I'm curious if anyone has bought or sold a pressure washing business, and if so, how a price was set. This is my third year pressure washing part-time in the Chicago area, and my full-time job now requires 100% travel (Monday - Friday) every week. This doens't allow me to devote the amount of time I would like to the pressure washing work. Instead of letting the company slowly waste away, I may be interested in selling everything from the equipment and client list to the corporation and website. Any information or feedback would be appreciated!
Anyone bought or sold a pressure washing business?
- Thread starter krisp23
- Start date
Grant
Administrator
Tim,
I think you might be hard pressed to get a sale price that is 4 or 5 times your annual gross, if you get an offer that good jump on it!
I don't know where you are as your profile just has "c" but in California I see businesses sell for about their annual sales gross give or take a few percent.
Krisp,
As with all service businesses the equipment, web site and even the corporate package adds very little to the only real item for sale being the good will of a good customer list with contracts.
Good luck to both of you!
I think you might be hard pressed to get a sale price that is 4 or 5 times your annual gross, if you get an offer that good jump on it!
I don't know where you are as your profile just has "c" but in California I see businesses sell for about their annual sales gross give or take a few percent.
Krisp,
As with all service businesses the equipment, web site and even the corporate package adds very little to the only real item for sale being the good will of a good customer list with contracts.
Good luck to both of you!
I have purchased two such businesses. Pricing is a lot more complicated than just applying a factor, especially to gross revenue. To get a ball park number, estimate your equipment value (what could you get for it on a non-distressed basis) and your ACF, which is before tax NI less depreciation, amortization, interest. Value of business will probably be the equipment value plus 1-2 times ACF. The range is so wide because of factors such as: are you doing the work, or do you have people doing it, quality of accounts, strength of competition, etc. Good luck.
jschessler
New member
price
Take busines including equipment and employees, subtract all expenses and mutiply by 4 or 5 you get a rough estimate of the value. But you must include the equipment. or subtract everything except the equipment, multiply by 5 and subtract the cost of the equipment from the price.
Take busines including equipment and employees, subtract all expenses and mutiply by 4 or 5 you get a rough estimate of the value. But you must include the equipment. or subtract everything except the equipment, multiply by 5 and subtract the cost of the equipment from the price.
Justin
Member
I have done both also.
With pressure washing and many other services, value is only what a buyer is willing to pay. It's like buying blue skys, how much is it worth?
Length of time in business and steady accounts mean something. However, those accounts can leave just as fast as they came. Selling a business such as yours would mean spending some time with the buyer and introducing them to all the customers and basically give everyone involved a level of comfort. Your wash job and his wash job will be different no matter what you do.
This type of business is hard to sell. You could sell the equipment and maybe a percentage of the business for a period of time or just sell the equipment and work a sales commission on the accounts you have.
Another thing to consider is the fact that you may wash something for a different price than what I would and therefore a change in price may lose some accounts.
Many things to consider but the bottom line is, it's worth what you can sell it for. It's that simple. There is no formula for a business value and if there is, it's wrong so don't base it on that. It may be worth a lot to the right person and to another it wouldn't be worth looking into.
I wish you luck!
With pressure washing and many other services, value is only what a buyer is willing to pay. It's like buying blue skys, how much is it worth?
Length of time in business and steady accounts mean something. However, those accounts can leave just as fast as they came. Selling a business such as yours would mean spending some time with the buyer and introducing them to all the customers and basically give everyone involved a level of comfort. Your wash job and his wash job will be different no matter what you do.
This type of business is hard to sell. You could sell the equipment and maybe a percentage of the business for a period of time or just sell the equipment and work a sales commission on the accounts you have.
Another thing to consider is the fact that you may wash something for a different price than what I would and therefore a change in price may lose some accounts.
Many things to consider but the bottom line is, it's worth what you can sell it for. It's that simple. There is no formula for a business value and if there is, it's wrong so don't base it on that. It may be worth a lot to the right person and to another it wouldn't be worth looking into.
