How to Evaluate a Pest Control Business Before You Buy

WEBVTT
00:00:00.160 --> 00:00:00.719
Pest control.
00:00:01.199 --> 00:00:05.919
Pest control can be one of the coolest, one of the best businesses to own.
00:00:06.160 --> 00:00:11.039
But this one you have to be extremely careful with if you're buying this business.
00:00:11.279 --> 00:00:20.079
Because there's lots of pitfalls, and one of the biggest pitfalls is understanding the business, but also understanding recurring revenue.
00:00:20.320 --> 00:00:26.239
So that's where we're gonna start because it's one of the biggest pitfalls when buying a pest control business.
00:00:26.399 --> 00:00:35.759
So you have a pest control business you find on buy biz buy sell, and the seller says, We have 1200 recurring customers.
00:00:36.079 --> 00:00:37.759
Something I see all the time.
00:00:38.000 --> 00:00:40.560
And that sentence means nothing.
00:00:40.880 --> 00:00:45.200
It means absolutely nothing until you know, are these customers active?
00:00:45.439 --> 00:00:47.119
How often are they serviced?
00:00:47.359 --> 00:00:50.240
How much do they pay per completed stop?
00:00:50.640 --> 00:00:53.039
Completed stop is kind of a key word here.
00:00:53.200 --> 00:00:54.479
How many, what's your turn?
00:00:54.560 --> 00:00:56.240
How many cancel within the first year?
00:00:56.399 --> 00:00:57.920
Are they on auto pay?
00:00:58.079 --> 00:00:59.359
How dense are these routes?
00:00:59.439 --> 00:01:03.039
Are these 1200 customers all over the state of Arizona?
00:01:03.119 --> 00:01:05.519
Or are they in this little pocketed neighborhood?
00:01:05.599 --> 00:01:08.799
How many callbacks do they receive, or how much do they create?
00:01:08.959 --> 00:01:13.840
And how much of the EBITDA depends on the owner personally, right?
00:01:14.079 --> 00:01:32.799
Um, because two pest controls can both show 1 million in revenue, 250 in SDE, but one might actually be worth real money, and the other might just be a scattered customer list of under underpriced routes and weak billing and just absolute nightmarish headaches.
00:01:37.519 --> 00:01:43.359
This is how I would actually underwrite a pest control company before I buy it, buy it if it was me.
00:01:43.519 --> 00:01:50.640
Um, not uh pest control is boring and fragmented, everybody knows that there's actual real diligence that needs to happen.
00:01:50.879 --> 00:01:55.439
So, first is rebuild the revenue by service line, right?
00:01:55.519 --> 00:02:02.319
So, just like everything else in home services, there isn't just like pest control, isn't just this one thing.
00:02:02.400 --> 00:02:05.920
Like pest control total revenue is too vague for that.
00:02:06.079 --> 00:02:08.000
I need it broken down into buckets.
00:02:08.080 --> 00:02:11.280
Uh, is this residential uh reoccurring?
00:02:11.439 --> 00:02:13.039
Is it commercial reoccurring?
00:02:13.120 --> 00:02:14.560
Is it one-time residential jobs?
00:02:14.719 --> 00:02:16.159
Is it termite treatments?
00:02:16.319 --> 00:02:18.159
Is it termite renewals?
00:02:18.319 --> 00:02:20.400
Is it mosquitoes treatments?
00:02:20.479 --> 00:02:24.159
Like you're going up against mosquito joes here, is it wildlife?
00:02:24.240 --> 00:02:25.439
Is it bed bugs?
00:02:25.599 --> 00:02:27.520
Is it rodent exclusion?
00:02:27.759 --> 00:02:30.800
Is it other kind of project-based work?
00:02:31.039 --> 00:02:33.680
Because they're those are not all the same assets, right?
00:02:33.840 --> 00:02:41.599
If you if this business did$1.2 million last year, I want to know exactly how that$1.2 million was made.
00:02:41.919 --> 00:02:44.080
And um, I want to know where that's at.
00:02:44.159 --> 00:02:46.879
Is it recurring or singular um project base?
00:02:47.199 --> 00:02:57.199
Because if$800,000 is residential recurring general pest control, that's some high quality revenue with maybe like a spattering of$300,000 in wildlife projects.
