What you're really buying
When you buy a round you're buying a list of customers and the goodwill that comes with them. You aren't buying the customers: they can leave the day after the sale, and they owe you nothing. That's why the checks matter, and why the way you pay matters as much as the price.
Questions to ask the seller
- Why are you selling, and how long have you run the round?
- How many customers are there, how often do they get visited, and how long have they been customers?
- What does each customer pay, and have you put prices up recently?
- How do customers pay: cash, bank transfer, card or Direct Debit? A round built on cash is harder to check
- How many customers are on a regular schedule, and how many are occasional or overdue?
- Will you help during a handover, such as introducing me to customers?
Check the numbers
Ask for the customer list with prices and visit frequencies, and the last twelve months of takings. Then compare the two.
- Add up the list: customers × price × visits per year. This is what the round should earn.
- Compare it with the takings and bank statements. A gap means customers have lapsed, prices are out of date, or the list is padded.
- Check the route on a map. A round with customers all over a county costs more in travel than it earns.
- Look at the dates of the last visits. Customers who haven't been visited for months aren't really customers.
Rounds are usually priced as a multiple of what they earn, and the multiple varies by trade and by area. Get a few figures from sellers, brokers and recent sales rather than trusting one number.
Structure the deal to protect yourself
- Pay in stages, with part held back until the customers have stayed for a few months
- Agree a handover period, with the seller introducing you on the first visits
- Put it in writing: what's included, what you're paying, and what happens if customers leave in the first months
- Get a solicitor to check the contract if the price is significant
Customer data
A customer list is personal data. In a genuine sale it can usually be passed to the buyer, but you then become responsible for it. Tell customers who you are and look after the information. The ICO's guidance on data protection for small businesses explains what's expected.
After you buy
- Introduce yourself on the first visit and by text, so customers know who is coming
- Keep the standard the same for the first few months
- Wait before raising prices, then review them with the method in how to price a round
- Bring the customers into your own system so you can see who has paid. See switching round software
Red flags
- A seller who can't show takings, or whose numbers don't match their list
- A round that's mostly cash, with no records
- Customers who've never met the seller's replacement
- Pressure to pay everything up front