Its been a year and a half since this topic was last discussed. I am about to graduate college and just got a job offer with a company.Window Cleaning has been great to me the last 5 years and has allowed me to graduate debt-free. [B]I do not start the job till August of 2012 so I have some time to transition out. [/B]
[B]That said, I have built a company that will gross $35,000 for the 2011 Fiscal Year[/B]. I have an Ettore AquaClean Dolly Mount DI system with 35 feet of Unger Hi-Flo Carbon Fiber Sectional Poles. I also have all the traditional tools needed for a residential/commercial window cleaning business.
I have 3 monthly accounts: One that is 675 a month, one that is 500 a month, one that is 125 a month.
I also have a quarterly account that is 250 a month.
[B]In just those consistent accounts I make about 16,000 a year,[/B] with very little headache to get them scheduled and booked.
The remainder of the business comes from Residential Window Cleaning.
[B]1. How much should I expect to make from selling this business?
How do I even go about selling it?
If I convince a friend who is also a student that window cleaning is very flexible and lucrative should I allow for a 50% deposit and the rest to be paid monthly?
What other questions should I be asking and do you have the answer to them?[/B]
Unfortunately just having a business doesn’t make it sell-able. Its definitely valuable to you but the question you are now asking is,“How valuable is it to someone else, or even is it valuable to anyone else?” Tim Ferris is an expert on making your business sell-able. Here is the link to his blog: http://http://www.fourhourworkweek.com/blog/2011/04/18/built-to-sell-making-your-company-sellable/
In a nut shell to determine if your business is sellable there are three criteria he chooses.
Is your business teachable: can the new owner easily teach anyone to produce your product or service
Is your product or service valuable: Is it unique enough that it can’t be easily replicated. In other words could they easily reproduce what you do on there own without having to buy your company. What is unique about your company that makes it difficult to replicate?
Is your business repeatable: Are your clients on a contract that guarantees them to be a repeat customer? How does the buyer Know that your customers are repeatable? Will they receive the new owner or is their loyalty to you? Do they view your service as a company or as a college kid who is cleaning windows to make his way through college?
Now that said your business is as valuable as someone is willing to pay for it. It might be valued at $10,000.00 but if you don’t have a buyer willing to pay 10 grand then its not worth that. On the plus side you might be able to find a buyer who does not understand these things and to your benefit is willing to pay more than or as much as it is worth. But that would border on unethical to take advantage of someones ignorance. My advice would be to sell it for offer 30% of a years gross as a starting point and see if you can gain some interest. It does not sound like it is worth more than that if even that to someone other than yourself.
I meant 16,000 a year, I have now corrected the post because of that typo–thanks for noticing. Its about 1,350 a month in solid regular business that is VERY consistent.
It’s just a customer list not a real business. JMO
Going rate has been three months revenue for many years. If you get an offer for more take the money and run.
By the way, good money for just a few accounts. Hopefully they’re priced well.
When I sold my WC biz, the consistent accounts made me most of the money and commitment to buy. I ended up making way less than 30% of my total gross, though. Find one of your competitors that you like and see if he/she wants it. Also, you would know your giving you client list to a fellow WC business man
I have successfully bought and sold service businesses. You may not want to hear this but your business is worth about the value of any equipment you have. Does a perspective buyer have any guarantee that your customers will stay if you’re no longer there? What incentive is there to pay a premium for those accounts? Once you take the other job won’t those accounts be up for grabs anyway?
I would keep these things in mind as you attempt a sale.
Don’t sell it. Build it. The company you just got a job for will most likely fire you at sometime over the next few years. Of course I could be wrong, but the average person is constantly changing careers. If you bust your butt I bet in 20 years you won’t be busting it that much anymore. Don’t put your hard work ethic to work for someone else’s company. Do it for yourself. I’ll be stright up honest with you. Most people who get a degree end up not using it. The ones who do have them in law or medicine. The MBA’s too often end up moving from company to company to find in the end it was for nothing. Now if the company is offering you a large sum of money, 6 figures or more, then jump on it. Keep the cash and use it to get a loan to grow your company. Like many people, hind sight is 20/20. If I had to do it all over again at 20 years old. I would have gone into the active military service. I would be sitting in my house right now pulling in over 8k a month for the rest of my life in a retirement at 41 years old. With my window cleaning business started 5 years ago I would be sitting pretty and really, retired at 41 years old. Again don’t sell the business man. Work it part time like you were doing anyway and/or hire someone to work for you. It’s your baby, something you should be proud of. The company you are going to work for will not care one bit that you are a smart businessman who built a business into a profitable business. They will only care about what you can do for them IE how much can you make them?
Why don’t you keep at? Do it on a part time basis. If something happens with the new job, you have some security and something to fall back on. Of course you can only do it if you have the time, try not to burn your own bridge. JMO. Good Luck at the new job.
Talk to the friend you’re considering selling to and see if you can hire him to run it. You most of next year to train him and you have contacts with other college kids. If your new job is in the same area where you’ve built your business then this will work. You could be in a good to position to grow the WC business and take your new job. You would always have the WC business to fall back on if something should change at your other job and the more you grow it the more it will be worth later if you decide to sell it.
I would love to be able to hold on to the window cleaning company and still run it while being a student. The only problem is that the company is relocating me from Southern California to Atlanta, Georgia. IMO they did this because they knew that if I was still in the same area as my window cleaning business I would not be as productive for them.
Well then I guess you have a decision to make. Do you move to ATL, and leave the business behind? Or do you stay in So. Cal and continue to build full-time what you’ve obviously got a knack for? This company isn’t the one who’s forcing you to sell your business. Quit thinking about selling it for a minute, and decide whether you’d rather stay and keep working it, or just straight up close it down. Decide that first.
In that case I might talk to a broker and get his opinion on the value of your company and length of time it might take to sell. You could also approach some competitors and see if they would be interested in buying it. Do not show them your client list and do not tell them you’re leaving town. If they are genuinely interested, then at that point have them sign a confidentiality agreement with some wording stating that you will have them tarred and feathered if they solicit any of these accounts within a certain time frame. You could also consider selling each account individually to some competitors, you might get more this way. It might not be a bad idea to approach your customers about signing a service contract and be sure there is a survivor clause in it which helps ensure that the customer’s obligation survives any change in ownership.
I bought a bunch of route work 2 years ago with no money up front, an agreed upon percentage of sales each month, and an agreement that if the customer dropped me through no fault of my own then I wasn’t liable for that portion of the payment but if I screwed up the I had to pay.
I think you might enjoy receiving a check every month for a year once you’ve moved to ATL and maybe you can use that to fund another venture.
I couldn’t disagree more with this comment. I’ve bought two and sold one and have seen it been very successful when negotiating 4-5 months gross price for the business. The only thing I would say is that a buyer needs some protection in the event that there is some attrition (which there’s always a few). Perhaps a six month guarantee with half up front. After six months examine what’s left over and the balance due is what the monthly billings are at that point (30% x 12 - down payment).
If the buyer does a good job then there wont be any issues with the transition.
