Scales


The cleaning community has seen more than a few mergers and acquisitions lately. BSCs are constantly looking for ways to boost their company's value, hoping to catch the eye of the right buyer. A new report for commercial service businesses outlines four key strategies that can positively impact a company’s valuation and improve attractiveness to potential buyers. These insights are particularly relevant for cleaning and maintenance companies, which are seeing increased consolidation activity.

One primary takeaway centers around the idea of revenue predictability. Recurring revenue streams, such as those from long-term cleaning contracts and maintenance agreements, can often command valuation premiums that are three to five times higher than revenue from one-off projects. In fact, businesses that generate a high percentage of their revenue from consistent, reliable contracts can grow at twice the rate of their project-based counterparts. To capitalize on this, businesses should aim for at least 80% of their revenue to come from long-term, committed service contracts; a focus on "quality" revenue over "one-and-done" projects signals stability to potential investors.

Technician productivity is another strong factor. The report emphasizes that companies that optimize technician performance often achieve higher margins and tend to boast strong customer satisfaction. By doing a few basic tasks like digitizing work orders and streamlining communication between technicians, office staff, and customers, companies can empower their frontline employees to spend most of the time on billable work.

Enhancing operational efficiency via new technology is another helpful strategy. Software can provide significant advantages by maximizing productivity and minimizing errors. These systems/software tools can provide staff with real-time data and tools to manage tasks and customer interactions. A tech-forward approach helps to demonstrate scalability and showcases the ability to manage growth effectively.

The report also stresses the importance of prioritizing the most valuable customers. Building a customer-first culture improves retention and drives sustainable growth. With timely customer communications, companies can position themselves as trusted partners. This involves digitizing all customer interactions (from service histories to invoices) and striving for a customer retention rate that crosses the 90 percent threshold. Strong and dependable customer records and focusing on cementing relationships with the most profitable clients are essential steps to build a business that is not only successful, but also highly valuable. In today’s competitive market, buyers are looking for these extra factors more than just high revenue returns.