I wish you luck!
Tim Hayes
Believe me - a million dollars is not enough to retire on, unless its invested. My janitorial business gross over a million the last couple of years - its a lot, but if you want a $300,000.00 home and $40,000 vehicles - its not enough. If you want to live on an yearly income of $30,000.00 - $40,000.00 a year - you can retire with a million, if you invest it the right way. just my 2cents
Believe me - a million dollars is not enough to retire on, unless its invested. My janitorial business gross over a million the last couple of years - its a lot, but if you want a $300,000.00 home and $40,000 vehicles - its not enough. If you want to live on an yearly income of $30,000.00 - $40,000.00 a year - you can retire with a million, if you invest it the right way. just my 2cents
Tim,there are many ways to look at things,with a million cash in the bank,you can use the money as collateral to invest in a new business,live off the interest or buy a 600,000 house,80,000 car and a 100,000 boat,then work part time just to make extra money to travel on,and pay utilities,to me that would be retirement,i know people who make millions a year and spend so much money they cant afford to retire,its all relative,i dont want to be the richest man in america i just want security. to know that everything i need to live is paid for and asset protected.
i know a gentleman who owns a drywall company in maryland that employees 15 people that generates 1mill in annual sales and the owner only takes home 100k and was bragging that it was his best year,to me thats just not worth it to run a business of that caliber,our sales are somewhat a meager 200k as compared to others but our net profit is 50%. im sure this number can be debated into a thousand different arguments,we run things very efficiently,management is tight,we do everything in house and manufacture our own cleaning products, and do not waste any of our resources,our productivity is high,and our market is focused,if i cant grow and keep profit magins at the same percentage,i see no reason to deal with the extra effort.
i belive in high profit margins not gross sales numbers. thats just what i been taught. 80/20.
maybe in a couple more years i will see things differently,i know i see things more differently now than i did 2 years ago.
i know a gentleman who owns a drywall company in maryland that employees 15 people that generates 1mill in annual sales and the owner only takes home 100k and was bragging that it was his best year,to me thats just not worth it to run a business of that caliber,our sales are somewhat a meager 200k as compared to others but our net profit is 50%. im sure this number can be debated into a thousand different arguments,we run things very efficiently,management is tight,we do everything in house and manufacture our own cleaning products, and do not waste any of our resources,our productivity is high,and our market is focused,if i cant grow and keep profit magins at the same percentage,i see no reason to deal with the extra effort.
i belive in high profit margins not gross sales numbers. thats just what i been taught. 80/20.
maybe in a couple more years i will see things differently,i know i see things more differently now than i did 2 years ago.
grant,there are more things that are just as valuable as annual sales figures such as management,business strategies,proprietary information,and name recognition.
i agree purchasing a business that has low profit margins and low employee productivityat x amount of annual sales is not as great of a bargain compared to a company that has high productivity,high profit margins and valuable intellectual property with smaller gross sales numbers.
i agree purchasing a business that has low profit margins and low employee productivityat x amount of annual sales is not as great of a bargain compared to a company that has high productivity,high profit margins and valuable intellectual property with smaller gross sales numbers.
Clean County PW
Active member
Timhays,
The two big differences between a company like the one that grosses over a million and has a much lower profit margin then your company is this.....That company most likely is worth alot more then yours so when time comes to sell it the owner will make a bundle.......and also the larger the company the lower the profit margin. This is just the way business works.
Take a guy that is a one man operation nobody will have as high as a profit margin as he will but a ton of others will make a ton more then he ever can and in business usually the bottom line is the money you can put into your pocket and how much your business is worth when you hang it up.
Another thing about that $600,000 house..here a house like that is quite common and its usually not much of a house since everything is so expensive in my neck of the wood...but the taxes on average will run you $15,000 or so a year so a Million dollars won't go as far as people would like it to go....at least not here unfortunetly.