00:02:57.360 --> 00:03:04.639
Uh, that may be profitable, there's some big one-time revenue uh events, which is sometimes a good thing for businesses.
00:03:04.960 --> 00:03:33.280
But I don't I I don't want to pretend like it's the business isn't what it is, because if you think it's 800k and reoccurring and you get there and it's a million of this is singular jobs that's based on the owner's connections to commercial contractors or to an HVAC company that's giving them all their rodent work, then once you take over the business, you're gonna have issues because you don't have that connection with this HVAC contract, you're not buying what you think you're buying.
00:03:33.520 --> 00:03:45.919
So I always start with semi the last 12 months revenue by service line, customer type, and recurring versus non-reoccurring, and then that's where I generally assign like the value and the score if we're gonna continue or not.
00:03:46.159 --> 00:03:51.199
Because like residential recurring general pest is where I put the highest weight, right?
00:03:51.280 --> 00:03:52.479
That's what my industry is.
00:03:52.560 --> 00:03:55.680
That's from from an HVAC plumbing side, like that's where I would do best.
00:03:55.919 --> 00:03:58.560
But re recurring commercial can be good too.
00:03:58.719 --> 00:04:10.159
Uh, you just have to check on margins, customer concentration, and uh the potential for you know churn post-owner sale because most of the time a lot of these commercial jobs are connected to the owner personally.
00:04:10.479 --> 00:04:14.960
Termite renewals, you know, they can be good, but I would definitely check for liability depending on your state.
00:04:15.199 --> 00:04:20.399
Mosquitoes fine, but you know, I just don't value it the same because depending on where you're geolocated, right?
00:04:20.639 --> 00:04:25.279
You could have certain spots that have huge winters that just don't get mosquitoes for three months out of the year.
00:04:25.360 --> 00:04:30.319
And then wildlife and bed bugs can be profitable, but there's kind of generally more project revenue based.
00:04:30.399 --> 00:04:43.920
Um, so it's trying to understand exactly what kind of business you're buying because you don't want to pay recurring revenue multiples for project revenue, uh, wearing like a subscription costume or LARPing as a subscription company.
00:04:44.079 --> 00:04:46.240
You just want to make sure you're paying for what you actually have.
00:04:46.399 --> 00:04:53.600
If you're buying a business, financing can make or break a deal, which is why I work with Alan Peterson from First Internet Bank.
00:04:53.759 --> 00:04:57.600
Not only is he a good friend, but he is the best in the business.
00:04:57.759 --> 00:05:05.439
He's closed over 90 million in SBA loans specifically in the skilled trades and manufacturing industries in the last year alone.
00:05:05.600 --> 00:05:10.319
He's the kind of banker that works with how to get this done, not if it can get done.
00:05:10.480 --> 00:05:15.759
Hit the link in the description below to get a good faith deposit plus a free deal review.
00:05:15.839 --> 00:05:18.560
He also does pre-buyer qualifications as well.
00:05:18.800 --> 00:05:21.680
Click it, Alan Peterson, first internet bank.
00:05:21.839 --> 00:05:27.519
The second thing, so now that we've got revenue out of the way, is define what active customers is.
00:05:27.600 --> 00:05:30.560
So this is across every single home service company.
00:05:30.639 --> 00:05:36.079
I love seeing this because it's always a point of contention, is you have to rebuild the customer count.
00:05:36.319 --> 00:05:44.399
The sellers of every home service business, and in this case pest control, love saying we have 1200, we have 2,000, we have 3,000 customers.
00:05:44.560 --> 00:05:45.759
What does that mean?
00:05:46.000 --> 00:05:57.040
Because that could mean that, hey, you have canceled customers, are they customers from three years ago, or are they customers that paid for a one-time project fee this year, but are not in any renewal subscription service?
00:05:57.279 --> 00:06:01.439
So when somebody says that they have a customer, you need to define what that customer is.
00:06:01.519 --> 00:06:03.759
And usually I just ask for the customer export.
00:06:03.920 --> 00:06:09.120
Again, if you're not under LOI and you don't have an NDA and all this kind of non-competes, uh, sometimes it's hard to get.
