Plumbing is critical component to the daily living for all of us. Plumbing businesses are essentially comprised of people that have the standard technical know-how. Most plumbing owners invest in employees to offer the best service to their customers.
At the same time, plumbing businesses also have to invest in equipment, tools and up-to-date machinery if required. It’s not an easy business to run, but it can be very profitable, the market is almost as big as the U.S. itself.
In order to capitalize on the opportunity, plumbing owners have to understand how to unlock the potential value of their business upon exit.
What is your Plumbing Business worth?
In order to understand what your plumbing business is worth, you have to have a clear view of your financial statements. To do that, gather the number for the last three to five years and compile them into a bigger report, where you will also include information regarding other plumbing businesses in your surroundings.
Take a look at the following metrics:
- 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 Plumbing Business worth more?
Before setting your asking price, you can’t rely on your business valuation if you don’t take into account some other key factors that make your plumbing business worth even more. But which aspects are those? Check these out:
- 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
What does the average Plumbing Business sell for?
Since 2008, when our research began, there has been only 54 plumbing business sales in the United States. For a very popular and necessary business model, the sales number was quite small, but that happens because most of plumbers work independently.
Despite that, it is a very, very profitable business, as you can see by looking at the average sales price, up to $732k and average multiple rate, at 2.30.
What is the most frequent deal size?
The most frequent deal size is less than have the average sales price: $300k.
Is the Plumbing Business market getting bigger?
It is too soon to ensure that, but 2018 was the best year for plumbing business in the United States by far. 2017 was also a very good year, but not as good as 2014 and 2015, for example.
For now, it’s possible to say that plumbing businesses are operating in good times and it might be a good idea for you to sell it right now. But remember in order to achieve the maximum valuation you need to properly prepare for the sale.
Are bigger businesses worth more?
Yes, with very few exceptions. The rule is the bigger the business have higher multiples and higher valuations. Sometimes, however, it happens that a bigger plumbing business, valued at a higher price than the others, have a lower profit than a smaller business.
What states have the most Plumbing Business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? As you can see if you are located in California or Florida, you may get a lot more offers than if you are in Arizona or Ohio. 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 Plumbing 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 9 months, but you can also see deals getting closed in 3 to 6 months depending on the opportunity.
What is the process of selling your Plumbing 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. Many entrepreneurs forget about a step, or just don’t have the right guidance and get frustrated with the process. Don’t forget to go through all of these, and if you have any questions or comment at the end of the article feel free to contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Plumbing Business, 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 plumber industry it may likely be a person who already has experience in the field.
How should I sell my plumbing business?
Marketplaces – (under $500k yearly profit)
Smaller business and micro-businesses are usually best sold privately by the owner through forums or classified websites.
To sell your plumbing business, check out:
Broker/M&A Advisor – ($500k – $10m yearly profit)
Medium sized businesses in the $100k-$20m are best sold through brokers who help with finding buyers, negotiating and structuring the deal. To sell your plumbing business, check out:
Investment Banks – (Over $10m yearly profit)
Larger businesses are best sold through investment banks or merger and acquisition companies. To sell your plumbing business, check out:
How much will it cost to sell my plumbing business?
Generally a business broker will charge 8-12% of the sales price of an plumbing business including inventory depending on the deal size. Larger deals attract a smaller fee. Below is a range of fees at each deal value level.
- Under $1m – 12%
- $1m -$4m – 10%
- $4m -$10m – 8%
- $10m -$25m – 6%
- $25m + – 4%
Conclusion
Plumbing businesses are mostly made of people, and most of plumbers in the United States work independently. However, it is a very profitable business, as average sales price is up to $700k and most frequent deal size is $300k.
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.