How To Sell A Plumbing Business In California | Five Tips
When it comes time to sell a plumbing business in California, there are a few things you need to do as a retiring baby boomer business owner in order to get the most out of your sale. In this blog post, we will go over some tips on how to successfully sell your plumbing business in the construction sector.
If you are a business owner in California and ask yourself: “how do I sell my plumbing business”, we have identified five tips to get you started.
Reasons for Selling a Construction Business in Plumbing Niche
Below are the most common reasons for selling a plumbing business in California.
1. Ready for Retirement
If you’re ready to stop working and rest on your laurels, selling your construction company in California, a plumbing business, is a great way to fund your retirement and get some well-deserved peace and relaxation in your later years.
2. New Venture
Maybe you’re bored with construction types of businesses, such as a plumbing business, and want to take on a new business or career challenge. You’ll have to sell your business to focus your efforts on this new endeavor.
3. Risk
Sometimes the risk of owning a plumbing business can be too much stress. If you grew a successful construction business in the plumbing niche, you can sell it and relax rather than continue under the stress of being a California business owner.
4. Cash
If you want cash to buy a new house or start a new business, the best way to get this is to sell your current business. This strategy can help you avoid loans.
5. Industry Outlook
If the construction industry in the plumbing niche is changing too quickly for your liking, you can sell your plumbing business, passing the baton to someone willing to change with the times.
Increase Your Company’s Valuation
Even though you plan to move on from the plumbing business, the best strategy for selling it is to grow your business, then sell it.
Our first tip for selling a construction company in the plumbing business is to increase your value!
Below are the ten best strategies to increase a plumbing company’s value.
1. Customer Base
Having consistent customers that your plumbing company can rely on is one of the best ways to increase its value.
2. Sustainable
Ensuring that your plumbing business doesn’t spend more than it makes is essential in raising the value.
3. Cash Flow
A sign of a good plumbing business is a consistent cash flow that allows the company to grow, rather than waiting long periods between income.
4. Competitive Advantage
Your plumbing business should have something that sets it apart from other construction companies to give it an enticing competitive edge.
5. Scalability
Have a growth plan in place to exemplify the scalability possibilities to potential buyers who want to buy a plumbing business
6. Operating Systems
Organize all your books and operating systems for the new owner.
7. Financials
Have structures in place to plan for a dip in the market or other financial emergency.
8. Management Team
Make sure you have a trustworthy and efficient management team that will be able to introduce the new owners to how the company operates successfully.
9. Employee Satisfaction
Ensure that your employees are satisfied with pay and work environment to lower the risk of sudden resignations or no-shows.
10. Clear Value
Lastly, paint a clear picture of the value to the potential buyer or the broker, so all your hard work pays off.
5 Steps: How to Sell a Plumbing Business
Our second tip is to learn about the process behind selling a business. Below are the five crucial steps to selling a construction company in the plumbing business.
1. Prepare the Business
Try to finish works in progress and organize the administrative aspects to prepare the business for a successful sale.
2. Increase Company Value
Utilize the ten strategies discussed above to increase the value for a higher sale price.
3. Determine Ideal Buyers
Study the construction company market and enlist brokers to help you define your ideal buyer who might be buying a plumbing business.
4. Market to Buyers
Market your business to those ideal buyers, showcasing the value and unique selling points.
5. Close the Deal
The last step is to agree on a price and move into escrow, closing the deal and selling your plumbing company.
Why Use Construction Business Brokers?
Our third tip is to consider using a construction business broker in the plumbing niche.
The process of selling a plumbing business can be complicated and time-consuming. But a plumbing business broker can help you navigate this process and get the highest price possible. Even with the process simplified into the five simple steps above, it can still be confusing if selling a construction plumbing business is new territory for you.
Brokerage firms are like financial advisors, but instead of helping individuals, they help companies and businesses. They specialize in buying and selling businesses and can make selling your construction plumbing company in California a breeze.
Below are the top 5 areas where construction business brokers can help you successfully plan and sell a construction company in the plumbing business for a high value.
1. Knowledge of Buyers
These brokers will know more about what your ideal customer should look like, helping to find the best potential buyers.
2. Understanding of Company Value: How to Value my Plumbing Business
A plumbing business broker will be able to answer your question: “how much is my plumbing business worth“, and understand its value to present it to buyers in the most enticing way.
3. Insight into Market Trends
Buying and selling businesses in California is a constantly changing market. The brokers will know the latest trends and utilize them to your advantage.
4. Committed Time and Effort
You still have to run your business until you sell it, so brokers and boards can take the weight of doing the legwork off your shoulders.
5. Sales and Marketing
You may have no idea how to pitch to buyers or negotiate a price. But brokers are experts at reeling in buyers and selling your plumbing business for the highest price possible.
Use a Construction Business Valuation Calculator
To estimate the value of your business, calculate cash flow and earnings using a construction business valuation calculator for service businesses such as plumbing companies. Do your homework and make sure you’re getting a fair business price.
How to Sell a Plumbing Business: Tax
Our fifth and final tip is to become familiar with the taxes involved in selling a business.
As discussed, a brokerage firm in California can help make the process more successful, and they can help you understand how much you should pay in taxes when selling a business. If you don’t follow certain tax practices when exit planning, you may be shocked by how much of the gross sale goes to the government.
A construction business broker can help you utilize strategies like annual giving, rollovers and exclusions, incomplete gift non-grantor trusts, charitable lead annuity trusts, and grantor retained annuity trusts to lower the taxes on the sale.
Conclusion: How to Sell a Plumbing Business
Selling your plumbing business can be an exciting time, but it is also a life change that requires forethought and careful planning. Before selling your business, know its worth in both tangible and intangible assets. Find a reliable professional representative to manage the process while you continue to maintain your business. Market to and negotiate with vetted buyers and close for a reasonable price.
If you would like a proper business valuation or want the most out of your business sale, Andrew Rogerson of Rogerson Business Services can help. He’s an expert in helping sellers get the most value for their businesses and work tirelessly to ensure a smooth transaction.
Contact us today if you are considering selling your plumbing business now or within six months to learn more about how we can assist you in valuing and then successfully selling your business in California!
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