If you were looking to sell your business how would you come up for asking price? I know somone who commercial work does about 8-10k month depending on what month. So do you base your selling price off what it does a year or what you would want. Does it change if you wanted money upfront or a month to month thing that I hear alot about? Thanks
I have heard of companies selling commercial routs for 6 months value. I would try to get it all up front but with banks being much tighter these days it may be hard to find someone who can borrow that much for an acquisition. If they have the cash thats a different story.
I say ask for as much as you can!
Myself, I successfully sold my clients for 6 months gross value a year ago.
I based it on the annual revenue, not any monthly slivers.
I was paid in installments over the course of 5 months.
One fat check would’ve been nice, but it worked out okay the way we did it, too.
And a friend of mine here in Toronto just sold his client list for 10.5 months of gross, so there are no rules, really.
I truly believe that the higher the hourly rate of your work, the more it’s worth, also, and the more saleable it will be.
How long the clients have been established is also a key consideration.
1 million dollars and a bulk box of ramen
Don’t forget a case of Lucky Logger beer to go with the Ramen! I used to have a whole drawer filled with those bottle caps back when I was a kid…ahem- younger I mean;)
Nothing says “deeeeelicious” like Lucky Logger and some Ramen… well except cat food!
My business is worth a lot more (to me) at this time than it would be if I wanted to sell it. If I was looking to sell I’m sure the 6mo - 12mo gross value would be reasonable - However if someone came to me today with an offer I wouldn’t take any less than the the 9 years I put in x my yearly gross revenue. Which no one in their right mind would pay. Guess I’m not selling
Unfortunately everyones business is worth a lot less than they think it is. I bought my first handful of route accounts 2 weeks ago. The guy called up and said he would give me an amazing deal at 13 months revenue, 2 minutes later I brought him down to reality and gave him 3 months. He had no contracts in place… So the salesman spent a day with him and drove around, going into each store explaining how the business was being sold, and most of them signed our service agreements.
We only paid for the ones with paper in place of course. If its not on paper it doesn’t exists…
Funny enough the guy rolled into our office today with 4 more service agreements all filled out in his handwriting. We promptly showed him the door.
Last year my routes were up for sale, for what amounted to 9 months value. BUT - They all had paper, 4 trucks, and 4 employees software came with the deal. Nobody could come up with the $… I have a lot of accounts… So eventually I guess Ill break them into pieces to sell… Probably in the next couple of years… Sooner if anyone on here is interested
Now? Right now, I’m like a lot of the cleaners on this forum. I don’t have a “business.” I have a “job.” So it’s not worth much, to anyone else, unless they’re looking to buy a job. (Which would be weird, right?)
In 5 years from now? I’m planning to sell it for six figures.
So what do you think youll need to have in place to get 6 figures for it?
What I’m working on now. A straight up money machine.
You probably have a better idea than I do… but my big thought is the importance of combining two things:
what Kevin always talks about - high value, high price points, focused target market.
Cutting edge technology (like Responsibid, which is in the budget for the beginning of Fall season), to help systematize the high perceived value. As technology gets better and better, it will make systems easier to implement, for those who are looking to work themselves out of a job.
The art (blatant Seth Godin plug) is in creating a system that creates high value for people, independent of me. If I can do that, I feel like I deserve to be paid pretty well on the tail end.
Of course, there’s a LOT of specifics in both of those two things. And marketing. Tons and tons of marketing. And systematized marketing, at that.
But those are the basics, from what I can see now.
I don’t get it Chris. Unless you were totally getting out of the business why would you sell for 9 Months Value? Let’s say it took you on average 5 years to build $15,000 a month - You sell for $135,000
But keeping and working it - after paying an employee (let’s use 25%) and expenses (rough guess 10k) you’re going to profit almost what you sold it for in one year. If it took you another 5 years to build the same $15,000 a month, it just doesn’t weigh out to me.
Please don’t take offense. I don’t want it to come across like I’m questioning your tactics either - just curious to your plan by selling.
Chris, if you ever are interested in splitting a route and have anything in Marshalls Creek, East Stroudsburg, Stroudsburg, Snydersville, Tannersville…all in PA-I’d be interested.
Many sell for 1/3 the annual revenue. For most, that means their 100k co will fetch around 30k. Not much to retire on for sure.
a million dollar co for 335k
one of the largest, a 13 mil company sold for 4 mil, and that was all documented commercial contracts
of course, very subjective to the buyer and his wallet. and as pointed out, those contracts and agreements in writing make the difference. If a 100k co had nothing on paper, does it even exist to sell? “Goodwill” doesn’t sell very well.
Commercial sells waaaaay better than residential. Look at Fish, why do they pound in their franchisees to get commercial, and at the end of the day the franchisee doesn’t even own those accounts! Fish Corporate does!! They know where the value in resale is, commercial.
In reverse, that means it would take 333k to build a 1 mil company. Whether in 333k of cash, pounding the pavement or time etc.
I agree with what everyone has said on this thread.
My only question is if you build the business to the point
where it runs independently without you, why would you
want to sell it??
I mean your constantly making money with very little input…
to me that is an investment that is worth holding onto.
That’s exactly how I think too… But just because it’s my thinking doesn’t mean it’s correct. I may be missing something??
This has run through my head a lot. Mainly because of my personality, I’m either gonna be calling the plays, or not part of the game. Don’t think I’d do well just making money from it. Feel like I’d be just constantly battling getting sucked back into daily operations.
the biz is worth 1. what I say it’s worth or more importantly 2. what buyer says it’s worth
as biz owners we always feel its worth more because of all the blood sweat and tears, accounts whether residential or commerical unless contractually obligated to your company are worthless if you really think about it. What guarentee does a buyer have that the accounts will remain loyal for a specific period of time unless contracted? If the sales pitch is well they love me they’ll stay loyal if I’m a buyer I say well they don’t love me.
imho someone who buys a service based business is really buying a brand that’s established dominates search engines and is well known. Which is why no buyer ever pays 100% unless your tmobile and they pay over your share price because locked in contracted subscribers
the in between is called negotiations