Akram Abdullah

In just eight months, business owner, Akram Abdullah, bought a commercial cleaning company at a fraction of its asking price, fixed it, and sold it for a considerable profit using what he’d learnt from the Dealmaker’s Academy.

Buying a Business and Flipping It In 8 Months (Zero to Six Figures)

On the day he met the young owner of a commercial cleaning company that was up for sale, prospective buyer, Akram Abdullah, was sure of one thing: he didn’t want to pay the full
asking price.

Twelve months prior to the sale, the owner had placed the sale in the hands of a broker who had convinced her that she should ask for £180,000. Unsurprisingly, for such a small business, there had been little interest from potential buyers.

Meanwhile, Akram had been on the hunt for a new business. He and his business partner had recently sold an insurance brokerage they had grown from scratch over nine years.

“We’d had enough,” recalls Akram, “It was successful; it was profitable. We just didn’t really enjoy it anymore. If somebody had offered to buy it off of us, I would have said, ‘Here are the keys. Take it.’ It was a good business, but it needed somebody fresh to come in who had the enthusiasm and excitement to take it further.”

The pair had sold the business relatively quickly using deferred consideration. It was then that Akram began to look for a new business opportunity, hopefully, one that didn’t involve starting from scratch.

His transition from a business owner to a business buyer was aided by the podcasts on Business Buying Strategies of the Dealmaker’s Academy and a Discovery Day seminar. re that starting a business from scratch wasn’t really what I wanted to do,” recalls Akram. After all, he had done that with his insurance business and a financial services company. “I didn’t really fancy doing it again. It made a lot of sense to buy something that had been running for at least five or six years.

“The obvious advantage with buying an existing company is that it has an infrastructure, cash flow, and a customer base.” He began to think about what type of business he would be interested in. “I wanted a business with recurring revenue. With the businesses I had prior to this, you were only as good as your last month or last day, and that becomes quite tiring.” Besides, he wanted a business that was easy to understand and one to which he could add value.

Finally, he decided that an established commercial cleaning operation would meet his new criteria. It would be easy to understand and can benefit from recurring revenue.

“Ideally, I wanted to acquire one business and bolt others onto it. I was looking for a platform.” He set out to find owners who wanted to sell their businesses. 

“I registered with all the business brokers out there. Even before I went on the Discovery Day, I realised that most businesses were really overpriced. I was speaking to the sellers, and their expectations were extremely high.”

Undaunted, he sent about 200 letters to the owners of commercial cleaning companies. “I got about 14 responses. Of which, I had four meetings that were quite positive. While all this was going on in the background, one of the brokers that I registered with contacted me to inform me that a business I was interested in had a reduced price.”

Akram called back and spoke with a junior member of staff who let slip that the business owner was hoping for a quick sale due to “personal circumstances”.

His interest piqued, Akram asked for the company’s financial details and, if possible, a meeting with the business owner. The owner agreed to meet the very same day, which to Akram implied that she was a motivated seller.

Initially, the business had been advertised for about £180,000, but that had been reduced to about £120,000. Having looked at the accounts prior to the meeting, Akram decided that he would pay no more than £80,000 for the business. During the meeting, the stressed-looking seller explained why she was so keen to sell.

“She had two powerful reasons to sell.” Firstly, her passion for the business had dwindled over the past 10 years. “Running the business was not the future she saw for herself. Her passion was teaching. In the last two or three years, she qualified and started working as a teacher. That’s what she wanted to do.”

Secondly, she was six months pregnant. She planned to take a year off from teaching to travel around Europe with her husband and child. “But she wanted the business sold before she gave up teaching. So, we had three months to make that happen.”

The talk naturally turned to price. How much did the owner want for the business?

The owner said that she wanted not £120,000, but £80,000 for the business. As an avid listener of the Business Buying Strategies podcasts, Akram knew that it was important to hide his excitement about the price drop.

“I expressed mild shock and replied, ‘Look, if I knew that you were going to ask for as much as that, I wouldn’t have had this meeting. I wouldn’t have wasted your time or my time.’ I admitted that a couple of other deals I was working on were more attractive because the opportunities were bigger. I continued, ‘If I’m honest with you, your business is quite small, and it isn’t that attractive.’”

