Buying a carpet cleaning company.

Bob's dinner invite thread about the dude that bought his competitor's company gave me an idea
I just checked a few carpet cleaning businesses for sale in LA county and surprisingly there are a few for sale brokered by agents, some of them are asking 300 k, with a net profit around 150 k, I was thinking well, that price is asking price, if it were to be sold, I'm sure it would be closer to 225 k ? if I were to buy one closer to 150 - 175 k without any equipments since most likely I won't like their equipments and set up anyway, I would make that money back in about a year, after that it's all profit ( after expenses of course ), I know it's a big headache to separate the 2 companies but I'm sure I can keep everyone busy at all season, what do you think ?

In every slow period, those with money are afforded a great opportunity to expand and grow. If you are in that seat, I think you have the right idea.

The key to making it work and reduce the headaches is the manager for the new business. As long as you have the right person in that role, you should do quite well.

One of the best advice that I ever received about business is that you should never be the smartest or most valuable member. In a military unit, it isn't the officer that is the most valuable at all...and they know it. It is the NCO's in the company that make things work.

If you can find the right manager, I would say it was a good idea.

IF I had the money to do that, a lot of "IF's" would be involved.

I would want to know very well, upfront, what I was getting into. Who they did work for, what kind of margins they had, and if you were going to be able to retain what they had.

Like Rob said, it would have to run without me in it. You seem pretty wrapped up in your company now, and still haven't got yourself off your own trucks. It's impossible to be in two places at once.

I'd also say, why not buy their equipment too, and keep them separate entities for awhile? I see it both ways, but keeping it separate for a while may be an advantage for retaining clients until you are paid back your investment. Especially if they rank good in your market.

Freemind1 wrote:Especially if they rank good in your market.

I know you said quite a few things prior to that ranking good part but I believe that's the key right there, I could care less about how much repeat customer's that they have because I know for a fact if the owner of the business is heavily involved in the operational aspect of the business, most of those repeat customer's probably are going to find someone else as soon as they realize the owner is gone, the same way with my company, I've had a few customers that only want me to clean their carpets, I entertain some but some of them I flat out turn down, I told them I no longer go out there and clean carpets, but because of the fact I'm still answering the phone and involved in the business, they are still with me because they know if they have issues, I will still be behind it, it will be different with the new business and the owner is gone.
Their Yelp reviews have to be in the hundreds ( at least more than 200 reviews ) with no more than 4 - 5 negative reviews and those negative reviews have to spread out pretty even throughout their year in business, also they have to rank #1 or #2 in their locality in Yelp or Angie's list in their local area.
At least one of those company for sale said that they have 5 trucks and have 5 employees running those trucks, I would cut those down to 2 - 3 guys and instead of having 5 vans running around, I would run 1 or 2 vans with 2 guys in each van. That will cut down costs substantially.
No doubt it will be a big headache in the beginning.
Oh yeah, their books and taxes and numbers have to proof that they are indeed making what they claimed they are making.

IF it were me buying this company, I think I would want it as follows:
1 office manager. This person answers phones, keeps the books, helps with dispatch, and whatever else you think they should do (like work on SEO).
3 trucks, 2 as spares.
2 workers on two trucks, one on a single truck.
One of those guys is the crew leader over all the techs. He keeps stuff in order and plays boss for all the other guys/gals. He answers to the office manager and you.
Your two man trucks tackle the bigger stuff. Jobs where two guys are useful.

Your single op does the small jobs that make little sense to send two guys into. Maybe even does encapping of offices, or whatever you deem senseless for two guys to be doing. Be a good position for an older guy or someone who WILL work independently.

The only thing you need to do for this business, is check up on everyone and market it.

In all honesty, buying another company is a step into the big leagues. You are buying a functioning company, and you only have so many hours in the day. This is where "systems" come into play, and if set up right, you basically are collecting the money and putting the right people in place to manage everything. It runs without you, or at least it should.

I would not want to buy something that required as much attention from me, as the one I already own. We SP's already spread ourselves thin. There isn't enough of us to do that twice.

It's because of all this, I see why people either buy a franchise or they implement "systems" like the franchises have, and want to be fairly hands off. I wouldn't want to "buy" another job. I'd want an investment.