00:06:09.279 --> 00:06:18.000
So, but what you're looking for is hey, what's a customer name, address, service type, billing frequency, service frequency?
00:06:18.160 --> 00:06:21.040
Uh, like what are they charging people monthly on average?
00:06:21.199 --> 00:06:24.480
I mean, you could ask for this time kind of in generalizations as well.
00:06:24.639 --> 00:06:25.759
Like, there's ways around it.
00:06:25.839 --> 00:06:30.480
Just be careful because you don't want to spook a seller because you're asking, like, hey, give me your customer list.
00:06:30.639 --> 00:06:36.399
Like, you don't actually want their customer list, you just need the customer data to understand, like, hey, are they on auto payment?
00:06:36.560 --> 00:06:37.360
Like, that's a huge one.
00:06:37.439 --> 00:06:40.720
Auto payment, how many of those 1500 customers are on auto payment?
00:06:40.800 --> 00:07:03.360
Because if it's 200 out of 1500, I would say they don't have 1500 customers, at least if they're claiming to be a residential recurring service company, like you're not, or you're gonna have a high churn rate, and then look back at cancellations, look at past due balances, like these are all really important due diligence items to show you how good the quality of their list is.
00:07:03.439 --> 00:07:11.519
Because saying I have 1500 customers means nothing if you're basing any kind of valuation on customers, which you should base some valuation on customers, right?
00:07:11.600 --> 00:07:18.480
There's a customer acquisition cost that you can utilize to base uh the value of some said customers, um, not just goodwill.
00:07:18.639 --> 00:07:28.079
So that is part definitely part of it, and then for quarterly customers, like active service, does that mean like they've been serviced in 90 days, 120 days?
00:07:28.240 --> 00:07:31.680
You know, if it's a bi-monthly customer, or how you know what I mean?
00:07:31.759 --> 00:07:41.519
Like you want to understand like how regularly are they servicing their customers, or what term rate does that generate, how many of them are reoccurring, and that's that's really the big part.
00:07:41.600 --> 00:07:46.079
And then you can utilize that data a little bit later to do route-based, which we'll talk about here in a second.
00:07:46.240 --> 00:07:49.360
Because an active customer is not the name in the database.
00:07:49.439 --> 00:07:57.920
The active customer is someone who's going to you can rely to call on you for service in the next few months, and that you're gonna be able to bill and retain and route with.
00:07:58.079 --> 00:08:03.120
So making sure that you have good customers going into buying a business is the key.
00:08:03.360 --> 00:08:08.399
Number three is gonna be separating MRR from revenues per stop.
00:08:08.639 --> 00:08:13.360
So this is where math can kind of get messy and why that customer data is so valuable.
00:08:13.519 --> 00:08:21.680
Because a customer who's paying$50 a month or$49 a month is not the same as somebody who's paying for a$49 service call.
00:08:21.839 --> 00:08:30.000
If they pay$49 a month but get serviced quarterly, that's something worth like what,$147 per completed stop.
00:08:30.079 --> 00:08:39.840
And this distinction matters because MRR tells you that on subscription base, uh, or it tells you the subscription base, but it the revenue per stop tells you the route economics.
00:08:40.000 --> 00:08:55.120
For example, if a customer has like uh our company has 800 active residential recurring customers and the average billing is that$50 a month, then that's$40k of MRR annualized about$480 half a million dollars.
00:08:55.360 --> 00:09:04.480
If those customers are serviced quarterly, that force that's four stops per year, 800 customers times four stops times 150 per stop.
00:09:04.720 --> 00:09:07.679
Now I can underwrite the truck production, right?
00:09:07.759 --> 00:09:16.559
Uh, because if one of the tech completes eight stops per 150 per stop, the truck produces 1,200 per day.
00:09:16.879 --> 00:09:21.279
But at 20 working days per month, that's 24,000 per month.
00:09:21.519 --> 00:09:27.840
But if the tech does only six stops per day, then that truck produces$18,000 per month.
00:09:28.000 --> 00:09:32.320
So same customer pricing, same technician, different route economics.
00:09:32.480 --> 00:09:41.360
So I know I got really into the weeds there, but like it's extremely important to understand route economics because, and we'll talk about it here in a second, but like this business is route, like that's it.
