[pristineclean]

I started a cleaning business in June 03, and managed to obtain a very healthy turnover and profit for year one. Now I'm halfway through year two, ytd is more than year one, and I'm starting to really struggle in managing the business. 

I think I have two options, either find an experienced equity partner, or sell at a price which would reflect the short life of the company. Any advice on either of these options would be warmly appreciated, probably from people who have been in the same situation.

[The Great One]

Hi

Another option is to take on a 'manager'. This person would take on the actual visiting of the site you have and make sure they are run properly.

I am not saying you never go out and visit but this person would take on a lot of work and you would still be in control of your business.

Well done by the way!

Regards

Martin

[Fox]

Hi

I am sure you will not be surprised by this question - what do you call a healthy turnover?

Being such a young Company will go against the selling price if that is your choice.  As already suggested good Management could solve the problem but from your question I imagine you have already investigated this route and decided it is not the way for you.

Make sure it is not just a stage of 'I've had enough' because we all go through that and it will pass, could you please give more info on the basics of your company and why and how you have come to this decision?  Might help with more constructive answers.

Fox 

[martin19842]

hi there,

a difficult question requiring a lot of thought, before you decide to do anything.  I have set up a business after being in commercial cleaning for about 6 years.  Our forecasts show that year 2 and 3 will be a dramtic increase in year 1.  And at the moment we are at forecast for year 1, with planning compiled by two independant people, one of those being an FD.  Therefore we are in a position to plan for the future ie management, day to day business decisions etc.

therefore my opinion for what is worth, is keep a hold of what you have, this industry offers the opportunity to set yourself up for life.  By bringing in an equity partner, you are potentially giving a percentage of that away.  And that partner will then benefit from day one of their involvement in the business.

Remember back to your first day in the business (enough said)

therefore an ideal route would be to bring in a manager, or someone who isnt a manager and then train them up to do the job that you want them to do.  Also you can then structure their reward package so that they may receive a bonus for profit performance.  The benefir of that is that you still keep full control, but at the same time that person the new 'manager' is given an incentive to perform, to take ownership of their role so that they earn more money, and if they are earning money then so are you.

the other very important factor, is that when you started your business, you must have had a goal, or target set, to what level you would take your business.  It may well be that you will get to that target sooner than you were thinking.

dont know if any of this helps, as i said right at the start a very complex decision.

good luck

regards

martin

[pristineclean]

thank you for replying to my posts, first and foremost. Although I'll consider advice from anyone, I was particularly pleased to receive replies from two people whose postings I always view as being constructive and helpful.

My turnover year one was just over £150k, with business split 60/40 between builders cleans and offices/commercial premises. 

I employ supervisors at all sites, and take advantage of the ESF to get free training in Heath & Safety. Net effect of that is that they are then viewed, in theory if not always in practice, to carry out their own risk assessments and site inductions and reducing the amount of visits I need to make to sites.

I have one manager for the building cleans, but I am still required, as the CIS6 holder, to present myself at new building contracts and to 'book in' works completed and my time is being stretched between site visits, management and sales (we all know how time consuming tender documents are) with new sales being the usual loser. 

My current thinking, perhaps affected by post holiday blues (my first full week off since I started; nothing like self pity to help decision making  ) and an appointment with a solicitor next week to extract money from a builder who really doesnt want to pay me, is that someone with a vested interest in the business will always be more cost aware than someone on salary and bonus, and that if you have someone with a stake, you can devolve rather than delegate to that person.

I think that, in partnership with someone competent, turnover and profit is always going to be better than doing it yourself. The more experienced among you might be able to tell me otherwise.

Anyway, thanks for the advice thus far.

Callum
 

[martin19842]

hi there,

you are in a similar position to me, or I am in a sim1lar position to you whichever way you look at it, Our year 1 projected is £150- £175k which we are on track to do, and then we move on from there. 

turnover moving to 300K as you have quite rightly ponted out is stretching you, I have a partnership arrangement, where the other partner has other business interets and is in effect at present a silent partner.

However we have always recognised that as business expands through year 1-2 then my silent partner, may well get further involved in the business, and indeed that was written into the original partnership agreement.

We work well, and indeed plans are in place for summer 2005, where the involvement in the business will increase for the presently silent partner.

there are two ways to look at the partnership or manager direction, and obviously you have recognised and identified  them.

So good luck in the decision making process.

incidentally whereabouts in the country are you?

regards

martin

[pristineclean]

Hi Martin

Similarity is closer than you think, except my silent partner made an initial operational contribution on the strict understanding that he would then be pursuing full time involvement in his other business which is exactly what happened.

I'm based in Bucks, although most of my work is in the Gt Lon area. My biggest wtf to date was taking on two building cleaning contracts in Devon/Cambridge for a larger customer so looks like I'll be piling on the miles come March...

I'm sure your experience far outweighs mine, but if there's anything you think I might be able to help you with once you kick start please let me know, I've become quite the craftsman with putting tenders together 

Callum

[Happyeater]

A word of experience, partnerships rarely work.

Keep your help as employees and make the money yourself while keeping control.

[martin19842]

callum,

we are based in cambridgshire, if you need any help in the cambridge area, then feel free to get in touch.  we are more than able to undetake sub contract work.

With regards to tender docs, we have a h and s pack than runs to 100 pages, answers all the tender responses in a minute, then we just fill in the prices.

our build clean ops are within 2 hours of cambridgeshire, and specialist projects are anywhere,depending  on whether the client wants to pay

so just jump on your bike and come up the road!

regards

martin

[Fox]

Hi Callum

I understand where you are coming from when you talk about partnership being a way forward because of the way they will see the business (as a long term investment, instead of drawing a salary and moving on when something better is offered).  The problem will be finding the right person, are you a Ltd Company?  If so I am sure you are looking into the share option, ensure that you always have the controlling share and you will always know that you utimately hold the reins, but again it is the problem of finding the person who will agree to comitting on that basis. 

Contract cleaning is a 'burn out' business and always will be.  Contract Managers rarely last more than 12 months because of the type of work and pressure and when they do leave where does it leave you?  It takes so long for someone to know and learn the ins and outs of this industry, it is not a job you can go to uni and get qualifications for!

You are putting alot of thought into your decisions which is good and I can see you are not blinkered as you are also analysing as to why you are at this stage (back from hol, bad payer etc).

When looking at the selling option it is not just the fact of being a young company that needs to be brought into consideration.  A bulk of your work is builders cleans which are in effect one off cleans, no matter how good your relationship with the builders they will always have the option to use another company.  When selling a cleaning business you will basically be setting your price for 'good will'  buyers will not only want to know your turnover and profit figures but will need to be sure that they will stay stable at that, they will look at how long your contracts have run and want to be reassured from the management of the business that clients will not fall away because a business has changed hands.  So if you do look at selling any buyer will need to be assured that the business will run (and is run) without you!

I know sounds crazy as if that was the case you wouldn't have this problem!  The other option is to sell with you as part of the package for a certain amount of time (usually 6 to 12 months) and you just draw a salary in this time while the new management take over.

Hope some of this helps, I am sure you will make the right choice for you, but I would say give it another 3 months and see if you still feel the same before you make your final decision.

Fox

[pristineclean]

I really do appreciate the input, and on balance I don't think that any figure I get for an outright sale would be a true reflection of the company value, if only to me. The advice offered has been really helpful, and I'm grateful for the postings.

Having slept on this since posting, I'm coming to the realisation that the advice offered is generally correct, and that I should hold on to the business for at least another twelve months.

I'm much obliged to all for the advice, and although I can't imagine how I could return the favour I'd be delighted to have the opportunity at any time.

 Callum