Selling my Business after 25 years..

Discussion in 'Lets talk Business!' started by nusteem, Jun 16, 2013.

  1. nusteem
    nusteem

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    I am ready to call it quits or retire. I bought this business for my son and have operated for 25 years and ready to move on to other things I have done in the past. Can anyone give me any insight as to what to expect ? I have bought and sold property but not a carpet cleaning business. Has anyone had any success in this area??

    thanks
    Myrtle Beach SC
    Last edited: Jun 17, 2013
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  2. Derek
    Derek

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    Where you located
  3. nusteem
    nusteem

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    Myrtle Beach SC

    I think I have found the answer after doing a google search.

    6-12 months or could be as high as 18 months depending on valuation.


    How long does it take to sell a business? From the time the business hits the market to the time the deal closes, it often takes between 6 to 18 months on average. This time does not include the business valuation or the post training and transition time that a buyer may want as part of the transaction. - See more at: http://www.cosemindspring.com/Topic... to Sell a Business.aspx#sthash.i30Z7M3u.dpuf
    Last edited: Jun 17, 2013
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  4. Newman
    Newman

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    I purchased a 30 year old business, one truck O/O, at the peak of the market before the crash, late in 2007. The biz was for sale here in the Chicago Suburbs for over 3 years. You will have accountants do a nice business evaluation and set a target for you. At the end of the day, a business is worth only what someone else will pay for it.

    The problem with selling an O/O business is that the person who is willing to work the business typically does not have the $$ to purchase the business. The Investor who has the capitol to purchase your business is not willing to work the business. You will experience this conundrum wrapped up in an enigma...

    If you have all of your systems in place such as employees running the trucks, managers and the phones handled you will have a better chance of profiting from the sale of your business. If your business will not go on without your presence, in the end, it essentially worth the FPE (fixtures, property, equipment).

    I wish you the best of luck on your future endeavors, PM me if I can help. Cue Steve Tourben in 5, 4, 3, 2, 1...
  5. Art Kelley
    Art Kelley

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    It's not as grim as Chris makes it out to be, but you should consider a working transition with the person buying your business. You have thousands of customers built into the value of your company; people who trust you and value your services. Be their chimp,(not their tech), go on each job with them or their chosen tech, for a two or three year period. Help them to become successful. The legendary sale that Touburn did with his company was a flop for the new owner who lost all his invested money as the business failed in a short period of time. That was unnecessary and nothing to be proud of.
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  6. bob vawter
    bob vawter

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    the secret to selling yor business is finding some dumb smuck wit enough money to buy it.......
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  7. TomKing
    TomKing

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    Nusteem
    I have purchased 2 very small O/O companies in the last 3 years. I looked at a 3rd and could not make it work.
    If I where looking at your business to purchase here are the things I would be looking at.

    1. How clean are your books? Do you run your personal finances from your company? I hope not, I have seen it.

    2. How accurate are your customers records? Do you have the full contact info for every customer including email? Are your records on a scheduling system like Camelot or Service Monster?

    3. What is your client count for the last 3 years? How many customers have you served? I do not really care how many people you have serviced in the last 25 years. I would be looking for 1500-2000 customers that repeat every 15-18 months.

    4. What is your repeat customer rate? Can you prove it with accurate records? I would be looking for 60-70% for a 25 year old company

    5. How strong is your internet presence? Do you have a mature web domain? Do you have multiple phone numbers? Do you have a business location with a strong Places listing? I would be looking for first page listings. Do you use a cell phone or a land line. Cell purchases are a pain in the butt for multi trucks to buy.

    6. How systematized is your sales and marketing process? Do you have records of the results of your marketing campaigns?

    7. What is your Gross for the last 5 years? Are you growing or flat? What is your net? Can this be seen in Quick books and your tax returns without the comment I take another $25k in cash. I can't buy that.

    8. How clean is your equipment? How old is it?

    9. What is your average residential job? I would want $260 or up What is your average commercial job? I would want $350 or up.

    10. How much monthly regular commercial work do you have? Not a they call me regularly. I am talking you show up the first Tuesday of every month type of stuff and you have been doing it for 2-5 years. I would be looking for a good one truck operator having 4-6k of this per month.

    11. Do you do all the work or do you have employees if it is just you I would think 20-30% will leave my when I buy you out.

    So let's say you did $175,000 last year and could say yes to most all of these questions. Lets also say your net is $110,000 without trying to add in a bunch of I take 2 vacations , car lease or other stuff.

