Selling Residential Business to 12 yr. employee

Hi Guys! Been awhile but now I’m 60 with so much arthritis that I need to get out. My employee of 12 yrs wants to buy my business. He is only 30, but is doing very well as he owns over 12 rental properties, has held some full time manager jobs in the auto parts industry and has worked part to full time with me as mentioned. I have paid him very well and he makes 30 to 35% which is why he’s stayed with me. He basically wants my customer list and truck and supplies. My 20yr old business grosses around 72,000 per year. No contracts, but 20% get in/out or out only done 2x/yr. Still getting new customers thru word of mouth and flyers. Its residential with only one monthly business contract.

My customers know my employee and I’m sure would stay with him as well as the commercial customer. He also plans on doing powerwashing and I’m sure they will use him vs who they are currently using, so he will have even more income from them. I’ve been reading on the site those selling and suggestions on how much from 10% to 16% to 30% of gross. My employee is thinking of paying an amount down then payments. He’s a good friend and I totally trust him to follow through. Any suggestions of % of gross or net to start with???

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Another possible option would be to see if he would “co-own” with me, like 50/50, but I don’t think he would do it. I’ll have to get a part-time job or drive Uber or Lyft.

Just to throw in some other ideas… Could you hire another laborer and then focus your efforts on non-arthritis-aggravating work like marketing? Perhaps you could build up the business enough to hire a few more guys eventually with the goal of just doing admin work several hours a week. Ideally, if you could systemize everything and make it autonomous it could keep making you money so you don’t really have to work much at all and then “retire” hopefully without needing to drive an uber.

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I don’t have any good recommendations but this is interesting so I’m following this thread.

Good luck to both of you!

Edit: I take lots of turmeric for my arthritis and joint pain. It really helps.

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we bought a business where we payed $1000 down and 20% of sales from his business for 2 years we’re 6 months in and he has made about $5000 from us

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Why is a 20 year old business only grossing 72k per year?

If he wants to buy it from you, I’d JUMP on that and jump on it hard. Let HIM dictate terms for you because honestly, I really don’t see many people wanting to buy this.

There are too many variables and obvious problems. 72k tells me you don’t raise prices=problem for new owner.

No contracts=less chance of retention.

“I’m sure would stay with him” isn’t very reasurring at all.

WVWindowWashing is on the right track IMHO, you’re not ready to sell yet.
He mentioned other ways of getting around your physical problem such as hire another laborer, focus on marketing.

Let me add tho, RAISE YOUR PRICES with your existing clients and new clients as well so that you are grossing more.

He mentioned systemizing everything. Absolutely agree with that, when you do this it is more attractive to someone looking to buy a business. Don’t take the first deal that comes your way sir, your employee/friend has the high ground and will gain for next to nothing what you have spent 20 years building.

Best situations to buy a biz are:

DEATH
DIVORCE
SICKNESS
BANKRUPTCY

because you would be capitolizing on someones misfortune. The person buying a biz is always looking for people in those situations. You fall into that catergory. You ain’t ready to sell yet, you have work to do THEN sell.

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Do you feel that’s fair for you?? for leaving nc

Some history here. A few years after starting my business I got a second surgery on my rt knee which had severe arthritis which left me unable to climb ladders. So my new employee R, who wants to buy the business, did all the ladder work in and out and I did inside that was reachable. (had other employees who came and went) Then got severe arthritis in my neck and my chiropractor and others and myself new I had to go back to social work(have a masters) or teach in the schools. Then I got severe arthritis in both wrists. Still didn’t get out, procrastinated, did all the tumerics and cold laser therapy and chiropractic etc, but all temporary fixes leaving me injured to do what I wanted in leisure time: kayakfishing, cycling, etc. So I’ve known I had to get out for years and also know if I stay in its like pulling teeth to keep me from going to the jobs and do some work which makes me even worse. The only thing I enjoyed was cleaning windows, LOL!!

I raised prices from $4 to $5 to $6 to $7 and my pricing is competitive with the rest of the Richmond market. I also raise a customer a percent after so many years. I’d like to continue to make some profit from the business and share the business with my employee. So perhaps seeing if he would want to split the business with_me say 50/50 and raise the prices for old and new customers then I can work on marketing and getting more commercial accounts.

Very grateful for all the responses!!!

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If you pay your employeer 30-35% how much is that on average per hour for him?
May I ask where are u located?