The two big differences between a company like the one that grosses over a million and has a much lower profit margin then your company is this.....That company most likely is worth alot more then yours so when time comes to sell it the owner will make a bundle.......and also the larger the company the lower the profit margin. This is just the way business works.
Take a guy that is a one man operation nobody will have as high as a profit margin as he will but a ton of others will make a ton more then he ever can and in business usually the bottom line is the money you can put into your pocket and how much your business is worth when you hang it up.
Another thing about that $600,000 house..here a house like that is quite common and its usually not much of a house since everything is so expensive in my neck of the wood...but the taxes on average will run you $15,000 or so a year so a Million dollars won't go as far as people would like it to go....at least not here unfortunetly.
oneness
Member
John:
Very good point about the taxes. People forget about that.
I do agree with tim, though...you can retire with $1,000,000.00 in the bank, depending on how old you are when you retire, what kind of lifestyle you desire in retirement, and of course, the economy. Lots of seniors found themselves back in the workforce in 2001 and 2002 because suddenly the investement income from their portfolio got much smaller. A million is still a heck of a lot of money, and even if you figure a low average of 5% annual return on your money, that's $50k/year, not to mention social security, 401k, etc, if you have any of that. Lots of folks live rather comfortably on $50k/year.
If you figure a more accurate 10% average return on your money, you can live off 1/2 of that and let the other half grow...meaning your return will continue to grow.
Very good point about the taxes. People forget about that.
I do agree with tim, though...you can retire with $1,000,000.00 in the bank, depending on how old you are when you retire, what kind of lifestyle you desire in retirement, and of course, the economy. Lots of seniors found themselves back in the workforce in 2001 and 2002 because suddenly the investement income from their portfolio got much smaller. A million is still a heck of a lot of money, and even if you figure a low average of 5% annual return on your money, that's $50k/year, not to mention social security, 401k, etc, if you have any of that. Lots of folks live rather comfortably on $50k/year.
If you figure a more accurate 10% average return on your money, you can live off 1/2 of that and let the other half grow...meaning your return will continue to grow.
once an entrepreneur always an entrepreneur,just cause you sell out for a million cash,doesnt mean you will need that the rest of your life.
your forecast on the big business is realistic but not the way i want to live.
i know a gentleman who owns local garbage collection company that operates for the cities and counties. while business was booming and the vehicle fleet was in need of replacement he sold the company for 10 million dollars and signed a 2 year no compete agreement,after 2 years he was awarded the bid for the garbage collection again and retook the business back for pennies on the dollar.
ps around here you can get a nice 8000 sq foot house in upscale neighborhood for 600k,or something nice on the lake. thats why most of the people who live in these houses are from up north or california.
your forecast on the big business is realistic but not the way i want to live.
i know a gentleman who owns local garbage collection company that operates for the cities and counties. while business was booming and the vehicle fleet was in need of replacement he sold the company for 10 million dollars and signed a 2 year no compete agreement,after 2 years he was awarded the bid for the garbage collection again and retook the business back for pennies on the dollar.
ps around here you can get a nice 8000 sq foot house in upscale neighborhood for 600k,or something nice on the lake. thats why most of the people who live in these houses are from up north or california.
no i am refferring to cutting edge and innovative ideas and proccesses that would not be standard practice in this industry,that obviously give one certain advantages in the marketplace,as well as rights to patents and product sales that have allready been put into place for upcoming years..
the list goes on really no two businesses are run exactly the same,and to spend many years building a successful business to base its selling potential on the gross sales number is not logical.
for instance i could go out and lowball every account in my state to get the cash flow,purchase the cheapest equipment,and vehicles for a fleet,hire cheap labor for manpower and sell the business within 6 months for our 1 million dollar gross sales figure....1 that makes no sense,because this example of a business has no real value,just current cash flow.there is no vision or strategy for where the company is going,or for assuring they will have the strength to survive the market for years to come.
create your own market,now theres real value
there are some companies who have very huge potential in the marketplace that are on ground floor opportunities presently,those are worth more than the gross sales number,these types of businesses have greater future profit potential.