I see your point James, pretty much like Bob said, there should be a manager, the problem is here in CA, a manager has to be making at least 50 k / year, that's too expensive for me !
Plus the way I look at it, as of now, because we are still slow, I have way too much time in my hands, I can still manage both companies without too much stress, now person that answer phones is a must though, I can definitely see hiring that person to answer phones for both companies and forward the overflow calls to my cell, that way we lose minimal amount of calls that goes to voice mail.
Crew leader is also a must, that would be at least 36 k / year, but with my system, I'm sure I would increase efficiency and cut costs down.
Another issue that I see is the employees, I'm sure there will be one or two loyal employees to the existing owner and will have a hard time adjusting to my system and my attitude, not to mention the trust issues that I have, crap, it sounds difficult already, lol.

I actually don't like franchises, I don't like being my own boss and being told what to do, I would work for someone else first before doing a franchise.

Sounds like a lot of sound reasoning being thrown around. It might be worth it to go see this operation and see it up close to eliminate some of the unknowns. It might be clown circus.

I understand where you are coming from DP. Money can become an issue.

But someone has to do the work, and it can't all lay on one person, even if you think you can handle it all. Eventually, both companies will be booming, and you will be sick from lack of sleep and family time.

You can probably shift some responsibilities to an office person, or maybe even buying services from an independent (like a CPA, an SEO business, etc. ) But I have seen times where you were frazzled with all the work you had.

This is also going to make you think harder about those slow times. You are basically what, doubling (or better) the amount of employees you have, right? What will you do if things slow down? Laying people off or letting them go could cause you serious problems with your businesses. No one wants to lose good people.

I'm not a fan of franchises either, but more a fan of "systems". They are what makes a company run auto pilot. It turns a business into an investment. Every business with employees HAS to have good systems. A company is only as good as the systems they use.

But as Rob said, you NEED to see for yourself what you might be buying. No way I would buy a circus. If the structure is there, it's worth looking into. If it's chaos, it's a non starter.

You guys are right ! Time to make some phone calls.

Or you can relocate to the Midwest and buy me out? I'll work for you instead.

Trust me on this Bob, you don't want to work for me, lol.

Well, you probably don't want to live around here either, so I guess we are both safe.

Well looking at the home prices, I wouldn't say I wouldn't want to live there, it sure is tempting, especially if things don't pick up by next year, my vacationing funds are getting thinner, lol.

It will not be picking up around here either....I don't know how much longer I can hold out like this? My anchor commercial has been good for 4-5k per month during the Summer for the last 4 years, but even it is non-existent this year...only cleaned one building in the last 8 weeks.

I just don't understand the slowness of business.

Around here, the snow birds are all here. Lakes are crowded and people are spending money. Just not on services that they did last year.

Maybe cause everybody is shitting their pants that their medical insurance is going to sky rocket, or that people aren't going to be able afford nursing care for their parents. Plus all this Trump and Russia stuff. This is just dominating the news

Something is up Mo, that is for certain. I haven't seen it this dead in 5 years. I have been looking to see what jobs are out there as a back-up plan. Wall Street seems happy, but nobody else seems to comfortable and I do blame the media for all this doom and gloom crap.

I did pick up 2 smaller commercials for next week though, so that will help and hope to hit the neighborhoods this weekend with flyers again. Maybe next week is just the start?

Well if that's your reasoning Mo, I agree, health care is definitely more important than carpet cleaning or window cleaning

Its not that they have to decide between health care and carpet cleaning. Its the fear and uncertainty that jacks thing up. I know a lot of people in Cali thought the world was going to end when trump got elected

I cant complain too much. I busy as hell next week and its been a pretty good month so far

So, I need to relocate to your area then Mo?

Great Idea, I think you can keep up the work as you are so confident in doing so

milspec6 wrote:So, I need to relocate to your area then Mo?

That's an old post Rob one had one the slowest two months this year in 11 years

Oh, check, I missed that

How are things your way now?

Like I said worst Jan and Feb ever. Im too old for a career change. A couple of more years and I'm cashing out and moving out of the country.