How can I tell if a virtual assistant agency for sale is profitable?

Profit comes from the gap between what clients pay and what contractors are paid, less the owner’s time and the tools that keep it running. The checks below help you see that gap clearly. They do not give a verdict. Your accountant does that part.

Billed hours against paid hours

Ask for a report that lines up the hours billed to each client with the hours paid to the contractor who did the work. A gap is normal, since it is how the agency earns its keep. Look for whether it is steady, and for hours that were worked but never billed. Ask how rates are set and how often they have changed.

Retainers, hourly work and the owner

Retainer clients and hourly clients behave differently. Ask how each is billed, how notice works and what happens in a slow month. Then find out how much of the work the owner does personally. If the owner bills time and draws no wage for it, the statements may look stronger than they will once you hire someone to do that work. Ask your accountant to adjust for it.

Client concentration and staying power

Ask how much of the revenue comes from the largest few clients and how long each has been with the agency. A client who found the agency through the owner’s personal network may leave with the owner. Speak with a few clients, if the seller allows it, once the deal is well along. See also how to read a call centre’s results.

Tools and other costs

Add up the software the agency pays for, such as project tools, time tracking, phone and file storage, and ask whose accounts they sit under. Subscriptions held in the owner’s name may need to be moved. Ask what the agency spends on finding new clients and whether that spending is visible in the statements.