Hey guys,
I am looking at buying some accounts and want some advice on if it is a good idea or good deal.
The business has been around for 20 years and seems to be legit. I want to go talk to most of the accounts before I make the purchase to ease my mind that they are legit accounts.
The business is selling all of their commercial accounts and keeping their residential ones. They are selling 85 commercial accounts that make $75k a year. The asking price is $40k. There is only about $400 worth of equiptment, other wise it is all blue sky as they say. I would be working this myself…and possibly my wife as a part timer.
Any advice will help.
Its only worth what the assets’ value is. Offer 400 bucks for whatever he has for the tools and give him 30% for a year.
I have thought about buying a company several times, but the only way you will get a good deal is by having the upper hand and having a position of power. Right now, your position is WEAK.
Why is he selling only his commercial? Only 400 in equipment? Dude, my hose reel almost cost that much.
This will sound bad, but the advice that was given to me by someone I love was this:
These are the only reasons to buy someones company:
Death, Divorce, Bankruptcy, or illness.
Yes, I know. We all have honor. Facts are facts. He wants 40K for WHAT exactly. I had a guy try to sell me his 15 year old biz for 110,000. 92% residential. No contracts. 10,000 in equipment.
He told me the reason is because he made 175k last year. Oh and get this: he said his equipment, his customer list, and good will. What the heck is good will.
I think I am going to go and cash that “good will” check now.
I sold 80 commercial account worth about 3700 per month, for 8k…I signed a no compete and the first month we went to every account and cleaned them together. Only lost one! It was and established route for 5 years…I bought a residential list for 10% of gross revenue for 13 months, He wanted 10k, I laughed…glad i did it %age because out or the 400 I only ended up with 40…I would offer him 3 months gross and the first month you guys clean them together and split it…and have him sign a 5 year no compete… or do a % per month
Buy your own equipment. Take your proof he is selling and go to his accounts an take them. lol
Seriously buying things like this is a shot in the dark. Is it 100% the clients will stay with you? Are they under contract? You’ll find most are not in this business and I’m presuming your talking store front route work here? Again this goes back to a topic from last month about route work and WHY DO PEOPLE SELL IT? I really dont understand if it’s such a great part of this industry to be in. Heck 75k per year? He could pay $15 per hour to both a cleaner and client manager and still walk away with $1000 + per month. But I guess it’s just not that great anymore for him. I would not buy and never would buy anyones business, regardless of why they are selling it. Do the work yourself, you’re not Mr. Buffet where you can afford to buy businesses for profit only, are you? Cause in the end your going to have to do the work anyway so again do it yourself.
+1…
If i was to buy the accoutns it would be at a perentage of sales. What happens if the accounts are not under contract and they all back out and go with some one else?
SEE YA 40,000 dolla billa yall later.
I’d rather sink $20k into advertising another 15K in equipment. $5k for a fishing boat. At thsi point I would pick up a few emplyees and manage while catchign some small mouth… Which reminds me about this weekend…
Yea, this guy is in the middle of a nasty divorce. Sorry I failed to mention that. This is the main reason he is selling the accounts. I thought that the 40k was a little bit too high. And these are mainly store fronts…I guess some in/outs.
It depends on where you live. Will you be working in cold weather?
If it has been established that long and provides a steady income, it might be a very good deal.
It depends on what you are looking for.
Does that mean grosses $75K per year? That does not really describe the accounts – they may not be profitable.
That price seems very high…
That depends on how close the work is together, how long it took to develop the route, and how hard
it would be to get that work.
It is not easy to get enough storefronts in a small enough area to have a route that provides a steady
income wherebye you can make a living.
Scattered stores are not worth much.
75k net. This will be cold and warm weather…south dakota. The town is big (150,000), but I can get anywhere in town in 15-20 minutes. The route is set up to where the store fronts are all very close. Kind of zoned off in town.
…Close together makes it worth more. Is there a lot of competition? If it is likely that you would
be the domanant force in the area for a long time, it might be a good deal.
I’ve bought 2 commercial routes in the past… Both had many disappointments and headaches.
I learned alot…ALOT.
This is what I would do IF I were to purchase another route:
Clean all the places together and meet the owner/manager (Which I did the second time)
Only pay 2-3 months of yearly value with a 25% deposit the first 30 days and a payment in full on day 31st of owning the route. IF any accounts fall off, and THEY WILL, your remaining balance will go down. PLUS your trust earning really comes from that first & second clean on your own… So you get a chance to really experience that account.
I also purchased some equipment from the second business acquisition… never again.
If I could go back and do it all again would I still have went the course I did or not purchased the routes???
I would do it again, just do some things different.
There are deals to be had, just make sure you are making the deal, not him…
2 or 3 months is not enough money to get a decent route.
Why would anyone want to sell for that?
I would do the work with the owner for a while to see what it is and then buy it.
You should not lose a lot of work unless you look like you have no idea what you are doing.
If that is the case you need to work with the owner a longer time.
Work goes out and work comes in.
I want to give you guys an update…
Well, I went ahead and made the purchase! I got the deal done for $34k. I got 90 accounts that will give me a minimum of 120 cleanings per month. This does not include the job’s I have been doing on my own. The first month is under my belt and my sales are higher than projected. There is room for growth and I look forward to it. So as of now…things are going very well and I am very happy with how it all turned out. I will keep you posted on how things go.
HOLY CRAP. So what’s your monthly net? 34k is alot of bread. When do you project to see a real profit because until that 34k is back in the bank you have made zero off the accounts. I’m sure there is another window cleaning company walking around right now, thinking “holy crap I can’t believed I pulled off that sale” lol
He said the gross was about 75k per year. $34 K is a low price for that much income. It won’t take long to make his money back
and he has a regular income.
I know that Merv. I can read. The gross of 75k is the last owners gross figures. He now has bought the business and states he has one month of serving the accounts he just bought. That one month should now give him an idea of what his gross is.
I’m not trying to upset anyone. But what did he buy? A job? I mean hey people can go about their business anyway they want. There is no one surefire way of doing it. But I honestly think he got ripped off. For his $34,000.00 he could have marketed and advertised so much an got way more then 90 accounts. If we do some math the average price of his clients. is $31.50. That’s deviding his 34k by 90 accounts, devided by 12 months. Now take that same 34k and market with a 1% ROI. On the high cost end a postcard can be mailed out at $0.50. So he mails out 68,000 post cards with a 1% return. That gives him 680 clients for the same money. 680 clients averaging $31.50 each gives you over 20 grand per month or over $250 grand per year. But hey I hope it works out for him in such a volatile section of the industry.
If you really want to build your business here is my advice. 1) Offer him 2 to 3/m worth and negotiate from there. The biz is more valuable if he has contracts (for customer retention) I have bought a dozen small commercial companies and will continue for as long as I can find them. I never pay cash but negotiate terms for 1 to 5 years normally no down payment with a clause in my contract - any account that cancels comes off the monthly payment unless he can save it for me. If I purchase a co for 3/m worth and an account cancels in that time frame it becomes his loss. My co now services more than 2,300 storefronts and send letters out to my competitors every quarter asking them if they want to sell. I only buy the deals, never risk my capital and have a very solid contract that works to my benefit. And I always make my monthly buyout payments so I can use them as a reference for my next buyout. 2) Hire one or two salespeople to walk and talk all day, week, year to keep new accounts also coming in. All of this is of course if you want to build a massive company. Jim, Squeegee Pros
I don’t believe marketing commercial accounts works. What kind of marketing are you referring to?
Stores do not respond to ads unless there are no window cleaners in the area IMO. Have you tried it?
