There are several revenue streams associated with the swimming pool industry. The two main streams are the pool service and minor repairs. The tech side of the business is not difficult for the average person to learn if they take the training period on the route seriously and actively seek out the information available from industry training resources.
There should also be a guarantee for a transfer of accounts. If an account does not transfer to the new owner the seller should replace the account, or refund the amount of the account that wasn't transferred. The transfer period may vary depending on the accounts.
The attrition rate during a transfer should approximately be one to two percent. If you're in the north east or the north west, your hourly fee for service will vary from the sunbelt servicemen. Most pool service professionals in the north will have an abbreviated swim season. However, there service income is supplement of the opening and closing of the swimming pools.
Running a Route & Pool Associations
Running a route correctly is not difficult: you must keep your overhead as minimal as possible. This can be done by:
Running your business from home or from a reasonably priced facility
Using an economical vehicle
Shop your supplies
Charge the proper service rate for your area
Charge for additional service items
Upgrade your customer's equipment as needed
Putting a Band-Aid on equipment is never advisable. It is not good for your bottom-line; and if the equipment fails again in a short amount of time, you may be accused of being incompetent. Trying to save customers money may cost you an account.
The manufacturers are willing to assist you when it comes to equipment upgrades and renovations. It is in their best interest. The more assistance they provide and the more familiar you are with their equipment, the more likely you are to install their brand.
Another way to minimize your overhead and gain some route protection in the process is to join a pool association.
In the Sunbelt, the most successful pool association is IPSSA, Independent Pool and Spa Service Association. In California only, it would be both IPSSA and UPA, United Pool Association. In Florida, it would be IPSSA and FPA -The Florida Pool Association. In many other states, it would be IPSSA. If you have questions, you can contact our office for more information. All associations offer a similar protection. All will offer liability insurance and some will offer route coverage should you become sick or injured. The terms of the route coverage will vary from chapter to chapter, but most chapters will do your pools for you for a period of time if you are injured.
The monthly dues for IPSSA and UPA are nominal and include a liability insurance policy and route coverage. There are also other great benefits to joining one of the associations including the help and information gained from meetings and seminars. They also give you an opportunity to make friends and contacts with other pool professionals in your route area. The final association is NSPI, National Spa and Pool Institute. NSPI also offers liability insurance but may not offer route coverage.
Purchasing a Route
As stated, there are two areas of income we are concerned with here: service income and repair income. When purchasing a route you should always be concerned about the service income first. Service income will determine your purchase price. The multiple for purchase price determination will vary from market to market; however, only slightly. The purchase price should always be based upon the monthly service income (monthly cleaning fee) only, times the factor being used for your area. You should never base the purchase price of a pool route on repair income, or ANY ancillary income. If a pool man is trying to include repairs or ancillary income as part of the monthly service fee, he is selling contrary to industry practice.
Due Diligence: The pool service industry, like most other route based businesses, sell based on a multiple for gross account service income. Due diligence in our industry is different than what you might experience when purchasing a Pizza Parlor or nearly any other brick and mortar business. In route sales rarely does an individual sell his entire company. In this case, a seller's tax return would display the income from all of his accounts, not just the accounts being sold. Also, it is difficult to ascertain the overhead expenses he incurs in his business which you would not in yours
If a pool tech is a builder/serviceman, his tax returns would include building as well as pool service income. The other problem with relying on tax returns is you never know how many accounts generated the bottom-line number. Maybe he had 100 pools and he has already sold fifty. The tax return would display income for 100 pools and you would have no way of knowing this. A list of the accounts and the payment histories are always the best way to determine the service fee and the purchase price for a route.
While most pool men have the same general expenses, they do not have the same income. Income is what you will be purchasing. One of the best ways to get a handle on the monthly service fee as well as what a pool man is charging for repairs is to look at the customer histories. Customer histories should show when an account was billed and when the account paid. the payment history of the customer is one of the most important items to review during purchase.
Customer histories, many times, will also display the customer's repair history. This will help determine what extra charges have been implemented and what extra charges will need to be implemented to experience your desired profit. Do not be overly concerned if the Seller is not charging for additional items. This is usually an easy fix.
The two most important items to discover when reviewing customer histories is, are the customers paying their monthly service fee and are the rates abnormally low? Rates on the low side are acceptable because your purchase price is based on the monthly service fees of the customers and rates can be raised. When you raise rates, you add equity. You did not purchase the equity. However, if rates are abnormally low, you may end up with a group of just cheap customers that will not raise their rates. This is not good. There is a bottom for monthly service fees which you cannot go under. This is where the knowledge of an experienced Pool Broker is essential, but you must ask for assistance.
