How I bought another cleaning company. How I went about it, and other details…

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by Tom Watson on February 8, 2015

Within a few years of starting my cleaning business I ran across an ad for a cleaning business for sale in the paper.

I stumbled across it because I was always looking for an opportunity to make more money, which meant I was scanning the classifieds daily.

A cleaning business for sale. I was interested!

To make a long story short, I saw the title CLEANING BUSINESS FOR SALE and I got excited. Turns out I just stumbled across someone looking to unload what they had. This guy was doing the business part-time, and it grew a little bigger than he expected. He didn’t want to quit his job, so he wanted to sell the business.

I was already an established cleaning company at this point, so I felt pretty comfortable expanding my business this way. That doesn’t mean I didn’t suffer some nervous moments as I proceeded, but it wasn’t enough to stop me from signing on the dotted line.

The company for sale was small, only had a few employees and generated about $60,000 to $65,000 or so in total revenue according to his records. I don’t remember the exact number. The accounts were all commercial cleaning accounts.

There was one large apartment complex that had a bunch of smaller locations scattered in the vicinity, as well as two furniture outlets, a construction company headquarters and a few other smaller type accounts. Maybe ten accounts in total.

I did my homework, then bought a cleaning company

I carefully looked over all his records, talked to a few experts on the matter, visited all the accounts and spoke with each employee that he had. To me the deal looked like it was on the “up and up” as they say. I weighed all the pro’s and con’s and thought it was worth the risk, so I did the deal.

For the record, I paid $16,500. He was asking about $30,000 for a while (before I came along) then reduced it to $20,000 once I became involved. After I offered the $16,500 and the deal was done, he indicated that the major franchises offered between $10,000 and $12,000. So my offer was the best and we did the deal.

As for terms, I was a cash buyer. I would think most sellers are looking for a one time payment. For me the deal was a big winner, as I expanded my territory and increased my revenue at the same time. I also benefitted because the seller had several outstanding bids that did not become official until I took over.

That meant I landed somewhere around an extra $30,000 a year in revenue because the bids he gave became MY accounts after the sale. This was bonus money, as there was no way to know for sure the jobs would fall in my favor. One job in particular was a high-end apartment complex.

When I did my deal I was also getting equipment and cleaning supplies. This totaled about $6,500 plus an old work van (it ran ok, but looked ugly). This meant I was really only risking $10,000 to buy the business. For me it was worth it. I made the $10,000 I risked back in only 3 months time, but then again I already owned a business and felt relatively comfortable with what I was buying.

Buying another business is a BIG DEAL

Buying a business is not something you take lightly. It’s a big deal and you need to proceed carefully. While my experience was extremely positive, there is no guarantee of a happy ending. Also keep in mind that I’m NOT A LAWYER, so I can’t give advice or make suggestions on what anyone else should do.

Sharing how I went about it for my unique situation is all I can share. At the end of the day there is an old saying that goes “you should not invest more than you can afford to lose”. I tend to firmly believe that line of thought. So proceed with caution if you see these type deals out there.

The guy I bought from was a police offer and he owned the cleaning business on the side. This gave me a pretty comfortable vibe as did my due diligence. Plus the numbers he gave me added up, and he seemed to have all his ducks in a row. If you have ANY reservations, you need to walk away.

{ 4 comments… read them below or add one }

1 AQ Sellassie February 11, 2015 at 8:46 pm

This is why office md’s of Atlanta has been a blessing to both family and customers. great advice as aways..

2 Tom Watson February 12, 2015 at 1:41 pm

THANKS!

3 Robert June 26, 2015 at 2:47 pm

Tom, Robert here in Chicago. Great post but if you don’t mind I’d like to delve a little bit.
How long were you in business for yourself before making this purchase? How long had the business been in existence?
Did you keep the seller on as an employee?

4 Tom Watson June 28, 2015 at 8:16 am

Hi Robert! I was in business for 3 years or so and I’m not sure how long the other guy was in business, but I would assume it was similar to me. No, I didn’t keep the seller on, as he was looking to GET OUT due to family issues. I did inherit his staff (my choice).

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