Opportunities
Office Janitorial with $27K/mo in Contracts - Owner Only Manages
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Specifications
Over $27,000 in monthly contracts split between 27 clients with 40 buildings net this commercial cleaning business $300,000 in sales. Begun in 2002, this company has grown to include 13 cleaners who provide janitorial services on weeknights and Saturdays. Each client receives a walk-through to ensure that their needs are met by a tailor-made cleaning plan. No two cleaning schedules are the same, so in addition to regular services, clients are offered carpet cleaning, floor resurfacing and window cleaning as requested.
Due to ailing parents, the seller is planning to move to Los Angeles, but his dedication to customer service and engendering loyalty has built a strong business. However, an easy area for growth would be working with property managers to gain more clients. Commercial cleaning is a strong industry, and a growth plan could include offering services to apartment buildings for cleaning between renters.
This business is perfect for someone wanting to manage a profitable company without being involved in labor. Currently, the owner trains employees, bids jobs and oversees quality control. This is a great opportunity to build up a growing service-based business.
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Business Highlights
- Year Established: 2002
- Location and Service Area: Omaha
- Number of Clients: 27 customers/month with 40 buildings cleaned each week; 45% of clients have been with the company for 4.5 years
- Services: primarily janitorial with some carpet cleaning, floor resurfacing, and window washing (subcontracted work)
- Reason for Selling: Moving to Los Angeles
- Employees: 13 cleaners averaging 25-30 hours/week working evenings and Saturdays
- Hours: employees work from 5pm – 11pm cleaning 2-3 buildings per night
- Growth Opportunities: bid more jobs; work with property managers; build website
- Current Owner’s Responsibilities: employee training, job bids, quality control
Financial Highlights
- List Price: $249,000
- 2016 Gross Sales: $309,694
- 2016 Cash Flow: $85,690
- YOY Growth: Consistent sales over $300,000, with profit margins ranging from 24-28% since 2014
- Assets Included in Purchase: $42,000
- Equipment: $15,000 – vacuums, mop buckets & poles, carts, durable goods
- Intangible Assets: client list, reputation and good name
- Contracts: $27,000 – 30 clients with average contracts between $900 - $1,200 per month
*amounts may vary
Cash Flow Analysis
| Description of Financial Statement | P&L Statement January - May | P&L Statement January - December | Tax Return | Tax Return | Notes |
| 2017 | 2016 | 2016 | 2015 | ||
| GROSS SALES | $123,979 | $309,694 | $302,692 | $301,678 | |
| Net Income Shown on Financial Statement | $17,149 | $28,602 | $24,859 | $38,258 | |
| ADDBACKS | |||||
| Compensation to Owner | $18,550 | $42,320 | $43,774 | $41,150 | |
| 11% Tax on total W2 Salaries | $2,041 | $4,655 | $4,815 | $4,527 | |
| Meals & Entertainment | $807 | $3,509 | $1,068 | $853 | Personal expenses |
| Health Insurance | $2,649 | $6,593 | $0 | $0 | Personal expense - not onward going |
| Interest | $171 | $11 | $0 | $0 | Non-onward going expense |
| TOTAL ADDBACKS | $24,218 | $57,088 | $49,657 | $46,530 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $41,367 | $85,690 | $74,516 | $84,788 | |
| Profit Margin | 33.37 % | 27.67 % | 24.62 % | 28.11 % |
- 27% profit margin in 2016
- Consistent gross sales over $300,000
Services
Currently there are 27 clients under contract with 40 buildings between them. Each contract grosses between $900 - $1,200 per month. Of these clients, 45% have been under contract for 4.5 years.
Each client receives a walk-through during which the space can be assessed and the cleaning needs can be addressed. No two spaces are alike, so each customer is given a tailor-made schedule for basic janitorial services. Should they require additional cleaning, also available is:
- Carpet cleaning
- Floor resurfacing
- Window washing
These secondary services are subcontracted out to qualified individuals.
Mission Statement
It is our mission to pay attention to all the details. Your employees, clients and special visitors will see that your environment reflects the standards you hold inside. We want to create a clean and orderly environment, so that you and your staff can feel good about where you work and concentrate on other things besides cleaning. We also take care that bacteria and microbes are minimized in the process of cleaning. I personally interview, background check, and hire those of only the highest character and work ethic. Thorough training and supervision bring best results.
I keep in direct contact with our EXPERIENCED employees to build relationships, understanding, skills and attitude. This has proven to keep our average retention rate at 4 times the industry average! This means that you will not have a large flow of “strangers” or “franchisees” roaming around your staff and personal belongings.
We also use top quality Betco cleaning products to ensure the best results.
Market & Growth Outlook
- Industry outlook is strong as commercial cleaners will always be in demand
- Growth exists in bidding more jobs and adding more services
- Extra services are subcontracted, but advertising these services more could create more demand and the need for permanent contractors for window washing, floor resurfacing and carpet cleaning
- A new owner should also consider working with property managers
- Apartment buildings need cleaning in between renters, and Omaha has an abundance of apartment complexes
- Build a website
- Currently there is no company website, but with a simple platform a new owner could create a digital space for potential clients to search for and find the business
Valuation Details
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business.
The formula used is as follows:
2016 Cash Flow x Prescribed Multiple = Fair Market Value
Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20-question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
With this information, the computation is as follows:
$85,690 x 3 = $257,070
The Fair Market Value of this business is $249,000, a discount of $8,000 due to the owner's need to relocate to Los Angeles.
Funding Example
Purchase Price: $249,000
10% Buyer Down Payment: $24,900
10% Seller Financing: $24,900
80% Bank Loan: $199,200
Seller Financing 5-year term at a rate of 4.5% equals a monthly loan payment of $464.
Bank Loan 7-year term at a rate of 5.25% equals a monthly loan payment of $2,839.
After business expenses and loan payments, a buyer with a 10% down payment of $24,900 would retain a profit of $46,052, a 184% return on investment in the first year!
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $249,000 with the terms listed above, the coverage ratio is 2.16.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857