Grant,holding a wand and spraying water may not be rocket science but running a lucrative business is in my opinion.
the list goes on really no two businesses are run exactly the same,and to spend many years building a successful business to base its selling potential on the gross sales number is not logical.
for instance i could go out and lowball every account in my state to get the cash flow,purchase the cheapest equipment,and vehicles for a fleet,hire cheap labor for manpower and sell the business within 6 months for our 1 million dollar gross sales figure....1 that makes no sense,because this example of a business has no real value,just current cash flow.there is no vision or strategy for where the company is going,or for assuring they will have the strength to survive the market for years to come.
create your own market,now theres real value
there are some companies who have very huge potential in the marketplace that are on ground floor opportunities presently,those are worth more than the gross sales number,these types of businesses have greater future profit potential.
Grant,holding a wand and spraying water may not be rocket science but running a lucrative business is in my opinion.
Justin
Member
so what ever happened to the tread starter?
Seems like there is some intelligent conversation about business and net worth and whether or not you can retire with a million dollars or not. A million is a nice sum of money if it was tax free and I'm sure some of you can and would retire from this and live happily ever after.
Let's look at retirement a little though. For me, I will never, ever retire. There will always be that burning desire to achieve greatness that many of us entreprenuers have. Retirement in my opinion is the beginning of death. You see it all the time, once a person retires, they begin to die. For some it happens sooner than for others but after retirement from a career, life all of the sudden loses purpose and meaning. Retirement means you've accomplished some or most of your goals and it's time to sit back and begin to die. Of course I'm not being literal but it does happen. I've seen it with folks that retire. That's my take on retirement.
As far as business value and worth, again, there is no formula and there is no right answer. When you take a garbage company for instance (a little inside information)... Most smaller companies in the garbage business are started with the intent to sell to a bigger player. However, the bigger player in the garbage business at will can put a small company under and here is how it works... Take a large disposal company near you, wherever you are. What can and sometimes does happen is the larger company pools a number of salesmen together in your town where there are a couple smaller companies doing all the business. The big player firsts offers to buy the business for a set amount. If the smaller companies aren't willing to sell, the big guy figures the cost of buying versus the cost of taking. The taking process involves organizing a sales force that will go out and sell commercial and residential accounts for much less than what they are paying now. Typically, these big guys are going into this knowing that the price they are getting from the customers will be a significant loss to them and they are prepared for that. Again, it's measured by the cost of buying or taking. Both take money and time. Now we have Jim and John company that was paying $140.00 a month for disposal and the big guy comes in and gives them a price for $65.00.... less than half of what they were paying. The big guy gets the account. Of course, it's a loss for the big guy but that has all be calculated well in advance. What happens now is the smaller company starts to lose accounts to the lowballers and when the ball starts rolling, depending on the financial strength of the smaller company a month or two with little or no cash flow could sink the smaller company. Of course this is all calculated and measured prior to the big guy stepping in. Little guy with no cashflow folds up fast and wishes he would have taken the offer in the beginning. Now it's too late. Big guy, once little guy folds up in bankruptsy then raises his prices and has eliminated competition. The customer is limited as far as where they can go so they pay. Now the big guy after 3-5 years begins turning a profit which has also been calculated. Soon they have 80% of all the disposal business in the area. Either way, the big guy wins in the end and the little guy is forced out of business. This is just a scenario but it's done in a lot of businesses.
If I wanted or was interested in the Chicago area pressure washing Krisps accounts and was big enough, what theoretically could be done is first look at to purchase and gather information, then go in and lowball. Krisp, with no or very little cashflow for a month would either have to find new accounts or would close shop. I think this is referred to as a hostile take over.
