George Vallone·October 12, 2023

When Buying Small Goes Right | George Vallone Interview

George Vallone, a former B2B tech/SaaS sales professional, ran a proprietary outreach search during the pandemic (targeting ~400 cleaning companies across the southeast) and bought Newell's Cleaning Services in Nashville, Tennessee in January 2021 for well under $1m in revenue. This is a return/update interview roughly two and a half years post-acquisition: George repositioned the business away from general cleaning and Airbnb cleaning into a focused apartment-turnover service for large multifamily communities, growing revenue from $1.1m (2021) to $2.3m (2022) and tripling overall by late 2023, while running at 50% COGS / 30% overhead / 20% profit margin. Growth drivers include a strict quality-assurance and contractor-incentive system, pricing power that lets him turn away low-quality customers, deep ties to the local apartment-management community, a strong Nashville multifamily construction tailwind, and a newly hired VP of Operations (a former customer from property management) who now runs sales and day-to-day operations. Looking ahead, George is building custom scheduling software (a digital "turn board" app) to cut scheduling time and support scale, and is launching a bootstrapped (non-SBA, no new acquisition) expansion into a second city in 2024, run by another former-property-manager hire, while candidly wrestling with how much to delegate versus stay in the driver's seat himself.

Deal facts

revenue: $1.1m in 2021 (at acquisition), $2.3m in 2022, tripled+ by 2023
financing structure: SBA loan (referenced paying "the SBA every month")
notes: Bought a sub-$1m revenue cleaning business (Newell's Cleaning Services) in Nashville, TN in January 2021, acquired via a proprietary outreach campaign targeting ~400 cleaning companies across the southeast. Grew revenue from $1.1m (2021) to $2.3m (2022, +100%+) to a targeted ~20% growth in 2023. Margins: 50% COGS, 30% overhead, 20% profit margin on an accrual basis. New 2024 expansion planned as a bootstrapped (non-SBA) startup in a new city rather than an acquisition, to avoid loan payments given current interest rates.

Why this business

George came from B2B tech/SaaS startup sales and saw a window during the pandemic to make a career change. He ran a systematic, self-directed search (with help from an intern) targeting roughly 400 cleaning companies across the southeast US, and acquired Newell's Cleaning Services in Nashville, TN in January 2021, getting what he describes as a good deal because it was during the pandemic. He then repositioned the business away from general cleaning/Airbnb cleaning into a specialized apartment turnover service for multifamily communities of 150+ units, which he identified as a strong product-market fit niche in the Nashville market.

What's working

Cutting everything that wasn't turnovers (dropped general cleaning and Airbnb cleaning) to focus exclusively on multifamily apartment turnovers, which he credits as the primary driver of aggressive growth
Pricing power: the business is selective, choosing quality customers who pay on time and accept posted pricing, and turning away smaller or price-sensitive projects
A formal quality assurance program with 2-3 daily field inspectors who log contractor mistakes into scheduling software; results are reviewed with the whole contracting team and tied directly to raises and schedule-preference rewards/punishments for contractors
Deep relationships with local property managers and the Greater Nashville Apartment Association as the core sales channel, with a strategy of mapping national property management companies' "sister properties" in other cities to guide future geographic expansion
Hiring a VP of Operations (Jeff, a former customer/regional property/maintenance manager) who now runs sales and day-to-day operations, freeing George to focus on growth initiatives
Strong tailwind from being in a fast-growing market (Nashville's multifamily construction boom) with more demand for turnover vendors than there are qualified vendors
Building proprietary scheduling software (a "digital turn board" app with two-way customer communication and property-specific pricing) to cut per-job scheduling time from ~4 minutes to under 30 seconds and reduce the need to keep hiring schedulers as volume grows
Recruiting VPs of operations from within the property management industry itself (former customers who understand the value proposition and are burned out on property management), which produces natural, high-trust salespeople

What's hard

The business is highly seasonal, spiking 20-30% in revenue from May through September, which complicates staffing decisions like hiring a full-time carpet-cleaning/handyman employee
Deliberately slowed 2023 growth to ~20% (versus 100%+ in 2022) to lay infrastructure and avoid harming service quality for existing customers while "bursting at the seams"
Emotional difficulty of delegating: George says he is candidly struggling with handing the reins to his VP of Operations because he doubts anyone else will grow the business as aggressively as he would himself
Building custom software is a real financial and adoption risk (cost was under $50k but not disclosed exactly); no existing SaaS product fully met the business's need for non-recurring, per-job detail capture and per-customer/property-specific pricing
Choosing to expand into a new city via a bootstrapped, non-SBA startup rather than acquisition, partly to avoid loan payments and elevated interest rates, which means building an unproven playbook from scratch in a new market

Notable quotes

We've tripled, probably more than tripled, the revenue since I bought the business two and a half years

I think it's probably the primary reason for that aggressive growth is because we found a product market fit in multifamily with these turnovers that is very unique to at least the Nashville market.

What was that famous quote, show me the incentive I'll show you the outcome. It's like if we're not incentivizing our contractors in some way to do better, well they're going to take the path of least resistance if there are no repercussions and no rewards for the quality of their job.

I don't want to take full credit for our success, I'm in the right place at the right time for this business.