How to Sell a Housecleaning Business

If you are planning to sell a cleaning business, the value is in the recurring revenue stream coming from an established clientele and in your company's good name, reputation and the loyalty of its customers. Keep this in mind as you prepare to sell the business: You are selling your cleaning business as an ongoing concern as a superior investment to other alternatives. You must offer a better return on investment than a buyer could get from simply investing his money in stocks.

• 1

  Clear up any tax bills. If you let IRS issues fester too long, they may attach a lien to your business or to a particular asset or may initiate another levy action. At best, this could disrupt the sales process and, at worst, could expose you to a lawsuit if you fail to disclose the tax problem.

• 2

  Prepare documents. You should prepare a full balance sheet listing the assets of the company--including inventory and contracts to provide cleaning services--as well as liabilities or obligations of the company. Liabilities include accounts payable, rents or leases due to outside landlords and debts. You will also need to provide a cash flow statement detailing income coming into the business and debits going out of it.

• 3

  Consult with a business valuation expert or business broker. They may have detailed records on the sales of other businesses similar to yours and may be able to provide you with ideas on how to price your business. For example, you can price your business using a multiple of annual profits or gross receipts.

• 4

  Market the business. Potential buyers include younger family members, employees and competitors. They may ask you to provide financing, that is, to accept a series of payments for your business in lieu of a lump sum.

• 5

  Evaluate the buyer's ability to make good on the terms of the sale. For example, if you sell the business accepting a series of monthly payments and your buyer manages the business poorly, you may be able to repossess the business, but not before your buyer causes substantial damage to your regained flow of income.

• 6

  Draft a confidentiality agreement. This is an agreement wherein the potential buyer acknowledges that she will be privy to sensitive, confidential information that if divulged or abused would cause substantial harm to you and your business interests. For example, a buyer could conceivably view your client list and the income and pricing data associated with your clients and contact them in an attempt to poach, not buy, your business. A signed confidentiality agreement can help protect you from people who would abuse your trust. Conversely, the buyer may ask you to sign a noncompete agreement or to stay on to help with the transition.

• 7

  Meet with the potential buyer. Ensure your workplace and books are organized and your papers are easily understood. Your new buyer may be an entrepreneur, not an accountant. Ensure your materials are easily readable.

• 8

  Decide on an acceptable price for both sides. Many small businesses are bought and sold based on a selling price equal to a reasonable multiple of some key business metric. For example, a cleaning business may sell for six times the annual profits or two times average gross receipts.