Whats Your Business Worth?

#CARRIERMAN

Hi PressurePros

Ecxellent summation. This is the kind or forums that I think all current buisness owners or potential ones should read. If you can read the exploites of those who have been there, the only way to go is forward. I believe all that has been posted here has the potential to help in about any industry. Once again, excellent.

Rusty

Leo G

The thing you guys are missing out on in the name of your company. If you have made your company a good name that has a reputation and a good word of mouth advertising system, you have something to invest, your companies name. I am a single guy running a cabinet shop (no employees). I can do $100K gross receipts a year. I've got about $30K of my own equipment. Even without myself, my companies assets and word of mouth advertising are worth something. After it is sold and they put some schmuck in there to replace me the story may change. But that's their problem now.

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Sawdust Follows Me Everywhere

http://lrgwood.com
Custom Cabinets in Hartford County Connecticut

mahlere

your equipment is worth whatever the bluebook value is at the time. The name and word of mouth, by itself, is not worth anything to a potential buyer (at least not one that has any understanding of it) The reason is simple. The word of mouth is for you Leo G. There is no guarantee that any one of those customers will deal with me, mahlere.

The only thing that makes any of your customers valuable to a potential buyer is contracts. Whether it be contracts that you have to build cabinets. or Service contracts. But you could have a 10,000 person customer list without contracts, and no one will pay you much for it. Because there is no guarantee. But have 4000 customers who are on Service contracts (and have renewed for a few years) they are going to deal with that company no matter who is there. They probably don't even know who the company owner even is, let alone deal with him/her.

If you have a name that is branded, with good top of mind awareness, you probably have the systems in place as well. It's all part of something bigger.

Richard

I surely dont want to be a part of something like this...I aint no Mcdonalds mahlere, cause you sure seem like you're saying over and over if you arent running like a franchise, you have nothing. I would never be happy with the fact that customers did not personally know me. I would never be happy sitting back in my leather chair directing my little robots. Where is the personal relationship??? I'd rather have 2000 personal reltationships with customers whose house I personally have walked into, than some system which I dont participate directly just because I want to have something to sell....

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Rich

mahlere

no paintguy, what I'm saying is if you don't have systems in place so that your company is not dependent on you, you probably won't be able to sell your company.

You can operate a very lucrative company without the systems. But it will be a company that is dependent on your participation. It will only be lucrative to you.

If you hope to sell your company - run it like a franchise. If selling your company is not a goal - personalize it for you.

That's all I'm saying.

Richard

Bingo

Now we're talking. This sums it up perfectly. Now each simply picks which he desires and which makes him happy and whaaala.

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Rich

Ben76

Umm, a trade based business will NEVER be worth more than it's beat-up, worn-out tools.

The exception might be a business that has accounts that could be transferrable, i.e. cleaning, painting appartments after tenants move out, etc.

The whole franchise idea is laughable. The McDonalds of building? Snork! Give me ONE example of a small scale trade based "franchise" that someone bought!

Cheers, Ben

ruskent

I know a guy who has a kitchen and bath company. Just does kitchen and baths. Has a show room. Designers etc. His father inlaw bought started the company in 1949. The guy i know bought it for 500k 20 years ago.

Averages around 3 million a year. With i think 14 employees.

Anyone who thinks a contracting business can't be worth anything won't get to far in business.

Don't you guys read the article in Professional Remodeler about companies being sold?

Matt

mahlere

Roto Rooter

john elliott

I'm glad you said that, I've been wondering about that myself

John

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."

Mike Finley

To name just a handful that have all successfully made the transition from small operator to systemized business to franchise.

• handyman (Mr. handyman)
• lawncare (Lawn doctor)
• bathroom remodeling (tub liners - Re Bath)
• log home building (Lincoln Log Homes)
• painters (CertaPro Painters)
• home building (Ubuilt it!)
• plumbing trades (Mr. rooter)

The window business is in the process and so is the roofing trade, as are others.

Nothing can stop any business from having the potential to be franchised, except the owner's mentality.

mahlere

also,

1-800-got-junk
merry maids
Mr. Handyman
Mr. Rooter
ServiceMaster Clean
Mr. Electric
Mr. Sparky
CertaPro Painters
Lawn Doctor
Rooter Man
Stanley Steemer
Mr. Appliance
PuroSystems
Aire Serv
One Hour Air Conditioning and Heating
Benjamin Franklin Plumbing
Re-Bath
Kitchen Tuneup
Kitchen Solvers
Precision Door Service
DreamMaker Kitchen and Bath
Duct Doctor USA
Aero Flow


And they are only the ones in the Topp 500 Franchise List

mahlere

As an old saying goes "You can or you can't, the choice is up to you"

mahlere

In addition, if you think that the largest Residential Builders (Toll Brothers, Centex, Hovnanian, Etc.) don't have systems in place.....well, let's just say that Old Man Hovnanian hasn't seen the inside of his office for months at a time, yet he still draws personal paychecks of millions $ a year.

The OP was about how much your business was worth. The point is, without a system to let your business operate without your daily input, it's not worth much to anyone outside of you.

If you have the system(s) in place, it's worth money to someone else.

Bob Kovacs

I know that for a fact, since I was part of the team building their new corporate HQ, and his office still isn't done, almost a year after the rest of the company moved in- there's still decisions on finishes that haven't been made....lol.

Bob

mahlere

you were involved with that? that's 10 mins from me...neat little town.


Now, if you can just work on that $50,000,000 caulk budget, y'all might make money...

Bob Kovacs

Yeah, I was sent down there "just for a few months to coordinate the post-tensioned parking garage". That turned into 14 months (would have been much longer if I didn't leave the company)- I ended up coordinating the garage, bidding, buying and coordinating the interior fitout, and fixing a lot of the "design intents" that were for all practical purposes impossible to build. It truly is an awesome building now that its (almost) done.

Bob

mahlere

I haven't seen the inside...but I dig the little moat out front...should've put a drawbridge in

But, truth is Hovnanian Companies can operate without any of the principles in the office for months at a time. And according to CNN, their market value (as of 3/17/06) was about $2.9 Billion. I think there are a few systems in place.

mahlere

I want you to save this post, and in 10 yrs, assuming you are still in business, I want you to reread this post. See if you still feel the same at that time.

Richard

I appreciate your Contractor Talk contributions, thanks for all your concern and your input

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Rich