Prepare Your Service Business To Sell With This Video

If you're looking to buy or sell a local service business, in this video, I'm going to go through the process that we've utilized to help companies sell their business. I'm also going to share some resources that have helped in the process. For the business owners that we work with, we have a unique opportunity where we work directly with business owners of local service businesses that are multi million dollar businesses that have sold for multi million dollars over the past year. And, and so we're going to go through how we work with them, some of the strategies that we implement to help them sell their company for top dollar. Also going to go through just some basic principles of things that if you're thinking about buying or selling a company, specifically selling a company, what can you do to make your company more attractive? And so we're going to outline what that looks like and yeah, should be a really great video to help people that are looking for those services. So the first thing that I want to discuss is there are two books that, that I highly recommend regardless if you're buying or selling a business. The first one is called Built to Sell. And what this book is about is setting up your business so that it is a sellable business. And a lot of times, especially people that are looking to buy businesses, they're looking for sellable businesses. And not every business is sellable. And one of the big things that this book talks about is removing yourself from doing the work and sitting, you know, on your desk with your seat up, having other people do the work. So that way when people are buying your company, they're actually buying a system, a system that generates money, which is the whole goal. And so this is an awesome book to talk about how to do that. And then the next book is called Buy, then Build. And this is more for people that are looking to buy companies. But if you're looking to sell your company, what this book allows you to do is to get in the mindset of, okay, what are these people looking at when they're thinking about buying a company? And what are the multiples and all the different things that go into it and what are the ways that they can structure their deals? So this is an awesome book to help get in the mindset so that way you don't get taken advantage of by all these different numbers and stuff. It helps you just, okay, this is what this person's talking about, or is this an investment person, or is this a search fund person or is this a whatever it is. Awesome, awesome book. Regardless of what side that you're on so highly recommend those two books. And then let's just take a look at some of the strategies that we've implement from a marketing and sales perspective over the last three, four years. For some of these businesses that have been selling recently. We have some businesses, they've been around for 10 years, others 30 years, 20 years. So it runs the gamut of how long business have been in business for. But what we found was that typically the threshold for investors looking to buy a company is around the 1 million to about $10 million is like if you're, that's a typical like home service, local service business. If you're in that realm, this video is going to be for you because this is literally what we do for businesses to help them be more attractive to be sold. So if you're at the million dollar mark, a lot of times you're going to still be kind of running around, maybe running the show. And so people don't necessarily want to buy a company to buy a job. They want to buy a company to put pieces in place to run itself. And so that is something to think about as you're scaling your business is can I remove myself from the seat and still have things running From a sales and marketing perspective, people that are looking to buy a company, they want to get to the point of your customer acquisition cost, which is how much does it cost me to do marketing or advertising to get this customer? And if I can get that number to 10, 20, 30, $40 and it makes sense from revenue perspective as a percentage of the revenue, then you have a scalable process that you can just pour more money on and the system is going to continue to run and you're going to scale the business because you have a method to get new customers at a defined cost. So the whole goal of this whole process from a sales and marketing perspective is to get to that number so that we can say, okay, we spent $20 to get this customer, can we get this lower, can we get this higher? What's the quality of that customer? So from a visibility perspective, which is the first part of any sales and marketing sequence, anyone looking to buy a business is how many eyeballs do I have on the business and how many leads do I have coming in and how many jobs are we doing on a monthly basis or on a yearly basis? Because if you can grow the number of jobs that you're doing, number of sales, you're ultimately going to grow the business. Which is the whole point of buying a company is that you want to buy and then you want to build it into something bigger. So let's start with visibility. One of the biggest areas of opportunity for local service businesses is in organic search, which is your Google business profile, getting Google reviews. I can't tell you how many times we talk with business owners and they're like, we're the best in the business. We have the best reputation, we have the exceptional service and their Google business profile, their number of reviews, everything just looks vanilla like, like every single other person when they probably been in business for 30 years and they don't have a digital presence that articulates how they feel about their company and the reputation they have offline. And so everything is moving digital. And so these companies that are looking to buy businesses are going to say, how many Google reviews do you have? What is your online reputation look like? Is it streamlined to get leads in to your company? And if it's not, maybe it's something that they can take over and build these processes. But we're talking about maximizing selling your company or areas of opportunity if you're buying a company. So if you don't have Google reviews, start there, come up with a process, get Google reviews. We had a client over the past four years that went from six Google reviews to 2,000 Google reviews. It can be done. It just needs to be a constant focus. And not only does it help with your search engine optimization for getting reviews, it helps when you go to sell your business because it tells your reputation, it tells that you are the number one in this industry and in the world, in the country, in your state, in your region, whatever it is. And then also from a visibility perspective is picking some of these areas and maybe it's your business to business connections that are giving you referrals. Maybe it's through running Google Ads or whatever. Someone buying a company wants to see that you have a new customer acquisition strategy dialed in. Because when they buy this company, they don't want to necessarily not have any new customers coming in the door. That's ultimately the worst thing that they could do. And so they want to make sure that when they take over this company or buy this company, they're going to still have new customers flowing in. Now, once you have this dialed in and you have a good consistent flow of new customers and you have strategies in place, then you can talk about conversions. Now this is both on the buying and selling side, because if you're selling a business, this could be a bane of your existence, which is getting your customer service representatives or salespeople to actually close more deals. That