How Much Can I Sell My Business For?

Tahoe Painter

Hi all,
I have been in business for over 20 years, painting for 33 years. I am no longer enthuised about bidding & the b.s with dealing with employees. Tired of training (so they can now run off to start their own business!) & the sad/poor trained painters that "say" they have 20 years experience! Yes, probably does sound like I am "burnt out". Can anyone tell me what or if their business is worth, are there any painters that sold their business that can give me any ideas, do I sell & carry the financing myself? Thanks

rbsremodeling

Most contractor companies aren't worth squat. The owner and his contacts are mainly it. Your equipment, tools equal nothing.

Land if you own that and a building/office a bit of value there.

Branding if you have good Name recognition, your website and company name may be worth something.

I partnered with someone and sold my companies name Made it a DBA in another state near by and forward website leads/referals for that state for 20K and 10% of profits to use in another state that may be an option

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Celtic

Your business is only worth what another is willing to pay ~ it makes little difference if you have been in business for 20 years or 20 minutes.

What about your business is worth more than 1¢ to someone else?
Why would someone want to buy your business?

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72chevy4x4

I have a painter buddy who was extremely established and well trusted who moved away for missionary work and 'sold' (gave away) his business/name/phone to a long time employee who had been faithful to him. There was no real value on the name or phone, all though the phone number has been around so long that people who have used him 15-20yrs ago will remember the name, look it up in the phone book and give the new guy a call.

I know of a CPA firm that bought an old established fellow's 'name' and made a partnership business of it. The CPA may be a principal in the new business, but along the same lines the established name goes a long way. Ditto with a tractor dealership who had been in business for a very long time-in the right hands the "been in business since 1942" can go a long way in establishing trust.

best of luck, but the reality is that you will likely fetch little to nothing.

slickshift

Unless it is a "Turn-Key" business with all the appropriate systems in place (if you don't know what I mean then you probably are not there), not much
....except the maybe the value of the equipment

For an explanation of the Turn-Key biz, and how it relates to us, read The E-Myth

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Quote:

Originally Posted by ModernStyle I have never used this crap before and I pray to the paint gods that I never have to use it again, I would rather use Behr

Dorman Painting

If you've got a number of commercial contracts worth a stated amount, you can certainly sell your business for a profit. A paint company may have the contract to paint all of the Wal Marts in a five state area, you bet it's worth money. That same company may have five vans, four pickup trucks, eight sprayers, thirty ladders, and a boom lift. They also own an acre of ground with a 5000 square foot shop. That business right there is worth a tidy sum to a young up and comer willing to work hard and make it happen.

What's your business worth to you? What are your annual numbers? Do you own a shop on some property? Lots of variables go into determing what a business is worth. My grandfather sold his printing business back in the 80's for over a million dollars, building, landing and a sizeable government contract out of Fort Knox...

Cache

A business is generally valued based on its net income projected over the course of several years. However, this doesn't apply to a service business because the owner isn't selling a product, he is selling his time and skill. Both of his products (time & skill) leave with him. The only thing left to calculate a valuation is inventory, equipment, and real estate. The vast majority of contractors here are either running out of home or from a leased office. Neither add any value. Equipment is generally valued at "Ebay" prices. A buyer generally expects to pay less than half for any existing inventory and most deals I've been involved with, or privy to, have been closer to about $0.20 on the dollar.

"Good Will" is where things get a bit tricky. IOW, how much is the company's name worth. In some cases this is actually quite valuable as the name is associated with quality. Unfortunately, that is rarely the case in the contract services world. While there is a certain amount of consumer loyalty, that all goes out the window when the owner changes. IOW, anyone who knows the business well enough to be loyal, will also know that the company is changing ownership. Also, the owner of a service business usually thinks their "brand" is worth more than it actually is. I'm gonna sound like a jerk but, when we leave, the market doesn't even notice our absence.

Obviously these statements are all based on the assumption that your business is like most here in that you have a fair amount of well used equipment and a handful of employees. It could be that the local market really knows you and you command an abnormally large portion of the market share. In that case, that is where your value is. You might consider taking the better part of a year to hand over the business to the buyer. IOW, having someone work as the current foreman/future owner. Make the focus of your day to day activities for the next several months more about training him up and connecting him to your contacts and clients. In that case, your business might be worth something to someone.

Otherwise, your business is worth street value of equipment, pluss 50% discounted inventory. Add a couple thousand bucks good will, and rid yourself of the headaches.

MALCO.New.York

Tahoe Painter.



Tahoe Roofer.