He makes $40 to $50/hr for 3 to 4 hrs/day. And while that seems like a lot he does all the ladder work both in and out plus the top half of inside windows that I can’t do without looking up and hurting my neck. I realize to he’s the highest paid window-cleaner in the country and I’m the worst businessman in the country but: he does excellent work, has been with me over 10yrs, great with the customers and probably moves faster than any window cleaner as we do a $300 job in 2 hrs using ladder on the outside. Much faster with DI pole. He gets way to much, 50% minus a gas fee for doing work by himself. Again, I screwed up with the high percent to him but have no kids so it works.

So he is practically a partner without having to pay truck and liability and business taxes.

It sounds like your health issues have hindered the potential of your business.

As someone mentioned earlier, a contract where you make a percentage of the revenue for X years is probably best in this case. Which is what you were thinking. Honestly it comes down to how much you like the guy. He should probably pay the blue book value of the truck as the up front payment. Then if you want to be nice a low percentage like 15% or 20%. If you need the money then 25% or 30%.

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what about an amount down then 2 commisions for you. one commission for sales (finding new busines) and a declining commission on existing business, that way you get some income but he gets a larger peice each year.

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I like leavingNC, JohnC and cactus27’s suggestions for selling. A percentage down, such as the truck, then a
2 yr percentage either declining or 20% or something like that.

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If he is that fast he might not want to get bogged down with office manager duties. Maybe you guys should do a reversal, you could become his employee and be the office manager.
That way you could still keep your hand in the WC business for a while and he could have a more gentle transition to the endless office manager duties.

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Excellent suggestion, are you an amateur detective too?? Or is it your magic hat??:slight_smile: LOL
You’re right, he doesn’t like scheduling etc. But he did make a “smart ass” comment to me a few weeks ago that if I stayed on all I would do is answer the phone and schedule, like that was “not working”. So you’re suggesting I sell the business to him with a down payment through buying the truck, and a percentage for 2 years and pay me a certain amount per week to schedule, do estimates and put out flyers?? ( built the business on flyers to mailboxes then word of mouth) Or, go in 50/50 with him where he pays half insurance expenses etc and I schedule, set up new “powerwashing” business, I raise rates, then after a year sell it to him??

Yes, it through the power of my magic hat that I am able to make recommendations (plus it keeps the drizzle out of my eyes when looking up at windows!).

Selling via option 1 or 2? Both seem like feasible and profitable options, too close to call.

The youngster would definitely benefit from getting some hands on with the support tasks that managers must deal with. He probably enjoys the 100% closure that makes window cleaning tasks so pleasant. He probably needs to gain an appreciation for the open ended nature of management tasks and non-billable hours that are never quite completed and always subjected to revision and improvement.

Maybe it would be healthy for both of you for him to run the entire operation for a while. If the manager transition is hard for him he would welcome you back with open arms and you would have had a nice break to recharge.

You’re paying him $50K a year when your business only grosses $72K per year? And you pay all expenses? He’s crazy to bring it up at all since he’s already getting paid as the owner and has none of the headaches.

$40-50 per hour sounds like you’re already paying him as a partner. How much could possibly be left over for profit to you, the owner? I like the idea of sticking with what you know and moving to more of a manager role, hire a laborer, and drum up enough business that both of you will earn more. See if he is willing to sign partnership paperwork and take part ownership and share the expenses since he will be making more with the extra work. Whats the point of selling whatever is left over and then finding another job to make ends meet? Work something out that is mutually beneficial.

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This is a great question… esp. when 1 guy can make 80-100K/year himself… and these are 2 guys going at it.
The business must be in rural area. Hence the 30-year old has 12 rentals but all probably low rents… he wants the window cleaning business to fill in his time and make higher income.
Buying this business is low hanging fruit for the young guy and would he make the effort to go out and buy another business if current owner decides to hang on? Good thing to find out first.
Current owner should try to hang onto the profits from this business as long as possible and also give as much value to new partner/owner as possible doing non-arthritis-enhancing jobs…
Good luck!

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The truth hurts sometimes Tory and you just said some true things

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This is what I would do if I were in your position
Come up with an asking price … let’s say 25 grand 1/3 of gross. An ya t sounds like it is low profit margin, but what ever. You have a guy that wants to buy it so there is half your battle.
Being that you like the guy he seems like a good buyer tell him no down payment give me 20% of all proceeds every month An keep me on as Mangment for an additional let’s say 20 % all until the principal is paid in full.
Now the big thing to me is with this deal. Not saying it’s the greatest idea either. Do you get proceeds from new clientele. If I was the guy buying I would say no , but that’s for you guys to figure out
This is just one way. The good thing is you have a guy that wants it. Just have to make it fair for both of you.

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Your forgetting one main thing. He has a buyer hat wants it.

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