    So $14,500 monthly

    You have a truck that is less than 4 years old. a bunch of well taken care of equipment. Which I have yet to see. Your truck is a national brand not some piece of junk you built with some buddies.

    Lets also say you have 4 k of monthly commercial work.

    Here is what I would be willing to pay for a company that could say yes to 95% of those questions I just asked.

    30% of the first year commercial $14k . This means I will manage or work this for the first year for no profit. I will have to pay myself or a employee to do the work. I will have equipment and overhead.

    A 4 year old truck $32k for top of the line CDS 4.8 less for other stuff. I would pay cash up front on this.

    $5-8 k for misc equipment if in great shape. I mean great shape $2k if it is all dirty and aged. Most of this I would probably not want and you would do better to part it out.

    So here is my offer if again you could say yes to 95% of the questions I asked.
    Money up front for your truck cash $32,000
    1 months revenue $14,500
    30% of 1 years commercial $14,500
    Strong brand and internet misc equip $5,000
    Total offer $66,000
    paid in 3 installments over 90 days to insure a good transition. With performance clauses

    This means if you where a owner operator and you bought your company you would earn $44k your first year. If I were a multi truck I would be able to pay an employee's salary for one year. After one year I am not managing your business for free.

    Now if your records are bad you have no commercial and you tell me I don't need to advertise and the business is built all around you.

    Cash for your van and one month's revenue. Too much risk. I would part out your equipment gut it out for the first 2 months and hope for the best.

    If you cannot answer yes to most of the questions I asked maybe you want to spend 18-24 months getting your records together so you can ask more.

    The sad things in this business is that the entry level into the industry is so low. If someone who would be a O/O had say $200k (which many on this board would say there company is worth by saying 1.5 annual sales) why would you just not buy a used truck and go for it yourself someone with that amount of cash they earned probably has some smarts.

    If you are a multi truck and you had $200k you could be on tv on 4 channels monthly and most certainly increase you business $175,000k.

    The honest fact is most O/O companies are worth the wholesale cash value of the equipment and 1 to 2 months revenue no more.I do not care what some CPA has to say they don't pay the bills.

    It would be the rare company that can get one year's revenue for a sale price. If I where selling I would go look for solid 2-4 truck companies to approach selling to. The big boys 8-10 trucks will not want to pay and the guys off the street will want you to hold the note. If you have set a realistic selling price just like real estate things go fast.

    You might be able to transition as an employee for a period of time to help your transition. They are also the type of companies that could benefit the most.

    I would have cash tomorrow for the right deal in my town.

    Good luck in your next endeavor and selling you business. I am sure you have worked very hard over the last 25 years.
    Last edited: Jun 17, 2013
  8. Derek
    Derek

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    ^--- nice Tom, we should all copy/paste/print that and keep it taped to the wall in our office.
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  9. Newman
    Newman

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    Tom, please elaborate on this point. I am considering divorcing ATT and porting my 35 year old land line and porting the number to a cell line. I have to use remote call forwarding. ATT does not have very responsive customer service. Are there issues with changing cell lines back to land lines?
  10. TomKing
    TomKing

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    i have found on both purchases that the cell phone from the company we bought could not be turned to a land line. We need all our lines coming into the regular phone banks. We had to keep the cell phones leave them on a CSR desk and someone had to baby sit them at night for Emergency Water Damage. Both times they where on contract and to get them to our name we had to start one year contrats.
    Cell phone companies stink when you have to sell the number.
    My recomendation get a good land line number into your office or home and have it forward to a cell when you need to or better yet hire a girl to answer those phones.
  11. Moser Brothers
    Moser Brothers

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    I bought my business for $19,000, the equipment was 5 years old and he payed about $55,000 for it and I got 5 years worth of clients, I fired most of them

    Then I got refferals from a retiring cleaner for 10 percent of the job for the first time and they were mine after that free and clear

    I bought another cleaners phone numbers for $500, he wanted $1000 but they weren't my clientele, I fired all of them but got some good clients from his Yelp listing. I shut the numbers down after a couple years after the phone bill was higher than the work I got from them.

    I'd like to buy another cleaners clientele again if the numbers are right




    ....
  12. amygeorge
    amygeorge

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    I paid one year of income. It included all equipment for carpet cleaning and water damage including trailers. He had an excellent business and it was well worth the price. He also trained me and one other tech. He is always ready to help with questions, I just don’t call him, that’s what this board is for. Most folks would say I was crazy, but I don’t advertise except for the local paper when they run specials. It’s time to start because we need to promote T&G which the previous owner hated and didn’t do for some reason. My situation is different than yours because you have serious competition, which I don’t. Just a portable 40 miles to the west and Wichita Falls 50 miles to the east has a number of cleaners, but they don’t get too excited to come here and clean carpet, but will drive here in a second for water damage.

