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Rocco, that's what I'm looking for. I started in August and now have 3 accounts with revenues of $69,200 annually at an estimated 38% profit margin. I know this is small change compared to a lot of folks on this site and "revenue" is not a measure you should use but I'm looking to grow rapidly.
My dilemma starting out is that I only have 2 employees and I'm helping with at least half of the cleaning. I do not want this to be my job I want to run the company. Any thoughts on how long you have to stay in the trenches before you step out. I also have a full-time job and a six-figure salary so I need to make a lot of money to make up for the income and fringes.
Plan is to be at a minimum of $750,000 revenue before leaving FT job.
Question: most of the replies are from people that were self-employed or the people they know in this busines are self employed. All of which is not the same as owning a business.
Which do you want: A business or a job that you own.
For a business, it's very profitable. The profit margins are very high.
For a job that you own. You'll barely grow.
I know a guy, true story, that started a CLEANING BUSINESS back in 2002. He sold it for $400 million in 2012.
That's the difference between some one that starts a business and someone that does something "to keep food on the table". Both are not the same.
Source: Me. I've spent years managing big cleaning companies at the Senior management level.[/quote]
After I secured about $2-$3 million in my fund. I'd used the funds to make down payments for purchases of cleaning companies. I'd structure my deals so the cash flow from the business will service the debt payments but no more than 50% of cash flow.
I think this is more than the OP has in mind. He wants start his own business where he can make a decent living, and your advise to become the next Donald Trump of the cleaning business. Most investors are not going to bank roll someone that had little to no experience running a janitor business. This advise might work for a successful business that has proven profitability and growth over several years, something they can show investors if you invest with us, you will make money. This is not for the guy just starting out is going to be able to pull off, unless he owned and sold a couple of businesses before.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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You may have a hard time competing with big companies that do maintenance but also parking and security, such as ABM. Also, many companies are going to require background checks on you and your employees, and that you have substantial bonding and insurance.
It depends. You'd have to get some contracts first. It can be profitable if you have enough contracts. You also have to do a good job to keep the clents happy, and keep on top of the contract re-signings so you can ensure future business. I'd make sure they sign for at least a year.
If you do the work yourself it is easy, but if you have to hire employees...I'm not so sure. The government has made it really risky to hire people as subcontractors. So you may have to employ them and pay at least minimum wage, FICA taxes and do a bunch of paperwork and stuff. In that case, I'm not sure how well it would pay off.
Then if you lose a contract or something, you'll now have all these employees to worry about...
I would not listen to nor follow this advice. You can CLEARLY "see" this person has no idea what they're talking about.
Anyone that has aspirations of starting and building a business, please do not listen to the folks that say it can't be done, or you need prior experience. YOU DON'T.
You're only limited by your own thinking. Having been and currently in the trenches( looking for companies to buy), many of you have no idea what the possibilities are. The opportunities are unbelievable.
Focus on designing business systems and building assets that offer value( there are 15 core assets for a business to build). The by product is ever increasing profits. Most people get in backwards--Fire, Ready, Aim.
The problem is, the new entrepreneur get's held down by:
1-Listening to people that have no idea what they're talking about
2-People giving advice and they have NO experience
3-Not creating HIGH CALIBER connections and contacts
4-Using sweat equity and disposable income to build a business
5-Listening to "Haters" on a forum.
6-Not spending money on EXPERTISE. (trying to figure it all out on your own)
Last edited by Rocco Barbosa; 09-28-2014 at 06:29 PM..
Anyone that has aspirations of starting and building a business, please do not listen to the folks that say it can't be done, or you need prior experience. YOU DON'T.
You're only limited by your own thinking. Having been and currently in the trenches( looking for companies to buy), many of you have no idea what the possibilities are. The opportunities are unbelievable.
Focus on designing business systems and building assets that offer value( there are 15 core assets for a business to build). The by product is ever increasing profits. Most people get in backwards--Fire, Ready, Aim.
The problem is, the new entrepreneur get's held down by:
1-Listening to people that have no idea what they're talking about
2-People giving advice and they have NO experience
3-Not creating HIGH CALIBER connections and contacts
4-Using sweat equity and disposable income to build a business
5-Listening to "Haters" on a forum.
6-Not spending money on EXPERTISE. (trying to figure it all out on your own)
I sat behind a Harvard student at a baseball game and he laid out the exact same process with Private Equity. I told him that I wish I could have recorded the conversation. Rocco's thought process is on another level but makes sense. I sign the cleaning contracts for my company as well as other services and have thought about getting in the business myself. I did it in college for someone else. I am an SVP at my company but, I cannot take the corporate politics forever. Thanks for the post. It gives me a different bar to set.
You are cleaning and there is nothing secure about that. It's not a job like a nurse, where nurses are actually NEEDED. I'm sure hiring a cleaner is something that anyone could do without. A lot of companies are hiring their own independent cleaners rather going through a cleaning company. I was a custodian and I loved it! But I guess the former cleaning company was terrible at cleaning so I was hired as the janitor,working as an employee of the hospital, not the cleaning company. They dumped the commercial cleaners in a week to hire me, that's how bad they were at cleaning! So my point is, yes, it can be aprofitable business, but that's not saying that it can't be taken away in the blink of an eye. I left cleaning for college because it was not a secure job
The business is great but volatile. What I mean is, as soon as your customer gets a itch, their going to scratch it. Meaning, customers can be very "dumb". They'll change a cleaning company contract out in the blink of an eye. You're in a commodity business. There is nothing unique about the service.....having said that........
You'll definitely want not only a sales person but a well defined organization. Management team on down. Be honest with yourself as it relates to what YOU want your role to be.
You're right, it's all about volume. So if you're thinking in those terms, the worst way to grow is by way of internal growth i.e- your sales team.
The biggest and most successful cleaning companies that I know of, all got there the same way--acquisitions. They started small and once the foundation was laid, they went on non-stop buying sprees. Instead of slugging it out in the marketplace trying to "steal" market share, they bought market share. Essentially, they bought all of their competitors as well as synergistic companies.
That's how you get big. Buy your growth. Companies like Coke, Google and Amazon get big by acquisitions, not selling products.
You will not get big by sending out sales teams to land new contracts. That will get you to a certain point than after that, you have to focus on buying other companies. That's how you get to a point to where you cash out after 10 years and go do something else.
IF IT WERE ME:
If I were to "start" a cleaning business today here is what I would do.
I would offer a PPM (Private Placement Memorandum) Essentially, you quietly soliciting private investors for capital. Lot's a of S.E.C. regulations to follow to do this. Consult your local securities lawyer.
After I secured about $2-$3 million in my fund. I'd used the funds to make down payments for purchases of cleaning companies. I'd structure my deals so the cash flow from the business will service the debt payments but no more than 50% of cash flow.
I would keep doing that over and over until I built up a big cleaning company than sell it to a Private Equity Group.
Buy it, grow it, sell it, Rinse and repeat.
That's not the traditional advice you're going to get from MOST business folks.
There are just to many ways to do it. I'll be doing something similar but NOT in the cleaning industry.
Hi Rocco I have a question, when you offer a PPM do you need to allocate capital of your own ownership? (other than the capital allocated by the investors).
I ask this because if you find investors and they can allocate 100% of the capital then what is your participation in this PPM?
How do you determine your stake in the business if you do not have any capital to invest?
Thanks!
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