Webinar Recap: Best Practices for Buying and Selling Pool Routes With Chris Webb
One trend continues to dominate the pool industry: routes are always changing hands.
Buying or selling a pool route can be an excellent way to grow your business rapidly, diversify your income, balance out your workload, or just get a nice payout for all your hard work. But what does it take to buy or sell a pool route successfully? In our recent webinar, our panelists sat down to discuss their experience and best practices for buying and selling pool routes.
Our panelists included:
- Chris Webb of National Pool Route Sales, seasoned pool route broker
- Bryce Sirrine, Skimmer Ambassador and owner of Beyond Pool Cleaning
- Niki Acosta, Marketing at Skimmer
Watch the full webinar here or read the recap below.
Why Should I Buy a Pool Route?
Purchasing a pool route can be a clever move for many business-minded people (and not just people in the pool industry!). Let's take a closer look at some of the benefits of taking this step:
- Growth by Acquisition: When you buy a pool route, you essentially add a slew of new customers to your business at once rather than finding them one by one. You can also use pool route acquisition to break into new territories and expand your service and repair footprint.
- Building Relationships and Community Connections: Owning a pool route gives you a golden opportunity to forge meaningful customer relationships. Moreover, happy customers are often a great source of referral business.
- Diversified Income Portfolio: Different customers will need different services, so your income won't depend on just one type of job. Adding repair work, for example, diversifies your portfolio and can provide a kind of safety net. This ensures your business stays strong even if some parts aren't doing as well.
How Do I Know If I’m Ready to Buy a Pool Route?
Pool routes are an easy way to grow, but they don’t come without caveats. Here’s Bryce’s checklist of things to make sure you have before buying:
- You have the funds for the purchase
- You’re realistic about time-to-ROI
- You have the infrastructure to support growth
- You have not made another acquisition in the past 90 days
- The acquisition aligns with your long-term goals
To consider growth by acquisition, you must have the money ready at the time of purchase and in the future to avoid cash flow disruptions. Bryce highlights why this is critical.
“It’s not just about the money to make the purchase, but you have to look at the increasing costs of maintaining those pools as well. You should plan on those customers being slow to pay initially. When you first make a purchase, It can take as long as two months for that money to be reliably coming in how you expect from your existing customer base. Make sure you have enough money to make the purchase and sustain the business for a few months while you sort out cash flow issues.” - Bryce Sirrine
Before you buy a pool route, ensure that your business has the backbone to handle more customers. This could mean having enough staff, the right tools, and systems in place to manage a larger workload without hiccups.
Chris Webb added an essential note, stating that “Operating manpower is probably the one constraint that everyone’s wrestling with the most. I hear a lot from my sellers: ‘I can’t take care of these pools – I need to trim my route to keep this manageable.’”
How to Evaluate a Pool Route for Buyers
Buying a pool route is a considerable decision that involves careful consideration and planning. To make the best choice, follow these business acquisition best practices recommended during our webinar:
Do your due diligence: Research extensively before purchasing to understand the market, know the history of the pool route you plan to buy, and assess the existing customer base's satisfaction level.
Take over billing right away: Ensure that you have control over the financial aspects from the start and help prevent any financial discrepancies down the line.
Ensure a guarantee clause in the acquisition agreement: This could be a guarantee regarding the condition of the pools, the equipment, or the retention of customers after the takeover.
Clearly define your business practices and goals: Set customer service standards, decide on the pricing strategy, and have a clear vision of where you want to take the business in the future.
Assess the potential for marketing efforts: Consider if the funds you plan to allocate for buying a pool route could be better used in marketing efforts to generate more business organically.
Go for routes with expandable service opportunities: By thinking of yourself not just as a pool service provider but as a "backyard concierge," you unlock many doors to additional revenue. This role involves tending to all the needs a pool owner might have, essentially becoming a one-stop shop for all things pool-related.
Consider the scale of the acquisition: Buying a smaller number of pools (like five) will have a lower value on a per-pool basis than purchasing a larger group (like 50).
🌟 Webinar registrants received a Buying and Selling Pool Routes Evaluation checklist and a Route Acquisition ROI Calculator! If you didn't receive your copies, contact our support team and ask about receiving these resources.