    If you’re willing to finance part of the business, that will help. I plan to sell within 5 years and I will owner finance with a serious down payment \ investment from the new owner. Banks will only finance 70% of the appraised value on fixed assets. Good will and great cusomters? Forget about it - they can’t repo them.
  13. renegade_cowboy
    renegade_cowboy

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    People actually retire nowadays? Have you thought about making it a turn key business so its a revenue stream you can suckle off while in your golden years?
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  14. Desk Jockey
    Desk Jockey

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    That's what my father did. I don't know if I have the patience for it but I think if you're not doing something you rot away much faster than if you're active.

    My father came to work everyday up until the cancer had him so weak that he couldn't make it in any longer. He was 83-years old and I think this place kept him going and active. He loved working......I got a little of that but nothing like he did.

    I have no plans to retire, can't afford to. So I'll be doing something, just not sure what.
    Last edited: Mar 22, 2014
  15. Mark Saiger
    Mark Saiger

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    You are going on the speaking circuit Richard!

    You will have a blast and so will everyone that has the chance to see and listen to you!

    Let me know if you need a manager....I would be willing to give it a shot....LOL!

    (I'm really just looking for something to do in the future too, so I though I would try to tag a long :) )
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  16. Desk Jockey
    Desk Jockey

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    We need to do like a Blue Collar Carpet Cleaners Comedy tour. :very_drunk:

    I'll need to work on my standup! :winky:
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  17. ruff
    ruff

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    As always there's no one size fits all. Some companies are worth more and some less.
    And it is right that the company is only worth as much as the buyer is willing to pay for it.

    However, what Tom is describing in his well written/reasoned post is certainly a great deal............. for the buyer. The ruthless bargain hunter that will only buy for pennies for the $. A buyer that only buys from those who have no other choice but to sell both quickly and at rock bottom price.

    Not that I doubt Tom's assessment that that is what's out there.

    So another way will be to plan your selling well in advance and Groom your potential buyer.

    If we take Amy's post, unlike Tom, I think she got a bargain. For one year's work (deductible) she got a great working business with growth potential and the ability to expand it nicely if she markets it well. That business potential for making money will actually increase many times over with the right marketing behind it. In reality it was a good deal and now she has a business that could potentially support her for a very long time. She still would have done right for herself even had she paid more.

    So, don't take the advise (as realistically as it may describe the majority of transactions out there) as the gospel. Take it for an accurate description of the shark infested water out there.
    You may need to learn how to swim with the sharks or accept being eaten alive.
    Last edited: Mar 22, 2014
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  18. Chris A
    Chris A

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    Yeah I would buy businesses all day every day at Tom's numbers and prices, but in almost ten years I've never seen or heard of a deal like that in my hood.
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  19. Art Kelley
    Art Kelley

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    So after jumping through all the hoops Tom puts up, you're actual business is worth $34000 after subtracting the value of your equipment. Two months revenue for an average O/O. After a lifetime of nurturing your business, creating goodwill in your community, busting your ass, grossing a solid $175000/year. Dang. I've got that much debt on my credit cards right now after this slow winter and will pay that off in a few months.
    You're better off not selling, at least to a vulture, and operating this golden goose as a handy retirement cash machine.
  20. Desk Jockey
    Desk Jockey

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    The problem is that when you buy an O/O business much of it is blue sky unless you have locked in contracts. Few of us do, so at the switch much of your data base could potentially leave.

    Used trucks and equipment, unless new and well maintained can be bought for much less than you or I value them for.

    So that tangible is very hard to grab and much harder for a lending institution to be willing to put up the money for unless you have a way of securing it.

    175K that's a chunk of change and yes you should be able to find someone that will want to take over that business. A great starting point for some young buck to build upon. :icon_cool:

    However don't fool yourself either, cashing in is not where the easy money is. The easy money, is being made now. Later you get what the highest bidder offers, not what you want or deserve. :errf:

    Bank away all you can, invest in your retirement now so you're as comfortable as you want to be later.


    Look at Ofer, that dude isn't worried about selling. Hell, he's printing money............yep saw the plates myself in the back of his car. :winky:
    Last edited: Mar 22, 2014
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