Why You Should Always Be Preparing To Sell Your Answering Service
Sometimes business owners plan for the sale of their business for several years, aligning the ideal timing with careful planning in order to maximize the sales price and minimize their tax liability. However, for most businesses their sale is less planned and more spontaneous, due to a sudden change in priorities, health concerns, or outside pressures. For these business owners, they don’t have the time to optimize their company in order to get the best possible deal. Their lack of forethought means they end up with a less-than-ideal sales price. This is especially true for smaller businesses and entrepreneurial companies, which describes many telephone answering services. Here is a simple four-step process to ensure you’re ready to sell at any time, and to sell with the confidence of getting the best terms. 1) Optimization Strategy: The first step in preparing your business for sale is to implement the ideas in our post “7 Tips to Maximize the Sale Price of Your Answering Service.” In this article we discussed the recommended actions to take. This will require some time, often a couple years or even more, so be patient. The main thing is to take methodical, strategic actions that will incrementally boost your sales price. As you do this, a happy side effect will be an enhanced bottom line, so this step will pay out now and in the future as well. 2) Quarterly Review: Once you have completed all seven tips to maximize your sale price, review them each quarter. Some things slip over time and need readjustment. Other times changes in your business, practices, or personnel require a refresh of these seven tips. The key is to maintain what you accomplished in step one. If you revisit this every quarter, then it shouldn’t be difficult to uphold. 3) Annual Assessment: Each fiscal year do a basic financial analysis. This could include looking at top line sales, bottom line profits, and key operation metrics, but the one essential item is to calculate your business’s EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. This indicates your answering service’s operating performance. EBITDA reveals profitability potential, which feeds into your business’s valuation. The higher the number the better. While you can make this calculation yourself, you can also have your accountant do it if you’re not a numbers person. If you’re truly preparing your answering service for a possible sale, your number should go up or at least stay the same each year. A decrease in EBITDA indicates you are not as ready to sell now as you once were. 4) Business As Usual: As you seek to prepare your answering service for a possible sale, you need to balance this effort with a future focus of doing what is in your business’s best interest from an operational standpoint. This is not the time to coast. Plan and act as though you will own this business for many years. This means investing in technology, hiring key staff as needed, continuing to market and sell, adding new services, moving if needed, and even being on the lookout for other answering services for you to buy. A failure to keep your answering service moving forward will hurt your prospects when it comes time to sell. No one knows the future, so it’s hard to know when you might want to or need to sell your answering service. This means you should always think in these terms and work in this direction. If you decide to sell, when you decide to sell, you’ll be glad you did. 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 firstname.lastname@example.org 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.