selling a business

Discussion in 'Homesteading Questions' started by Mommalee, Oct 15, 2004.

  1. Mommalee

    Mommalee Well-Known Member

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    I know a lot of you are entrepreneurs so I just wanted to get an opinion/advice here.

    My husband and I have had a housecleaning business for a year now, and it's done very well. We do all the cleaning ourselves and are pretty booked most of the time. In fact, we no longer take one-time jobs because all of our clients are regulars and we just don't have time anymore. We have 3 kids that we bring with us but ideally would like to be at home with them. So, we are confused about how to go from a mom&pop operation to being the boss with employees. If anybody has done this please share what you know.

    Also, we've also discussed the possibility of selling the business. Would it be worth anything the way it is? We have a license, but other than that our business consists of our clientelle and our cleaning supplies. Plus we've only been around for a year. So I have no idea what value the business has and whether anyone would buy it, since we started it with almost no overhead, and it was so easy to do. Wouldn't someone rather do it the way we did rather than purchase ours? I don't know.

    If we could sell the business I wonder if it would be enough to invest in an espresso cart. There isn't one in this town and I've asked around and it seems it would do well here. Can't imagine why no one has tried it and we'd like to jump on the opportunity, but don't have $$ for it as things stand. Anyone have experience with this type of business and what would be the drawbacks I'm not seeing?

    Thanks in advance!
     
  2. Donovan K

    Donovan K Well-Known Member

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    Sounds like you would be better off expanding the business you have now over selling and starting up fresh. As for selling, you offer little more than an established client list and if there is no written contract between you and the clients, you cannot even really offer much when it comes to promises of immediate cash flow for a potential buyer. Anyone can get the license apparently and cleaning supplies are easily found anywhere and it is unlikely your tools or inventory of supplies is anything that couldnt be easily found elsewhere.
    Since it is just you and your spouse doing the work, you dont offer a staff that can keep things going when the new owner takes over.

    What may be your best bet is to expand with more steady customers and one-time jobs by adding contract workers. With just you and your spouse working the jobs, you are severely limited in the number of jobs you can do, not even getting into the issue with childcare here. What you need to do is post notices for part time workers needed for your cleaning jobs. You hire some single moms, stay at home moms, full or part time students at a local college, community college, on a per hour basis, as contract employees, classified as causual labor, paid on an IRS 1099. They are independent contractors and you dont have to pay the employers share of federal and/or state taxes, no social security, no fica, no benefits. Call the local college about students looking for work, post with the local state employment office, put ads in the local penny saver type paper, put up notices on grocery store, laundramat bulletin boards, etc. Shouldnt cost you anything, really.

    Check out applicants by running their credit report and criminal background. Give them a quick training program and put them to work as the work comes in. You pay them less per hour than you are charging, of course, so you are making money on their time so you can concentrate more of your time on getting new customers and serving the higher need clients yourself. You are going to have a pretty high turnover rate on these workers so keep several people working at least a little to keep them as long as possible. The more time you have to stop to search for workers and train them is more time away from making money. You should find a few dependable types that really need the money and are limited in the work they can do and when.

    Real profit in this kind of business comes from having others do the actual labor and you getting paid and keeping the contract workers busy. Keep a close eye on your costs including equipment and inventory of supplies. Keep good records on every dime spent as they are potential tax write offs. With any luck at all, you will find yourself a year or more down the road with you and your spouse running the company and not cleaning houses.

    Expect to be disappointed with a lot of workers that call in at the last minute to cancel out on a job you need them for. Expect mistakes and do not be surprised when you see your workers are not all that dedicated to doing their work to what you would do. This is just natural. They see it as a minimum wage job and dont have that pride of ownership that comes from having your name on the door. Dont be surprised you are working harder than ever at times because that comes with success.

