Should I buy an existing house cleaning business, and how much should I pay?
That's the question we're going to answer today.
Hi there, I'm Angela Brown and this is Ask a House Cleaner.
This is a show where you get to ask a house cleaning question, and I get to help you find an answer.
Today's show is brought to us by HouseCleaning360.com
which is a 360 view of the perfect home.
If you're looking for a house cleaner, or you're looking for a window washer, or a carpet
cleaner, or someone who services the home, you can find that person on HouseCleaning360.com
If you are a business owner and you have a business that services the home, and you're
not listed there, run over and grab a listing so that as we send people over there
they will find you.
All right, on to today's session, which is from Mario, who wrote in and he wanted to
know: "I'm ready to buy a business, but I'm curious what questions should I be asking
the owner, and how much should I pay?"
Okay, so Mario this is for you.
My question to you is, why do you want to buy someone else's business?
Is it because it's flourishing and there are a whole bunch of things that come along with
it that will keep you from reinventing the wheel?
If that is the case, then those details need to be negotiated and hashed out.
But for the most part, here's what I see.
I see house cleaners getting out of the house cleaning business and they want to sell their client list.
Well, a client list is not worth very much because
customers pay us for the most part per cleaning.
So it's not like you're buying a year's worth of contracts that already exist, that are
already paid for.
Now, if the client has customers on a retainer and they've paid a year in advance, that is
a different story.
But for the most part, people go clean a house and they collect a check the same day.
And so there's no loyalty whatsoever.
The loyalty is, "Oh, my house cleaner that was cleaning my house is now gone.
Instead of the new guy coming in, I could give him a chance.
Or I could just pick a new cleaner of my own choosing."
And that's often what happens.
If you buy a business, if you're buying an existing clientele list it's really not worth
very much money because there's no guarantee whatsoever that customer will stay loyal to
you as the new business owner.
The relationship was with the previous house cleaner.
Not you.
The next thing is, is there a territory that's associated with this?
If you buy a franchise they will assign you a territory, and so you are only allowed to
clean in that territory.
When you buy a franchise they guarantee you no one else from that company marketing in your area.
However, here's the catch, when you buy a franchise they are guaranteeing you that no
one from that company can come in.
But they cannot guarantee that independent house cleaners will not come in and compete
with you in that marketplace.
And so what are you really buying?
Are you really buying a territory?
There could be 35 other independent house cleaners that are in that same area that are
marketing there, and there's nothing you can do about that.
Are you paying for the exclusivity?
Because if you are, that might be something you want to rethink.
If you're buying a franchise, the concept is that you're buying an existing training program.
Here's where buying a franchise actually makes sense.
If you are buying a long-term, well known business that has a great business name, and
it's got great business reviews, and they have a marketing plan that's already set up
that's on a national level, that includes websites and social media and all that stuff.
You don't have to reinvent the wheel for that.
And for that there's a very hefty price for you to jump in and buy an existing business.
But if you're buying it from an independent, chances are they probably have a crappy website.
They probably have crappy social media, and that social media is connected to them.
It's based on the friendships that they've made.
So even if you buy the business you're not buying their friends.
You're not buying their likes and their shares.
What you're buying is a client list, or maybe set up with a training program.
Is there a training program in place?
That's one of the things that you have to ask.
If you're buying an already existing training program that might be worth the price.
But, are you going to have to instill the program?
Or does it already exist, and are there already employees?
If you're buying already trained employee, and let's say that there are 15 or 30 people
that already work for this company, that's something that's worth the money.
For you to go out and find 30 new people that you trust, and then train them all, and get
them all up to speed, and know their reliability and who works well with who, that's going
to take a lot of time and that's going to be costly.
If you are able to buy that already then, booyah!
That might be worth it.
If you're thinking about buying a business, how much are you willing to spend?
It's going to come down to your price, it's going to come down to your budget, and it's
going to come down to your operating capital.
If you have 30 people working for you, boom, all of a sudden that you didn't have yesterday,
do you have the resources in place to hire a manager in order to manage those 30 people?
If you wake up one day and you have 30 call outs, or you have 15 call outs and you're
not able to meet your workload, now all of a sudden you're doing a lot of customer service
with customers who are expecting cleaning and the cleaning never happened.
If you're buying a cleaning business is it a residential cleaning
or is it a commercial cleaning business?
Commercial cleaning contracts are easier to sell than a residential service, for example.
If you're going to start out, and you're going to go rebuild all of these new relationships,
you might as well just do that from scratch.
That saves you a whole lot of money, and a whole lot of heartache and headache from trying
to buy someone else's existing good reputation that now you have to live up to.
So, it is possible, and how much you pay for it is going to be entirely up to you.
The prices vary all over the board.
Now, there are brokers out there who buy and sell businesses.
My suggestion would be to call a broker and say, "Hey, listen.
I'm thinking about buying this business.
What is the going rate in my area for buying a business of this type?"
And then give them the specs, and oftentimes they'll do the research if they don't already have it.
And they can tell you a really finite amount of money like, "Here's how much this business
is worth."
And only then can you make a decision on does that make sense for you.
So, good luck, Mario because it sounds like you're doing some fun stuff.
I love the entrepreneurial spirit.
But that's my two cents for today.
All righty.
Until we meet again,
leave the world a cleaner place than when you found it.
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