Whether you’re just starting out or looking to grow your market share, purchasing a service route from another pool business can be a relatively quick way to bolster your customer base — and there are several benefits to acquiring an established service route.
The Investment
If you have the desire to purchase a pool route, first consider the cost to do so. It’s important to note that, while you earn your money back, it can take anywhere from 10 to 15 months to do so.
Pool route prices are based upon the monthly income the route generates. According to Charles Baird, owner of Pool Route Sales based in Lake Forest, Calif., and creator of the nationally recognized Millionaire Pool Man program, the investment for a pool route depends on the desirability of the area. “In Vegas, you’re probably paying 10 times the monthly income of the route; in Hawaii about 14 times; and in Los Angeles about 12 times,” he says.
Each route also depends on each area and how much the seller charges per customer, says Maria Passantino, real estate broker for Pool Route Brokers. “A route that typically generates
$2,000 in revenue a month in service billing might sell for $24,000, which is the value of 12 months,” she explains.
Comparing Broker and Private Sale
If you’re just getting started and looking to build your customer base from scratch, going through a pool-route broker may be your best option. Another option is to purchase a route through a private sale. Whichever you choose, you need to make sure the company you’re buying from or through is:
n Local to or familiar with the area in which you’re interested in obtaining a route
n Able to provide training and firsthand experience on the route
n Agreeable to a contract that protects your best interests
Chris Smith, vice president of AAA Pool Service in Venice, Fla., has acquired pool routes both through a broker and through private sale. “The broker was a bit more expensive, because they obviously have their commission built in,” he says. “But the broker does some work to make sure the accounts exist and we’re buying something of substance, and the broker held the money in escrow while we determined that everything was as advertised. That was the main advantage.”
Using Pool Route Brokers, pool service providers can view available routes on the company’s website in various areas of interest, including what the route is netting and the purchase price, Passantino says. The buyer receives 30 days of training on the route from the owner; a 90-day guarantee that all the accounts will transfer to the new owner; a five-year noncompete for the accounts sold; and the protection of assets through an escrow account.
“For us, compatibility is very big,” says Baird of Pool Route Sales. “We want to make sure the buyer and seller get along up front because they have to get along after the purchase of the route. Once they meet and are in agreement, we take care of the paperwork.”
Sam Andrews, owner of Hallelujah Pools in Ellenton, Fla., has purchased three pool routes — one from a broker and two in private transactions. He says he prefers private transactions because of cost savings and a hands-on approach. It does mean more work on the part of the buyer, but “it’s absolutely all to the advantage,” Andrews says.
“You have to do the research on the seller,” he continues. “The legal part is easy to do: You just go to a lawyer and get the contract written up. A broker ends up making a lot of money, and that’s money spent that I think can be avoided. If you’re selling a route, using a broker would be fantastic because of the protection and advertising provided. But, if you’re buying a route, I think it’s best to do it on your own.”
Though Smith of AAA Pool Service has experienced purchasing both ways and says brokers work very well, he too prefers private sales. “We used what the broker did for us the first time as a template because the guy we purchased from wasn’t advertising the sale; we heard about it through one of our suppliers,” he says. “We obviously had to do more of the research on our own, but it was cheaper. We looked into the person who was selling the route.” He then had a lawyer draft a private agreement based upon strict criteria the lawyer thought was important to protect Smith.
What to Look for in a Route
As route options become available, note what makes a route the most ideal for your business. “It depends on what service providers’ aspirations are,” says Baird. “If they want to be a very large company, it would be different than a one-man-show. A one-man show wants a route as tight as possible and good, paying customers. Someone who wants to be really large needs a wider radius, because a route that is too tight inhibits growth. You want tight daily routes but not tight overall.”
Andrews of Hallelujah Pools agrees a tight route is beneficial for a new provider. “A tight route is the secret — if you can get 60, 80, 100 pools in one neighborhood or within five miles of each other, then you’re golden. And you want to make sure you’re buying from a guy who doesn’t have a bunch of troubled pools. You should ride with the seller for a week or two for free to make sure you’re not getting into something you’ll regret,” Andrews says.
Andrews found routes for private sale through word-of-mouth for the most part. “I’m a talker and I talk to everyone,” he admits. “And our supplier has sales posted on the bulletin board. Someone called me the other day saying that he was
selling and wanted to see if I was interested. Once you’re out there, there’s nothing to it.”
Baird says training and mentoring are essential in these types of transactions. Pool Route Sales provides training and seminars for all of its clients through Baird’s Millionaire Pool Man program. “We try to set a standard for ourselves and the people we work with,” he says. “The sad thing is that most people won’t admit they need a mentor. That’s probably the biggest negative in almost 40 years of doing this — the people who feel they know everything already are the least successful. The people who come in with an open mind and want to learn are the most successful.”
Pros and cons of purchasing a pool route
The biggest problem in purchasing a pool route is that it’s easier to do nothing than it is to do something, Baird says, adding that “people are not as motivated as they used to be.”
Passantino agrees that buying a service route and falling down on the job is the only negative to purchasing a route. Buyers need to make sure their staff is showing up and doing what’s expected of them if they want to be earning money right away, she says. “If you were trying to build a route on your own, you’d get one or two at a time,” she says. “Or you could buy 30 accounts to build your route and get that immediate income.”
The pros of purchasing a pool route, however, seem to outweigh the possible cons associated with your employees’ performance. “There is no question it’s one of the most beneficial things to do for a pool service business,” Andrews says. “If you have the money to invest, I would completely recommend it.”
