Many factors affect the salability of a business; below are just a few of the main considerations specific to the pet care industry. Please be advised that it’s the whole package that counts more than an individual item.
Income drives everything, so the more, the better! As a general rule, facilities with revenues under $250,000 are difficult to sell and the most attractive listings are businesses with over $500,000 in gross income. Seller has to consider that when a buyer purchases a business, they will have a loan payment and smaller businesses simply don’t generate enough cash flow to support the debt service and buyer income. Hence a business with lower revenues is not as attractive on the market compared to others that generate healthier cash flow.
Businesses with declining revenues over a considerable period of time (2-3 years) pose a risk for a buyer and lender, thus being less attractive on the marketplace.
For our listing purposes, the minimum revenue we can entertain is $250,000.
Business structure and employees separate a hobby from a business. A sellable business has well-trained staff, policies and systems in place that will continue to generate income when the seller is replaced by a buyer. Hobby facility has an owner who pretty much does everything with some seasonal or part-time help. The hobby facility is a high-risk investment and thus challenging to sell.
For our listing purposes, we can only consider facilities with regular, year-round, staff in place.
A pet care business has to be fully in compliance with legal requirements to be sellable. This includes proper licensing and zoning/land use / permitting requirements. Operating under a Variance or Special (conditional) Use Permit is not a hindrance to selling, but operating illegally is a show stopper.
For our listing purposes, we can only accept facilities that are in full compliance of zoning, land use, permitting and licensing requirements.
Most buyers are looking for facilities with over 50 runs/suites/dog capacity (if kennel free). It’s simply difficult for a business to generate healthy revenues, and subsequent cash flow, with less than that. In our experience, facilities with under 30 runs are challenging to sell, unless they also offer high volume daycare, grooming, etc. so revenues are still over the desired $500,000.