You’ve spent years building up your staffing agency. Year after year, you’ve been building the value of your agency.
Now you’re planning to retire or you’re ready to make your next foray in business. Maybe this was always part of the plan, or perhaps the move has been prompted by changing life circumstances. Maybe it just seems like a good time to get out and try your hand at something new.
So how do you cash in on the business you’ve built? Selling your agency might sound like a difficult task, but it’s easier than you think.
Calculate Your Staffing Agency’s Value
The first thing to do if you’re planning to sell your staffing firm is to value the business. This is similar to any other business, so you shouldn’t have too much trouble finding a formula or someone to assist you with the valuation.
You’ll need to know the business’s gross and net revenue, as well as the value of assets, such as your website or your office building if you own it. You’ll also need to factor in liabilities and debts, as well as overheads.
Next, you might want to factor in the growth of the business as well, especially in an industry like staffing. The industry has been growing steadily over the past few years, so there’s the promise of increasing returns for any potential buyer.
It is better to have a third party evaluate your business before a sale. This can help you hit the market with a realistic price attached. It also helps to be able to back up your numbers from a neutral third party. Buyers may otherwise feel your numbers are inflated or try to offer you a low price compared to your agency’s value.
Start the Search for a Buyer
When you’re planning to sell your business, you want to be sure you’ve found the right buyer. This isn’t always the person or group that will pay top dollar.
Look for buyers who have staffing industry knowledge, as well as those who are interested in keeping the business running. Buyers without knowledge might not be good for the business. Other buyers may have plans to maximize their value and then cash out, leaving the business in shambles.
If there are several interested buyers, you can usually command a higher price. You can also ask for incentive-based increases. Since the buying process can take time, this structured agreement locks the buyer into a higher price if you hit certain performance goals during the process.
Check the Legal Fine Print
You’ll want to engage a lawyer when you decide to sell your staffing agency. Agreements can be tricky to negotiate. You want to be sure you’re selling the business for fair market value. You also want to be sure the agreement doesn’t allow the buyer to skip out at the last minute.
If you have partners or shareholders, you’ll also need to be sure the sales agreement doesn’t impact them or any agreements you have with them in a negative way.
A last-minute sale is sometimes unavoidable. You may receive life-altering news and need to sell the business quickly.
For the most part, however, selling your staffing agency should be a long-term plan. If you want to sell your agency, you should be planning to do so in three to five years from the time you start planning.
This gives you a chance to build the value of the business so you can get an optimal price. Take steps like diversifying your client base and motivating your internal team to deliver results. When the time comes, you can command a higher price for a well-run and growing staffing agency.