The neighborhood of your accounts is not as important as the way your customers pay their bills. There are several high priced neighborhoods where collection is a problem. Most people in average middleclass neighborhoods have a far better collection record than some so called upper-class neighborhoods.
How many pools can I service in a day? A good question, but difficult to answer. The average pool tech will clean approximately 20 full service pools a day. Some pool techs will clean 25 to 30 in a day. It depends on the individual, what type of pools he or she is cleaning and automation used by the pool tech and pool owner. The average pool man will clean between 2 and 4 pools per hour, including drive time. If the accounts are chemical only, he can do many more. I have known pool techs who have serviced nearly 100 chemical accounts per day. If the accounts are commercial, he or she will service fewer.
A full service customer is a customer for whom a pool tech takes complete care of the pool - cleaning and chemical treatment is part of this service. A chemical account is a customer who has only their water balanced by the pool tech. This owner usually cleans his own pool. A chemical account can take as little as five minutes from arrival to departure.
A commercial account is a public pool: Hotel/motel, park pool, apartment pool, homeowner association, etc... A commercial account can be very demanding. If something goes wrong, they want it fixed immediately. Repairs are great for your pocketbook, but you must be available to make the repair, which brings us to another topic, seminars.
Each manufacturer will give classes, at different times during the calendar year, on equipment installation and repair. Most manufacturers charge a nominal fee for the seminar to be certain you will not book and then not attend. It is important to attend these seminars. Seminars are a great way to continuously improve the knowledge you will need to experience a more desirable bottom-line. Knowledge is power, but it also equals more money.
Let's get to the big questions on most people's mind when they purchase a pool route. Can I build a company out of my purchase? Is there any growth? The answer is an unequivocal, yes. There are more accounts out there than you will ever want or need (depending on where you live). Thousands of pools are built each year, but there are already millions in the ground. You just have to know the right ways to acquire them. That is where we come in. I have had customers go from 50 pools to 1,000 pool is just 3 years. However, this is not the norm. If you start with a larger number of pools, you should experience greater growth in a shorter period of time. If you are interested in purchasing a route, building onto a route you are purchasing or have already purchased, please contact us at 877-766-5757 for more information.
Trade Shows, Publications & Training
Another way to gain knowledge is to attend trade shows. There are numerous trade shows throughout the year and throughout the country. These shows will have service companies, builders, manufacturers, trade schools, pool brokers, etc... There is one caution I might put forth at this time about trade schools and seminars. If you are not in the business, I would not attend the seminars. The instructors of the seminars are under the impression that everyone taking the class is a service technician. If you can't keep up with the industry jargon, they will leave you behind. It is best to be trained as a serviceman before you take a class.
Many sellers are only concerned with the sale of their route and how much money they receive from this sale. They are not concerned with the quality of service provided by the new owner. This is the type of Seller you should try to avoid. If a Seller's interest lies only in the money received from the sale, more than likely, he will not care about how well you are trained or if you succeed at all in your new venture. While this is a simple business, you will need to be trained properly. Everyone needs a mentor to experience the greatest success. Our Millionaire Pool Man Program is also a great mentoring program.
Try to find a Seller who is concerned with who purchases his route. This will go a long way in assuring that you will receive proper training. A Seller, who is concerned about his customers, is usually a good Seller. He should have some compassion for the way his customers are treated after the sale. However, this does not mean you will gain the knowledge to be as successful as you can be.
When you purchase a route from a For Sale By Owner, you are trained by only that person. You learn the way he service the accounts. You learn the way be bills and charges the accounts. You learn everything you know about our industry from that individual. How many really good businessmen do you believe are out there selling their accounts? The answer is, not many. Most pool techs are too busy servicing their pools to learn how to run their business. This is what they teach you. You need more than just the 30 days training offered by any seller. You need a continuous mentor. This is where our experience is invaluable. Without a mentor, you will never experience optimum success.
One of the other problems I have seen in our industry is a number of individuals who believe they already know everything about business or the pool business. This is one of the greatest detriments to success. You can't know everything. Someone can always teach you something. So, never stop trying to learn. Never stop trying to improve. If you have an insatiable appetite for knowledge and a great attitude, you will almost always be more successful than the guy who thinks he already knows everything. The Millionaire Pool Man Program can help you acquire the knowledge to be great in this industry.
Account Verification & Brokers
Account Verification is another reason not to purchase from a for sale by owner. A Buyer should have a Pool Broker involved in the sale and purchase for his protection. A Pool Broker has no interest in taking the accounts away from the Seller or in causing the Buyer any harm.