00:09:41.440 --> 00:09:43.440
It is a route and marketing business.
00:09:43.600 --> 00:09:48.960
You have those two economics, it's acquire customer efficient routes, acquire customer efficient routes.
00:09:49.120 --> 00:09:55.919
So when you're taking a look at route economics, you're looking at average revenue per stop, stops per tech per day, and revenue per truck per day.
00:09:56.080 --> 00:10:01.120
If the seller can't provide these, that's a that's a first big red flag, and that's where I would stop from there.
00:10:01.279 --> 00:10:04.879
Well, I wouldn't stop that, but like you have you have to be able to get those numbers somehow.
00:10:05.039 --> 00:10:07.200
Um, those are key to their business.
00:10:07.440 --> 00:10:10.480
Number four is again, like we talked about, route density.
00:10:10.559 --> 00:10:18.799
Um, mapping out where the customers are, or at least talking to and understanding from the seller's point of view how much window time, how much real window time is there?
00:10:18.879 --> 00:10:24.879
Because the seller might fudge these numbers a little bit because again, route density is extremely important in this business.
00:10:25.039 --> 00:10:31.600
It's not an operational improvement after you close, like this is the diligence item before closing that you need.
00:10:31.919 --> 00:10:39.200
Average window time per month, or I need to have be able to map all the active customers' addresses myself.
00:10:39.279 --> 00:10:47.039
Like the you have to give me something to be able to fully understand how efficient this company is currently running.
00:10:47.200 --> 00:10:50.159
I mean, if it's not efficient and you think you can make it more efficient, great.
00:10:50.240 --> 00:11:04.720
Like there's some opportunity, just don't pay for a streamlined, high efficient company that's just doing crazy numbers or doing poor poor route economics and paying them like they're doing great route economics.
00:11:04.960 --> 00:11:09.600
So, I mean, you'd group customers by zip code, neighborhood, subdivision.
00:11:09.759 --> 00:11:22.240
I mean, you can group group them by historical routes, uh, technician routes, how like average time at how many jobs they're running per day, by the their overtime usage, something like that.
00:11:22.399 --> 00:11:40.240
You want all that data, and then you're gonna start looking for clusters, like hey, a pest control company with 900 customers and a tight zip code, like one zip code that's really small, sweet, is different than a customer or a seller with 900 customers across three, five, ten zip codes, 100 miles, right?
00:11:40.480 --> 00:11:41.200
Vastly different.
00:11:41.279 --> 00:11:42.799
I think we understand why.
00:11:42.960 --> 00:11:52.480
Um, it's just because, like, hey, the more stops you can do per day, the higher and keeping the revenue per stop the same, you have a higher daily production.
00:11:52.799 --> 00:11:54.000
So the the reason.
00:11:54.080 --> 00:11:57.600
So I'm I'm asking the seller, I'm saying, hey, what's the average time between stops?
00:11:57.759 --> 00:12:19.440
How many customers are outside the core service area, how many routes routes are full, you know, how many days are technicians driving too far for too few revenue, or you can ask them how many days can you show me uh some sample a few days and pick three random dates and then actually look through their CRM and see what their average truck uh take home is at the end of that day.
00:12:19.600 --> 00:12:26.080
Uh you can ask if there's zip codes that produce that are poorly poor producers or zip codes that produce the least profit.
00:12:26.240 --> 00:12:29.759
That's generally pretty valuable um items.
00:12:30.000 --> 00:12:36.080
And then from there it's just it's again you're understanding like, hey, I'm not just buying customers.
00:12:36.240 --> 00:12:40.320
We've we've decided that they're real customers uh now, right?
00:12:40.399 --> 00:12:42.399
Or they're not real customers, but hopefully they're real customers.
00:12:42.480 --> 00:12:44.720
Now we're just deciding, hey, are they real customers that we want?
00:12:44.879 --> 00:12:47.200
Are they in in a close geographical area?
00:12:47.279 --> 00:12:55.200
Um, and maybe if they're not in in like the greatest geographical area, but like can you build strategy around that and then just don't pay for don't pay for it up front?
00:12:55.519 --> 00:12:56.720
Um, sweet.
