Buying a window cleaning round
27 July 2015
Something that a lot of people consider when starting a window cleaning business is buying an established round. Whilst personally, I would always I recommend building up your own round, I recognise there are circumstances where that is simply not possible.
There are inherent risks when buying a round, but when the right precautions and procedures are taken, it’s possible to do successfully.
How much should I pay?
This is a huge grey area. Generally, rounds are valued on a multiplication of their monthly turnover. On average, rounds are sold for between 2 and 5 times their monthly turnover value, but in certain circumstances they can demand up to 10. A rounds ‘going rate’ will vary depending on where it is (e.g. Central London), the type of work (e.g. commercial / domestic) and the quality of the work (close proximity, well priced, age etc.)
So a 5-years established, well-priced round consisting of closely placed commercial and / or high value domestic work is worth more than poorly priced, scattered low value domestic work on a council estate. Obvious enough?
The best thing to do is calculate the ‘going rate’ for a round in your area, by finding other ideally equivalent rounds for sale either very close to you, or in an equivalent town or area. Work out the average multiplication rate of the monthly turnover across a few of these rounds and you have your benchmark, but bear in mind the other variables mentioned will come into it. Personally, unless there were tangible reasons why the round was worth more, I would aim to pay no more than 3 times the value.
There are many tales of window cleaners that at best, have paid substantial amounts of money for rounds that have either turned out to be or quickly reduced themselves to a half the size promised, or at worst have been completely made up.
There are several things you can do to reduce this risk:
- Try and have the current owner actually complete the entire round with you, ideally splitting the earnings. Most importantly it proves the rounds full existence, and gives householders/ customers the opportunity to be introduced to their new window cleaner in person. Where this is not possible, arrange to at least call on the entire round together to make the introduction. This is by far the most effective way of ensuring a minimal customer drop off when you complete the transfer. (Where they are not in, use a transfer letter – see below.)
- Ensure that the rounds original owner, not you, communicates the transfer effectively to the customer either in person, over the phone, with a letter or all of the above. Don’t just turn up and say "I’m your new window cleaner” – I can assure you that does not go down well
- Ask for proof of the rounds financial status and age – don’t be afraid to ask for bank statements and / or historical accounts – they are not obliged of course but if they provide this information you can have much more confidence in the viability of the round. Make sure you actually check them – have they been getting paid the full round value each month? If not, this could be a sign of bad payers or bad collection.
- Negotiate a staged payment for the round – don’t pay in one lump sum. For example you could make a part payment before handover, and make full payment after the first month’s turnover in complete. It protects your investment, ensures the earning potential is there and protects you against a large drop-off of customers (beyond the expected – see below). Most decent sellers will either expect or offer this.
- Agree in advance an ‘acceptable’ level of customer drop off – losing some customers is inevitable – some people will not like the change, or they might just not like the way you look! 5-10% is probably normal – so agree on what will happen with payment for this work in advance – will you swallow the cost as an unavoidable expense, will they deduct it from the value of the round owed or will you meet halfway – all are acceptable outcomes provided the drop off does not exceed much more than 10% of the total round size.
- Be very careful with commercial work under contract – ensure any contracts can be transferred to you legally and upheld, and that they are not about to expire or go up for re-tender. You do not want to have to bid for work you have purchased, and the fact that you have purchased it will mean nothing to the client!
- Exercise caution with rounds consisting of high value, low volume work. For example if a £3000 a month round consists of 3 x £1000 nursing homes, losing 1 job would result in losing a third of your earnings. Whilst this is the almost unavoidable bain of any commercial window cleaner’s world, it’s worth considering.
- If you are purchasing equipment with the round, check its market value separately and make sure you are not overpaying. Exercise the same caution you would buying any second hand vehicle and fully test all the equipment – extend all the poles, run the pumps, controllers, check the hoses, look for leaks etc. and identify any issues in advance.
- Document the purchase with a basic contract and / or receipt. Outline, even itemise, what has been purchased and for how much. Consider adding in a clause that prevents the seller contacting your customers for a period of 3 – 6 months (it’s not unheard of for sellers to sell a round and continue working it). Legally, it could be very difficult to enforce, but having it in writing may act as a deterrent.
If you take these precautions, you are minimizing the risk of your investment, and maximising the chances of buying a good, stable, well maintained round – it is possible and can be a fantastic business investment that can provide you with a decent income, almost overnight.