Postings Advertise Resources Blog Discussions About Us Register Login BizBen Podcast   BizBen Podcast  
BizBen.com
500 New & Refreshed Posts, Postings Daily
Over 8,000 Postings & 2,500 Resources
Assisting Buyers & Sellers Over 25 Years!

Categories

Janitorial Cleaning Services: 6 Considerations When 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 crew members 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 business purchase money somewhat difficult to borrow in the current environment, the entrepreneur interested in buying a janitorial service should be encouraged by an offering that includes some or all 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 to purchase? 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 & Lead Advisor at BizBen.com (established 1994 - 8,000+ small & mid-sized businesses for sale & wanted to buy postings - with 500 new & refreshed posts daily). BizBen.com offers business buyers, owner sellers, business brokers and advisors free access to online postings, articles, blog posts, discussions, podcast, resource and broker directories, etc. Peter heads up the BizBen.com ProBuy, ProSell, & ProIntermediary Programs. Peter Siegel, MBA can be reached direct at 925-785-3118.

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

Contributor:

Peter Siegel, MBA
Areas Served: Nationwide - All Areas
Phone:  925-785-3118 Cell, 925-785-3118 Text
Peter Siegel, MBA - Founder Of BizBen.com (since 1994), I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I advise/coach buyers, sellers, and brokers daily about buying & selling small to mid-sized businesses throughout the Nation. I can be reached direct at 925-785-3118.

Other Related Blog Posts, Articles, And Discussions You May Be Interested In

Buying A Business Without Financials Business Seller Doesn't Have Recent Financial Figures: What Should I Do?

The owner selling the business doesn't have recent financial information or documentation but insists revenues are increasing. Should buyers believe the seller? What should buyers do in this situation? ProIntermediaries on BizBen answer the question of verifying seller/owner's financial claims.
Buying A Health Club Successfully Working Out A Deal: Things To Consider When Buying A Boutique Fitness Gym

First thing you may be asking, what is a boutique gym? Simple, a boutique fitness gym is on average much smaller than your typical large-scale gym, ranging from 800 to 2,500 sq ft. In this BizBen blog post, Joe Ranieri (Southern California Business Broker) discusses this topic for gym buyers.
Due Diligence Gas Station Purchases Buying A Gas Station Business: What To Look For When Doing Due Diligence

Doing due diligence when buying any type of business is extremely important. Regardless of what type of business you are buying there are certain things you will always look at such as, financials, equipment, legal issues etc. We take a look at several angles for optimal gas station due diligence.
Why Many Deals Fail Why Many Deals Fail: Unrealistic High Asking Prices Are Usually The Culprit

The unfortunate truth is that approximately 50% of all small business sales transactions fall through. While failed transactions can happen for a variety of reasons, Peter Siegel, MBA (BizBen Founder & Lead Advisor) discusses the most common reason deals fall through; unrealistic asking prices.
Curb Appeal Selling A Business Does Curb Appeal Really Help Sell Small Businesses? Brokers & Agents Discuss

This post is essential reading for any prospective business seller. Curb appeal is critically important, not just to the amount of the final sale price, but also to whether there will be a sale at all. Top ProIntermediaries and ProAdvisors discuss this valuable topic on this BizBen.com Discussion.
How To Buy A Dry Cleaners Finding A Dry Cleaner Small Business For Sale That Will Be A High Performer

Before you buy a dry cleaners small business, read these critical tips about this industry. Discover why a dry cleaner needs to be "green" to be profitable. Peter Siegel, MBA (BizBen ProBuy, ProSell Program Advisor) explores this topic and other helpful strategies on buying a dry cleaning store.
8 Questions To Sellers 8 Questions You Most Likely Will Be Asked When Selling Your Small Business

When selling your small business, you'll be bombarded with questions - from the brilliant to the ridiculous. You need to be prepared. Here are some of the key questions you can expect to be asked. Tim Cunha (SF Bay Area Business Broker) reviews many of these possible questions from potential buyers.
Tips For Business Sellers Business Owners: Do Not Make It Hard To Buy Your Business - Successful Tips

Successful sellers of small businesses need a game plan to sell their California small business for maximum price and for the best terms. Peter Siegel, MBA discusses these seller strategies with BizBen Blog readers based on his experience as the lead Advisor with the ProSell Program on BizBen.com.
Keeping A Business Sale Confidential Why Is A Small Business Sale Kept Confidential? Advisors Discuss This Topic

Recently a business owner asked me on the phone, "Why do you keep the sale of a business confidential? How do you keep the sale confidential - any good tips?" Multiple Advisors weigh in on this subject. What would be your answer to this business owner? ProIntermediaries on BizBen discuss this topic.
Dual Agency Brokers Does Dual Agency Really Work For All? ProIntermediaries Discuss This Topic

Who really represents the buyer? The selling broker or agent through dual agency? Many brokers and agents weigh in on this Discussion on BizBen. Bottomline is all business buyers need to know who really represents them and has their best interest at heart when seeking and negotiating on deals.