When you've decided to go out on your own and start a service business, you’re eager to hit the ground running and get a bunch of accounts. It’s understandable — that’s how you make money!
But it’s also hard to get a bunch of accounts overnight, especially if you live in a saturated market like Arizona, California or Florida, where I live. It can take time to organically grow a robust list of accounts, and as we all know, time is money. That’s why a lot of people look into buying pool routes, which is the subject I’m going to dig into today.
Buying accounts or entire routes can be a great way to get your business off the ground, but like any business deal, you need to know exactly what you’re getting into before you do it.
I’ll start with my own story. When I first started Chlorine King, I bought 10 accounts from someone off Craigslist — and I’ll tell you right now, that was a mistake.
When you buy off Craigslist, you’re going in blind. You’re giving this person a great deal of money without any idea of what you’re getting into. You have no idea what condition the pools are in, what the customers are like, if they pay on time — nothing. For all you know, you’re going to end up with a bunch of dud accounts and nothing to show for it but empty pockets.
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Today, I don’t have any of the accounts I purchased originally (and I started in the industry just a couple years ago) because they turned out to be junk accounts. That’s money invested and quickly lost.
(Note: This is not to say buying pools from another person is always a bad idea. Actually, one of my good friends in the industry sells accounts once a year or so; he just gets too busy and sells off a few. But I know who he is, I know he’s a stand-up guy and I know he’ll sell me good, quality pools.)
The other route you can take (pun intended) is to buy a route from a brokerage company. Basically, these companies have routes they list for sale on their website with a few details, like how many pools are on the route, the breakdown between residential and commercial, monthly service gross income, yearly service net income and more. If you see a route you like, you contact them and they broker the deal.
The great thing about going through a brokerage company is that they typically have pre-qualifications for the pools they sell. You can count on them, for the most part, to take out the “dud” pools that aren’t worth your time. There’s also money held in escrow to protect you, the buyer, as well as a warranty on the pools for (typically) three months or 90 days.
You may get a good deal from that guy on Craigslist, but when you’re buying a route through a firm, you’re also paying for peace of mind — and when you’re running a business, that’s invaluable.
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The other thing to consider when buying a pool route is whether you want to outright buy your new route or finance it. In my case, I bought my pools outright, and I’ll tell you why. When you buy a route, you’re buying the pools on it for about 12 times the monthly rate, which means you’re basically fronting the money you’re going to be receiving from the clients for a year. So after you consider all the stuff you’re putting into it — chemicals, wear and tear on your equipment/ vehicle, your time, etc. — you’re not really making any money for about 12 to 15 months.
Now slap a finance charge on top of that, and you’re looking at 18 to 20 months before you start making money. So I would definitely be careful when considering financing; it may be the right choice for some, but if you can, I’d put a lot of thought into buying outright.
Buying a route is a gamble, even when you’re buying from a reputable firm. You may buy a route and customers may not like you, and then drop you. The warranty won’t cover those types of things, and then you’re losing good money on the deal.
If I did it all over again, I would probably take the time to grow my business organically, maybe take another part-time job while building my business and put money into advertising. That puts you in charge: You know everything about the accounts you have and you’re not financially invested in them. Remember, once you buy an account, you’re invested in it for a year. But if you acquire a pool organically, you’re not beholden to it. You can walk away anytime.
Buying a pool route is a serious transaction — you’re putting a lot of money into it and it comes with a commitment. So if you do go down that road, make sure you’re doing it with an established company that’s going to back you up. Or, at the very least, buy from a person you know and trust.