I want to merge my friend's carpet cleaning part of his business into mine

Discussion in 'Lets talk Business!' started by Matt Wood, Dec 24, 2016.

By Matt Wood on Dec 24, 2016 at 7:33 AM
  1. Matt Wood
    Matt Wood

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    That might sound harsh from the way I worded that, but it isn't. I'll break it down.

    His business compared to mine is 10 times bigger in the cleaning industry, not just carpet cleaning. In fact, his carpet cleaning is very tiny, compared to the janitorial and pressure washing side. But it seems like it's his biggest headache, because he can't find good help. This has been going on now for several years. How do I know???

    About once a month, I get calls from him to come clean some carpet for him at one of his customer's facilities because his employee didn't show up, he just fired his employee, or one of his employees damaged some upholstery, etc.

    So you ask, "why doesn't he just go out and do it himself?". He told me that he's physically not capable of doing it anymore.

    Why do I want to merge the two together? My first reason is, major boost in Gross, and helping him at the same time.
    If it weren't for this guy, I never would've gotten in this business. I worked for him in high school. I hated it then, because of how he ran it. He didn't have the tools or procedure like it should've been to make the job enjoyable. He sold me my first truck mount and helped me get on my feet, and he lets me borrow his neglected truck mount, lol, any time I might have a problem with mine. (when my amtex went down the umpteenth time, he alway was there to let me borrow his), even though I did the same when his 427 had big problems


    So my question to you is, how can I approach him on this? What kind of offer should I give him?

    I was thinking, to bring it up this way: "What was your net in this part of your business (12-19%)? Are you tired of the headaches yet? What do you think I take over this part and give you just that percentage of the job?"

    Is that a good offer? If so, how long should that offer go? How would you approach someone in this manner
    Pioneer Floorcare likes this.

Comments

Discussion in 'Lets talk Business!' started by Matt Wood, Dec 24, 2016.

    1. Matt Wood
      Matt Wood

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      Please don't think I"m trying to stab my friend in the back on this. If that thought has crossed your mind, let me say that he tried to sell me that part of his business back in '07. I was dead as a door nail in this business, and I tried to buy it with zero assets used as collateral. When I look back at that day I applied for that $50k/loan, I feel like an idiot. I'm so glad the bank turned me down on that loan, because that was right before the fall of '08, and his 427 was about to crash on him

      All he had to offer to make his business look like it was worth $50/k was
      -a list of customers on paper
      -a trailer with a boxxer 427 and some equipment in it.
      -all his commercial buildings with carpet where he has contracts currently to do janitorial.


      I don't plan to offer him a big check to purchase that part of his business. I just plan to offer a percentage of each job. That's why I was wondering how to approach him on it, and what would be a reasonable percentage to offer?
    2. Mikey P
      Mikey P

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      Over a beer or coffee?
    3. Onfire_02_01
      Onfire_02_01

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      If you wanted buy his portion I would offer a % of the $ for a certain number of years. Say 20% for 5 years.
      Alternatively you could set a price for what his income is for 1 year and pay him that amount.
      You could also look at subcontracting with him. It sounds like he doesn't have a large job base outside of his janitorial accounts so you could offer to do his carpet jobs for 75%, that way he doesn't have the worry about the carpet cleaning but he can still offer the service to his customers and make a small profit on the side.
    4. steve_64
      steve_64

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      Just offer a flat rate per referral. A percentage would work but what about upsells?

      Sounds like a good pairing if you can decide on a fair rate for both of you.
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    5. Matt Wood
      Matt Wood

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      How would you approach the subject without making his business sound insulting
    6. Onfire_02_01
      Onfire_02_01

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      I know you have been having some problems over the last couple years and I am looking to grow my business, would you like to do a deal?
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    7. steve_64
      steve_64

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      You can wait for him to call looking for help or give him a call and let him know what you have been thinking about. See if he is still interested then let him talk and go from there.

      I wouldn't do a percentage myself. Maybe $20 per job for him to answer the phone and pass it to you reimburse monthly. Keep it simple.
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    8. Matt Wood
      Matt Wood

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      That seems like a good deal. He certainly deserves a decent referral, but I need to profit as well. I'd hate to do this and end up going $$$$negative
    9. steve_64
      steve_64

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      I don't know the average per job. It's also up to you to upsell for more profit

      What's your cost for a new acquisition? Go from there or his job average. It should be an easy deal since you are already in the door.
    10. hogjowl
      hogjowl

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      It's worth whatever he wants just to get you out of that trailer!
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    11. Mikey P
      Mikey P

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      If this guy is a friend why can't you have an honest open discussion?

      Or is he a typical buggy eyed southerner who sees a conspiracy in everything?
      Last edited: Dec 24, 2016
    12. Jimmy L
      Jimmy L

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      Just make it simple. Subcontract out to do his carpet cleaning. Don't merge.
    13. Bob Pruitt
      Bob Pruitt

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      I think you are better off just making 2017 the year you do more than push a wand.
      Go market yourself...make it your focus and work your cleaning jobs into the marketing day.
      Buying someone else's customers rarely works out even when you are in a van instead of a pick up truck.
      Seriously Matt you can grow your own business as big as you decide to... else I agree with Jimmy and others about sub-contracting his accounts.
      If he wants 20 or 30 percent... add that percent to your regular rate.
    14. Shane Deubell
      Shane Deubell

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      Just be straightforward, I want to grow my business in 2017. Would you be interested in selling off or setting up a commission structure on your carpet cleaning jobs.
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    15. Matt Wood
      Matt Wood

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      I like the idea of setting up a commission structure. No offense to anyone else who wants to sell their business, but, if all you have is a list of customers and maybe some equipment, I don't see the benefit of just writing a fat check to buy a list on a piece of paper. It seems more valuable to me to pay commission off the jobs. I know he'd rather just get a big check, but I don't see it happening that way.
    16. Matt Wood
      Matt Wood

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      Can you give me an example of how the commission structure would be set out?
    17. Desk Jockey
      Desk Jockey

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      You process the work, you use your chems and equipment. He has no skin in the game. His only risk is you "steal" his customers.

      Look at what profit margin he is making now and work out what is reasonable as just a lead generator fo you.
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    18. Matt Wood
      Matt Wood

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      It won't be on purpose, but I'm certain that some of his customers will just call me directly the second time around after a year or two of the merge, which, in turn, I'll probably forget that they're his original customers and won't give him that commission

      On the other hand, his big commercial accounts will always go through him which will always be a guarantee percent of the job going his way
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    19. Matt Wood
      Matt Wood

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      I just got off the phone with him. I planted a good seed for both of us:clap:

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