I need some advice...I am considering buying an already established pet sitting business, but have no clue what it is really worth, the only thing I would really be buying is client info...the business is already insured and bonded so there would only be a transfer fee and not the entire fee for being insured and bonded....What kind of questions should I ask the seller and if anyone has a clue what a good asking price is I would appreciate any help. Thanks. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ 02-14-06, 06:26 PM frankvan At the very least, I would want to examine the books of any established business I was considering buying into. Caveat emptor.
02-14-06, 08:03 PM DorianGreyed Kitty, ask if you can contact any of the clients. While you may not be given that information, it can't hurt to ask. I would also make certain that the bonding and insurance is transferable. If you are purchasing a business, asking about insurance and bonding is, or should be, expected. You will need to contact the insurer and bonding agent. Don't accept the word of anyone else.
02-14-06, 11:55 PM coldfuse Pet sitting sounds like a business you would thoroughly enjoy! That is another reason to be cautious: don't let your emotions make the decision for you. The facts are far more important.
1. How much money does the business earn? How much does it earn after paying the owner's salary (remember, you can earn money working for someone else with no investment whatsoever)? How reliable is the earnings statement? Businesses like this are ultimately valued based on the cash they generate.
I have no clue how many times earnings a fair price is for a pet-sitting business. Pay as little as you can - every cent you pay is a penny you cannot put into good customer service.
2. Is the business successful because its clients like the owner? Perhaps the owner could stay on for a bit and introduce you to the clients. Be sure to take into account losing a few of them.
3. When you asked the owner for a non-compete agreement, what did she say?
4. If you are not already friends with the owner, don't become friends while you are investigating the business for purchase. Remain completely objective. Do not see silver linings where there are gray clouds. Do not take her word for anything that cannot be substantiated. Do not be afraid to ask for bank records and tax returns. Do not be afraid to ask why the business is for sale.
5. Have you thought about purchasing the business its own earnings? This would protect both ends. Perhaps you could give the owner a few dollars from each pet sitting job for a year or two, which would be fair verification of the quality of its client list and profitability.
6. When you sit for frankvan's pets, put pictures of George Bush around the house. It will calm them down.
02-15-06, 12:27 AM DorianGreyed 6. When you sit for frankvan's pets, put pictures of George Bush around the house. It will calm them down.
Frank wouldn't mind that at all. Just use several thicknesses and put the pictures in the corner. The pets will find it, and use it.
(That really was a nice touch, Fuse.)
02-15-06, 07:47 AM frankvan I recommend using Geo W's pictures for lining the bird cages and as kitty litter substitute. Wink
02-16-06, 02:25 AM babthrower Hi, Kittypal.
I have no idea how a pet sitting business works, so I'm just giving general information here.
The books you should ask to see, and the information you must find out, are
1. Check book (stubs) for one year - who are the payees? Suppliers? Owners? Employees?
(A competently-run business will have a company account. If the bank account is also the owner/owners personal account, walk away. There is no way to reliably check what you need to know.)
2. Bank statements - 1 yr. - any overdrafts? NSF checks? Average balance?
3. Utilities bills - 1 yr. Any unpaid balance?
4. Payroll records if they have employees - check how many days per month they had workers there, if any. Check they have sent in all government salary deductions. Double-check this with bank statements. If they had no employees, were the owners taking draws, or salaries? If draws they are responsible for heir own taxes; but if salaries, you might get stuck paying unpaid taxes.
If they just used high school kids after school, on a cash basis, talk to one kid. How much were they paid? Are they owed any money? Will they be available if you need them?
5. December 31 2005 tax return. If this has not yet been prepared, see December 31, 2004. Could you live on the amount of income they reported?
If the naswer is 'no' and the tell you they took in more but concealed it for tax purposes, they're either cheating the government or trying to cheat you. Walk away.
If they don't have a 2005 return, look at gross income , owner's draws or salaries, and net income (bottom line gross income less expenses). What counts is owner's draws or salaries and net income.
Make sure that the bank deposits are from daily receipts from customers, and not from money invested, or loans from their relatives or friends, or anything that would be artificially keeping a poor business afloat.
6. Are the premises rented or owned (e.g. in their own home?) If rented, is the lease renewable? If in their own home, how much will it cost you to set up similarly in your own. home?
7. Check their business licence with city hall, and check if there are any violations so far. Check the by-laws to see if it is legal to operate that type of business either in the existing premises or in your own home.
8. Ask the neighbors if there have been any problems: parking, etc.
9. Ask for three customer referrals.
If there is any problem getting any of this information, run like a rabbit, wallet clutched firmly in your hand.
If everything looks all right, and the customer base looks good, think about offering an amount equal to half of one year's profit including owner's salaries. Plus half the new value of any special equipment e.g. pet grooming equipment. Be prepared to go as high as one year's profit.
A service business is not really worth much. That is because it requires little capital to start up. You could hang out your own shingle, check licencing, put an ad to run in the local paper, and set up in your own home for not much money. "Good will" is really customer base.
02-16-06, 08:21 AM kittypal Thanks guys...It's actually my sister-in-law and myself who are thinking of buying (we decided not to unless she lowers her asking price) ANYWAY...The reason she is selling is because her and her husband are moving to Colorado for his work so she CAN'T keep the business. The business is 5 years old and she has three regular employees, they get half of whatever the pet service price the customer pays for their salary. She DOES have some regulars who are willing to keep on, after all if the quit they would have to get a NEW sitter anyway. The thing is is that like I said she really isn't selling anything but a her customer info and a micro soft program that has all the files, and templets to print out receitps, calanders, etc... She wants 14 thousand which in my opinion is way over the top...The sitting business CAN be pretty profitable, but like anything you really need to go out and bring in business...Like DG said the insurance might not be transferable and even IF it is it needs to be updated continually as does yellow pages etc.. so we would have to pay all that again. We think she is trying to make a buck selling this instead of just recouping what she put out...We may just do our own because it would be cheaper to start up. Thanks!!! Smile
02-16-06, 08:41 AM Lydia Hey Kitty - - I think that doing this on your own is exactly what you should be looking into. $14K for nothing more than a few clients and the name of another company and whatever might be leftover for the year in the phone book is not a fair price. Really...what are you getting for that investment?
Check out this site petsits.com startup kit You can join the site for under $30, get your own email addy whatevername@petsits.com that you want, you get a start-up kit that talks about how to do it and you can join a forum talking to others that do exactly the same thing. I'd say it's worth the $30 just to check it out more seriously.
As others mentioned - - bonding is on the individual, not the "company name" so that would not go on to you and the insurance is also likely at the individual level, so I'd doubt that you'd see anything on that front.
You're smart to be doing your homework!!!
Good Luck!!! >:< Lydia
02-16-06, 01:21 PM kittypal Thanks for the link Lyds!!! Smile
02-16-06, 11:10 PM coldfuse
quote: Originally posted by frankvan: I recommend using Geo W's pictures for lining the bird cages and as kitty litter substitute.
Ahhhhhhhh - the soothing effect he has on all creatures great and small. Sort of like a laxative.
This message has been edited. Last edited by: DorianGreyed,
