I’ve been currently working under a guy in my town who’s paying me hourly and gaining experience pressure washing and learning the ins and outs of the business. He Only does flat work and one job a day maximum and is going to retire at the end of this season. He wants to sell me his business for 50k which for the last four years has grossed 75k. The business includes around a 1200 person client list, 2 4gpm machines, a trailer a name and a website and phone number. I want to focus on house washing in addition to flat work and possibly roofs down the road. My question for you guys is this a good deal and worth that amount of money or am I better off trying to build my own client base and use the 50,000 for advertising etc ? your feedback is much appreciated
Without guaranteed contracts for $50K a year there’s zero chance I’d buy anyone’s business.
Just my opinion but I’d pass.
If you seriously consider buying a business from anyone have it valued/appraised by a third party experienced in that field (appraising).
1200 person client list and only one job a day maximum is a little odd, how many are leads, and how many are clients… does he have addresses for all of the clients? Phone numbers? E-mails? only flatwork is also strange; however if all this is true it sounds like a good deal. I have a hard time believing he’s done only flat work, one job a day, and grossed $75k with 4 GPM machines on top of it. I never had $50k to just throw at marketing so I’m not sure how far that would get you with a brand new business.
Depends how you value a business, current numbers or future potential. 2 different sets of metrics and mindsets. If he’s only doing concrete turning over 75k then what do those numbers look like when you talk 300 customers into say a $200 house wash every year or 200 customers that want there roofs or gutters done or all 3 every so often on top of your own marketing strategy’s. I wouldn’t say the asking price is too much but everyone has a different level of risk there willing to take. Now of course there’s a chance he’s pulled his numbers out of his crevice, but that’s a whole different thing.
The 1200 client list was compiled over 14 years of running the business. He has invoices and addresses of these people and a lot of emails. He just never wanted to get involved with washing houses and has just stuck to hard scapes. The one job a day thing is so he can finish in a few hours and go fishing or whatever. He’s been very transparent with his recordkeeping. He’s even started telling current clients that I’m going to be taking over the baton and introducing me to these people . No I don’t have $50,000 to throw at advertising But if I did I wonder if could I build that type of a client list in short amount of time. This seems like a way to skip that long process and would be more of a turn key situation. I’m thinking about taking this customer list and then adding house washes to it and it wouldn’t take much to build on that profit. That’s also assuming most of these customers will use me and not go to somebody else
I would say $10k $15k max if that. Most here will probably say $0. You could go out on your own and do $50k minimum your first year.
It may be worth it if he’s got a good reputation and customers like him and you get everything including equipment, etc. Plus will he do some type of owner financing where he takes a % of your revenue. Depending on where you live, most people only get their drives done every few years so if that’s all he was doing, then he would need a large list. How’s his pricing? There are a lot of things to look at. Save enough money to get bigger equipment though,
14 years? I’d be cautious of how many of his clients are still actual clients. I clean quite a few houses that are prepping for a house sale, so those clients are a one time deal usually. If they stay local, then I’m usually a shoe in on the next house, but if they are moving out of the area well then that relationship is likely over. They always say they’ll leave my card on the fridge when they move out, but you know how that goes.
Consider starting your own business, buy the rights to any of his marketing materials (have his website redirect to yours, phone numbers are rerouted to yours, etc, and then maybe strike a royalties deal with the original owner that for every client you have that states they are a repeat and you that you can verify that.
You are the one working with the guy, so you should know if his business is legit or not - meaning do you see yourself being profitable if the homeowners cut the check directly to you instead of the current business owner? Maybe the guy hasn’t shared his pricing with you. You’ll need to figure that out and see if that is something you can live off of because if he’s cleaning flat surfaces for $.06 a sq ft and then you take over and start charging $.018 a sq ft I bet those repeat customers will be outta there.
If you were going to start up a business yourself how much would it cost you? Figure that out and go from there.
I’m all in favor of paying him something, but I don’t know if $50k is that number. I’d second the $10-15k area.
I’m not a real experienced business operator here, but just a small-time guy. But this is the approach I would have if I was presented such an offer.
If you are only working one job a day now it won’t take long for you to build that into 2 or 3 jobs a day if you add siding and roofs. Save the $50k. Use $10 or less to get a small setup and start cleaning. In a few years you’ll be busy and debt free. That guy is nuts asking $50k. He’s emotionally connected to the business he built and being unrealistic. It’s worth the equipment and maybe slightly more for client list of whom only call you once every 3 to 4 years. Just buy his equipment.
How many of those clients are return customers? Will they come back if they find out there is a new owner? For pressure washing services that total number of clients over 14 years seems low to me.
Sounds like you would be buying his hobby, and not a business to me.
Something seems off with the numbers. What is his average ticket price? Let’s say $250. That would be 300 clients a year for $75k. So unless a lot of his work is recurring the client list seems low.
I value it for what his equipment is worth, plus some of the amount for guaranteed contracted cleanings.
