Seeking advice from anyone who have purchased a existing window cleaning company or route. A fellow window cleaner is leaving the country and is putting his company up for sale. He doesn’t seem to know how to value the company.
Can anyone give me an idea on how to value it and make a offer?
Thank you,
Kevin
Get his tax returns those tell the truth
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Hey Kevin!
Tell us a little bit more about it. What are the assets, how long has it been around, Is any of the work contracted?
buying a route means buying a customer list…doesn’t mean you will ever see a dime. If you decide to buy, have him take you around and introduce you to every customer in person and explain to them that he is re-locating and you will be taking better care of them than he has. Then, you have to produce to keep those customers
This.
I have bought 2 in the past. Just the work, not equipment. Contract and non-compete in case he were to up and change his mind a few months later. Worth 25% of annual gross. If possible, payable over 12 monthly payments. One I did all up front and one I did payments. Now years later both are still the bulk of the route work for two of my employees.
BobWasHere
I bought a route from a guy who was doing window cleaning temporarily between jobs. He had a nice organized portfolio with pricing and times. He was asking $1,100 and we were looking to expand our route and fill some gaps at the time, so we were interested. We ended up meeting with him and he told us if we wanted he’d come with us on the route the first time to speak with the customers.
We ended up buying it, knowing we were taking a gamble, and it worked out. This was 3 years ago and we still do 80% of the jobs (a few places have closed), and our initial investment was paid off in 3 weeks. We’ve built around it quite a bit since then.
If you’re looking for a good way to price it for a route, if it were me, I’d offer him two months worth of the total gross dollars you’ll make from the route, but that’s just me, it may be worth more than that, but he needs to know you’re taking a gamble because none of it is guaranteed, right?
If it were buying the whole company, I would want to see the customer list, and how organized and detailed it was. The more company documentation and customer information there is, the more valuable it would be to me. I guess if it came down to it. I’d look at his last 3 years of tax forms, his equipment and assets, and find out what his average yearly profit out the 3 years was and offer him 60% of that, paid out monthly over 2 years.
Buying an established route is a great way to start or build a window cleaning business. It’s important that it’s established an run properly though. You wanna see his books how long has he had these customers the bulk of it needs to be established work for at least 5 years. How we figure out around here what to pay someone for there route is done in $ amount each stop makes per month. So if the route is making 5 Thousand a month the owner will know that , and say I want 10x meaning he wants 50 thousand. Of course that’s what’s he wants you may negotiate it down to 8 times 40 grand or whatever 3 times whatever. Each store will be on a list of how much it makes per month an how often it gets cleaned.
Very important you must have a contract one thing in that contact that is a must would be a guarantee (among other things of course). whether it be a 3 month 4 month or 6 month. The guarantee is that all said jobs are just that paying jobs. if any job is not, or any job is lost with in that 3 months or whatever you agreed upon in the guarantee the total of that job in multiples of what ever you bough that job at comes off the principle . Trust me you will losss a certain percentage within that guarantee there isn’t anyone that I know of that hasn’t. I don’t care how great of a window cleaner any one thinks they are " YOU WILL LOSE WORk"
So if you lose let’s say 300 a month because of whatever reason and you bought the route for 10x 3000 will come off of principle.
This guarantee is a must trust me do you really have time to find out if each job that he has is a job plus there are jobs he has that are just holding on cause they like him once you take over they will cancel jmo. So the longer the guarantee the better.
So with this scenario of course you would not be buying him out . You would be putting down a down payment usually 20% of agreed upon principle , and paying monthly note payments upon an agreed amount of time usually 5 years. An interest rate will be negotiated an a amortization chart will be drawn up upon contact . After the the guarantee date you will figure out what needs to be credited back to the principle then your lawyer will recalculate the amortization of the principle.
If your buying some one out let’s say he has 2000 a month worth of work, and you figured out that the route is worth 5x. That’s ten thousand. Ther is no way that he should get that. If your buying someone out cash them there is more negotiating power so to speak.
The hardest part is going to be figuring out what it’s worth . I don’t know your market I know mine very well.
Something’s to look for
Like Chris says. How much is being subbed if any at all
How tight is this route How much can be done in a day $$ the more driving the less you can make
How many dead stops does he have get a list. Dead stops are ones he use to service but doesn’t any more for one resin or another
How long has he been servicing each account. The longer the better
Competition who is it are they aggressive
Look at see how many dirty stores are in an around the area your route is. The more the better that means there will be growth potential.
How are his prices. When was the last time he raised them how often does he raise or has he.
The books are important you wanna see who is behind in payment there is always someone the less the better
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Great details from experience
