How Much Can You Sell a Service Business For?
If you’re interested in selling your maintenance business, you might wonder, “How much can I sell my service business for?” The answer would depend on the company’s valuation.
A large part of business valuation is calculated based on the company’s revenue. Learn what buyers look for when purchasing a service business — get expert advice on how to increase your revenue and profit margins. This will make your company more appealing to buyers and give you the best possible profit when you sell.
How to Sell a Small Service Business
Finding a buyer for your service business isn’t that hard, provided it’s the right time and the business is healthy. What does that mean?
- Stable or growing customer base
- Positive outlook for the future
- Good reputation in the community
- Strong revenue relative to expenses
What if your company’s revenue isn’t where it could be? There are lots of steps you can take to improve it.
Grow Small Business Revenue
There’s no single way to increase your revenue. Most maintenance businesses find that a combination of the ideas below work best.
The first thing most people think of is to bring in more clients. Ideally, you want to be at the point where you’re hiring more people or even expanding to accommodate all the customers who want to hire you.
How do you find new clients?
- Connect with property owners and management companies in person or via social media.
- Join membership groups like the Chamber of Commerce, Rotary International, etc.
- Get referrals from other businesses that don’t compete with yours, like contractors or landscapers.
- Network with real estate agents who know about companies needing maintenance services.
- Subscribe to municipal announcements for jobs bid by government agencies.
- Get to know people who hire service providers at schools, health clinics, places of worship, etc.
What if your calendar is already packed? First, consider increasing your available hours. Could you operate 24/7 with on-call emergency services for jobs like snow shoveling or party cleanup?
Then it’s time to increase your fees. When a contract is up for renewal, up the price of services. The clients you work for probably do this with their clients every year too. It’s part of doing business.
Another option is to upsell on every job. Let’s say you’re performing janitorial services for offices; you could add plant maintenance, furniture moving, window cleaning, or similar tasks for an additional fee. Not sure what your clients need? Survey them and find out.
How to Increase Profit Margins in a Service Business
We mentioned revenue versus expenses above. This is your profit margin. That’s the difference between what you bring in and what you pay to operate.
How can you reduce overhead to increase profits?
- Operate as a mobile business instead of from a headquarters.
- Pay down loans and credit cards to get rid of interest accumulating.
- Buy supplies and equipment in bulk to save money over time.
- Optimize routing for more billable hours and lower fuel costs.
- Shop around for insurance coverage and bundle policies.
- Automate operating tasks to free up staff for billable time.
- Go through every expense line by line, and eliminate waste.
Have you done the work to make your service business ready for purchase? The Batallan Group would like to speak with you. We are experts at acquiring businesses in your field. Reach out to schedule an exploratory conversation today.