How to maximize profits when selling your staffing agency.
Whether you’re retiring, moving locations, freeing up cash for a new venture, or just taking advantage of the opportunity to exit, selling your staffing agency is a great way to cash in on years of dedication, hard work, and investment. But when it’s time to sell, you don’t want to settle for less than the full value of your business. You need to maximize the value of your business to generate the greatest opportunity for the liquidity of your asset.
In today’s post, we dive into the strategies you should implement to drive profits, open up the opportunity for a valuable sale, and create more leeway when it comes to selecting buyers.
Understand Your Financials
The first step in improving the value of your staffing agency for sale involves understanding your data. If you’ve not been tracking data, you need to start now. Track the status of your sales pipeline, accounts receivable, accounts payable, and all monthly expenses. Ideally, you’ll show trending improvement in key metrics like profitability, income, and revenue.
It’s also a good idea to eliminate non-essential expenses, such as entertainment expenses, so as to show an adjusted EBITDA number.
Improve on Key Areas
Once you understand your company’s financials, the next step is to compare them against industry benchmarks. There are important steps you can take to improve them before putting your business on the market. Some marketing, for instance, will go a long way toward bringing in new customers.
Increase Profitability
While every business owner’s primary goal is to get maximum profits, special attention should be paid when it’s time to sell to prove to potential buyers the current profitability of the staffing agency as well as its projected growth. Improving efficiencies and reducing overhead are surefire ways to increase your agency’s value.
If you’re overstaffed or have more inventory than is required, for example, look for opportunities to reduce expenses. Just make sure you don’t make drastic changes that could negatively impact your business before a sale.
Continue to Invest
One of the biggest mistakes made by entrepreneurs is taking their foot off the accelerator when the idea of selling their company comes up. When you stop investing in maintenance, new equipment, employee development, and process improvement, you start reducing the future value of your staffing agency. So, continue to invest and improve your business.
Diversify Your Revenue
Buyers are interested in a staffing company in which no single client accounts for more than 10% of sales. Diversification insulates your staffing agency from the loss of a major client. Work on acquiring clients from different industries.
Set Yourself Apart
If you’re going to increase the value of your business, you need to aim higher than what your competition does. Whether it’s generating faster growth or beating their margins, you need to focus on ways you can stand out from your rivals. Conduct market research and fill any gaps that other staffing firms have in their services.
Build a Top-Notch Management Team
Buyers look for a winning team of employees. A strong team will be key to business success after the sale. If you don’t have a strong enough team when you put your business up for sale, buyers may be turned off by the idea of having to hire new people to run the business.
Consider shuffling around the existing management team, hiring new talent, and evaluating your employee recruitment, training, and retention practices. Create professional development programs to improve your employees’ skills and retain your best employees.
Streamline Operations and Establish Processes
Your staffing agency is less likely to have cash flow problems when it has organized operations. You should have strict inventory management and procedures for dealing with clients and vendors. If you’re making or collecting payments late, this is going to impact your cash on hand.
Buyers don’t want to reinvent the wheel when the deal is done. If you have defined processes and procedures, document them to allow the new owners to run the business smoothly once you’ve moved on. If you don’t have clearly defined processes, it’s time to put some in place.
Seek Professional Advice
It’s important to work with an experienced business broker who can help you prepare your business for sale. A broker will conduct an expert valuation, highlight areas that need improvement, and make sure you have the best exit plan in place.
Selling your business is one of the biggest moments in your life as an entrepreneur, and having an expert walk with you will help ensure you get it right.
Did You Enjoy This “Guide to Sell My Staffing Agency?” Contact Lonnie Veasley for More Information
Let Lonnie Veasley help you prepare and enhance the value of your staffing agency so you can realize the maximum possible sale price. With over a decade of successful business experience in the Tampa Bay area, Lonnie can be instrumental in arriving at an asking price that reflects the true value of your staffing company in today’s market. He can advise you on a few changes or enhancements you can make to maximize the value of your company.
Get a business valuation today by calling (727) 238-4074.
