The average revenue over the last couple of years was 1.2 million, with earnings of 220,000, which is the average of the trailing 12 months to March 31st, 2023, and 2022. The sales price is $600,000.
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. This 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.” 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% secure because they have no advertising and no salesperson, and therefore the revenues have been within 20K each of the last 3 years. He has had some health issues, has lost interest in the business, and therefore has decided to sell. His daughter works less than eight hours a week, handles the accounts receivable and accounts payable, and is moving out of state. 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 are 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 done by invoice, which 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, adding residential daytime cleaning and multi-unit residential cleaning by reaching out to property management companies, adding construction cleaning, and calling on referral partners such as realtors and short- and long-term rental company owners and property managers. They can also add search engine optimization to their website. Add additional landing pages for their website for residential cleaning or other services. They also have no social media marketing. This can also make hiring less expensive. He spends over $6,000 a year on hiring, which can be accomplished less expensively.
No cleaning experience is necessary for the buyer. There are no required licenses. They will both offer a full transition, including training for up to 60 days. He is willing to stay on for up to 6 months post-closing to assist with the transition and sales for an agreed amount of compensation.
The sales price is $600,000 plus a small amount of inventory. The seller is willing to carry 10% of the $600,000 for a qualified buyer. The business will qualify for an SBA loan for a qualified buyer. This means that with the seller carrying 10% of the sales price, it leaves 540K, which a bank will provide 90% of, with the buyer providing 10% in a traditional SBA loan. Working capital is estimated to be 50K, which means the 10% down payment of 54K (10% of 540K, which is 90% of the sales price) plus 50K in working capital is only 104K, which is all that it will take to buy this business. It may be less since many banks provide working capital lines of credit as part of the SBA loan process. The sale price includes all equipment.
Location: Western Colorado in a large City
Other Information:
They have a stellar worker’s safety history without anything but small claims and enjoy a low workman’s compensation rate due to their safety record. The sellers will agree to full Reps and warranties to a solid legal and business standing. This is a corporation, which means that it will most likely be an asset sale and has been priced that way.
The location is a warehouse with 2 offices. The warehouse space is 40’ deep by 25’ wide, making it 1000 sf and there are two offices in the front; one measures 11’ by 12’2” and the other is 11’ by 12'10, making the total floor area of the warehouse 1275 sf. There is also 275 sf of storage above the office. The restroom takes up 40 square feet of warehouse space. There is a door between the office and warehouse, as well as a man door and a 12’ garage door in the rear of the building that lead to the alley. The rent is 1700 dollars per month, triple net. The landlord will offer both a short-term and a long-term lease, which the SBA requires.
Please Call or Email for Information: The broker is available at any time to discuss your interest in this offering and can set up a meeting either in person or by phone with the owner(s).
Thank you for your interest.
