Selling a Services Business

The business could be a solicitor business, tax preparation, or employment firm. The type of services business you offer is not as important as knowing it is a slightly different sale than a products business sale.

First, with services you generally do not have inventory to sell unless you are selling office supplies like the paper you have left over. Typically what you are selling in a service business is intellectual property and the building the business is housed in. You may even be selling the privilege of your experience. In other words you may be selling your business system that has worked for ten years or more in gaining you clients. You may also be selling your client list to the potential buyer.

As you can see in a services business you are typically making the sale of ideas rather than something physical. It is harder to place value on services than it is for products. You have to prove how tangible the information is and thus its worth. One way to ensure a potential buyer sees the worth is through the accounts.

You will need to show your financial reports, tax documents, and prospective revenue to the potential buyer to prove your companies worth. If your financial accounts can show a steady growth of income over time and that this can be projected to grow even more you have a better chance of selling the business for more money.

It is very important to be accurate in your information. The bidders on your business will be looking for accuracy in the financials, accounts receivable, and even equipment like desks you might be selling. You can guarantee the potential buyer is going to audit your information.

Choosing the perfect time to sell a services business can be difficult. You generally do not have specific months where business is slow. This can change based on the economy and the type of services you provide. Still, there are definitely times that are right for selling a services business.

Consider the current economic troubles. Many advice companies for budgeting money and getting out of debt are booming. If you have this type of service you could potentially sell your service business for a larger amount than five years ago. There is one last thing you have to worry about in the sale. In a services business the person who will be performing the work needs to be trained, educated, and potentially have certification. Before you can make a sale you need to make sure the potential buyer has the right education or at least will retain the proper staff. While it is not a law to ensure this, you want to do right by your customers, so it makes sense to be sure.