Ask the Building Maintenance Experts
Solutions for Your Toughest Problems

ICAN  Q & A  Home

Saturday, December 20, 2014

Question

I am thinking of purchasing a janitorial business that would include staff and a number of supervisors, with low attrition of staff, as well as the majority of accounts that have been around for five years or more. The revenue is consistent over time, though the margins appear to be lower than average for this size of operation. My question is, what should I be on the lookout for as I review this business?


Answer

In addition to analyzing and verifying all the financial data, I would appraise the non-tangible value of the good will. Accounts come and go. If you are serious about the business, visit the largest and most profitable accounts at night (sign a non-compete, non-disclosure contract if necessary). Determine if any customers are high maintenance and how smoothly the operation runs.
The next step would be to ask the seller if you could go with him on a customer visit. If things are progressing, mention to the customer you are considering working in and managing the business including his account. Once you have the customerís confidence, tell him you are purchasing the business. Communicate with integrity, yet remember: a business divorce and re-marriage often functions best when performed in stages.
Prior to the purchase; evaluate customer fit. Does rapport occur naturally? Does the current service level match customer expectations? Have past QC inspection reports been satisfactory? What complaints have been received in the past? Have customer service issues been handled in a timely manner? Why are margins low? Is the company known for low-ball pricing?
Find out what makes the business tick. Ask for a 90-day guarantee from the seller that each account will switch over or the purchase price will be reduced. That puts pressure on the seller to work for a smooth transition.
Gary Clipperton
National Pro Clean Corp.
(719) 598-5112
www.nationalproclean.com