How to Buy a Cleaning Business

October 6, 2022

How to Buy a Cleaning Business – What You Need To Know

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How to Buy a Cleaning Business – What You Need To Know

Unconventional Acquisitions

October 6, 2022

Alright, so you’re ready to quit the daydreaming and officially invest in your first (profitable) small business.

No more mind-numbing days spent working away in a cube farm and dreaming of a life of financial freedom. You want more money in the bank and more than 3 weeks vacation every 365 days. 

Lucky for you, here at Unconventional Acquisitions we teach you how to buy boring businesses so you can pocket more than just a little chump change. 

This week we’re rolling up our sleeves and getting down and dirty as we talk about the painfully boring business of cleaning. That’s right, we will today show how to buy a cleaning business.

Told you it was boring… Stay with me though. 

Tell me something people avoid more than scrubbing their toilets? Or washing 2-week-old crusty tomato sauce off their kitchen floor?

Week after week, you probably steer clear of the yellow latex gloves and get comfortable with the thick layer of dust growing on your TV console.

For us, this collective avoidance to clean…just about anything… is a great indicator that the cleaning industry must be booming. And truth be told, it is. 

According to Jobber, the cleaning industry grew 14% in this year alone and is expected to be worth $40.38 billion by 2025

Trends are also showing that the cleaning industry has a 20% yearly growth rate, with 80% of households expected to use house cleaning services by 2024.

With those kinda numbers, there’s no denying that this business may be just what you’re looking for. 

How to Buy a Cleaning Business

Before you head to to scope out a cleaning company to scoop up, here are 3 things you need to consider before buying a residential cleaning business:

1. What is The Value of The Business Assets? 

Before you buy any business, the first thing you need to do is make sure that it’s profitable. That’s obvious.

The next steps are to evaluate the rest of the assets. For a cleaning business, this probably looks like their customer accounts, staff, commercial property, website, and inventory or equipment. 

Here’s the thing though… the *most* important asset to evaluate (besides the whole money thing) is the customers you will acquire when you buy the business. 

Remember that a cleaning business needs customers to operate, so you need to make sure these accounts are worth your while. Without the right accounts you may be better off starting a cleaning business. (That’s not our recommendation.)

Here’s what to look for when reviewing a cleaning business’s customer list:

  • Location–How far is your staff traveling to clean? We want to keep things contained to one area without them driving all over town. This means that all of your customer accounts should be located in the same general area or neighborhood.
  • Frequency–How often are these customers requesting cleaning services? Is it weekly? Bi-weekly? Monthly? The more often, the better. Bonus points if they’re set up with some kind of recurring revenue, like a subscription service or membership model.
  • Job Size & Time–What’s the square footage of the space that’s being cleaned, and how long does it take to get done? We’re looking for large-ish spaces to clean (more money) and a short cleaning time (less overhead).
  • Rates & Pricing–How much is the business charging for the cleaning service? More on this later.

You’ll also want to make sure the business has a healthy portfolio of clients that you’ll hopefully retain once you buy this business. 

Knowing this kind of info will also show you if there are any gaps or room for improvements within the existing business, like increasing rates or combining services.  

2. How Much are They Charging For Their Cleaning Services?

When finding a boring cleaning business to add to your portfolio, you have to look closely at the current rates they are offering for their services. 

Services that are priced too low in the cleaning industry is a big no-no. Here’s why…

Like we said above, you’ll want to retain the previous owner’s customers, which means you can’t just go jacking up the prices by 50% because there’s a new sheriff in town. 

If that’s your strategy, you might as well say bye-bye to all of the accounts you just acquired. Yikes, bro. 

The problem is that most cleaning businesses don’t charge nearly as much as they should be. Most assume that offering lower prices means beating out the competition a.k.a. more customers. 

But the real trick is to compete on quality, not on price. So look for cleaning businesses that aren’t lowballing their services and know the value of their service.

One more thing? With quality services, you’ll also need to focus on quality staff. 

Low-priced services result in low-paid employees that give nothing more than a “meh” performance. 

You need to compensate your staff for MVP performances and this requires higher profits, and striking this up can be a delicate balance. 

3. Do They Have The Systems in Place to Run Efficiently?

Due diligence is something you will always want to do when looking to invest in any small business. 

You may be thinking…”what does that even look like exactly?” For starters, there are a bunch of questions you need to ask yourself and the previous business owner so you know you’re making the right decision from the beginning. 

From there, you gotta take a nice looooooong look at the operational processes that keep the business afloat.

Before you make any moves to purchase (like writing a letter of intent) you need to be 100% sure that everything is running smoothly. 

This involves the painfully boring task of reviewing their operating systems, any software, and their SOPs.

And our philosophy when you’re in the M&A game: No SOPs? No sale. 

You’ll want to look for things like training guides, manuals, and cleaning procedures—from how to properly clean a toilet bowl to deep cleaning upholstery. You want the whole kit and kaboodle. 

These docs are going to show you how the company has trained their staff and how they manage their current client accounts. It’s essentially a sneak peek into how every part of the business works, something you need a very good understanding of if you’re thinking about taking the plunge(r) to buy it. 

Now that you know how to buy a cleaning business, If you’re looking to dive deeper into finding more small (and yawn-inducing) businesses to invest in, we walk you through exactly how to do it in our online course for small business buyers.

And if you’re looking for community and help from the experts as you make your first deal, you should definitely join our mastermind

Yours Unconventionally,

Codie & Ryan

Co-founder – Unconventional Acquisitions

If you want to learn more about how to find and buy businesses, check out these articles👇

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