A Pool Broker should be authorized to contact a percentage of the accounts being transferred to verify their authenticity. If you do purchase a route from a for sale by owner, you should complete this process prior to giving the seller any funds. A Seller may say, give me half the funds now and half after the verification or half after training. If the Seller is dishonest, you could still lose half of your money. It is almost always better, for your protection, to have a Pool Broker involved in the sale and purchase of a route. The purchase price will remain the same. There is no discount in the purchase price when you purchase a route directly from the owner. However, there is usually a discount in your protection and a discount in the knowledge you will need to be successful.
Using a Pool Broker in the sale and purchase of a route will also assist you in case a dispute arises between you and the Seller. Usually a Pool Broker can resolve any dispute before it escalates into legal action. It is also important to have a sounding board. If you have a business idea, it is important to have a Pool Broker who will listen and discuss the positive or negative aspects of the idea.
An experienced Pool Broker should also have access to a pool route Escrow. The fee should be minimal and the escrow should be exclusively for the transfer of pool accounts. Any other escrow may or may not cover the items necessary for a successful and seamless transition.
A typical business escrow will not usually cover the important items necessary to assure a successful transfer of pool accounts. If you have no experience in the pool business, you may exclude something important from the documents.
Procedure to Purchase Pool Services Accounts
The Seller should train the Buyer for thirty (30) days. During the thirty (30) day training period the Buyer receives all the income derived from the accounts for service and half of any income derived from repairs executed by the Buyer with Seller assistance.
The Seller should also guarantee the transfer of accounts. The guarantee period should run for 60 to ninety (90) days from the close of escrow – depending on when the accounts are to be notified of the transfer. During this period the Seller should replace any accounts lost, due to any reason except negligence of the Buyer.
Some funds should be held in escrow for the guarantee period to assure Seller compliance and also to assure that the Buyer's training is properly completed.
The Seller should also be willing to sign a Covenant Not to Compete on the accounts being transferred. It should not negatively affect your business or your growth if the seller continues to service pool customers in the area. If the Seller does remain in the pool business he is usually more available for advice and consultation.
The Buyer or Buyers' Pool Broker should receive a list of the accounts, prior to the close of escrow, for the purpose of verifying the accounts being transferred. If the Seller will not provide a list of accounts, I would not consummate the purchase.
Procedure to Purchase Pool Services Accounts
Once you have determined your route of interest, the next step is to sign a Confidentially Agreement and provide proof of funds. Once this is accomplished, the next step is to speak with the owner. After the initial conversation, if both parties are in agreement, a meeting date and time are scheduled for customer history review.
It is important to make sure all of your questions are answered prior to meeting with the Seller. It is important to make sure you have discussed the purchase with all relevant parties, prior to meeting with the Seller. You should be ready to make your decision to purchase a route at the time you review the customer histories. If you are not ready to purchase a pool business, a meeting with the Seller is premature. Please have respect for everyone's time.
There will be no pressure on you, at any time, to purchase the pool accounts. However, please be sure this is something you really would like to do prior to meeting with the Seller and taking his irreplaceable time.
Once the buyer has met with the seller and reviewed and approved of all pertinent records, the next step is to open an escrow. To open escrow the buyer will typically deposit 10% in good funds as part of the purchase price.
Once escrow receives the list of accounts and once all funds to purchase are deposited into escrow, it is able to close. At the close of escrow, a percent of the purchase price is released to the Seller and the balance is held in escrow for the training and guarantee transfer period.
The Buyer is given possession of the pool accounts at the close of escrow. The Buyer's training period begins at the close of escrow. The customers are notified of the transfer once the Buyer has become acclimated, usually within the first thirty (30) days.
We have been selling pool routes for nearly 40 years. We look forward to assisting you with your decision. Many times we have only one chance to make the right decision. Let's get it right the first time. Let's work together to assure a successful future for you and your family. If you have any questions, please contact me at 877-766-5757.
THE FOREGOING INFORMATION IS OPINION ONLY. YOU SHOULD ALWAYS CHECK WITH A LICENSED BUSINESS CONSULTANT BEFORE ACTING ON ANY OF THE PREVIOUS INFORMATION. THIS WEB PAGE WILL NOT BE RESPONSIBLE OR LIABLE FOR ANY LOSS INCURRED BY ANYONE PURCHASING A POOL ROUTE THROUGH THIS WEB PAGE OR ANYONE ACTING UPON ANY OF THE FOREGOING INFORMATION.
National Pool Route Sales