Janitorial Cleaning Business Buying Tips For Buying Janitorial Businesses


The English have a saying: "Where there’s muck, there’s money," which can certainly be true for companies providing janitorial cleaning business services for commercial and/or residential clients. But before buying a janitorial business service for sale that seems profitable, it’s good to look into six aspects of the offering to make sure the business is  sound.

1. Value is not in capital equipment. A seller emphasizing the amount of cleaning equipment that will be included in the sale, may be attempting to distract the prospective buyer from more important aspects of the business. It’s beneficial, when taking over a company like this, to get enough equipment--in good working order to conduct the business. But it’s important to remember that most capital assets in this kind of enterprise, with the exception of any vehicles, have a short life span and are easily replaceable.

Most commercial grade vacuum cleaners and power washers can be purchased for a few hundred dollars per item. And will be useful for a matter of months, rather than years. And carrying more equipment than is needed may be an indication that the firm has lost accounts and not replaced them with new customers.

2. Customer contracts also can be overrated. Written agreements with residential customers, even with commercial clients, may be reassuring to the prospective buyer of a janitorial cleaning business service. But keep in mind that such agreements can be broken or circumvented by customers who change their needs or decide they don’t like the service provider. While it’s a good sign that a company has contracts with its clients, the careful janitorial cleaning business buyer should be doubtful if a seller claims these documents mean that future business is "guaranteed."

3. Customer distribution and loyalty: For some people buying a janitorial cleaning business service it's appealing to know there’s a major customer contributing a big chunk of the firm’s income and, consequently, reducing the need for a lot of smaller accounts to keep track of and to bill for services. But most experienced business people don't think it's a good idea to have all, or even most, of your eggs in one basket. There are a lot of reasons a new owner could lose the major client, including a personal relationship between that customer and the seller--a loyalty that would not be enjoyed by the buyer.

When examining the customer list, it also is important to know how long each one has been serviced by the company. A two or three-year history with a retail or commercial client is ideal because it represents a long-standing relationship that’s likely to continue. The buyer is wise to ask a lot of questions about customers with the firm more than eight to ten years. Are principals of that firm ready to retire or move on? What's the possibility of a management change with someone new in charge wanting to do things differently by using other vendors? And, of course, clients who've been with the firm only a few months can pose a risk because they may be among the many companies that constantly try different vendors, searching for the ideal match and the absolutely lowest price.

4. Employee longevity: It's not uncommon for a person with a background in fast foods, now interested in buying a janitorial business service, to make the mistake of discounting the importance of long-term employees. Considerable training is involved in preparing cleaning crewmembers to work quickly, thoroughly and carefully. The seller of a company with high worker turnover may want buyers to believe that competent and reliable employees are easy to find and to train. But it’s not a good sign if at least half of the cleaning staff hasn’t been with the enterprise more than a year.

5. Review those receivables: While many janitorial firms are able to get customers in the habit of paying immediately after each service is completed, the buyer may find an interesting acquisition target that receives many payments later, after sending out invoices. That’s particularly the case with a company serving commercial accounts. The critical factor here is to examine the receivables ledgers to make sure most invoices are paid within 30 days of service.

If the company for sale is carrying customers any longer, the buyer will notice the receivables total exceeds the monthly revenue figure. And it’s likely that some of those debts are uncollectible. A large receivables sum may not be a problem with some service companies but it should raise the red flag of caution when reviewing a janitorial service for sale.

6. Financing available: With purchase money difficult to borrow in the current environment, the entrepreneur interested in buying a janitorial service should be encouraged by an offering that includes seller financing. Not only does this feature make the purchase easier, it demonstrates the seller’s faith in the company’s continued success.

A bonus for buyers of either starting a janitorial business or buying a janitorial cleaning business company, or any business opportunity for sale, is pre-approval for an SBA-backed loan to assist in the purchase. Considering that many small business lenders are reluctant to help buyers and sellers complete their transactions, a small or mid-sized business offering that includes a commitment for bank assistance is a particularly appealing opportunity.

For an entrepreneur interested in acquiring his or her own enterprise, buying a janitorial business for sale can be a smart move. It’s important, however, to consider these six factors when reviewing potential business opportunities in this industry.

Looking to buy a janitorial business? See the entire list of California janitorial service businesses for sale in the marketplace at this time.


