How to Increase the Value of Your Janitorial Business

As the owner of a janitorial business, you’ve likely seen steady growth and record profits over the last five years.  According to IBIS World, the janitorial services industry earns $61 billion in revenue annually, with over $3 billion in profit.  This makes it a great time to sell your janitorial business.  However, whether you are preparing to sell in the near future or plan to own the company for several years to come, it is always beneficial to focus on valuation.  Consider the following tips on increasing the value of your janitorial business.

Develop a Successful Marketing Campaign

Customer concentrations are a concern for some buyers looking to purchase a janitorial company.  They want to be sure that the business will continue to have success, even if they lose a few customers in the transition.  If most of your revenue comes from only a handful of clients, you may want to increase your customers by developing and maintaining a successful marketing plan.  This will help to create a stream of new customers to your janitorial business, which will in turn, increase the value of the company.

While many businesses find success in direct mail or coupon marketing campaigns, this isn’t always the best option for janitorial companies focused on commercial clients.  Instead, use the customer satisfaction you’ve already generated to promote the business for you.  Use social media to your advantage by posting customer testimonials as well as photos of jobs well done.  Consider creating a page on sites like Angie’s List, and encourage clients to post reviews.  You may even want to offer a referral incentive to current clients that recommend your services.  These marketing strategies are not only inexpensive, but they are also highly effective ways to lower your customer concentrations and ease the concerns of prospective buyers.

Expand Your Service Offerings

Another way to add value to your janitorial business is to offer additional services.  Most customers would prefer to work with a company they already know and trust to handle cleaning and maintenance needs, so being able to offer extra services to existing clients allows you to generate more revenue.  In addition to standard janitorial services, you may want to consider offering add-on services like carpet steaming, furniture cleaning, or window washing.  In most cases, the cost of the additional equipment may quickly pay for itself as clients choose your company for these additional services and recommend them to other business owners.

While it is extremely important to keep existing customers satisfied through quality workmanship and additional services, it is just as important to stay up-to-date on current trends in order to target new customers in the marketplace.  Many businesses are looking to lessen their environmental impact by choosing to use only eco-friendly products.  Offering “green” cleaning products may allow you to reach a whole new customer base you otherwise may not have connected with.

Longer-Term Contracts

Prospective buyers are looking for customers on long term contracts.  Many commercial cleaning accounts have 30 day contracts that automatically renew.  You may want to consider incentivizing longer-term contracts by offering free or discounted services to clients that sign on for the long term.  When your janitorial company has contracts that are 12, 24, or 36 months long, it makes the business far more appealing for an acquisition.

Another way to secure longer-term contracts is to sign with companies that manage and service multiple buildings.  While this may sway your customer concentration, it will allow you to grow exponentially.  Many strategic and high net worth janitorial company buyers are looking for these management company contracts for servicing multiple buildings, and they are likely to place a higher value on a business that has such contracts in place.

Streamline Your Systems

Prospective buyers place substantial value in businesses that are efficiently run.  One way that many janitorial companies can increase their value is by updating and automating the appointment scheduling process.  Many new software systems will schedule appointments, notify employees, and even provide navigation to the cleaning crew.  Streamlining appointment scheduling not only increases the value of the business, but it also increases customer satisfaction and employee productivity, both of which are important to marketing a successful janitorial business for sale.

An organized billing system is essential to increasing the value of the business.  Potential buyers will appreciate clear and concise financial statements as well.  If your financial documents are being stuffed into a filing cabinet or shoe box, now is the time to organize them, using software like QuickBooks.  This way, buyers will gain a clear understanding of the business’s financial picture, and can easily transition the use of these processes after the sale.

Adding Value to Your Janitorial Business

Whether you plan to sell your janitorial this year or in ten years, it is never too early to start preparing your business for sale.  These tips will not only increase the value of your business over the long term, but they will also increase your cash flow now.  First, use the customer satisfaction you’ve created to your advantage.  Provide incentives for referrals and reviews on social media and other online sources of business leads.  Next, think about expanding your service offerings.  Providing even one additional service to your clients could increase the value of your business.  You may also want to consider residential cleaning services to fill the daytime hours when commercial cleanings often can’t be scheduled.  Finally, streamline your scheduling and billing, so potential buyers can see the value of your turnkey business.  Contact a business broker today to begin the process to sell your janitorial business.