“She thought for a while, and then replied, ‘Well, make me an offer.’”

Akram knew from what he’d learnt that it would be a mistake to make an offer at that stage. “I explained to her that that’s not how we work and reiterated that the business was small, and she just needed to give me a price. She thought about it for a bit and said, ‘Okay, I’ll take £40,000 for it.’”

Once again, Akram managed to hide his surprise.

“I was quiet because I was surprised that she dropped by half just like that. I think she misunderstood the reason for my silence. She thought I still considered the price to be too high.”

In fact, I was just wondering whether to accept her offer. But before I could say anything, she blurted out, ‘Right, the lowest I can go is £25,000. I can’t go any lower than that.’”

How did she reach that figure? Turned out that it was the amount she needed to pay off the broker and outstanding loans. The remaining amount would go towards a camper van for the European tour.

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The final deal structure involved Akram paying £20,000 on completion and £5,000 after three months.

As the business had a £20,000 overdraft facility and several thousand pounds in the bank, Akram could buy the company without putting any money down.

“Potentially, I could have pushed it, but I didn’t feel the need. I just wanted that deal done.”

His goal of buying a business with recurring income was achieved sooner than he’d ever have imagined. “The next morning, I logged into the company bank account and discovered that an additional £9,000 had dropped in overnight from monthly invoice payments.

“That was a real game-changer for me. I guess that’s when I realised that this was the right way to do things because I hadn’t had to work for that £9,000 to drop in. Every day since then, money drops in as invoices get paid in the background. It made life a lot easier. I didn’t have to work for it.

“All of a sudden, I had a business with the recurring revenue that I had been so interested in.”

The recurring revenue may have been a dream come true, but the business had areas that needed improvement.

“I knew from the financials and from talking with the owner that it needed some fixing. It was unloved.”

Akram and his Operations Director began by reviewing all the contracts. Although the cleaning staff had benefited from at least five wage increases in the five years prior to this, the cleaning contracts had not changed at all.

“So staff costs had gone up, but we weren’t taking any more in revenue, so I needed to fix that.”

Fortunately, the meetings with the clients to discuss how the business would be raising prices proved relatively painless. “They were very understanding,” recalls Akram. A few unprofitable contracts were offloaded.

Within two months, the company’s profitability had increased. Additionally, Akram improved the lead conversion process. He had discovered that leads generated by the company website had not been followed up.

“Almost every other day, leads had come in, but no-one had done anything with them. I saw that seven or eight leads had come in the month before I bought the business. I got onto those, managed to acquire new contracts, and get more going forward.”

The COVID-19 pandemic didn’t dent the company’s progress, despite having most employees work from home, reports Akram.

“We still managed to grow through the COVID pandemic. It wasn’t a major issue for us.”

Before long, Akram’s Operations Director announced that she’d like to buy him out or leave to set up her own commercial cleaning company.

“She got really excited by the company’s growth and enjoyed it so much that she wanted to set up her own business or, if possible, buy mine. That was about eight months into me having bought the business, so, after giving it some consideration, I decided it made sense to exit from it.”

He sold the company for six figures, which meant he had not only bought the company for no money down but also left with a sizeable chunk.

What’s more, he agreed to act as a consultant to the business.

“I already had two or three other deals from the enquiry letters that I sent out to other business owners, which were bubbling away in the background.”

Besides, he agreed to look for businesses that his Operations Director could bolt on to her commercial cleaning company in return for recurring revenue.

“It would allow me to benefit from doing the deals and still be part of the growth element of the existing business without any need to get involved in the operational side of things.”

He believes that keeping a distance from the company’s day-to-day operations allows an owner the opportunity to clearly see the areas of the business that need more attention.

“For me, the fun bit involves identifying all the things that the previous owner missed, and fixing them. When you’re in the business, it’s easy to miss something. From the outside, it is a lot easier to observe a business.

“I am now looking at bigger acquisitions for my next platform.”

He believes that the key to success in buying businesses is identifying the seller’s motivation. “It is more challenging to buy a business through a broker, but if the seller’s motivation is right, you can still get a good deal.”

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