Sales Memorandum Tool

Business name

WZY Cleaning Services, LLC

Proprietor's name(s)

Joseph Blygges and Lizzie Blygges

Contact details

Insert your business address, email address, and phone number.

Disclaimer WZY Cleaning Services and all the characters referred to in this document are fictitious. Any resemblance to actual business in New York State (or anywhere else in the US), or to real-life persons, is purely coincidental.

Business main location  

Other locations

List other locations and their purpose (if any)

What the business does  

Briefly describe the main purpose of your business and the sector in which it operates. NB! This section is required in order to get your sale listing ready to go.

Specialist fabric cleaners for both home and office markets focused on New York State. Carpet, furniture, curtain fabrics and more recently repair and polishing of wooden and parquet flooring.

Category  

Business category: for example, "restaurant", "carpet cleaning". The category is a key element to bring forward your sale listing and enable PPC advertising. Please notify us if your category is not listed.

Company website  

Enter the URL address of your website. Leave blank if there's none, or you do not want to reveal it.

https://exitadviser.com/business-for-sale/2015

Year established and history

When the business was established, where, and by whom. Give the main historical facts and/or key events during the business's history.

Established in 1997. 100% owned by Joseph and Lizzie Blygges (50% each).

Why the business is an attractive proposition to a buyer  

It’s important here to be persuasive. You must highlight the positive reasons as to why a buyer would want to purchase your business. Do this by describing its strengths, key values, and potential for future growth.

Profitable, long-established specialist fabric and floor cleaners with a combined database of over 4,000 office and home customers. WZY has earned an enviable reputation as the experts in restoring fabrics to their former glory. Few tricky stains can resist the WZY treatment as long as the call-out is made promptly. Growth investments, funded mainly from re-invested profits, include the latest environmental-friendly cleaning equipment, and a new operations center in Kingston.

Reason for selling  

Your reason for selling; make is short. Be careful not to appear too desperate to sell. Avoid any mention of negative reasons for selling-up and moving on.

Both now aged over 60, it's time to retire, sell-up and move to Florida to enjoy the sunshine and spend more time with the grandchildren.

Independency on the present owner

This is where you declare that your business is already well prepared to continue without your personal and unique presence. A prospective buyer wants to assume that the key information and customer/supplier relations are well documented and professionally handled by the company's staff.

The business is already prepared for the change of ownership. Customer relations, contracts, technical blueprints, and other key information is well documented. The staff members are trained to manage all operations without the present owner's supervision.

Product or service

Briefly describe your main product(s) and/or service(s).

Specialist on-site fabric cleaners and wooden floor polishing and restoration. A combination of scheduled jobs and emergency call-outs to treat recent spillages and stains.

Customer profile

Do you sell to businesses or consumers (or both)? Briefly describe the typical profile of a customer that would purchase your products or services.

WZY has built a loyal, diversified customer base of home and business customers. In Albany, sales value is similar for both customer types, although there are fewer, higher-value jobs in the business market. By contrast, Kingston branch sales revenue is heavily weighted towards domestic customers. An opportunity exists to develop the office market in Kingston, particularly for 30+ staff sites, although entrenched competition makes winning new business a challenge. Typical domestic customers have a household income exceeding $100,000.

Sales channels used

Briefly explain the sales channel(s) where your targeted customers can purchase your products or services, whether this is a shop, website, distributor, or some other sales method(s).

The website is a key channel particularly now that it takes online bookings. Joseph Blygges fulfills sales appointments with local businesses, supported by office email campaigns and telephone follow-up. Partnering is stronger now with the new "Customer Care" initiative. WZY applies onsite stain-resistant treatments to newly fitted furnishings, with the retailer/wholesaler receiving a share of WZY's margin on the job.

Key market facts

Include key market facts; prioritizing market size, trend direction, and market share. This is important information for a buyer, so do your research and reference any relevant reports which support it. Enter the total market size in units or value, ideally both. After that, indicate whether the market is growing, declining, or staying pretty much the same. Finally, enter your current percentage of the market share.