00:12:56.879 --> 00:13:00.639
Number five is is understand churn.
00:13:00.720 --> 00:13:06.559
It's not necessarily a need business, it's not, hey, my downstairs bathroom is overflowing with sewage.
00:13:06.720 --> 00:13:09.759
This is like, hey, I have some bugs outside, my wife's really grumpy about it.
00:13:09.919 --> 00:13:11.440
Like, can you spray around the house?
00:13:11.600 --> 00:13:24.639
Um, so it's understanding like, hey, how do we reduce churn as much as possible so that we can market and bring on enough new customers to outweigh any kind of churn that we currently have.
00:13:24.960 --> 00:13:30.960
When I think about this, I usually start like say you start with 850 active customers.
00:13:31.200 --> 00:13:34.480
You go through and you say, Hey, okay, how many new customers did you add this year?
00:13:34.559 --> 00:13:37.200
You added 320 new recurring customers.
00:13:37.360 --> 00:13:40.000
The year ended with 910 active customers.
00:13:40.159 --> 00:13:47.919
So, again, this is why that customer piece was so important in the beginning because we need to understand our actual customers first before we do anything else.
00:13:48.080 --> 00:13:52.399
Uh, but so we have now we we understand actual customers, we have a definition on it.
00:13:52.720 --> 00:13:59.440
We we started the year with 850, we added 320, we ended the year with 910.
00:13:59.600 --> 00:14:02.799
That means that we lost 260 customers.
00:14:02.960 --> 00:14:10.080
So, usually what you'll get is you'll get a seller that brags, hey, we added 320 customers this year, which great.
00:14:10.240 --> 00:14:13.919
Like, you added 320 customers, but you still lost 260.
00:14:14.000 --> 00:14:25.519
So, like net growth on that 60 customers, understanding like looking past some of the the um backpatting of the seller and saying, like, hey, okay, what's the real number?
00:14:25.600 --> 00:14:27.440
What's the the active customer?
00:14:27.519 --> 00:14:31.039
What are you actively adding uh due to loss and churn?
00:14:31.120 --> 00:14:36.559
And then it's understanding where the churn came from, like just talking to them, understanding why are they churning, where are they churning.
00:14:36.639 --> 00:14:40.960
Uh, we talked about auto payments, that's a huge point to reduce churn.
00:14:41.120 --> 00:14:44.240
Uh, like there's a lot of things uh that causes churn.
00:14:44.320 --> 00:14:47.679
This is a great option to build some value into the business as well.
00:14:47.840 --> 00:14:58.240
Is if you can figure out where's the churn and why is the churn, then you can easily, easily jack said it here first, easily, um, you can easily stop the churn.
00:14:58.399 --> 00:15:02.159
So focusing on that, um, and you just want to understand more about it.
00:15:02.240 --> 00:15:04.399
Like, hey, are they canceling within the first 30 days?
00:15:04.639 --> 00:15:06.960
Are you running a promotion that is within 30 days?
00:15:07.039 --> 00:15:12.639
Like, first month's 9.99, and then oh, we have a high churn rate in the in the first month.
00:15:12.799 --> 00:15:13.679
Surprise, surprise.
00:15:13.840 --> 00:15:16.080
So it's understanding like where this churn is coming from.
00:15:16.240 --> 00:15:17.600
Is it after the first service?
00:15:17.840 --> 00:15:21.600
Is it after the second service or before the second service, after the first year?
00:15:21.759 --> 00:15:24.000
Is it uh from a certain marketing campaign?
00:15:24.080 --> 00:15:32.080
So once you understand where the churn's coming from, uh, or if it's coming from a certain technician or whatever the case may be, maybe it's low quality on your team's part.
00:15:32.240 --> 00:15:33.120
I don't know.
00:15:33.279 --> 00:15:39.039
Uh, it's just understanding this because you don't want to get blinded by the new customer vanity.
00:15:39.120 --> 00:15:44.399
Like, we have so many more new customers when in reality, like, well, you churned the equal amount in the first year.
00:15:44.480 --> 00:15:46.080
So, congrats, good job.
00:15:46.320 --> 00:15:50.080
Um, so yeah, understanding churn is extremely important for the business.
