August focus: Domestic Cleaning Service
Getting Started: Building with a View to Selling
The most profitable way to set up your business will be to keep in mind that at a later stage sometime in the future, you will be able to sell your business as a going concern. With this in mind, approach your business in such a way that you will be able to do so. That means, keeping good and honest records, maintaining a happy client base, and doing regular advertising that all becomes a part of the ”good will” that will be sold with the business later on.
Selling your Established Business
When you are ready to quit your Domestic Cleaning service, you can sell your client base to someone else. However, never vendor-finance the sale of your business. Vendor finance is where you (as the person selling the business) allow the person wanting to purchase the business to put down a hefty deposit and repay the difference with interest over a two or three year period from the date of the sale. No matter how much money you were making you can almost bet that your purchaser is going to try to say that you sold them a ‘dud’ and will refuse to make their repayments. Being in business is more difficult than people first expect, and this is often quite overwhelming, especially when they take over an already thriving business and are then placed in the position of having to keep up with the hustle and bustle of the goings-on in the business. They won’t have grown into it as they would have done had they developed it themselves, therefore they will often find that they cannot cope with the demands of the business and will emotionally fall in a heap and try to blame you. They may try to litigate against you, and even though you have evidence to prove that the business was earning the money you said it was you are still going to have to spend money and time defending yourself, which is a hassle nobody needs or wants. Cash up-front or not at all.
The Only Time to Buy
The only exception that I would consider when buying a business is if you are thoroughly acquainted with the industry that the business is related to and if the business is set-up in a way that allows you to take over without too many interruptions to the goings-on of the business. By this I mean that the person selling the business has other people in place doing the work and serving the clientele or customers, and they themselves are behind the scenes managing the whole operation from the background. In this case when they leave their absence won’t interfere with the relationships that are established between the service providers and the people buying the products or services. The only relationships that will need to be nurtured then will be those that you will have with your staff.
A good manager knows not to come into a new environment and ‘rock the boat’ in too many ways. If there are changes that need to be made they should be done gradually over a period of time so that everyone who is involved in the business – staff, service providers and customers or clientele – can cope with the changes. Too much change too quickly will break the cycle of prosperity currently being experienced by the business and could be the downfall of what is currently a good business that could potentially become a great business.
The only time that I would instigate rapid change would be if I happened to find a business that were experiencing difficulty and were able to purchase it at a good price, and then (and only then) would I go into the business and make dramatic change. Installing new fixtures and fittings in the case of purchasing a business that is being run from a shop or display centre; changing staff; giving the business a real face-lift — all of these moves could work under these circumstances. But I would only risk this approach if I were able to purchase the business at a rock bottom price and only if I had a few years of experience behind me in order to know what to do, or a very creative mind that could devise ways to improve the business.
It is my opinion that growing into a business is the safest approach. In every workshop that I used to teach I always recommended starting on a part-time basis and working the business while you still have a supporting income coming in from somewhere else. This way you are able to re-invest the money you make from your growing venture back into itself, therefore helping the business to mature into an income stream that can eventually support you and pay for the costs needed to continue operating. This and many of the businesses that I write about in other article can begin on a part-time basis and can eventually grow into full-time operations. If it is your desire to achieve this and you remain focused, you will certainly be able to do so within twelve to eighteen months without having to hock yourself to the eyeballs to do so. Plus, the benefits of establishing yourself this way will be that you will gain the experience needed to cope with the business as it grows. With experience behind you there will be fewer occasions that overwhelm you and the likelihood of failing is significantly reduced. In my opinion this is the only way to start up a business. So let’s move on now and after considering whether to go into a partnership, take a look at the specifics of this industry.
.