    I couldnt advise you on the coffee cart.. not really my area.. but I have worked with contract workers in the service industry and I can tell you once I gave up doing all the work myself, my business really took off. One bit of advice I can give that you may not read if you did a lot of book reading or online searching for information, do not let these people you hire drag you into their personal lives. Keep it very professional at all times. Never give pay advances or loans. Do not try to solve their personal problems. Remember it is a business, not a ministry. Providing a job and a paycheck is the best and only thing you should offer or concern yourself with. Its your name the clients know so make sure these workers do not put you in a position to compromise yourself to your obligation to the client.

    Just my long winded two cents worth...

    Donovan
     

  3. Beeman

    Beeman Well-Known Member

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    You're right about someone just starting their own business instead of buying yours. But in reality some are clueless and would buy yours as it is established and has a customer base. That is if there was some type of guarantee like contracts that the customers would stay and that you wouldn't re-open in the same business as competition.
    As far as expanding to employees it would be the best way to increase your income. Being a boss is not for everyone and there is a lot that goes along with it. The best money you'll ever make is off someone elses sweat. Just know what you're getting into before becoming the boss. Contract labor can be sticky in some situations I would investigate thoroughly before going that route.
    Can't help you on the espresso cart, but you've already started something that you say is doing well with no start up capital. Why look to invest in an unknown when you already have a business?
     
  4. Mommalee

    Mommalee Well-Known Member

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    Good point. Thank you both for your thoughts. I guess I'd rather serve my favorite beverage than clean toilets, overall. But it is a bit more risky than working with what we've got.
     
  5. BCR

    BCR Well-Known Member

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    Check out SCORE.org or call your local SCORE office for free, confidential small business advice. They can help you make a plan to transform your current business into a new one.
     
  6. anniew

    anniew keep it simple and honest Supporter

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    I had a house/office cleaning business several years ago.
    I had no dependents, so worked very long hours to accumulate
    a sum of money. Then hired two workers when I got a contract
    with a private community to do their public areas. I let the two workers
    do much of the contract work as it didn't demand the excellence
    that private homes did.
    My suggestion would be for you and your husband to split up jobs,
    then each take a worker with you. You can do almost twice as many
    jobs that way, and keep an eye out that the workers are doing
    the quality work you want to keep your name reputable.
    I wouldn't hire contract people as you probably want liability insurance
    and bonding, in case something gets broken or a worker steals something.
    For additional customers, you might try bidding on big, long term jobs,
    perhaps for businesses that want after-hour work.
    If your husband and you split up jobs, one could do day jobs, and
    one could do after-hour jobs, each with a worker and one parent could be
    home at all times.
    Another way to up your income is to continue like you are, but advertise
    for more business. When you give a bid, up the amount above what you are
    making now per hour, and when a bid is accepted, drop the customer
    with the lowest hourly wage...or offer the job to another person for aa
    certain amount of dollars or take a cut from each visit.
    Good luck.
    Ann
     
  7. insanity

    insanity Well-Known Member

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    Good advise already given on hireing employees and such.Just thought id add that i bought my painting business from my old boss.I bought it because i new the steady was work there.There where no contracts just the contractors/builders saying they would give me a try and work with me.Well after he set his price i jumped on it.In case your wondering i paid 4 grand for it.It included one wore out work van with ladder racks, he had just bought the year before for (1100),A wore out paint sprayer(100) a few brush's,and a couple of ladders (probably 400 worth) and most important three contractors(priceless!)seriously there hard to find, especially good ones.All the things i needed to get started.He showed me how to bill them and how much and what for.(Boy was he making more than i ever thought!) Told me who to call for insurance/license/and CPA. Made my money back in the first month plus some just like he said.Grossed 88k Netted 55k and above for three consecutive years.
    Best move i ever made and i sure wouldn't hesitate to do it again.But now finding others that are as trusting might be hard but its not imposable.But i would go the route of the employees first,it sure will make you more money with less effort.Then if being a boss is not for you maybe you could sell.But don't under price you clientel there worth more than tools IMO. ;)