00:15:50.159 --> 00:15:53.039
It can be a huge opportunity as long as you're not paying for it up front.
00:15:53.120 --> 00:15:54.399
Again, don't pay for that.
00:15:54.720 --> 00:15:56.320
Next is callbacks, part of churn.
00:15:56.559 --> 00:15:59.279
It's like, hey, it's part of actually all home services, to be honest.
00:15:59.360 --> 00:16:04.080
Like, callbacks are somewhat normal, it happens, like it's part of the business.
00:16:04.240 --> 00:16:08.080
It's un not necessarily unhappy customers, but things are missed.
00:16:08.320 --> 00:16:16.960
You know, it's a service business where the customer didn't necessarily get the exact service they were hoping for or wanting, and so there's a little more work that needs to happen.
00:16:17.120 --> 00:16:19.120
But unmeasured callbacks are not normal.
00:16:19.200 --> 00:16:23.039
So I know exactly how many callbacks we get every month in our HVAC business.
00:16:23.279 --> 00:16:32.480
I know, just because it's it's an important metric to understand how many times are we having to go back out to sites because we didn't do everything right the first time.
00:16:32.799 --> 00:16:46.799
So when I'm looking at buying a business, and if I was looking at buying a pest control business, I would make sure that I understand I want the total number of completed service calls in 12 months, and then I want the total callbacks, and that's how I calculate the callback rate.
00:16:46.879 --> 00:16:51.679
So, like if you have 10,000 services and 700 callbacks, you have a 7% callback rate.
00:16:51.840 --> 00:16:52.799
Super easy math.
00:16:52.960 --> 00:16:57.759
And then what you want to do with that is you want to transform that into labor numbers, right?
00:16:57.840 --> 00:17:06.880
So you need to understand what's the value of that or what is the the current seller spending on that because it's a potential another point of opportunity.
00:17:07.039 --> 00:17:15.440
It's also how good is the team that you're buying, because you're buying the opportunity to run a team that doesn't necessarily need or have to work there.
00:17:15.680 --> 00:17:19.519
And so you need to understand how valuable the team is before you come in.
00:17:19.599 --> 00:17:25.839
Are they a great team that has 1% callback, 0.5% callback, or do they have 20% callback?
00:17:26.000 --> 00:17:46.960
Um, especially if you start getting into like singular item, singular revenue source, project-based revenue, whatever you want to call it, jobs, callback becomes even more important because again, it that's where your margins get eaten, is if you're doing a job for a thousand bucks, but you have to go back out there for six times to do X, Y, or Z, you're losing money.
00:17:47.039 --> 00:17:48.799
Like that's where all your margin goes.
00:17:48.960 --> 00:17:55.039
So we have 10,000 service calls, uh, 700 callbacks, 7% callback rate.
00:17:55.200 --> 00:18:08.160
Uh, assuming each callback takes an hour and includes drive time, treatment, notes, customer communication, 700 call callbacks at well, we'll say an hour, an hour and a quarter.
00:18:08.400 --> 00:18:13.680
Uh, that would equal 875 labor hours.
00:18:13.839 --> 00:18:19.839
So 875 labor hours divided by a total person's salary of 2080 annual hours.
00:18:20.000 --> 00:18:24.400
That's a 42% of just under 40 50.
00:18:24.480 --> 00:18:30.240
So, like, yeah, 40, 42 percent of someone's a singular person's job full time.
00:18:30.400 --> 00:18:35.279
So you have to pay somebody half the year to just do callbacks.
00:18:35.839 --> 00:18:47.359
So look at callback rate, look at by technician, by service line, by maybe pest type, so that you can maybe even by neighborhood, so that you understand, like, is this a is where's the issue coming from?
00:18:47.519 --> 00:18:49.039
Again, it's part of due diligence.
00:18:49.119 --> 00:18:55.279
This isn't the biggest one, but this will be an absolute something that eats your bottom line if you don't get ahead of it.
00:18:55.440 --> 00:18:57.039
These next two kind of go hand in hand.
00:18:57.200 --> 00:19:06.400
It's like the next two is is billing quality, like how clean is the revenue, how is there arr ARRR AP, what's going on with that?
00:19:06.640 --> 00:19:07.599
Pretty simple there.
