At the end of the year, some telephone answering service owners think about selling their business. They want to complete the sale by year-end. Often it’s likely too late to complete a sale if you haven’t already started, but now is a great time to prepare your answering service for sale by the end of next year and command a top sale price. Plus, the tax situation will most likely be different next year.
To sell your answering service for top dollar you will first want to optimize your business for sale so that it looks attractive to potential buyers. Follow these seven tips to help maximize your sale price.
Most answering service owners provide free service or special pricing discounts to non-profits they support. This is most admirable, but it detracts from the answering services salability. Explaining these accounts in a footnote on your financial statements isn’t enough because the work these accounts generate will skew traffic reports and scheduling projections. Get rid of these accounts or bill them. If you don’t want to negatively affect their finances, send them a bill and then make a personal donation to offset it.
In like manner most business owners run expenses through their business that benefit them but hold no value for a buyer. While these costs can be justified to the IRS, they inflate expenses on the income report and misrepresent the actual financial condition of the business. Eliminate them. If this is a problem, give yourself a raise and pay for them personally. This will hurt you tax wise, but will make your business more attractive to a buyer.
All your staff should sign non-complete agreements when you hire them. If you skipped this step in the past implement it now, and try to get all employees to sign them. (You may have to provide “consideration” for existing staff to induce them to sign; for new employees, the consideration is employment.) Having non-compete documents in place give reasonable assurance your employees won’t go off and start a new service to directly compete with the buyer of yours.
You should regularly look at the profitability of all clients and give rate increases to unprofitable ones. If you haven’t been doing this, start now.
Take steps to ensure your crucial personnel will stick around for the new buyer. Unless they are only buying your accounts, they will need someone with experience to run the business.
Though you should be doing this all along, aggressively look for ways to improve your daily operations. Cut waste. Reorganize job assignments. Eliminate unneeded positions. Seek lower-cost vendors or renegotiate rates.
Each of the above items will serve to maximize your profitability, which will make your answering service more attractive to potential buyers. Now scrutinize your income statement and fix anything that is still outstanding.
These seven steps will take time so begin now and reap the results when you sell and get the best sale price.
Janet Livingston is the president of Call Center Sales Pro, a premier sales and marketing service provider and consultancy for the call center and telephone answering service industry. Contact Janet at contactus@callcenter-salespro.com or 800-901-7706 to arrange a private consultation about buying or selling an answering service. Peter Lyle DeHaan is a freelance writer from Southwest Michigan.