Should I buy into Window Cleaning business

lincroft1710

Start with the assets - the vehicles and whatever else there is - any freehold premises such as building/yard where vehicles kept (not if it is part of owner's home.

stephenbalmer

lincroft1710 wrote: »

Start with the assets - the vehicles and whatever else there is - any freehold premises such as building/yard where vehicles kept (not if it is part of owner's home.

Thanks Lincroft,


There effectively very minimal assets i would suggest.


The business is run from his home but there are no real premises and nothijng really to store there in any case as the emplyed window cleaners keep their equipment.


The equipment is a few sets of ladders - £1000 maximum and cleaning utensils and materials £200 maximum.


Only other thing is two vans, both financed with a maximum of £5k each in asset after the fimamce is cleared.


All of these figures are probably on the high side of estimation to look on the positive side, they are most lilely of less value than i indicate.


Thanks, Steve.

silvercar

The current owner is doing it to raise capital, so he should be going to the bank for a loan or raising investment in his new business ie putting his own assets at risk not your money.

The risk factor for me is that his staff leave and there is no one reliable left to work the business. That creates headaches all round. Worse would be if one or more employees left and took the customers with them.

lincroft1710

So he has 2 vans on finance, which will be worth a total of £10K when the finance is cleared plus say £1.2K in "tools of the trade". That is maximum 8% of the value of the business. He is valuing the goodwill and client list at 92%, £138,000!

ComicGeek

And splitting the attention between 2 companies is always hard - he might end up running both companies badly and lose everything!

What experience does he have with the other home improvement activities? That's a very competitive market, and very costly if he doesn't have the skills or has to rely on subcontractors. £75k is a lot of money for this, what exactly is he looking to spend this on? Premises, marketing, salaries, tools, van?

And don't forget that if you lose the money, you'll probably also lose the friendship - friends/family and money don't usually work.

Mistral001

stephenbalmer wrote: »

Thanks Sea Shell, That's a great point and worthy of consideration.


I did not mention in the original post that the current owner is a lifetime friend from school days and his family knew my family the generation before. I don't think your scenarion is likely, though always worth bearing in mind.


The reason not to mention this was to get clear guidance without the 'friend element' coming into this decision.


Thanks, Steve

You do not know what might happen in the future. If there are difficulties say 10 years down the line and a solicitor or accountant points out to your friend or the family member that your friend gives his share of the business to that it is a choice between them losing their house or all their savings and you losing all your investment you might be surprised what choice they might make. This is a business decision. Make sure you protect yourself.

Pennywise

Mistral001 wrote: »

You do not know what might happen in the future.

Indeed, what if your "friend" dies? You could end up having to run it yourself and give half the profits to their next of kin who does nothing in the business or who has very different ideas to you.

As an accountant of over 35 years experience, believe me, I've seen it all. As said above, family/friends in business usually ends up badly, usually because they don't go through the same due diligence and preparing for "what ifs" that non family/friends would do before committing to eachother.

At the very least, you need proper, paid for, advice from both a solicitor and accountant and a properly drafted business partnership agreement setting out all the "what ifs".

tealady

The way I read this is:-

Your "friend" wants to "borrow" money from you to set up a new business.
You will have no share in that business nor any say in how it will be run.
Your money will be paid from another business which would appear to have few assets.
Should that business fail, you would be near the bottom of the list in being paid any monies owed.
If you cannot afford to lose your money then this is not for you.
Dont walk, run. This has disaster written all over it.

Ozzuk

A few more questions to consider...do you want to run this type of business? You mention only 6-8 hours a week, but if you are liable for 50% of the business what happens if issues come up - someone gets injured (falls off a ladder!), owner gets ill, new/better/cheaper company tries to muscle in, owner wants to sell. What is your attitude to risk? What is your current tax status? If you are already in full time employement that might impact any earnings from this new company, potentially futher diluting your return.

swingaloo

A lot of window cleaners in this area seem to be going from ladders to the water fed poles which I believe are expensive to set up from scratch. Is your guy going to move with the times or are new 'modern type' window cleaners going to take many of his customers in the future.

My son considered going into the business a few years ago and there were many 'rounds' for sale within 20 miles of our area. The most expensive he considered was asking for £18,000 for the entire business including all ladders etc. You are buying goodwill and that's not a given.