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It may be the most common question we receive here at SFS.JonDon.com:
“How much do you think my business is worth?”
A logical subject considering that you have invested years of your life into your company! NOTE: At the end of the day you will never REALLY know “what it is worth” till certified funds change hands when you close on the sale of your business!
However, even if the sale of your business is in the far off future, Steve Toburen explains why you should start tracking its value on a monthly basis right now. In this “How to Value Your Cleaning Business” Special Report, Steve breaks down four factors involved in an Initial Business Valuation (IBV) and gives you an IBV worksheet to value your own company.
Please, let us know how it works for you!
Steve
Disclaimer: Never put a formal price on and/or sell your company without competent professional financial and legal advice. This information is provided only to help you track your progress as you build your company.
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This is a good way to keep focused on your long-term goals. I will give it a try . Thanks, Charlie http://www.omahaadvancedcarpetcleaning.com
I looking at buying a cleaning business. the business is supplied customers from a larger cleaning organization. The owner is considered a sub contractor. How do you evaluated the value of this type of set up. The owner relies on work sent to him from a large business.
Thanks, tOM
Hi Tom,
Above all else you need to be careful about this statement: “The owner relies on work sent to him from a large business.” I tell every SFS class no one company/individual should provide more than 20% of your total business. (10% is better.) What happens if you buy the company and the guy decides he hates anyone that has a name starting with “T”? 🙂 I mean, seriously???
Now if you decide to move forward download the above worksheet and plus in the financial info from the company you are looking at buying. If they can’t (or won’t) provide it then run far, far away!
Best wishes!
Steve
Greetings Steve,
Your my last chance-25 year old cleaning business-recent health decline forces immediate sale-evaluation difficult-if you can assist me in any reasonably profitable sale, you will earn ( a 3% sale comission) the 2015 Platinum Cleaning Business Sale Consultant Award. Details on request. Please return confirmed.
Best regards,
Herc
Here’s a tricky one. I have a 15 yr old business I am looking to sell due to health issues with gross sales of $410K, owners cash flow at $130K, $90K in equipment and inventory, systems for admin, operations and marketing, FT staff of 3 that can now handle pretty much everything I can as owner…BUT, I want to keep a portion of the business (MicroSeal) that accounts for 25% of gross sales, and more than 25%percent of the profits (how much is hard to say as there are long term (lifetime) warranty costs that are hard to assess), but for argument sake, lets say that those sales are twice as profitable (half the COGs) of any other service we provide.
Do you have suggestions on how to value this “sliced-up” pie of a business? I have racked my little brain, but because about 40% of the MicroSeal services were done as add-ons to current clients, and the remaining sales from referral partner sources were all mixed in with our overhead…it becomes very difficult to put a dollar value on the impact of this.
Suggestions?
A very good question AND a very complicated one! My brain is too ‘little’ for it too since I don’t remotely have the financial data to even arrive at a formula to calculate a fair price.
NOTE: It is good that you recognize by keeping the Microseal you are lopping off much of the net profits of your core business. But then you should also understand you are losing the marketing and delivery system for your Microseal up-sells too! (Sure, you can build this ito any sales contract but we both know how that likely will go.) Would it be better to offer your business as a ‘package deal’?
So back to your original question. Given the complexity here I would advice you to engage the services of a Certified Business Valuation expert. Or if not that at least get your CPA involved.
I’d also recommend you ‘concurrently’ start the Business Sale Preparation Process. (BSPP) It is even more important than a price and yet sadly too many people start too late on this. But better late than never. Download my complete manual on the BSPP HERE.
Best wishes, Steve
Steve
Hello Steve
I am trying to sell my cleaning business. I work by myself for 15 years. I have a great clientela for the whole time. I am just selling the list of my customers. I make approximately 20 000$ a year. How do I put a price on my business please?
Thank you Jarka