Janitorial cleaning businesses are great businesses to start on a shoestring budget and no special skills needed except for the love of making the world sparkle and a little bit of elbow grease. Your janitorial cleaning business offers commercial or residential cleaning services or maybe both. Your janitorial business is specialized to your client base and you know each one of them by name. Maybe you have hired help because your business is doing great, and at the end of the day after the hustle you ask yourself, “What is my janitorial cleaning business worth?”.`
A broker can help you find the answer to that question, but understanding the process is always beneficial to you as an owner. After all, your objective is to receive the maximum value for it and in order to do that, you must first look at the many variables that come into consideration when looking at the possibility of selling your janitorial cleaning business.
In order to show you the different variables, we have taken data from the last decade of all the janitorial cleaning businesses sold in the United States that met our criteria, and broken it down for your further review in order for you to make the best decision on the sale of your business.
What is your janitorial cleaning business worth?
The value of your janitorial cleaning business is correlative to your individual business, the market and ultimately what potential buyers are willing to pay. Janitorial cleaning businesses offer a specific service, so being on top of your cleaning game is essential. But while you are trying to figure out how much your business is worth, here are some questions that should be answered before trying to value the price of your business.
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a janitorial cleaning business worth more?
When a buyer looks at purchasing your business, they are basically looking at their rate of return on their investment. So when will they recover what they have spent on the business? In order to show the prospective buyer that their ROI will be high and their relative risk will be low, you should have a few key characteristics associated with your janitorial cleaning business.
And while it is true that the profit and sales are very important factors when considering to purchase a business, they are not the only factors that can increase or decrease value the value of your business. The following characteristics will give your business better value.
Predictable key drivers of new sales
- Stable or growing volume from diversified sources
- Volume stats
- High percentage of repeat customers and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average janitorial cleaning business sell for?
When looking at the graph, the data analyzed consisted of businesses that range in valuation from $50 thousand to $10 million. And these businesses can sell for as much as billions of dollars or as little as a few thousand. You can see the average sale price of cleaning businesses that sold in the last year in the United States is at 2.1 times earnings, with the average sale price coming in at $400,442.27. However, to have a clear understanding you also have to look at the median sale at $196,500.00 and the most frequent sale was at $150,000.00, which play a factor in your valuation. All this information is a bit overwhelming without being broken down, so later in this article, we will further dive into these numbers and give you the information needed to be able to begin the selling process with confidence.
What is the most frequent deal size?
Since we live in an economy that has a market that fluctuates on a daily basis, pinpointing the exact answer to this question, is not as easy as it seems. However, if you look at the data collected, the most frequently sized deal is the $0-250k range, although as you can see there are plenty of businesses sold in the across all price ranges.
For example in 2017 there was 12 janitorial cleaning business sold that were in the 0-$250k range, and when you look at the $1-2 Million range, there was only 1 janitorial cleaning business sold. But no need to worry if your business does not fall into either of those valuation ranges, there is a buyer for every business, finding that buyer is the key. And in order to find that buyer, we suggest finding the right broker to help.
Is the janitorial cleaning business market getting bigger?
There will always be fluctuations in the market and trends. Janitorial cleaning businesses are provide essential services given the need to keep a clean space because nothing turns off potential buyers/clients/customers etc than a dirty space. And regardless of the fluctuations, being able to keep your business stable during those times will give future buyers the assurance that your janitorial cleaning business is a good investment and buy.
Are bigger businesses worth more?
Generally speaking, yes, the bigger your business is, the more that it is worth. Take a look at the image below, as there is an increase in revenue, your multiple becomes higher, which results in a higher valuation.
To help you understand the graph a little better, look at the multiple from 2017 for the valuation price range of $0-250k range, here the average multiple lands right at 2.37x, with a total of 12 janitorial cleaning businesses sold, however when you look at the $1-2 Million range in 2017 your multiple jumps to 2.63x, with 1 janitorial cleaning business sold. This clearly shows that larger businesses are valued at larger multiples and smaller businesses are valued at smaller multiples.
What states have the most janitorial cleaning business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? Florida and California tie for the most janitorial cleaning businesses sold. Florida and California are two large states which will give you an easier search for a buyer. But having a business in a smaller state with less sales does not mean that someone isn’t looking to acquire a business in your neck of the woods. Having a broker to help you find a buyer for your janitorial cleaning business no matter what state you are in, can help you successfully sell your business.
Why would you sell in the first place?
When deciding to sell your business, it can become an overwhelming and difficult decision. Your reasons will always be different from the business owner next door. Maybe you are ready to retire, or you are ready to move on to a new venture. Whatever your reasons are, ensure that you have the necessary knowledge and tools to maximize the value of your business.
How long will it take to sell your janitorial cleaning business?
There is not one set timeline for the sale of any business. The variables of the individual business and terms of the sale will define how long it will take to sell. Do keep in mind that generally speaking, the larger deals (over $1 million) take longer to sell than the smaller deal (under $200k) because of the complexity of the business, in addition to the risk of purchasing a company that large for the buyer. And try to remember, that your individual business will always sell at a different pace than other janitorial cleaning businesses, and being patient is an essential part in selling.
What is the process of selling your janitorial cleaning business?
Our step-by-step process will help you become more confident, when you decide to sell your janitorial cleaning business. Many business owners forget or overlook essential steps in the selling process and sometimes become confused and lost throughout the process. Doing each and everyone one of these steps will help guide you to the value of your business upon the sale. If you have questions or concerns about your business’ value or the process in itself please contact us and we will be happy to help.
Who will buy your business?
Finding a buyer can be frustrating and feel like a never ending search, but finding one is essential for the sale of your business. Tuck that frustration and fear aside because there are many options and possibilities. Buyers can range from first time buyers, experienced entrepreneurs, or private equity companies. No matter what the size or maturity of your business there is a buyer for your business, and we can help you find them.
How should I sell my janitorial cleaning business?
Marketplaces – (under $500k yearly profit)
Smaller business and micro-businesses are usually best sold privately by the owner through forums or classified websites.
To sell your janitorial cleaning business, check out:
Broker/M&A Advisor – ($500k – $10m yearly profit)
Medium sized businesses in the $100k-$20m are best sold through brokers who help with finding buyers, negotiating and structuring the deal. To sell your janitorial cleaning business, check out:
Investment Banks – (Over $10m yearly profit)
Larger businesses are best sold through investment banks or merger and acquisition companies. To sell your janitorial cleaning business, check out:
How much will it cost to sell my janitorial cleaning business?
Generally a business broker will charge 8-12% of the sales price of a janitorial cleaning business including inventory depending on the deal size. Larger deals attract a smaller fee. Below is a range of fees at each deal value level.
- Under $1m – 12%
- $1m -$4m – 10%
- $4m -$10m – 8%
- $10m -$25m – 6%
- $25m + – 4%
After reading this article and understanding the necessary steps and processes that come along with the sale of your janitorial cleaning business, and you’ve decided that selling your business is the right decision, we encourage you to have your janitorial cleaning business valuated by a professional broker, this will ensure that you are receiving maximum value for your business. We understand that your janitorial cleaning business is your everything, and we always keep that in mind, when valuing your business. So when trying to answer that question of what is your business worth, comparing it to the business in the next town over, will not get you the exact answers you seek. When you are ready to take the first step, we will be more than happy to help you find the true value of your business, and can help accelerate the sale, by helping you find the right buyer as well. Feel free to fill out our valuation form and get started right away.