4 Ways to Get Top Dollar for a Pet Care Facility
Planning your exit? These tips can help you get the sales price you want and deserve.
In our current economy, investing in a recession-proof business is the key to long-term success. When thinking through the types of businesses that fall into this category, you may not have considered a pet care business as recession-proof but it is. Americans are investing more money into their pets than ever before, especially since pets are now being elevated to family member status. Consumers are not cutting corners when it comes to the comfort of their fur babies and the American Pet Association found that Americans spent approximately $47 billion on pet products and services in 2010. Industry experts are predicting a 4.4% revenue increase in the pet care sector through the end of the year and these numbers are only expected to grow in the coming decade.
If you own a pet care facility and have been thinking about selling, this might be the perfect time for you to explore your options. Industry growth rates are high and historically, consumer spending on pets has held strong even through tough economic times. After all of the years you have spent building your business, you deserve to reap the rewards of your labor and the best way to do that is secure the highest price possible when you sell. To understand how a pet care business will be valued, we have included a few formulas below. Keep in mind that several variables go into valuing a business and only a professional business broker can tell you the value of your business.
- Pet Boarding: 1x annual sales + inventory, 2-3x SDE + inventory, 2.7x EBIT
- Pet Grooming: 40-%45% of annual sales + inventory, 1.5x SDE + inventory
- Pet Stores: 25%-30% of sales + inventory, 2x SDE + inventory
Now that you have a clearer vision of how your business stacks up, you can begin implementing measures to build value and increase the appeal of your business to prospective buyers. We have compiled a short task list of ways you can improve the value of your pet care business and get the sales price you deserve and hope it helps you on your exit planning journey.
Location & Facility
As mentioned before, consumers have changed in the way that they view pet care and are willing to spend more to ensure that their pet is comfortable. Knowing this, it is critical that you mold your pet facility to mirror their image of cleanliness, comfort, and happiness. Front the cash to renovate and clean your facility so that it always appears modern to clients. Older facilities in the pet care industry have proven hard to sell, but resort-style facilities are easier and more desirable to buyers. Just last year, we helped sell a well-known pet resort to strategic buyers from out of state and we received far more interest on the business due to the modern, comfortable feel of the facility. Ideas on how to improve your facility could include cozy cat lodges, grassy play areas, swimming pools, or climate-controlled suites. In addition to maximizing the comfort of your facility, location is a critical part of attracting buyers. Zoning laws are strict for businesses in this realm so you will want to make sure all of your zoning information is in order before selling. It is also easier to sell a pet care business that is located in a quiet, residential area where owners feel that their pets will be more at ease.
As with most service businesses, an online presence is crucial to the success of your business. More consumers are using the web to find businesses and SEO is becoming more competitive so we recommend implementing a multi-platform marketing program. Marketing will get more clients in your doors, hence boosting your cash flow and raising the value of your pet care business. A developed marketing plan also shows buyers that you are targeting clients through various channels and most likely have secured some income for the future. For service businesses, it’s always great to set up Yelp or Angie’s List pages. These sites allow clients to review your services online and are frequently used by consumers looking for new providers but want feedback from previous clients. A robust website detailing your services, pricing, testimonials, and basic company info is also great for SEO and cultivating leads. Finally, a social media presence will capture younger prospects and build your presence in Google results. If you do not currently have a marketing program, we recommend designing and implementing one several months before you decide to sell so that by the time a buyer comes along, you are already seeing results.
When it comes down to it, the value of your business will be heavily weighed on your financials. To ensure your financials are on par with industry standards, it is recommended that you always keep the occupancy rate no lower than 50% and aim to rake in around $3,500 per enclosure annually (if you board pets). Ensuring that your occupancy rate never dips below 50% will even out your cash flow and keep your financials more consistent. Steady occupancy rates also show buyers than your pet care business is lower risk and will most likely yield the same results for months after they officially take over.
One final way to grow your pet care business or build your cash flow prior to the sale is to add complementary services to your repertoire. Pet care facilities often start out offering one or two core services such as grooming or boarding but eventually add additional services to increase revenues and clientele. Even minimal services such as dog-walking or retailing pet products can boost your cash flow and get clients in your doors who may eventually seek other services. Similar to the way that we advise business owners to diversify their customer base, we also recommend diversifying your service offerings. A variety of revenue streams prove that your business is stable and just in case one department doesn’t meet their goals, there are other sources of revenue available to help replenish that.
The pet care industry is on track for a very high level of growth and development over the next few years and while it may feel counter-intuitive to sell during this time, it could actually be the best timing for your business. Business owners are more likely to secure higher sales prices when the economy is thriving, industry trends predict growth and stability and your business is doing better than ever. Those factors combined with buyers actively looking to acquire pet care facilities puts business owners in a very advantageous position. Even if you are not ready to sell right now, our no-cost, no-obligation business valuation can give you a better idea of what your pet care business is worth and how to increase your sales price. As a business owner, you should always have a plan for your future and the best time to start planning is now.