Introduction

My name is Arif Sealey and I have been selling routes since late 2009 and business has been good. When I tell people I’m a business brokers specializing in pool routes I always get the confused dog look which is understandable. Not many people know what a pool route is and with this report my goal is to educate buyers on the opportunity. A pool route is a group of customer accounts that a pool maintenance company services and cleans on a weekly basis. In California, Texas, Arizona and Florida cleaning the pool is a year round requirement. Sellers typically sell to reduce the number of accounts, retire or raise capital for another project or business. The list is endless and the bottom line is the owner wants to sell all or part of their route. The biggest difference between buying a business versus purchasing a pool route is the reduced amount needed to buy the route. The other differences are that the business name and equipment does not come along with the pool route. When a buyer purchases a route they have to establish their company from scratch and then place their newly acquired accounts under the new business. Because the buyer isn’t purchasing an entire business, the purchase price is a lot lower. In accounting terms there is no goodwill with the purchase of a route. The best way to illustrate this is to take a look at a business that generates $50,000 per year in cash flow. That business will sell for between $100,000 up to $150,000. Now let’s take a look at the same $50,000 per year with a pool route. You could buy a pool route generating that income for around $50,000 to $60,000. Therein lies one of the major appeal in purchasing a pool route.  Lastly consider if you have $150,000 to invest in a business but by purchasing a pool route you now only need $50,000 to meet the same income requirements. Now you have a balance of $100,000 that can be used for another investment to generate additional income.

 

Because you’re buying a route you have several options on how you run the business. If you’re ambitious and want to take over the pool industry with multiple employees, trucks and hundreds or even thousands of accounts you can. However, if you want to be a one man or woman operation that’s also doable. The flexibility is endless and only limited by your ambition and goals.

About Me

Prior to starting this business I bought a pool route in New Braunfels, Texas and grew it during one of the most challenging business environments, the great recession of 2008.

Let me back up a bit. When I purchased my pool route it was actually from two different sellers which was great because I got to see two sets of business operations. It was something not unlike the book “Rich Dad, Poor Dad” where I got to see how one business which was successful and the other you could plainly see why they were struggling and selling accounts. The good business which was a sole proprietor had equipment that was efficient and allowed him to service more accounts on a given day while the other business had employees that he routinely cursed at in front of customers. I combined the good things I learned from each buyer and joined my local IPSSA chapter. IPSSA provides a lot of education, networking and resources critical to the success of your business. They also offer sick route coverage and $3 million in general liability coverage.

 

Why am I writing this report?

My goal in writing this report is to educate those that are thinking about buying a business to consider the benefits of a pool route. When you’re making a big decision on where to invest your hard earned money information is key. I receive several calls each day with questions on what it’s like to own a pool route, how the transaction works and what questions I should ask the owner.

Owning a pool route is similar to owning any other type of service business in the sense that you’re buying a stream of income. One of the major benefits of owning a pool route is that the majority of the income is recurring monthly. Each month your customers pay you to maintain their pools for a set fee. Typically that fee ranges from $85 to $250 depending on the area of the country. Recurring revenue is important because it allows you to plan and have consistency in your monthly income. The other revenue source are filter cleanings (once or twice a year) and repairs. These items can greatly increase the bottom line however they can’t be counted on to happen each month. When I ran my pool route our repairs averaged between 15-25% of the monthly income so if you were billing $10,000.00 per month you could expect approximately $1,500.00 to $2,500.00 in repair income.

If your goal is to have employees then your role would change to primarily handling customer issues, employee issues, and marketing. As you grow the route, the value of your route increases as well by a factor of 12. Let’s say you land that new customer and they’ve agreed to pay $150.00 per month. You’ve just added approximately $1,800.00 in value to your company. Doesn’t sound like much but what if you added 20 new accounts by advertising, now you’re up to $36,000.00. Now you’re not only building your business you’re also building wealth.

 

Transaction from beginning to end

So you’ve seen the benefits of owning a pool route and you’re ready to start researching and talking with the owner. That’s where we at Sealey Business Brokers come in and discuss with you your goals and if a pool route is a right fit for you. For instance, banks typically won’t lend on pool routes because they’re aren’t tangible assets. So you’ll have to obtain the cash from somewhere else. Most buyers will tap a home line of credit, retirement accounts, partner with friends and family or just plain old cash. Once you’ve tackled that issue then we’d discuss something that I think is a great benefit to buyers and that’s the 90 day guarantee. Every seller will guarantee that no account is lost due to no fault of the buyer. Typically we see customer cancellations when the home is for sale and the new homebuyer decides to maintain the pool themselves. In these cases the seller of the route has the option to replace the account or elect to take the money out of the escrow account.

After closing, the seller will train the new buyer for 30 days. Some brokers only require 2 weeks onsite and then another 2 weeks on call. I think that’s a recipe for disaster. Two weeks isn’t enough time to get a good grasp on the mechanics of the pool system, customer quirks (please leave the door tags on top of the dog house!), billing, etc. Ideally you should see what goes wrong with a pool during you’re training so you know how to fix it later. There’s no better training than walking up to a pool and it’s green because the pump went out. Trust me you’ll learn a lot more from that experience that 2 weeks of blue spotless pools. Sealey Business Brokers also provides a free CPO (Certified Pool Operators Course) for most routes we sell. We believe more education is better and it makes you look more professional when you can tell your new clients that you’re CPO certified.

The last item is the 5 year non-compete clause. This clause prevents the seller of the route from advertising or competing with you on the accounts he or she has just sold you. It doesn’t prevent you from partnering up to handle repairs on your behalf or any other agreement you might come to after the fact.

Speaking of repairs, I often get buyers who aren’t comfortable doing them when they first start out. I always suggest two things when buying a route, the first thing is partnering up with the seller if possible to handle repairs for the time being. He or she knows the pools and the repair history of the pool. Second, and one of the most important is to join your local IPSSA chapter. The members are very knowledgeable and you can always find someone to handle your repairs which you can learn by watching and helping.

 Well that’s it for now, if you have any questions or are looking for a route just give us a call at 1-844-POOL-RTE (1-844-766-5783) or email us at asealey@SealeyBB.com.