The carpet and upholstery cleaning market has grown by circa. 5% over the past five years. Tough economic times have restricted spending on new items, with homes and businesses choosing to clean rather than replace carpets and furniture/upholstery. Over the past five years, WZY has surveyed future customer intentions, which consistently highlight a preference for wooden or parquet flooring when households decide to replace carpets. This research underpinned the decision to launch the wooden floor polishing and restoration service, in order to preserve WZY's long term market position.

Main promotional methods

Outline the main promotional activity that is used to build awareness and interest in your offers and brand, such as advertising, social media, personal selling, or other methods of marketing.

Strong word-of-mouth referrals from satisfied customers have been a major contributor to profitable growth over time, enabling promotional spend to remain at circa. $50,000 p.a. Local brand awareness is the result of sustained local newspaper advertising and print/online classified ads. Social media activity is building an important following through weekly news and information blogs posted on the website, Facebook page, Twitter, Google Plus and Linked-in.

The value proposition

Why are customers buying your products or services? What motivates them to select your offer above the competing ones? Is it uniqueness, pricing, location, quality of services, etc.? In other words, try to summarize your "value proposition".

WZY provides specialist floor polishing and restoration services that stand out with high-quality of the services rendered, as well as reasonable pricing.

The main advantage(s) over nearest competitors

Businesses that survive and make sustainable profits have found a formula for adding value to customers. This formula involves companies making their offer distinctive from the competition. Briefly describe your main advantages as compared to competing rivals. Name and shortly describe 1 to 3 of your nearest competitors on the marketplace.

Competitors have yet to replicate WZY's expertise in the rapid assessment of job requirements, selection of the right cleaning materials, and effective application of chemicals using the most efficient equipment. A two-year guarantee offer on all stain-resistant treatments reflects confidence gained from consistently high performance. The trend towards environmentally-conscious consumers aligns closely with company core values. WZY has always used top-grade, environmentally-friendly chemicals, and energy-efficient methods. A price premium of up to 20% over the competition is common.

Number of employees, full time

Number of employees, part-time

Key financial facts and forecast  

Business financial strength is of vital concern to potential buyers. Describe your company's financial position by providing facts about past performance, and where it's heading next (forecast income statement for the next 3 to 5 years). Shortly describe your business's debt vs equity position.

Owner/Director discretionary expenditure has been added back to free cash flow to arrive at the final valuation. Forecast compound sales growth rate of 3% is consistent with historic market trends and takes account of Kingston's potential to expand, and the shift towards wooden floor polishing and restoration.

Staffing

Describe your staffing situation and policy. Note particularly if you’re a significant user of subcontracted labor. Enter the number of full-time and part-time employees in your company.

Albany: 3 full-time onsite cleaning specialists; 1 full-time & 1 part-time office administrator, 1 full-time & 1 part-time customer service coordinator Kingston: 1 full-time & 2 part-time onsite cleaning specialists; 1 full-time administrator; 1 full-time customer service Joseph Blygges full-time management and sales, Lizzie Blygges part-time book-keeper.

Asking price  

Type your asking price or price range. Leave it blank if you prefer people to get in touch for a quote.

Or insert the value from the business valuation tool ($310,000)

Comment on asking price  

Add further comments (if any) on the asking price

Minimum 50% of asking price required in cash on deal completion.

Owner financing  

Owner financing is a solution where instead of getting the funding from a bank or other finance provider, the buyer borrows all or part of the sale price from you - the seller. Tick this box if you are willing to consider owner financing.

Owner financing terms  

Add any details/terms about your owner financing option (if any). These details/terms could include the loan amount or percentage of the purchase price, term length in years, interest rate, and repayment schedule (monthly, quarterly, yearly).

Funding amount: up to 50% of the purchase price. Term length: 5-6 years. Repayment schedule: monthly.