00:19:07.680 --> 00:19:14.880
Like, I want to know those things just because great, if you make a ton of money, uh, but it's all in AR, like you didn't you don't have the cash.
00:19:15.119 --> 00:19:20.079
And half the time you're gonna lose some of that anyway to people just never ever gonna pay you.
00:19:20.319 --> 00:19:36.079
So making sure that that the revenue coming in is good, billing quality is good, you're collecting on time, that your annual subscription or your monthly subscription is actually going through, and that you have a good process to can or they have a good process to renew those subscriptions.
00:19:36.319 --> 00:19:40.240
Um, and then again, next is technician productivity.
00:19:40.400 --> 00:19:43.359
Like, are are the techs doing low?
00:19:43.519 --> 00:19:44.799
Are they producing revenue?
00:19:44.960 --> 00:19:47.839
Are they how much revenue are they completing per stop?
00:19:48.079 --> 00:20:00.480
Again, everything we've talked about, but uh what I want you to focus on here is as you can as you combined all that data and you truly understand, start to understand the business, you'll get a picture of how great this technician is.
00:20:00.640 --> 00:20:06.799
Um are are they producing you know$17,000 a month or are they producing$25,000 a month?
00:20:07.039 --> 00:20:14.720
How much window time, how much is them, how much is it that how much is of that is them just hanging out at a gas station for two hours a day?
00:20:14.880 --> 00:20:19.200
Sorry, boss couldn't make that eighth call, ninth call a day, but was too busy, something came up.
00:20:19.440 --> 00:20:30.880
So these these things will start to trend, but once you have that revenue per truck data, once you understand the routes, hey no, this this guy makes only 17 because he does the the outer routes, so he picks up all these outer calls.
00:20:31.039 --> 00:20:41.200
Um, like great, okay, that makes a lot of sense, but you need to understand that before day one, and then the last and probably the most important thing is uh ownership dependency.
00:20:41.279 --> 00:20:49.920
So understand how much the owner is doing versus how much is done some by somebody else, either a management team or by the technicians.
00:20:50.000 --> 00:21:12.319
Because if you know, again, great, if you're buying off of an SDE number and the SDE number is huge, well, it could be just the owner does everything, so the margins are huge because he doesn't have somebody answering, he answers the calls, he's the one in the truck, he's the one doing the callbacks, he's the one estimating jobs, he's the one doing billing and financing, he's the one doing AR and AP.
00:21:12.640 --> 00:21:15.920
And if that's the case, like you're not buying a business, you're buying a job.
00:21:16.160 --> 00:21:18.079
Might be right for you if this is your industry.
00:21:18.240 --> 00:21:20.000
I'm not, you know, buy the book.
00:21:20.079 --> 00:21:26.480
Uh, but just make sure that you are adequately pricing that so that you don't get screwed over in the lawn.
00:21:26.559 --> 00:21:30.079
That's my big buyer's uh buyer's trap watch out.
00:21:30.240 --> 00:21:36.960
And the reason I'm so adamant on that is because I fell for the buyer's trap and way overpaid for my first business.
00:21:37.119 --> 00:21:40.720
So hopefully it helps someone out there not do the same thing.
00:21:40.880 --> 00:22:08.640
And so before you get hypnotized by pest control, as sexy as pest control is, uh, make sure that you understand the economics of the business, make sure you're understanding routes and churn and calculating revenue per stop and understanding the customer accounts and knowing what service line you're actually getting into, making sure you're verifying, licensing, and scoring some technicians before day one, so that once you start the business, A, you didn't overpay, and then B, you have a plan.
00:22:08.799 --> 00:22:13.599
You have a plan coming into this because you have a general idea of what this business is.
00:22:14.240 --> 00:22:21.440
If you like what you heard, like, subscribe, share, send your mom when she asks why the heck are you buying a pest control business?
00:22:21.599 --> 00:22:25.440
You said because Jack told me to, and then she can call me and yell at me.
00:22:25.519 --> 00:22:27.599
Um, yeah.
00:22:27.920 --> 00:22:31.200
Uh let us know which other kind of businesses you want us to break down, and we'll go from there.
00:22:31.359 --> 00:22:32.079
Appreciate it, guys.