Every so often --- one of Time To Pet's extremely talented clients likes to share some helpful hints, tips and pointers with other pet sitters. Today's post is all about selling your pet sitting or dog walking business. Cara Armour is our guest author and is the Owner & Alpha Female of Active Paws®, Inc. and product manager at PetProHero. Cara co-founder Active Paws in 2003 and is a Pet Sitter of the Year award winner. Enjoy!
Why do you want to sell your pet care business?
It's crossed your mind but how in the world do you make it a reality? Before even beginning to go down the path of selling your pet care business, make certain you really ask yourself WHY you want to sell.
I have a million times; I've been down and out, burnt out, exhausted, stuck in a rut, needed a change, wanted more freedom, wanted the money, got too big to handle it, you name it and those all seemed like great times to sell --- but were they the RIGHT time to sell?
If your reason to sell is to get rid of the headaches and quickly, this is not a good way to go about it. Selling your business is like selling your house --- you have to make it appealing to the public and it will be open to public scrutiny --- mostly your books. There is quite a bit of work to do before you can go listing your business.
Is your pet care business sellable?
First, you need to see if it's even viable. Here is a list of criteria that would offer you a better chance of being able to sell your business --- especially in today's market that is saturated with online pet care listing services and franchises that people can buy into without doing all that hard branding work you did.
- You have been in business 7+ years
- You have staff that would transfer to the new ownership
- You have a solid and reputable brand
- You are not your business --- the reputation and function are not dependent upon you
- Your clients are transferable
- You have been profitable for at least the past 3 years with a growth between 10--20%
Can you afford to sell?
Do you have another income lined up? How long will you be able to live off of the sale? Keep in mind that there will be costs associated it with it such as lawyer fees for drafting documents, broker fees if you choose to use one, listing fees etc.
What are you selling?
Since your brand, your client list and your staff are all essentially intangible objects, selling a service based business isn't as black and white as selling a house; and even that has many grey areas. Are you selling just your client list, your client list and staff but not your name? What are you presenting to the market?
What is the value of your business?
What is the value of what you are bringing to the market? Generally businesses are valued based on 1.5--2 times their gross earnings over a 3 year period. Now this is a very general statement as there are a myriad of ways in which one can value their business. Typically service based businesses sell for less, since there isn't inventory or tangible valuable objects to exchange. It's usually just a client list, reputation and your staff.
Who will buy your business?
You've poured years into building this baby --- do you care who takes over your clients? You might not but for many, the quality assessment of the buyer by the seller can be critical to the sale. I wouldn't sell my business to someone I didn't feel was qualified to keep up the level of care my clients expect. Not only would I worry about client dissatisfaction, but soon you will have a very unhappy buyer --- if your sales agreement isn't locked up tightly, you could have a buyer coming back after you.
The selling process
- Appraisal
- List it
- Market it
- Handle buyer inquiries
- Receive a letter of intent
- Negotiate the offer
- The buyer performs due diligence
- Final offer sign P&S
- Close
- Train if it is part of your deal
Two years ago I went through this process and made it a partial reality. I say partial because I sold my cat sitting client list to an employee. I have also come close to selling my entire business but honestly couldn't get a buyer to pay what it was truly valued at --- not even close. Often times it's easier for a new business owner, competitor or entrepreneur to look at businesses for sale and just wait --- wait until a sale doesn't happen and they just close up shop leaving clients scrambling.
I was miserable, my awesome manager had moved to California, I hadn't started using Time To Pet yet and every time a weekend rolled around 70% of my time was spent dealing with clients who's cats we were sitting. I couldn't take it anymore, by the time Sunday evening rolled around and the cat people came home, the dog clients sent in schedule changes, staff tried to call out and I was losing hair!
Then I got smart, I dove head first into my books. I knew the cat sitting was killing me but was it worth it? Turns out 7% of my revenue came from cat sitting, that meant 93% of my sales were from dogs but 70% of my time on the weekends was spent managing cat sitting. The numbers clearly told me that 7% of sales were not worth 70% of my time. BUT 7% was still a good chunk of change, I didn't want to dump and run. And as demanding as the cat clients may have been, they were great people that we had provided excellent service for because they kept booking!
I did my homework and put up a few listings. I got talking to one of my pet sitters about what I was doing and she said, "I'll buy it". I never thought to ask my staff, but who better to sell to than someone that was already representing your company well?
The sale went very well, but there was still a ton of work. I had to prove to her that it was a good deal so lots of sales reports, profit and loss statements and yearly reports were generated. A letter of intent passed between us, eventually a sales agreement and we closed. My offer included 90 days of training to make certain she had assistance in running the business. This also included open and honest communication with my clients which made an easy transition for the employee.
This successful deal got me interested in selling off the rest of my client list - I didn't sell my brand as I still intended to provide dog care under that name but in the end the numbers didn't work. I dove into my books once again and realized, the income was too good and the changes I had made in my business' structure made most of my headaches go away. After selling the cat business I cut my staff down from 14 to 7, started using Time to Pet and had weekends mostly free. Life was good, why sell something that was working well for me? I had worked smarter instead of harder.
Step back and look at your books as objectively as possible. What do the numbers tell you? Is your business strong enough for the scrutiny of a sale or could you use some tweaking to get it where you want it to be? There are TONS of resources available to us as pet sitters on how to improve our business and yes, there are almost just as many on how to get out of them. I did a little of both, sold off the problem which became someone else's livelihood, changed my systems to be more efficient and am finally able to work on my business instead of in it.
About the author: In 2003 Cara Armour co-founded Active Paws Inc., a professional pet care business based in the greater Boston, MA area. In 2009, Cara won Pet Sitter of the Year, many more accolades were to follow. Active Paws Inc. expanded into a grooming and holistic pet supply store, in addition to the pet sitting. Since 2003, Cara has hired over 50 employees in her pet care business and as a former retail store manager for larger corporate companies she has interviewed over 200 candidates. In late 2015 Active Paws Inc. began using Time To Pet software which opened up an incredible amount of time for Cara to pursue a career working with an online pet first aid and CPR company as the product and marketing manager for ProPetHero, the pet first aid and CPR division of ProTrainings. She still runs Active Paws Inc. thanks to the help of TTP and still has time left over to volunteer for The Boxer Rescue Inc, be a health conscious breeder of Boxers, and play in many dog sports such as agility, barn hunting, lure coursing and conformation.