Transition of business ownership

What plans do you have in place to ensure a smooth transition of business ownership? Measures might include training, a stated post-sale time commitment for hand-over completion, or even a willingness to stay on in the business for an agreed period.

WZY's business proposition is built on proprietary knowledge of cleaning chemicals and their effectiveness on fabrics. The owners agree to transfer this knowledge through ten days of intensive training, chargeable at a consultancy rate of $1,000 per day. To smooth transition to new ownership, Joseph Blygges is willing to provide the business with two days per week of consultancy services for up to six months following deal conclusion, at $1,000 per day.

Required buyer qualifications  

In considering a prospective buyer, what are the minimum qualifications they need to have, if any? Clearly state the buyer criteria here that is acceptable to you, such as prior experience and available finances. This can help significantly reduce applications submitted by time-wasters.

A buyer must have $180,000 dollars in cash on deal completion, $38,000 of which is to be deposited in an escrow deposit account. A suitable buyer will demonstrate solid managerial experience, ideally in cleaning-related services or relevant experience in applying chemicals. A background in sales and marketing would be helpful in realizing business growth potential.

Type of business sale

What type of business sale is it? It’s best here to clearly state your preference, whether you prefer an asset sale, transfer of membership, or a shares/stock transaction, without going into any detail at this stage.

Joseph and Lizzie Blygges seek a 100% transfer of ownership through a share sale.

Terms of sale

What terms of sale are acceptable to you? Here’s a chance to lay-out your minimum acceptable terms for a deal (if any). This helps set buyer expectations at an early stage, perhaps scaring off the less serious.

Nothing special, really. We are expecting to meet a serious and financially capable buyer. See the seller financing terms above.

The main business opportunities

Restrict this to the 2 or 3 main examples which are both plausible and will add the most to sales growth and profitability. You should also include any efficiency, risk-reduction, and/or cost reduction measures.

The Kingston branch has the potential to increase sales by 50% with investment in Marketing, particularly to businesses that are under-represented in the current customer mix, when compared with Albany. With consumer environmental-consciousness growing, there's a real emerging opportunity for WZY to further capitalize on its environmentally-friendly credentials in cleaning equipment, materials and methods.

The challenges and risk

All businesses have challenges and risks, so it wouldn’t be wise to pretend otherwise. Describe the top 2 to 4 main challenges and risks here that are most likely going to impact your business within the next 12 to 24 months.

The US recession causing a general "clean, mend and repair" mindset has benefitted WZY's business. By contrast, a recovering economy may impact adversely on traditional cleaning businesses. WZY's wooden floor repair and polishing service has the potential to grow significantly to compensate for any loss of traditional business but will require additional promotion to compete with more established players.

New or emerging competitors

Describe the impact on your profitability due to any new significant competitors that have entered your market during the past 1 to 2 years, or new ones that you know are about to enter.

WZY's premium pricing policy has naturally alerted existing competition. Without specialist chemical knowledge and skills, it's been hard for competitors to match WZY's restoration prowess and price advantage. A new competitor, Enviroclean, has recently opened in Kingston. Run by a chemistry graduate, Enviroclean has invested in the latest equipment and is trying to entice customers to switch with generous introductory discounts to win market share.

Improvement actions already taken

By highlighting 2 to 5 significant improvement measures that you’ve taken, particularly in recent times, you’ll demonstrate a progressive and proactive approach to running your business.

Continual improvement is key to WZY staying ahead of the game. This imperative is formalized in quarterly business reviews, involving all staff, which check performance against target and assess ways to improve the service. These reviews have seen several positive changes agreed and implemented, including online customer booking, use of post-job customer satisfaction forms, and sharing lessons learned from particularly tricky assignments. The wood and parquet floor polish and repair service was first suggested here, enhancing the range of flooring services, and helping to prevent competitors from luring away existing customers.

File attachments

You can upload files such as spreadsheets and presentations to be attached to your Sale Memorandum. Use the file uploader tool below. You may add comments about the files appended.

Expected schedule of the business sale process, attached.