We used to lament about the lemmings . . . that was before we developed a taste for them.
Lacking barriers to entry, the maid service industry attracts anyone with enough money to buy an e-book, a bucket, and a vacuum. We once resented Competitor’s low prices. Then we came to realize that, for an independent maid service company like ours, the situation presents a host of “marketing” opportunities.
—–Original Message—–
To:SCS
Subject: website email
My partner and I are starting a home services company, starting with residential cleaning, in New Hampshire.
I have extensively researched the “M” franchises and have decided that while they have invested considerably in their approach and infrastructure, the ongoing requirement (AKA Royalties) is way too much to pay.
Independent home cleaning businesses aren’t scaleable because operators lack the tools needed to effectively and efficiently manage over 25 employees and 50 assignments per day. Top flight maid service franchises have developed the tools needed for managing such volumes but, because they favor penetration, over scale, most of their deals also are not scaleable.
It’s difficult to find an exceptional Manager worthy of receiving shares in your company. How do you choose the right person? How do you structure a sweat equity plan which serves to motivate and commit? How many shares are required to serve your purposes? When do you offer the sweat equity plan? The biggest trap in offering sweat equity is that an employee will treat your promise of equity as a lottery ticket. Any employee does this when he or she likens the probability of a payout to that of winning the lottery. When this happens, he or she sticks the sweat equity in a drawer with the hope of winning, and continues acting like an Employee, not an Owner. For a founder, nothing is more disheartening than sensing that you may have wasted a share of your precious investment for no sweat.
When it comes to starting a house cleaning company, there are two sides of the stigma coin. The one side: your new house cleaning company is going to be a conversation killer at your next college reunion. The flip side: you don’t have to worry about the market being overrun next year by your alma mater’s graduating class. And for a capable, intelligent, well-capitalized business person, the flip side is what makes success in the industry achievable with a fair degree of probability.
Introduction
This article describes two separate methods to value your house cleaning company. You might be surprised to learn that if you are selling a larger business, the banks will ultimately have the final say in the valuation of your business, based on guidelines set by the Small Business Administration (SBA). Once you know how the market values your company, then you’ll find that there exists tangible things you can do to influence and optimize the value of your company.
It Pays to Train House Cleaning Professionals
Among service industries, professional house cleaning is somewhat unique, in that it combines the potential for scale with a demand for exceptionally personalized service. The most successful professional house cleaning enterprises excel because they manage to grow by offering consistently better and customized service than their competitors, and they also manage to maintain their quality of service while they grow. It’s tough to do both, and that is why most of the truly exceptional personalized service providers are comprised of only one or two persons. But such single or pairs of housekeepers do not represent enterprises. They represent one or two persons self-employed as housekeepers.
By Anne Thompson, President HCA
Introduction
Essentially, if your company has been profitable enough to pay a buyer a reasonable wage to himself, and still hypothetically generate sufficient free cash flow to cover debt service with a margin of safety, then you may be able to sell your company as a Going Concern, in which case this How To Booklet is written for your benefit. The difference between selling your House Cleaning company as a Going Concern, versus selling it as an Add-On Opportunity is more fully explained in a separate How To Booklet, “How to Value Your House Cleaning Company.”