When Should You Sell Your Home Care Business With Special Guest Jen Ramos

Now is the time...  

Whether you have been in business for years or just getting started, it is essential to know when to sell your home care business. On today's episode we welcome special guest Jen Ramos, Licensed Business Broker and an experienced Certified Exit Planning Advisor, from JR3 Consulting Group.

Check it out!

Think with the end in mind. If you're a home care business owner, then an important question you need to be asking yourself is when to sell your home care business.

Well, lucky for you, I have brought on my good friend Jen Ramos, who is an expert at buying and selling home care businesses. Today we're answering that question. Let's dive in.

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When Is The Best Time To Sell?

The best time to sell your home care business would be when you are at your peak of your business. It sounds a little counter intuitive, but when an owner is really doing the best that they are doing in their business, thats the time to sell.

Your sales are super high, your systems are in place, everything is running smoothly, your semi absentee owner - that's the best time.

What I like to preach is to set up your business to make the timing of your exit totally irrelevant. So if you're hitting on all points of value, that's going to drive that multiple as high as possible, then where you don't need to sell.

If you get an interested party that is interested in the business and months to make you an offer, you could either take it or leave that offer. That's the best time.

As businesses and business owners, we're trying to continue to grow our businesses, so how do we know when our business is at its best?

You know when your revenues are coming in really strong, your business is doing the best in revenue that it has in previous years. Also your profit. Your profit is a huge driver. So if you're making the most profit out of your business, that's an indicator, a strong indicator.

You could have one or two really strong years and the following year could dip down and if it dips down, that's not an ideal time to sell because acquirers are looking at least three years of financials and so they want to see that the business is profitable and very strong margins.

So if you have two years and then it decreases in the third year, what would be your advice in that regard? Do we need to get it back up to the third year? What would your advice be in that situation?

Maybe someone was thinking about selling, but now they had a low year. Things happen, right? Covid, things of that sort. So what are kind of like the action steps?

Do they want to get greater than what it was the previous two years? Is that kind of the goal?

Yeah, that's always the goal. You're always trying to drive the best profitability numbers that you possibly can. Sometimes there's extraordinary events that force a business owner out of the business and sometimes growth isn't ideal depending on what's going on with that owner at that stage of life, and that stage of the business.

It's up to the owner. It's an individual thing. It's a case by case basis. But ideally you'd want to grow your business to sell for peak, for top dollar. And so if you're in your third year and you're thinking that, well, let me stick it out another year, let me get these numbers up, these numbers stronger, then that would be a good strategy.

I love the fact that you mentioned profitability, not revenue, because that's such a huge factor in business. A lot of times we think "I need to get this X amount of revenue goals."

Revenue means absolutely nothing If you're not profitable. You can have a $2 billion business, but if you're spending 4 billion, you're not doing great.

I had a couple of clients where I had one that had strong revenue, the revenue coming in, but it was just going right out the back door. Their profit at the end of the day was really not strong at all. Then I had another business in comparison.

That was a $2 million business, and their profit margin was well over 20%. The one that was 4 million revenue was like 8%. If you're not controlling the margins and you're not controlling the revenue, the money coming in and going out, your business can really be a cash stuck, which Is going to devalue the business. So it'll hinder you from positioning it and pricing it for top dollar when that time is when you're ready to make that transition.

It's very important. Your profit is everything!

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How To Reach Out To Jen

https://jr3consultinggroup.com/

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