How to Sell Your Plumbing Company
COVID-19 has disrupted how many businesses operate, and some industries have been hit harder than others. Travel, entertainment, and restaurants have been heavily affected, but other industries have performed reasonably well.
Some businesses provide products and services that customers consider to be essential. Grocery stores and big-box retailers have maintained sales during the pandemic, and so have repair firms, including plumbers.
Plumbing businesses are attractive to buyers, because homeowners consistently need plumbing repairs, regardless of economic conditions. Plumbers that provide great service can generate a repeat business, which sharply reduces the need to advertise.
If you’ve grown a plumbing business and are considering a sale, work with an experienced business broker. You’ve busy running your operation, and the added burden of selling your business can be difficult to manage. A broker can help you complete these steps to sell your plumbing business.
Preparing for Sale
The most attractive companies have documented systems in place that a new buyer can use to operate the business. Make sure the following 3 areas of your business are well organized and you’ll save time as you manage your business, while establishing an easier transition to the purchaser.
Accounting Software
You can save time and increase accuracy using accounting software, and software makes it much easier to generate financial statements.
Payroll
Use a payroll company to process payroll. You can generate reports from your accounting system, and send the reports to the processor automatically.
Invoices
Use software to generate invoices, and to track incoming payments on a timely basis.
Uncovering Company Value
Discuss your entire business with a broker in order to uncover the true value of your company. When you dig into the details, you may find business traits that are attractive to a buyer, but not immediately apparent to you. Consider if any of the following traits apply to your plumbing business.
Responsiveness
You provide live, 24-hour phone service for customers who have a plumbing emergency. Clients can find out when a plumber is available much faster with your firm rather than your competitors, who don’t provide after-hours live support.
Specialization
You’ve built expertise working on plumbing in old homes. This skill is important because an inexperienced plumber can damage older pipes and connections during a repair.
Branding
Unlike some other plumbing companies, your plumbers drive well-maintained trucks and take precautions to minimize the cleanup required after a plumbing repair.
These factors increase customer satisfaction and help you maintain a large book of repeat business. A broker can take your company’s story and create marketing materials for potential buyers. A great marketing message helps you put your best foot forward, and generates more attention and interest.
Finding Qualified Buyers
Plumbing businesses are attractive to buyers, and you may have attempted to sell the business on your own. Many owners find that they waste time with potential buyers who don’t have the financial resources to make an offer. Your time is limited, and finding out that someone isn’t a serious buyer is frustrating.
Business brokers have a network of pre screened and vetted buyers, who have the financial resources to purchase a business. When a broker works on finding a buyer, you’ll save time and find a purchaser for your business much faster. Most importantly, your broker will make sure a potential buyer has the financial resources to buy your business.
Managing Due Diligence
When your broker finds a qualified buyer who is interested, you’ll need to prepare for the due diligence process. Brokers know the records that are required, and they can help you gather and review your documents. Your broker will also have the purchaser sign a non-disclosure agreement before any records are shared.
If the potential buyer requests more records, your broker can handle the requests. Owners who attempt to sell a business on their own are often frustrated by additional records requests. Your broker knows which requests are reasonable, and they can follow up with the purchaser.
Valuing the Business
What is your plumbing business truly worth? The value is a key factor in negotiating a sale price. The experts at Raincatcher provide a Broker Opinion of Value or a Certified Business Valuation prepared by certified valuation appraiser. This is an unbiased process that removes subjectivity from the valuation and reflects your company’s true worth.
A large portion of your plumbing company’s value is the loyal customer base that drives repeat business. A plumbing business also includes vehicles, tools, equipment, and possibly real estate (company office and warehouse). It’s important to consider the following factors when valuing a plumbing business.
Staff
The expertise of your plumbers and time they have been at your company has a huge impact on customer satisfaction, along with your office support staff. The key to customer happiness and repeat business begins with the happiness of your employees.
Licensing
Every town and city requires plumbers to obtain licenses or permits to operate. If you maintain compliance with each town and city, the buyer can take over the business with less required paperwork.
Founder Involvement
If you have reliable staff and good systems in place, the business can be smoothly transitioned to the new buyer. Buyers look for a true turnkey business and are willing to pay top price for these types of businesses.
Advice From an Expert
We spoke with Susan Frew of Sunshine Plumbing and Heating about best-practices for selling a plumbing company. Her answers and insight can help you make a more informed sales decision.
Q: How do You Know When it’s the Right Time to Sell a Plumbing Company?
A: When you no longer enjoy what you do
Q: What KPIs Should You Highlight When Selling a Plumbing Business?
A: The number of maintenance plans, average ticket sales price, number of customers in the database with good contact information, the average cost per lead, and revenue from repeat business
Q: What Can Plumbing Business Owners do to Stand out From Others Sellers?
A: Have an outstanding customer service strategy along with an intentional social proof strategy.
Q: How Would You Communicate the Sale and Transition to Your Team?
A: The team has been accustomed to clear, immediate communication and appreciate significant skill training initiatives. I would recommend that the new owner get to know each employee’s dreams and desires as a way to connect and build trust and relationships.
Q: Would You Recommend Using a Business Broker When Selling a Plumbing Business?
A: Yes. It is incredibly complex to buy and sell a business. You need to have an experienced, seasoned professional to guide you and help you to earn the most amount for your business and ensure that all processes and procedures are followed.
Q: Do you Have Additional Advice for Anyone Trying to Sell a Plumbing Company?
A: Meet with a business broker 3+ years prior to the sale so that you can understand the evaluation and to learn the areas of your business that may need refinement or adjustment prior to the sale in order to obtain maximum value.
Sell Your Plumbing Company With a Trusted Advisor
You hire experts and trusted advisors to help you in other areas of your business, and a business broker can be your trusted advisor throughout the sale process. Work with a broker today to close a successful business sale.
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