About The Author: Peter Siegel, MBA is the Founder and President of BizBen.com. He is an SBA SCORE Counselor, author, consultant/coach, and advocate on the topic of buying and selling small to mid-sized businesses in the California marketplace. He has writen three books and hundreds of publication articles on how to buy, sell, and value small businesses. For over 25 years he has assisted small business owners/sellers, business buyers, business brokers, and agents. For a FREE consultation on how to best buy or sell a California small business phone him direct at 925-785-3118.

Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business







  Helpful Resources To Assist In Selling And Buying California Businesses
William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Timothy Cunha JD, Business Broker: SF Bay Area

SF Bay Area experienced attorney, & business broker. I & my EvergreenGold team offer owners sound advice & expertise to build business value & achieve profitable sales. For a FREE business evaluation & SWOT analysis for your business call me direct at 650-600-3751, 650-866-5393 Text.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Peter Siegel MBA, BizBen Founder, ProBuy, ProSell, ProIntermediary Programs

Founder Of BizBen.com (since 1994). I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I consult daily with buyers, sellers, and brokers daily about buying and selling California small to mid-sized businesses. Call 925-785-3118.

Christina Lazuric CBI CBB, Business Broker: Orange County

Premier Brokerage for selling Orange County Service based businesses since 2005! CBB provides a step by step approach to Business Brokerage, M&A Services, Business Consulting & Valuations. Contact me about selling or buying service based businesses: 949-257-7823 Cell.

Ryan Clark, Business Broker: Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan, Business Broker at 310-652-8353.

William Park, Business Broker: Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
6 Reasons You Should Consider Buying A Commercial Cleaning Franchise Service

If you are open to exploring franchises available - the commercial cleaning industry is an area you should consider. Commercial cleaning franchises are quickly becoming a popular choice among business buyers. Peter Siegel, MBA (BizBen ProBuy Program) at 925-785-3118 explores this business industry.

How To Determine Whether The Buyer For Your Business For Sale Is Sincere

A problem owners encounter when offering a CA business for sale is that not all so-called business buyers are qualified to make the purchase. It's frustrating and costly to waste time showing non-qualified buyers the business. Here are ways to identify time wasters so the focus is on real buyers.

Sellers Ask: How Long Should I Wait For The Buyer To Do Their Due Diligence?

Business sellers & buyers ask the question in the buying process-how long should I ask for due-diligence when buying a small business? The answer really depends on several factors. They include: type of business, demand for the business, complexity of the business. Advisors weigh in on this topic.

Selling A Business Without Getting Sued: 5 Tips For Business Sellers/Brokers

How do I sell my business without getting sued, isn't a subject just for discussions with lawyers. A seller can take some precautions to reduce potential legal problems. Peter Siegel, MBA Founder Of BizBen and BizBen's ProSell Program discusses this topic for business owners/sellers and brokers.

Absentee Run Small Businesses - Is That Really A Possibility For Buyers?

Is buying a absentee run small business really a possibility? Peter Siegel (BizBen ProBuy Director) gets asked this question a lot in his consulting sessions with business buyers. Read more about what other Advisors and Intermediaries feel about this topic on this popular BizBen Discussion!

How Do I Navigate Through The Negotiation Process When Buying A Business?

Negotiating the terms of a business deal is a delicate process, where one wrong move can cost you the business that you wanted to purchase. Peter Siegel, MBA (BizBen ProBuy Program) discusses the ins and outs of negotiations, and how to work well with the seller to get a deal done.

Selling My Small Business: What Items Should I Have Ready To Be Successful?

When selling a small to mid-sized business, owners should have their paperwork and financial information ready to go! They should also have a short business plan of past history, current operations, and potential for the future. In this BizBen Discussion several advisors and intermediaries weigh in.

What Is The Typical Business Broker Fee For Sellers And Buyers? Who Pays It?

Was just asked the question from a business owner what the "typical commission" amount is for a broker or agent and if upfront fees are common? Thought this might be a great Discussion topic on BizBen for both business owner/sellers and potentially for business buyers (buyer representation).


Escrow Services Diane Boudreau-Tschetter
SF Bay Area Business Broker Manjit Singh
Veld Group Business Brokerage Los Angeles County
San Diego Florist Selling
Facebook
Twitter
Linkedin
Vlogs and Podcasts
Instant Email Alerts On BizBen
California Educational Events Buying And Selling Businesses
Advertise On BizBen
BizBen Blogs And Articles
BizBen ProBuy Program

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2020, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
6 Reasons You Should Consider Buying A Commercial Cleaning Franchise Ser...
Read More News
How Many Listings Is Too Many For One Broker To Handle? Is It 5? 10? 20?...
Read More News