Maria Dorian is a former maid service owner, and current owner of Taskaway VA.
After the sale of her 750K yearly revenue cleaning company she realized she could take her experience, and help other cleaning companies grow their business and prepare them to sell. In this post, Maria will tell you how to prepare your maid service so that when it comes time to sell, you can get the best price possible.
When you start a business, it’s not uncommon to have an end goal in mind. Whether that’s a revenue goal, a plan to step away from the company, or the intent to ultimately sell, there are actionable steps you need to take every day to achieve those goals.
If you’re planning on selling your maid service, the decisions you make today will impact your ability to sell the business and how much you’ll sell it for. Whether you’re planning on selling your maid service soon, or it feels like a faraway dream, the way you run your business can significantly impact that sales process.
In this post, we’ll go over the things you need to do in your business to make sure that it’s in the best place possible when it comes time to sell. You’ll also learn what the sales process can look like and what factors will impact your maid service’s final sale price.
Optimizing your day-to-day operations in preparation to sell
The better your business looks to a potential buyer, the more you’ll be able to sell it for. Here are a few things you should be doing now to make it easier to prepare your business to sell later.
Make sure your books are always up to date and accurate
Messy or out-of-date financial information can be a huge red flag to potential buyers. Make sure you’re keeping accurate accounting information and have a professional handling your financials.
Use accounting software that makes it easy to share your financial information with a buyer. Most potential buyers will want to see thorough financial information dating back at least three years to make an accurate assessment of your maid service’s financial health.
Invest in systems and processes
Before handing over your business, you need to have systems in place that other people can follow. Spend some time to make sure you’re documenting everything you do. A buyer doesn’t want to buy a job. They want to acquire processes and a team that will be able to help them grow the business.
Essentially, most of the time they want to buy a company that runs itself. Make sure you have thorough documentation of the systems and processes you use to run your business on a day-to-day. It’s also a good idea to have specific examples of times when you’ve stepped away from the business, and it continued to run on its own, or grew without you directly managing it. This will show that your business is automated and can continue to run without the new owner.
Keep your company information thorough and up to date
Keep thorough records of your company information, such as your employees, contact information, vendors, software, suppliers, and more. The more information you can share with a buyer, the more organized your company will appear. A buyer wants to know that they can pick up where you left off and have all of the necessary information to keep the business going after the sale is made.
Maintain good employees and team culture
Potential buyers will look at your employment numbers, employee culture, and turnover rates when assessing your business’s value. When it comes to your employees, working with A-players who are in it for the long haul will make your business more valuable as the buyer will know they can rely on low turnover rates and reliable staff.
Maintain a good reputation
When selling your business, a potential buyer will likely do their own research to see what your company’s online presence is like and read your online reviews. You can’t always avoid negative reviews or customer complaints. But if your end goal is to sell, it’s important to factor that goal into every decision you make.
For example, a client asking for their money back for an unfair reason might make you angry. And out of principle, you may want to refuse that request. But that decision to fight back might result in them leaving you a bad review.
When looking at the big picture, negative reviews will cost you a lot more than the refund you give an unsatisfied customer. Poor reviews online will make your company less valuable to a buyer who wants to invest in a company with a good reputation.
Preparing for the sales process
Once you decide that you want to sell your business, there are a few things that need to happen. Here are six stages that most companies go through from the initial decision to sell until the sale is finalized.
Decide if it’s the right time
Deciding that you want to sell your business doesn’t automatically mean it’s the right time to sell. It’s important to weigh this decision against other factors, as well as get feedback from a professional. Maria recommends speaking with a broker who can learn about your business, give you an accurate evaluation and recommend whether it’s a good time to sell.
Suppose the economy is bad or your business has some organizational issues. In that case, the broker might recommend waiting until the time is better or your business is in a more stable place. This will help you get the best price when selling.
Set an asking price
Once you’ve made the decision to sell, it’s time to set your price. If you’re not experienced at selling a business, or this is the first business you’re selling, it’s recommended to work with a broker to come up with a reasonable asking price that makes sense for your region and industry.
Here are some factors that can influence your asking price.
- Company age
- Number of clients
- The size of those clients (Having more clients with smaller accounts is more valuable than a fewer number of clients who pay more)
- How long you have been in business
- How long your clients have been with you
- Turnover rates and number of employees
- Expenses and business debts
- Brand recognition and online presence
- Your role in the business
- Your market and competition
Clean up your internal systems
Before you can meet with potential buyers, you need to be sure that all of your information is clean, organized, and up to date. Make sure your financials are all up to date and accurate, your training manuals are thorough and up to date, and any systems you use are well documented.
You also want to update any company information, such as employee information, software information, and client information. This is a good time to create any new documentation, SOP’s, or processes that you think will ease the transition after the sale and add value to the business.
Gather necessary information
Buyers will want to see as much information as possible. Not only that, but you want to make your business as appealing as possible and present it in the best light to market it to a buyer.
When gathering information to share, here are a key things to include:
- An analysis of comparable businesses for sale to justify your asking price
- A profit/loss statement
- Workers compensation statements
- Previous sales tax information
- Your unemployment rate (the lower, the better)
- Your company stats
- Three years of earnings reports
- A summary describing your business and team culture
- Strengths and weaknesses of your business
- Average ticket price
- The churn rate for employees and customers
- Media mentions or awards you’ve received
- Average online reviews or ratings
- Marketing plan and SEO ranking
You’ll also want to address what you’ll do after the sale. Some owners will stay on for a duration after the sale to help the transition or consult the new owner. Other business owners will want to leave immediately after the sale and hand over all responsibilities. Decide what role you’ll play, and make sure you have a plan for yourself after the deal goes through.
When hearing potential offers, decide the type of sale you want to have. Will you be asking for all of the cash up front, a payout agreement, revenue share set-up, or another method of payment? Also, decide if you are willing to negotiate or are firmly set on your asking price. Making this decision beforehand will streamline the process and make sure that you only hear offers from people who can meet your requirements.
Accept an offer
When deciding who to sell to, keep your current staff in mind. If you are selling to someone you don’t particularly like, it’s likely that your team won’t like them either and will have a more challenging time with the transition.
Follow your gut instinct on whether or not you think a potential buyer is the right person to acquire your business. After all, you are handing over something that you put a lot of hard work into. You want to make sure it ends up in the right hands.
What you do today will count when it comes time to sell. Make wise decisions, correct your mistakes quickly, and change what needs to be changed to put your business in the best position possible when you decide to sell it.
To learn more about preparing to sell your business and other resources Maria utilized when selling her own cleaning business, check out her full presentation from the 2020 Maid Summit.
The Maid Summit, hosted by ZenMaid, was designed to help maid services owners connect with industry professionals and sharpen their skills to grow their cleaning business. Check out replays of over 40 talks from this year’s event, here.
Thanks for reading! Check out these other articles on ZenMaid Magazine to help you grow your maid service:
- 4 Training Strategies That Turn Inexperienced Cleaners into A-Players
- How To Get Comfortable Having Difficult Conversations With Your Team
- How to Use The Five Love Languages to Nurture and Inspire Your Cleaning Team
- 3 Things You Need To Go From Cleaning Professional to Cleaning Business Owner
- How and Why To Use Video Marketing For Your Maid Service