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Who knew that scrubbing, sweeping, and sanitizing could add up to billions? 🧽 If you’ve ever looked around your spotless kitchen and thought, “I could get paid for this,” you’re not alone. The cleaning services industry in Canada is making serious money, and it’s not just about keeping dust at bay. 

In a post-COVID world, cleanliness is now a top priority in homes, offices, and beyond, the demand for professional cleaners is growing fast. In fact, this is one industry where getting your hands dirty is a very clean-cut path to profit.

Thinking about investing in a cleaning business? Let’s dive into why this industry is making a sparkling comeback and how buying a cleaning service could be a tidy addition to your investment portfolio.

INDUSTRY BREAKDOWN

Canada’s Cleaning Services Industry: A Polished Opportunity 🧹

The cleaning services industry in Canada isn’t just about tidying up; it’s a sweeping powerhouse that spans residential, commercial, and even industrial sectors. In 2024, this industry is projected to reach a market size of $6.4 billion and is set to keep growing at a steady clip. From scrubbing homes to keeping offices spotless, cleaning services cater to a wide range of clients, each with their own unique (and sometimes messy) needs.

For residential clients, it’s all about convenience. Busy households want clean spaces but don’t have the time to get down and dirty. For commercial clients, cleanliness is part of their brand image—no one wants to make a business deal in a grimy office. Then there’s specialized cleaning, which involves everything from post-construction cleanup to industrial sanitation. Each of these segments offers different revenue opportunities, and an established cleaning business often has a loyal client base that keeps the bookings rolling in.

Industry Trends

While cleaning may seem simple, the industry itself is anything but. Post-pandemic, everyone—from home dwellers to corporate bigwigs—is taking cleanliness seriously. Health-conscious clients are driving demand for sanitization and deep-cleaning services, and this isn’t likely to change anytime soon. If anything, the standards for cleanliness have only gotten higher, which spells good news for the cleaning industry.

And then there’s technology. Yes, even cleaning is going high-tech! From scheduling apps that streamline operations to advanced equipment that makes cleaning faster and more efficient, technology is giving cleaning businesses a competitive edge. For buyers, a business that’s already tech-savvy offers a modern, scalable model that can grow alongside demand.

The Finances

Investing in a cleaning business might not seem glamorous, but the numbers tell a different story. Cleaning services have a relatively low barrier to entry compared to other industries, with manageable start-up costs and minimal training requirements. But here’s the kicker—once you’re in, there’s real profit to be made. With Canadians spending billions to keep their homes and workplaces clean, the market is ripe for growth.

The Canadian cleaning services industry is expected to grow at an annual rate of 6.5% over the next few years. That means consistent revenue potential, especially for businesses with long-term commercial contracts or specialized services that bring in higher rates. Residential cleaning can provide steady cash flow, while commercial contracts—think offices, retail spaces, and schools—offer predictable, recurring income.

And then there’s specialized cleaning, where the profit margins are even juicier. Industrial cleaning, post-construction cleanups, and other niche services command premium rates due to the skill and equipment required. Plus, with the rising demand for “green” cleaning and sustainable practices, businesses that cater to eco-conscious clients are seeing even more financial reward. So, whether you’re vacuuming up cookie crumbs or scrubbing down factory floors, there’s money to be made in every corner of this industry.

Buy or Bust?

If you’re on the fence about investing in a cleaning business, it’s time to sweep away your doubts. With low start-up costs, steady demand, and growing niches like green cleaning, this industry is far from a “dirty” investment. The cleaning services industry in Canada offers stability and growth, with the bonus of high margins for specialized services. It may not sound glamorous, but as the saying goes: “Where there’s muck, there’s money.” And if you’re ready to get in on the action, buying an established cleaning business could be your ticket to a tidy profit.

Check out these Cleaning Services Businesses for sale:

1. 5 Star Exterior Residential/Commercial Cleaning in Chiliwack, BC - $899,000

2. Residential & Commercial Cleaning Business in Saskatoon, SK - $170,000

3. Merry Maids Franchise Location in Surrey, BC - $265,000

Interested in a particular industry? Reply to this email with the industry you are curious about and keep your eyes peeled in upcoming issues. 👀 

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DEAL REVIEW

Established Profitable Commercial Cleaning Business 🧼🫧

This business is a highly-profitable cleaning business with a strong reputation on Vancouver Island, BC. 

