Selling off Domestic Clients with staff in place?

[Reb D]

We have a cleaning company partnership that has just registered for VAT. We've been wanting to branch out into Commercial Cleaning for a while now. Are we able to sell off our Domestic Client base with the staff members in place? We would go under the VAT threshold but would remain registered. We have enough Commercial Clients to be able to sell off Domestics. The 55 domestic clients we would sell bring in the same amount of profit as our 10 commercial clients yet take up all of our time.

I'm assuming we would be selling them plus VAT?

If we can do this how would we value it as we're not selling an entire business, name or reputation. Just 55 clients with enough staff to complete the weekly cleans. Turnover 60k Net Profit 11k.

The person interested has worked for the business as a cleaner and in management so the staff and clients already know her in this capacity so we don't think there would be an issue for them making the transition.

 

[japancool]

11k before or after directors' drawings have been taken into account?

 

[Chris Ashdown]

Does not sound like much of a business at £60K turnover and £11k net, plus added management time on 55 customers running the show, accountants fees, and increasing customer base.

 

[Reb D]

We're basically selling contracts from both the clients and staff as a job for the buyer. We understand that. She has no plans to build and get into VAT, just client rebuilding if any cancel but there is huge demand in the area, she would also get our waiting list.

We're just not sure how to come to a figure. Obviously it's only worth what someone is willing to pay but we'd like to have something in mind

 

[The Byre]

You are selling a job and therefore must price it accordingly (i.e. low - if anything!) And £11k p.a. for all that hassle does not sound like much of a job at that! And you must remember that the VAT threshold is not moving, so the value of the maximum turnover is being diminished by inflation and RPI is nearly 10% and rising! Ouch!

These domestic cleaning operations are not scaleable because of the VAT thing.

Ask her for a figure and if it's anything at all, I would be inclined to take it and part as friends. It's not as if you want that part of the business!

 

[japancool]

We're basically selling contracts from both the clients and staff as a job for the buyer. We understand that. She has no plans to build and get into VAT, just client rebuilding if any cancel but there is huge demand in the area, she would also get our waiting list.

We're just not sure how to come to a figure. Obviously it's only worth what someone is willing to pay but we'd like to have something in mind

You didn't answer my question. 11k before or after director's drawings? If it's 11k before drawings, it's worth barely anything, to be brutally honest.

Put it this way - if I offered you a job paying 11k a year, but said you'd have to pay to get that job, how much would you be willing to pay?

 

[Reb D]

Thank you for taking the time ro help and pass on your wisdom. Between this thread and another I started I understand things alot closer now. @japancool it is before any drawings.

I guess we see its worth because currently this bunch of clients and staff take up about 2 hours a day and £200ish a week aint bad for that but theres no guarantee to a buyer that wont change. We could probably secure contracts for a year or two but nothing beyond that.

Being disabled with a disabled son I can only work 2-3 hours a day so my business partner does the same hence it taking up so much of our businesses time. We have another commercial business and we'll have the commercial side of the cleaning and thats what we want to focus on.

We are good friends with the lady so like you say, we will probably take what she offers as we do want to create lucrative businesses and not just have a self employed job so dropping the domestics is the way forward.

I think we were clinging on a little to sentimental value as its taken us 5 years and lots of hard work but thats all irrelevant now.

Onwards and upwards. Thanks again ?

 

[MBE2017]

Another way to look at things, is how much does it take to aquire a customer? If say the figure was £50, then you could probably ask £2000-2500.