Owner Only Works 2 Hours a Week, Does No Advertising,Easy to Grow
The average revenues over the last couple of years was 1.2M with earnings of 220K which is the average of the trailing 12 months to March 31st, 2023, and 2022. The sales price is 600K.
The company does mostly nighttime cleaning of office spaces and medical facilities. They also provide carpet cleaning, hard floor cleaning and maintenance, window washing, and disinfecting.
The owner started the company over 20 years ago but is already mostly retired, only works 2 hours a week, and wants to fully retire. The owner states “There are a couple of things that you should know that might help you understand the recent financials. Last year I dropped two big accounts, one of which was a manufacturing facility that was open 24/7 and employed over 300 people, proved to be a difficult account since we were only allowed to be there a few hours each day. The other was a medical/ surgical facility in Montrose that we discontinued in November because it was the only account we had in the area which made it harder to manage. In retrospect, they were bad decisions, but my heart just isn’t in it like it used to be to be.” Jeff, the Broker, has asked the owner to try and grow the company again and he has agreed to do so. He has a large new customer coming on board the week of April 22nd and has not been taking accounts that want cleaning only once or twice a week. He is going to say yes more to allow the company to start growing again. This is why we have priced this based on 2023’s earnings because he believes the loss of the two accounts can be made up before the closing.
The company’s revenues are almost 100% recuring because they have no advertising, no salesperson, and therefore the revenues have been within 20K each of the last 3 years. He has had some health issues and has lost interest in the business and therefore, has decided to sell. His daughter works less than eight hours a week, handles the accounts receivables and accounts payables, and is moving out of state is the other reason. The new buyer can easily do both of their jobs and still have most of each week leftover to grow the company. The company has 45 employees. He has an office which he goes to because he has an old school mentality. He never meets with clients any longer and only meets periodically with the cleaners. This could be a home-based business with just a storage unit for each city, but he likes having an office and leases a small part of a warehouse where his operations manager works part time and where they store some of their equipment. Most of the cleaning materials and equipment are owned by the company but are kept at each business in their janitorial closets. There is also 2 job inspectors. The great thing about cleaning companies is that they are so simple to run and grow. The employees are the most inexpensive among all the service types of companies and they are easier to find since they are not required to have any skills and can be trained over just 3 nights. Plus, cleaning companies have the highest rate of recurring revenues in the service industry, bidding jobs is very easy which is one of the main areas of risk to a new buyer, most customers have regularly scheduled cleanings, and billing is by invoice and in many cases can be automatically deducted monthly.
The business owns 3 vehicles that are used for the business by the employees. They also have office equipment, supplies, and some small equipment. The total of this is estimated to be 55K.
Growth Potential: The company literally has zero advertising which should be changed. The seller believes that there are many ways to grow this company including further automating the scheduling of work and employees, expanding their service area which would be very easy, add residential daytime cleaning, multi-unit residential cleaning by reaching out to property management companies, add construction cleaning, and by calling on referral partners such as Realtors.