Hmmmmmmmmmmmm

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JBBS

This should be fun.

bwalley

$1.00

simplejack

Do you have a super or someone who can run the business for awhile?! Trust me Theirs a GOOD chance you'll be back! I got burnt out too and decided I had enough in the reserve to invest in a family business closer to home and that had NOTHING to do with contracting...18 months later, after busting the new venture...It was the biggest mistake of my career.

Coming back at the level I left off is nearly impossible in this economy, and really theirs nothing else I'm really good at that would pay even a fraction of what i earned...No my friend unless yer on your way to complete Retirement you might want to keep some interest in the company.

starting over is a lot harder the second time around!

Tahoe Painter

thanks simplejack for insiders view of what can happen after you sell the business (or just plain get out!)
My hopeful plan is to try to sell the business(if possible), sell the house(eventually) & head south to mexico (where the $ goes a lot further, there is no snow, and the ocean breeze makes you feel better!)
This may not happen as soon as i would like but i am trying to "get a plan" for when i can no longer take any more!
As far as other contractors have said " your business is not worth squat, or, it is only as good as "your name" and if you are not there, "it aint worth a penny". They may be right. The only reason I even considered bringing this subject up in this forum is that I was talking to my old foreman (who I trained for 10 years & now has his own business) is that he told me and I quote " if you ever want to sell, I want to be first at having chance to buy it". Now what guy would not look at his business differently & think - well I do have some really great bread n butter accounts, maybe it is worth something!
As for the success he may have after buying it, well yes i would do whatever it takes to make sure all clients "remember he was running my work, & the only difference will be he will be doing the billing, etc."
So, this brings me to this, I then start to research paint contractors who have their business listed for sale & I wonder why this certain contractor who lets say does $500,000 or so a year & thinks he can sell for $150,000.
Not that i think my business is worth that much, but who knows?

SelfContract

Test the water....Put you business names/description/location/type/potential, etc... on eBay, starting prices = $1, reserve price = your desire$$... then you will know if a billion of people from the world will see & respond to buy or not?? If they don't reach your reserved price, you don't sell.

slickshift

Excellent...this is truly your best case scenario!

Your old foreman knows more about what's up with your biz (and the value of that info), and the biz itself (that a name and rep is truly worth something), than someone who is weighing buying a Subway Sandwiches or True Value franchise, any off the street entrepreneur looking for an investment, or the number crunchers at the bank
He knows...and will place more value on purchasing your business than any other person or entity

Find out what is is willing to pay
It may take some negotiating to get what you are looking for

But he will place the highest value (way over anyone else) on your biz
So, more than any other prospect, you are in the driver's seat

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Quote:

Originally Posted by ModernStyle I have never used this crap before and I pray to the paint gods that I never have to use it again, I would rather use Behr

Mike(VA)

Anyone who has any sense is going to ask questions. How would you answer these?

• How much does the business throw off? In other words, how much do you take home?
• What are your physical assets? Do you own stock? Entity type?
• What is the goodwill value? Its called 'blue sky' by some. If you left, what would happen to the goodwill?
• What on-going contracts do you have and are they assignable?
• How is your marketing done and what does your lead system look like?
• How is your accounting system? Shoebox, QuickBooks, other?
• What are your debt obligations, legal liabilities?
• What geographical area do you work and what are the demographics?
• Are you willing to stay on for a while to ensure a smooth transition and monitor the new owner?
• Are you willing to self-finance and be willing to take it back due to a default?

That's just a few. If you don't, or can't, answer these questions to a serious buyer, he's going to walk. If you have a trusted employee, or former employee, who you know will work it as you have, try to work out an arrangement with him. Makes for a lot less sleepless nights.

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I EXPECT THAT SOMEDAY I WILL SEE THE FRUITS OF MY LABOR. IS IT SOMEDAY YET?
Clifton, Great Falls, McLean, Fairfax Station, Manassas, Virginia Renovation Contractor

SLSTech

Just a few links for you to peruse:
Company's for sale http://www.businessbroker.net/Keyword/Construction-Businesses_For_Sale.aspx
Selling to employees: http://baltimore.bizjournals.com/baltimore/stories/2008/01/28/focus8.html
A book on the subject: http://www.constructionbook.com/buying-selling-a-business-9781599181721/construction-business-development/

There is a lot involved in the process (see Mike's & other comments above) & it will generally take almost 5 years to get your company up to the point of selling it.

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kabir1008

New Here

$500,000 sales 10% profit = $50,000/ year(cash flow) X 3 years to pay off $150,000 roughly

ive seen this alot ( 1/3 sales is the asking price)
having all business systems in place

glenn