Deal Facts 🔥

Green Flags 🟢

• High SDE Margins: The business enjoys an impressive SDE margin of over 29%, reflecting efficient operations and a solid cost structure. Such profitability provides a cushion for potential buyers to reinvest or weather market fluctuations.

• Established Operations: With a foundation built since 2019, the business has grown quickly and developed a strong reputation in the commercial cleaning industry. It benefits from 50% repeat business and consistent client referrals, indicating customer satisfaction and loyalty.

• Full-Time Management in Place: A full-time management team supported by reliable long-term employees and subcontractors reduces the reliance on the owner. This setup offers a smoother transition for a buyer.

• Home-Based with Minimal Overhead: Operating from home minimizes fixed costs and enhances profitability. Additionally, the flexibility of a relocatable business adds appeal to a broader range of buyers.

• Seller Support: The seller offers up to three months of training and support post-sale, ensuring a buyer has sufficient time to understand the business operations and maintain continuity.

Red Flags 🔴

• Aggressive Asking Price: The $1.4 million asking price equates to a 5.2x SDE multiple, which is above industry norms for similar cleaning businesses. Buyers may need to negotiate a lower valuation or use creative financing to justify the investment.

• Subcontractor Reliance: The business uses subcontractors for most of its operations. While this minimizes employee overhead, it opens risks such as circumvention, where subcontractors could directly approach clients and undercut the business.

• Cash Flow Risks: If payments from commercial clients are received post-service, the business may face cash flow challenges, especially when subcontractors need payment upfront. Understanding the payment cycle is critical.

• Undefined Recruitment Strategies: The quality and consistency of subcontractors play a significant role in service delivery. Without a well-documented recruitment and training process, maintaining service standards could be a challenge for a new owner.

• Geographical Uncertainty: Though listed as relocatable, it is unclear whether the business's clients and subcontractors are centralized around Vancouver Island. This could limit its practicality as a fully relocatable operation.

Possible deal structure: This business presents an opportunity for a tiered earn-out structure to bridge the valuation gap and mitigate risk. A potential deal structure could include:

• Lower Cash at Close: Offer $500,000–$550,000 upfront 

• Performance-Based Earn-Out: Agree on subsequent payments based on achieving specific revenue or margin targets, with the total deal value potentially reaching $1.1–$1.2 million.

Alternatively, a buyer could propose an all-cash deal at a reduced price of $800,000 (closer to 3x SDE) to eliminate future uncertainty.

This structure allows the buyer to align the price with the business's actual performance while addressing the seller’s desire for a higher valuation. Buyers should carefully assess contracts, payment cycles, and subcontractor agreements to ensure stability during the transition.

Watch Our Video Breakdown

For a more in-depth analysis, check out this video deep dive of the deal by our Founder, Morgan Tate:

Want to learn more about this deal? Reply to this email with a “send me more details” and we will connect you with the broker!

TWEET HIGHLIGHT

Who knew “escaping the rat race” might involve roofing in Florida? Apparently, swapping the cubicle for a ladder can cashflow big time! So, if you’ve got as little as $75K, you, too, can trade spreadsheets for shingles—and maybe a tan. 🌴 Just remember: the sun’s hot, but that cashflow’s hotter!

And here’s the kicker: buying a business, even in industries you might not have thought about, can be your ticket to a cubicle-free life. It’s about investing in something with steady demand (because hey, everyone’s roof needs some love at some point), taking control of your own schedule, and building wealth on your own terms. So if freedom, flexibility, and financial upside sound good, this could be your golden opportunity.

GOOD READS

Recommended Resources 📚

Below is a list of articles, books, and other resource we recommend for buyers or operators of small businesses!

1. Although here at Mainstreet Memo we like to think we give you all the info about emerging industries to buy a business in, this article highlights industries experiencing significant growth, offering insights into emerging opportunities for business buyers.

2. The Ultimate Guide to Buying a Business in Canada – This comprehensive guide covers everything from finding the right opportunity to negotiating the deal, with insights into financing options and sale structures..

3. Looking for hidden businesses? 👀 This guide shares strategies for locating business opportunities that aren’t publicly listed, including networking tips and approaches to connect with potential sellers.

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