’re only going to get eight depending on what that broker fee is, plus the contract for the attorney and all that. A broker is not going to tell you who’s selling it to you, so you have no idea. It’s easier and better for you and the client so that you know the seller and the seller knows you.
To transition a route properly, we would have the current owner of the accounts call [the clients], we would conference call them also so they would be able to get to know our company and then give them our prices. They can decide if they want to continue with us. We don’t want them blindsided.
We also sold a route. At the time, we were having high employee turnover and weren’t able to find decent employees. When you have high turnover and somebody doesn’t show up, I have to pull a technician to go take care of it, but then they don’t make as much money. I sold [the route directly] to an individual. I said, “Here are my clients — you can look at the list. I can’t service these clients the way they should be serviced, and I don’t want the clients suffering for our negligence.”
I sold it for one to two times, and I was done. All our clients have contracts, so it’s different contract versus noncontract. I spoke to or emailed all of them, and told them a company was buying out their contract for the remaining balance, that they wouldn’t owe anything and going forward it’s going to be the new company. I told the clients I would meet with them on the jobsite so they could get to know the new company. Maybe two wanted me to meet with them; almost all were fine with a phone call.
When buying or selling a route, the pricing is often referred to as 8 times or 12 times, meaning multiplying what the client pays monthly for their service times that number.
- A 50-client route, which is billing at $150 a month per client
- Selling for 12 times, meaning $150 x 12 = $1,800
- Then each client/contract is deemed worth $1,800, so the total cost/price of the route would be $90,000, or 50 x $1,800
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