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Rules of the New Game Under this model, cleaning technicians are treated as contractors rather than employees. As the owner explains, “I would guess that roughly 25% of the homes being cleaned for pay in California are being serviced by domestic referral agencies. There are a lot of rules that have to be followed and if you don’t know what you are doing, the California Employment Development Department (EDD) will reclassify your contractors as employees. This would be a very expensive mistake. We’ve built a model where we are 100% legal. We just completed an audit by the [California] EDD last winter and the results show we are fully in compliance. “ Limitations and Advantages The owner does caution that there are some limitations to this business model. “I miss not being able to provide training, equipment and cleaning products to my cleaners,” he says. “Doing any of these, however, would create an employer/employee relationship.” The company has two full-time employees who handle the day- to-day activities. The owner’s involvement is limited, spending only two to three hours a week in the business. He started it as a maid service franchise in 1999, and believes that the processes he implemented then are a big part of the agency’s success to this day. The Numbers The owner is now offering his business for sale, with plans to move to the high deserts of California afterward. The numbers break down as follows:
The owner is asking $450,000 for his business. He is willing to finance up to 50% of the purchase price for three years at 6% interest.
For more information about this business, contact Steve Shwetz of Mesa Property Management by at (909) 524-9541,or via email at steve@mesaproperties.net.
FAQs
A: It is a plan for transferring ownership, protecting business value, and preparing the company to operate successfully without the current owner.
A: Buyers commonly evaluate cash flow, recurring revenue, customer concentration, employee stability, systems, assets, and the degree to which the company depends on the owner.
A: Ideally, several years before a planned sale or transition so financial records, leadership, processes, and customer retention can be strengthened.
A: Documented systems, dependable managers, recurring clients, clean financials, stable margins, low owner dependence, and a reliable workforce improve transferability.
A: Verify revenue quality, profitability, customer and employee retention, liabilities, contracts, pricing, equipment, compliance, and the seller's stated cash-flow adjustments.
