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From determining the value to filling out the paperwork, there’s more than you might think to selling your cleaning business. Make sure you get the most for your money.

For one reason or another, the time for selling your cleaning business has finally come. No matter how many years you’ve put into your company, whether it be a lifetime or a single year, you’ll want to make sure that you get what your company’s worth.

But how do you know what your business is worth? It’s certainly got to do with more than just the equipment you have. (In fact, your equipment is probably the least of your business’ value.) There are dozens of variables to consider, not to mention calculations to make, to maximize the value of selling your cleaning business.

Selling Your Cleaning Business

4 Steps to selling your cleaning business

1. Preplanning

To determine the appropriate selling price for your business, collect some information first, if you don’t already have it handy. Here are some of the things you’ll need to have ready:

  • All current and pending contracts, including longevity of contracts and history of service
  • Accounting ledgers
  • Employee records and overhead costs
  • A list of physical assets, such as cleaning equipment, office equipment, supplies, and vehicles

Some things to think about here, particularly if you haven’t fully decided to sell:

  • What kinds of contracts do you have? Do you work with many small accounts, or a few large accounts? Typically, investors in cleaning businesses prefer many smaller accounts to the large accounts. That’s not to say you should go out and try to rack up a bunch of new accounts before selling your cleaning business (client longevity matters, too), but it will affect the value if you don’t have that many clients, even if your current clients are big accounts.
  • Do you have a sales team (or person) already?
  • Is your workforce likely to stay on board after the sale of the company?

 


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2. Determining the value

There is no set formula for determining how much your cleaning business is worth. In theory, you could set any price. However, if you want to maximize your profit while also remaining competitive in the marketplace, do some calculations to find out approximately how much is a reasonable ask. We highly recommend that you contact a qualified business broker who is familiar with the cleaning industry to help you figure out the proper multipliers to use for your valuation. If you want to get a rough idea, take the average of the following:

  • 70% of your annual revenues
  • 80% of your net sales
  • 450% of your net income
  • 650% of owner’s equity

Take the final number and add any additional value, such as the cost of equipment and furniture, to get an approximate value for your business.

3. Find a buyer

Finally, you need to find a buyer! Again, the best way to do this is to go through a business broker, but if you’re selling your cleaning business independently, you’ll want to make sure you list it in the right places. BizBuySell.com and BizQuest.com are two online resources that can be helpful, as well as sites like Craigslist. Consider taking out ads in local publications with a similar target audience as yours. And of course, one of the best ways to sell anything—word of mouth. Tell everyone you know what you’re up to, and you might be surprised at the prospects that come your way.


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4. Deciding not to sell

After reading this, you may rethink your decision to sell, which isn’t a bad idea. Even though now is a good time for selling your cleaning business (the Bureau of Labor Statistics projects average growth for the industry through 2024), double-checking with yourself that you’re doing it for the right reasons is just smart business.

If you’re selling because your business isn’t doing as well as you’d like, there are some other checklist items you might look at that can help you build on what you already have, which may be more lucrative in the short term. Have you:

  • Tapped all your resources to make your cleaning business a success?
  • Invested in new technologies and updated equipment?
  • Hired the right people?
  • Focused on a niche market?
  • Done all you can to reduce turnover and increase customer satisfaction?

If the answer to any of the above questions is no, perhaps it’s not quite time to sell. However, if you answered yes to everything, or if you just know in your heart of hearts that it’s time to move on, you’ll do well to be as thorough as possible. If you can, make one last investment in a good business broker, take the time to gather all of the necessary information to defend your price point to any potential buyers, and don’t settle for less than you’re worth.

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