As the economy booms, there is more demand to hire workers and thus more demand for staffing companies. The business of hiring people can be very complicated to operate and usually very profitable businesses, as most of staffing businesses are very large ones.
Because of that, these are complex businesses to run or administrate, so when it comes to assessing the true value of an staffing business, owners have to be aware of many different aspects that can make their companies worth more.
Usually staffing businesses owners receive strong valuations. Check out the next topics and find out how to value your staffing business and how to sell it for the highest price.
What is your staffing business worth?
In order to know what your business is really worth, you have to gather all finance information you can find from the past years and compile into a report. Your potential buyers will probably ask for a complete report with numbers that justify the price you are asking.
Take a look at these metrics and make sure you put all information required in the report.
- 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 staffing business worth more?
Don’t set your asking price before knowing which aspects can make your business worth more. How many employees do you have, what is your business size, where is it located, if there are more offices around the country, if you operate with up-to-date technology.
Make sure you answer all of the questions and cover all elements from the metrics below:
- Predictable key drivers of new sales
- Stable or growing volume from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic 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 staffing business sell for?
There has been exactly 100 staffing business sales in the past ten years in the United States. Average sales price in this period was $779k, a very large number, and average multiple rate was 2.3x, what is expected for large businesses like that.
What is the most frequent deal size?
Most frequent deal size is $1.2 million, which shows how valuable a staffing business can be, as most of those businesses sellers were millionaires.
Is the staffing market getting bigger?
2018 and 2017 were good years, with a very similar total transaction value.
It’s not correct to say that staffing market is getting bigger, but it is correct to say that it is living a very good moment and it’s a great time for you who is thinking of selling it.
Are bigger businesses worth more?
Yes. The bigger staffing business is, the higher will be the deal size and the profit from your sale. Take a look at 2018 numbers, for example:
With very few exceptions, the rule “bigger the business, better the multiple is” can be applied in here as well.
What states have the most staffing 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? As you can see if you are located in Florida, Arizona or Texas, you may get a lot more offers than if you are in Indiana or Minnesota. But sometimes you can overcome the low number of deals with investors or competitors looking to enter a specific new area, and get lucky with an offer.
Why would you sell in the first place?
The reason to sell always varies for each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your staffing business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your staffing business?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your staffing, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the staffing industry it will likely be somebody in the industry.
How should I sell my staffing 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 staffing 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 staffing 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 staffing business, check out:
How much will it cost to sell my staffing business?
Generally a business broker will charge 8-12% of the sales price of an staffing 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%
Staffing business can be extremely valuable, especially if you know how to sell yours for the best price. Make sure you cover all elements that justify a great asking price.
If you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today. Leave your comments on any doubts or feedback, we are glad to hear your thoughts.