Cabinet and wood businesses have a very interesting business model, that can also be called woodworking.
There are very different kind of cabinet and wood businesses, and their specificities vary according to the company’s size, target public, number of employees, where it’s located and so on.
Cabinet and wood businesses can be very easy to sell if you know how to attract potential buyers, but you have to make sure you know exactly how to value your business in order to sell it for the best price possible.
With so much to do, such as cabinetry, wood carving, joinery and carpentry, cabinet and wood businesses owners must take into consideration that a lot of people are interested in furniture made from wood, for example.
Take a look at the following topics and learn how to sell your business for maximum value.
What is your Cabinet business worth?
The very first thing you need to do is discover that your cabinet and wood business is worth. And you’ll do that with two basic steps: the first one is gathering all finance information and compile it into finance reports in order to provide potential buyers with all data they ask for. Second, it’s also important for you to learn the best from your competitors and explain potential buyers how they are harming your profits.
Follow these topics and make sure you know all the answers:
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a Cabinet business worth more?
And now you started analyzing and answering the last questions focused on how your business is valued, you can begin planning on how to make it being worth more with these next metrics:
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
Cabinet and wood business can be more valuable when one of those diversified sources is a website, and when you have more employees working at the same time and more and more service to be made, as well as up to date equipments and machines that help your staff.
If your business operates in other states and is able to produce different materials from wood, even better. Make sure potential buyers are aware of all these informations.
What does the average Cabinet business sell for?
Since 2005, there has been 175 cabinet and wood businesses sales, with an average sales price of more than $1 million.
It means that once you own a business like this, it’s very likely you profit a lot from its sale, especially if you consider the average multiple (up to 3.5) and the total transaction value for the past decade: almost $190 million, despite the low number of sales.
What is the most frequent deal size?
Even average sales price is up to $1 million, most frequent deal size is much smaller: only $400k.
It happens because most of these 175 sales were between $0-250k and $250-500k, especially in the last five years.
Millionaire sales are also possible, but are more unlikely, as you can see in the chart.
Is the Cabinet and Wood market getting bigger?
Like most of business models, cabinet and wood market has its ups and downs. However, 2015 numbers were almost as better as the best year so far, registered to be 2006, with more than $28 million of total transaction value.
However, 2013 and 2014 were not the best years, with numbers much smaller than 2012, 2011, 2010 and so on.
How it’s going to be 2016 is very unpredictable, but it is expected to be a year as good as 2015 was at least.
Are bigger businesses worth more?
Yes. The larger the cabinet and wood business the higher the multiple, so the higher the profit as well.
In 2015 for example $0-250k average multiple was 1.92, while $250-500k was 2.34. So that means that if you think there is an opportunity to grow your revenue and profits the next year, you should wait to get to more than a million dollar valuation.
What states have the most business deals?
California, Georgia, Florida, North Carolina and Texas are the best states for you to sell your cabinet and wood business for the best price.
But sometimes you can overcome the low number of deals with investors or competitors looking to enter a specific new area, and get lucky with an offer.
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your business?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Cabinet and Wood, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the cabinet and wood industry it may likely be a person who already had a store in the field.
Cabinet and wood market has its ups and downs, so it’s not easy to predict if 2016 is going to be as good as 2015, but it’s very possible.
At the same time, even though there have been so few businesses like that sold in the past ten years, owners can profit a lot from them, as the average sales price is up to $1 million.
If you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today! Leave your comments on any doubts or feedback, we are glad to hear your thoughts!