Accounts are worth paying for

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Sunday, November 30, 2008

Accounts are worth paying for

CATEGORY: Blog

So why do you go into an industry if you don`t think the very business in which you are working so hard is`nt worth very much? What`s your incentive if you are not building any value in the business itself? Are you making so much more money in this biz than you could make working for someone else? And don`t forget to take into account all the benefits that typically come with working at a job. Health, pension and, quite possible best of all, both physically AND mentally leaving at the end of the day. Are you making enough to compensate for all this and then some?

When you go into business for yourself shouldn`t you expect a payoff in the end? Or are you just buying yourself a job? Truck, trailer, equipment, advertising, etc. Jobs are free!!!! Why buy one? One should be in any business venture in hopes of coming out ahead of where you would be had you gone to work for someone else. Some people may argue "I am my own boss and I call the shots" or "I`ve never worked for anyone else before". Both statements certainly have merit and exactly how much can only be determined by each individual. But to go into an industry that gets very little respect from the "outside" world and then devalue the efforts of others who are operating the same businesses as you is something I do not understand.

A common argument is that you do not know how many customers will stay with you. I agree, you do not know. But in ANY business you do not know how many customers will stay with a new owner! Yet other businesses sell for far greater multiples than those in this industry. And why do you fear the customers changing companies? Is the service you provide subpar? What would be the reason for a customer to change companies just because it was sold? If they did that wouldn`t they be getting someone new anyway? And they will have to make a considerable effort to do that. They must call a few companies for estimates, wait around to meet for those estimates and then take a chance on a new guy anyway? Sure, there will be a couple that switch for any number of reasons but to worry about half disappearing is a little extreme IMHO unless you know the quality of the work you provide is going to be below the level they were receiving prior to the sale.

To go even further I would argue that in this industry you are more likely to keep the customers if you buy a biz. We make it so easy for the customer to buy our "product". They do not have to get in their car and drive to a location, park their car and walk into a building, look around, gather everything they want, wait in line to give their payment, carry their purchase back to their car, get in the car and drive home. At each step of the way their minds have to make a conscious decision on their next action. At any point they can change their mind and go in a different direction. You want the services we provide? Just say so and we come to you, you don`t have to do anything. You are taking the decision making process and its many possible outcomes away from the consumer thereby giving them much less of a possibility to choose to go in a different direction.

One last point- I don`t think many people pay all that much attention to who cuts their grass. At every estimate I go to I always ask who was your previous landscaper. Most people do not even know the name of the company! They just want someone to maintain their property. Put yourself in the customer`s shoes. If you got a letter saying your landscaper has sold the businesses and now Joe Schmoe is going to be cutting your grass would you immediately call and cancel? You very well may pay a little more attention to the next few cuts but to actually call and cancel just because it`s someone new?

Remember every time you tell someone that another company in an industry is worth little or nothing, you are saying your own operation is worth little or nothing as well. Doesn`t make much sense.

Posted by Administrator on Sunday, November 30, 2008

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