What Makes a Pool Route More Attractive For Sale?
When it comes to selling pool routes, there are various aspects to consider to make your route attractive to potential buyers. Before you put your pool route on the market, you must focus on presenting it in the best possible light to attract the right buyers.
Consider the following aspects:
- Tight routes and historical data: Showcase a compact route with well-maintained historical data of your accounts. A history of customer retention can add great value.
- Clean books: Maintain transparent and organized financial records to foster buyer trust.
- Market rates and company culture: Uphold market rates and nurture a positive company culture to aid in customer retention, enhancing your business value.
- Value-added services: Incorporate additional services such as tile cleaning and pressure washing to boost the overall worth of your route.
- Customer relationships: Building and maintaining strong customer relationships can be a significant selling point.
- Valuing your business: To set the right price for your business, consider factors like the compactness of your route, historical account data, and customer retention rate.
- Timing and the economy: Although it's a common belief that selling before summer or at the start of the year fetches a better price, Chris emphasized that finding the right buyer is more vital than timing.
“Don’t try to time the market. When it’s right for you, get the route listed." - Chris Webb
Transition Plans: Ensuring a Clean Handoff
When the time comes to hand over your pool route to a new owner, having a well-thought-out transition plan in place is crucial. To facilitate a smooth change of command and help retain clients, consider the following:
Warm handoffs: Introduce the new owner to your clients personally (or request the seller to do the same) to create a comfortable and reassuring environment.
Communicate effectively: Use various communication channels to reach out to your clients, making the process inclusive and personal. Present the transition in a light that showcases the benefits it will bring to the clients, like improved service or new features.
Set realistic expectations: Prepare for a 3-5% turnover rate. Some customer turnover rate is unavoidable, but setting up this expectation helps them navigate the transition more smoothly.
If you are thinking about buying a new route to grow your business or selling your current one to try something new, knowing all the details is important. Here are some key takeaways Chris expressed to our audience.
🌟 Bonus Audience Q&A
Q: How often do you see routes being sold with owner financing?
Chris: I want to say owner financing is maybe 25 percent of the time. It’s better than lowering your prices because once you do that, it’s gone. When you finance a piece of it, you maintain the selling price and you’re able to collect on that money.
Q: What do routes typically sell for?
Chris: 8-10x monthly rate is what the seller is going to net out most of the time when leveraging a broker, and there’s fringe on either side depending on the business.
Q: How much can you sell your company for vs. selling off customers as individual pools?
Chris: More often than not the routes are more valuable than the business. When you consider things like the value of the website, the value of the name, that used to be more valuable five years ago. That value is getting less and less by the day.
Q: How long should a standard guarantee be? Two months? Six months?
Chris: 90 days is standard for National Pool Route Sales.
Bryce: On the buying side, I wouldn't accept anything more than 90 days, and on the buying side, nothing less than 30 days.
Q: How can I find average pricing?
A: If the pro who is selling their routes uses Skimmer, they can get this information easily with an export of their customer list.
Q: What if you don't have contracts with the customers? Does that affect the sell price of a route?
A: It’s certainly a higher risk to consider, but there are many service companies that don't have contracts or service agreements in place. You'll definitely want to understand what services are included in the service amount.
Q: What is a typical broker cost/rate?
Chris: A broker will typically receive 2x the monthly service amount, netting a seller around 10x in a typical transaction.
Q: How long should I wait to list after a price raise?
A: It is recommended to wait a minimum of 60 days after you raise prices before you sell. Doing so minimizes the disruption to clients.
Whether you are on the buying or the selling end of the spectrum, integrating Skimmer into your business model can prove to be a game-changer to help establish processes, maintain clients through a high standard of service, and offer a detailed record of historical data (a must-have for any savvy buyer).
To learn more about Skimmer, schedule a demo. For even more tips on buying and selling pool routes,
- Watch the full webinar here
- Or read Bryce's blog on real-life lessons learned in buying and selling pool routes.
Here’s to a future of success, growth, and happy clients with Skimmer by your side!