Using last season as an example he did 260 jobs. 200 were return customers. He uses this as a selling point to me. He claims his business is based on about 60% return rate. and the other 40% are through craigslist adds and eddm. Hes very open with his pricing. One of his specials is 500sft driveway for $80 which is 16 cents a sqf .Then anything after that is 18 cents sqf ( strictly talking about predictable surfaces, driveways, pathways ect.) Average ticket last year was around $275. Sometimes he will have a huge driveway, retaining walls, pathways and the ticket can be $600. Right now he pays me hourly $30 dollars an hour. He sends me the invoice through email and i go do the job with my own equipment and im a 1099 employee. I have my own business as well where i do house washing and pw at my own rate. I have been working for this gentelman to gain experience and how the business works but he keeps dangling the 50k price tag out there and im a little conserned thats to high. He did say i could put 10k down on the business and pay 10% of gross revenue to pay the remaining 40k off. which would be interest free. So if i make 75k in the first year after buying the business i would essentially pay him 7500 a year or more based on my revenue untill paid off. I like the royalty senerio better because its not a guarantee how many clients i will retain.
Great points. HIs business is definatly legit. He is just really small potatoes and had been a one man show untill he brought me on last season because he wants to retire. He’s a very honest and transperent guy when it comes to showing me his prices and even his client list. Ive even done estimates with his priving structure for him when he was busy. I really like your royalty idea. Because technically the only thing im really buying that has concrete monatary value is his equipment and trailer. 2 4gm comercial grade machines, 2 surface cleaners, hoses and wands ect. I have two machines myself so i really dont need 4 anyways. The cleint list could be benificial and they may retain me but its a risk. How do you put a price tag on that cleint list? Thats why im here and have appreciated the feedback so far.
$75k per year for each of the past 4 years or $75K over a 4 year period? How saturated is your market? If there aren’t that many washers around, I would lean towards doing my own thing. $50K goes a long way with continued advertising/equipment over a few years. Can you study his list of people and see the amount of repeat business in the past few years? If he does flat work only, who is washing the houses/roofs of his customers?
When a business changes ownership, some people see that as a good time to find someone new. It might be different if you had been with him for a few years and gotten to know the customers (repeat customers) and them know you. The change-over would be a lot smoother with less drop-off. No contracts = no guarantee.
terrible idea. That list is worthless unless they’re recurring. Two 4gpm machines and a trailer is nothing. The website could be something depending on how well optimized it is and how well it comes up with gmb. Even then its nowhere near 50k.
You can start one incredible pressure washing business for 50k.
@Racer suggestion is a good one.
How about proposing to take his client list and giving him 10% of any jobs you do from that list for the next 3 years.
Adds up to about 7k of income each year for him if you do the same amount of business from that list as he was.
You have your own machines so he could sell his setup and get immediate cash.
If you want to work harder than he was you should be able to grow many more clients from referrals and your own sourcing and if his client list doesn’t provide like he reckons then you are not out of pocket.
Maybe give him $5k upfront but that includes website and lists and then 20% on his customers for 3 years. Most companies that have outside sales even up paying about 15% so not much difference. You’d need to provide him good, scrupulous accounting for them, to be fair to him. That way he’d get the number he wanted if they stayed around and would also encourage him to make sure he helps you keep.
I guess my take is different, as it will likely be in different areas of the country. In some states it is quite common to “buy” a competitor’s book and equipment, with the book being the bigger slice of the sale. Simply put it is an acquisition, which is common in all other businesses, but when it comes to construction people get sketchy. Do what you think you should, but do what every major business does, look at the books before buying (business taxes for 5 years). You could theoretically “tender” an offer to him subject to review of finances equipment, etc. I’d also have a lawyer review and write it up, so that he doesn’t miraculously need to come back to work because of some exceptional circumstance. I’d also write up about him not doing “side jobs” in your area. 10 years of cultivating relationships and clients is worth something, how much is the question. The equipment, unless new, doesn’t seem worth much to me. Now if he has 8 stainless steel electric reels, multiple good guns, rolls of hoses, fittings galore, an enclosed trailer or truck, chemicals out the whazoo,a couple of surface cleaners, well that does add up. Everyone here can do that math quickly figuring great condition at .50 on the dollar.
Good luck to you and thanks for posting this, haven’t seen this type of post in awhile. I like reading through everyone’s rationale for doing it or not doing it and how they would proceed.
I would throw that 50k at advertising instead. If pricing cpa correctly and getting a new client for around $10 you could have 5000 potential new clients. If you spend 25$ per acquiring a new client then you could have 2000 new clients. Still more and better then that stale 1200 name list. But that is only my own 2 cents. I could be all wrong.
I’m still lurking an dlearning from the WCR forum but here’s my $0.02
I bought a window cleaning business 3.5 yrs ago as my exit from education. I got the vehicle, client list (4,000+), phone number, equipment, logo tardemark, etc. I paid similar to what your boss is asking. I was estatic-I had clients already!!! But I really did not. He grossed the same as your boss but ran a sorry business and was losing money overall. My payment was is exit strategy and all he had to show for all his years of work. He’s now a handyman.
I replaced every single piece of equipment and the vehicle within 6 months. You better know how to fix those machines because they will quit working or die faster than a aayfly. The client list has been cleaned up and of the original I have 350 that have had any sort of commincation with me in 3.5 years!
I advise you to spend to spend far less money and build a great PW trailer/truck, spend money on advertising and knock on doors.
Someone said no more than $5-15k. Offer him $5k for his phone number nad let him sale the client list and website (minus the number) to someone else.