can be hard. And someone buying a company might say, hey, well I can come in and you have all these leads, but you're not optimized properly to convert them through your sales funnel. So I can tweak that. So coming up with a process for this is really good, but it's not the end all, be all. And then the final thing is your retargeting. So a lot of times businesses that we meet with, they have 40, you know, 40 years in business and they have all these customers, 70,000, 100,000 in an Excel spreadsheet or in some type of CRM or something, client relationship manager. But they're not utilizing those people to retarget them and bring them back into the funnel. This is the gold mine if you're buying or selling your business. If you're buying a business and they are not doing this, it's going to be a home run when you buy this company and you actually implement a retargeting strategy. Because there's hundreds, you know, fifty thousand, seventy thousand, hundred thousand people who have never heard from you that already know like and trust you that you can just go and tap them on the shoulder and say, hey, come and work with us again. If you're selling your company, you need to build this out. You need to either do like a monthly newsletter or come up with some type of email marketing or text message marketing plan. So that way when you go to sell your company and you're pitching your strategy for sales and marketing, you can tell them, we have visibility taken care of, we have conversions. It might not be optimized fully, but we have a conversion strategy. But more importantly, we have a great retargeting strategy. And this is going to keep your hopper full. So when you buy this company, your cash flow is not going to dwindle away, it's going to keep crushing it. So this is the strategy that we implement. We do a lot of this stuff for the companies. But if you're looking at buying or selling a company, obviously we could do it for you. But you could just do this yourself. You can try and implement some of these strategies. If you have a current marketing person or you like this stuff, you can do this. Now, let's talk holistically about a business and some of the things that people are going to be looking for when they're buying or selling a company. And it's going to be these four core areas. And this is from another book called Clockwork. And basically business distills down to Four core areas. Attracting customers, converting customers, converting leads into customers delivering the goods and then collecting the money. So anyone that's looking to buy a company, they're going to evaluate these four core principles. Are you attracting enough people? Do you have a system to attract people? We just talked about that in that funnel. What is your process for converting and are you converting these leads into actual customers? So that's not a make or break, but that's an area of opportunity to tighten up your processes. So if you are selling, you can sell for more delivery. Now, anyone buying a company is not going to be looking at the delivery of the service. They may look at customer service, but a lot of times, especially if you're over 1 million, they're not going to want to come in and do the carpet cleaning or do the duct cleaning or do the H Vac. They're going to want to look at this holistically and look at, okay, maybe we need to hire another service manager or whatever. But they want to know that your delivery is going to be consistent. So that way when they scale the business, you have a proven delivery system and process. And the last one is collections. Now, this again, is not a make or break, but it's good if you have a strategy in place. And the reason is because if you do all this work and you're not collecting any of your money, your cash flow is going to be terrible, which means your profits are probably going to be bad because you're writing off all this money. You're spending money on labor, you're spending money on cost of goods sold, you're spending money on marketing, and then you're not even collecting the money. So someone might come in and say, okay, well, everything is good. The person just can't collect money. They don't have a process for this. So let's go in and implement a process to collect more money. And so these four core areas, if you can answer these, you're going to be way ahead of someone who's just going in blind trying to sell their company. And if you're looking at buying a company again, these are four core levers that you can pull. Now, one of the main things that I want to talk about, we have a couple minutes left. I want to make sure that we hit when it comes to what is your company actually worth? And there are value business valuation experts that are out there. This book right here, Buy Then Build, and this book, in fact, by Built to Sell, they both talk about how to value your company. And you could read these books I'll give you a quick snippet of what they say and some recommendations. So let's say that you do a million dollars revenue. Let's say you're the owner and you pay yourself $100,000 as the owner. Then let's say that you make a profit of $100,000. So there is a tax word that they call EBITDA, which is your earnings and other things that go into it. But the gist of it is your revenue is a million dollars, your profit is 100,000, and then your owner's pay is 100,000. So in this instance, let's say your ebitda would be $200,000. So if I remove you from the equation, then this company would generate $200,000. Now, if you are a core person in the business, maybe they pay you 100,000, but they're going to buy the $100,000 of profit and then there's going to be $0 available. So when someone's looking to buy this company, they're looking at those numbers saying, how much do I want to spend to buy the $200,000 profit? And this is where the multiples come in. And typically what, what I've seen at least is if you have reoccurring revenue like a H VAC contractor, you can get 5, 10, 20 times whatever that EBITDA number is. So if it's the $200,000, let's say you get five times that, your company will be valued at a million dollars. A lot of people think that if you have a million dollar revenue, then you're going to sell your company for a million dollars or a million dollars times whatever. That's not the case. They look at your profit number and there are other things, you know, if you have buildings and assets and that kind of stuff. But the gist of it is you can distill it down to figuring out what is that profit number. And if there's no profit in your business, it's going to be very hard to sell, and especially if you're looking at like millions of dollars. And so these books are really good if you don't have a profit. Another really good book is called Profit first, which highly recommend if you don't even have a profit yet because it's going to help you show a profit, which again is going to help you sell for more money. So I hope this was helpful. If it was helpful, drop a comment below with questions or what you found valuable. And if you like content about growing local service businesses or maybe even you like this type of content about how can you build your company to sell it? Like this book talks about build to sell. I can make more content about this because we've had the experience of going through with local service businesses literally on the call, pitching with the customer to buyers to trying to help articulate the value that they bring to the table. Would definitely love the feedback to see if this is something you're interested in and be sure to hit like and subscribe. If you're interested in meeting with us and you need some help with some of these things, I'll put some links down below and we'll see you in the next video.