Now off the subject but in line with Krisps original question... I have a couple customers in the Chicago area that may or may not be interested in those accounts. I could put him in contact with these people but I'd be interested first in knowing volume and rough prices of what Krisp is charging for the services. If Krisp isn't or hasn't been charging enough for these accounts because he is a part-timer, then it would be cut and dry. However if Krisp has something there and the proposal is profitable, then one of my guys may be interested in the accounts. The equipment is another story. What one person uses to wash with may or may not be suitable for another. The equipment would more than likely have to be sold separately.
There's my 2 cents on a few things.
Seems like there is some intelligent conversation about business and net worth and whether or not you can retire with a million dollars or not. A million is a nice sum of money if it was tax free and I'm sure some of you can and would retire from this and live happily ever after.
Let's look at retirement a little though. For me, I will never, ever retire. There will always be that burning desire to achieve greatness that many of us entreprenuers have. Retirement in my opinion is the beginning of death. You see it all the time, once a person retires, they begin to die. For some it happens sooner than for others but after retirement from a career, life all of the sudden loses purpose and meaning. Retirement means you've accomplished some or most of your goals and it's time to sit back and begin to die. Of course I'm not being literal but it does happen. I've seen it with folks that retire. That's my take on retirement.
As far as business value and worth, again, there is no formula and there is no right answer. When you take a garbage company for instance (a little inside information)... Most smaller companies in the garbage business are started with the intent to sell to a bigger player. However, the bigger player in the garbage business at will can put a small company under and here is how it works... Take a large disposal company near you, wherever you are. What can and sometimes does happen is the larger company pools a number of salesmen together in your town where there are a couple smaller companies doing all the business. The big player firsts offers to buy the business for a set amount. If the smaller companies aren't willing to sell, the big guy figures the cost of buying versus the cost of taking. The taking process involves organizing a sales force that will go out and sell commercial and residential accounts for much less than what they are paying now. Typically, these big guys are going into this knowing that the price they are getting from the customers will be a significant loss to them and they are prepared for that. Again, it's measured by the cost of buying or taking. Both take money and time. Now we have Jim and John company that was paying $140.00 a month for disposal and the big guy comes in and gives them a price for $65.00.... less than half of what they were paying. The big guy gets the account. Of course, it's a loss for the big guy but that has all be calculated well in advance. What happens now is the smaller company starts to lose accounts to the lowballers and when the ball starts rolling, depending on the financial strength of the smaller company a month or two with little or no cash flow could sink the smaller company. Of course this is all calculated and measured prior to the big guy stepping in. Little guy with no cashflow folds up fast and wishes he would have taken the offer in the beginning. Now it's too late. Big guy, once little guy folds up in bankruptsy then raises his prices and has eliminated competition. The customer is limited as far as where they can go so they pay. Now the big guy after 3-5 years begins turning a profit which has also been calculated. Soon they have 80% of all the disposal business in the area. Either way, the big guy wins in the end and the little guy is forced out of business. This is just a scenario but it's done in a lot of businesses.
If I wanted or was interested in the Chicago area pressure washing Krisps accounts and was big enough, what theoretically could be done is first look at to purchase and gather information, then go in and lowball. Krisp, with no or very little cashflow for a month would either have to find new accounts or would close shop. I think this is referred to as a hostile take over.
Now off the subject but in line with Krisps original question... I have a couple customers in the Chicago area that may or may not be interested in those accounts. I could put him in contact with these people but I'd be interested first in knowing volume and rough prices of what Krisp is charging for the services. If Krisp isn't or hasn't been charging enough for these accounts because he is a part-timer, then it would be cut and dry. However if Krisp has something there and the proposal is profitable, then one of my guys may be interested in the accounts. The equipment is another story. What one person uses to wash with may or may not be suitable for another. The equipment would more than likely have to be sold separately.
There's my 2 cents on a few things.