Thinking about selling your plumbing business? Maybe you're ready for a new adventure, a change of pace, or you're gearing up for retirement. Selling your business isn't just about putting it up for sale and crossing your fingers. To get the best price for all your hard work, you'll need to dig into what your business is worth, considering both the tangible and intangible assets you've built up over the years.
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- Decide when to sell
- Keep clear records
- Get an accurate appraisal
- Create an exit plan
- Market your business
- Choose a buyer
1. Decide when to sell
You may make more money long-term keeping your business than the initial payout from selling, so take the time to decide your priorities and confirm your reasons - before you have a buyer waiting to sign the dotted line.
Preparing yourself
Once you sell, you may be living off the profits of this sale for some time. Get a clear idea of what your business is worth and compare this with how much you will need to maintain your lifestyle, or prepare for your next project. Take an honest look at your spending habits and goals and evaluate the long-term financial implications of selling versus continuing to own your business. Prepare emotionally for the sale too, and consider the major change it represents in your life.
Preparing the business
Whatever your reasons for selling your plumbing business, industry experts suggest you should give yourself about two years to get everything lined up. The aim is to take the time to demonstrate a period of sustained growth and profits. Waiting to sell until your business reaches its most successful, profitable point is often the best strategy, as any prolonged dip in profit will negatively affect its resell value.
To get your plumbing business prepared to sell, check out:
2. Keep clear records
When planning to sell your plumbing business, a range of people, including buyers, lawyers, and business brokers, will be interested in your financial records. Maintaining clear and accurate records is a critical component of operating a successful plumbing business. Utilising a financial management system like Tradify can streamline your daily operations and manage your plumbing business invoicing, timesheets, jobs, and online payments, simplifying your record-keeping and making things easier when it comes time to sell.
For free tools to keep your business records on track, try:
- Cash flow forecasting and profitability for trade businesses
- Small business break-even analysis for tradespeople
- Small business sales forecasting for tradespeople
Accounting software
Tradify also connects with your accounting software, making it much easier to generate financial statements and track your ongoing costs.
3: Get an accurate appraisal
Once your records are on track, your plumbing business will be ready for an official appraisal. Your estimation of future revenue will be key to getting a quality bid for your business. It will come from the average number of jobs, your profit margin and charge-out rate per job, the number of customers in the database with good contact information and revenue from repeat business. These factors determine our business's overall market value and are another reason why keeping accurate records of your business is crucial.
Your plumbing business appraisal will calculate the value of tangible assets, such as:
- Vehicles
- Tools
- Equipment
- Real estate
Alongside intangible, or 'goodwill' attributes, such as:
- Experienced staff
- Licenses
- A clear marketing plan
- Unique services
- Minimal owner involvement
- A loyal customer base
Removing the cost of your Seller's Discretionary Earnings (SDE) will give a clearer picture of your business's true profitability. Start with the net income from your tax returns, which shows your profit after all operating expenses. Then, add back non-essential expenses like interest on debts, depreciation and amortisation of assets, and any unusual costs.
You should also adjust for costs that may not continue as 'normal' business expenses, such as your salary, discretionary expenses like staff parties or meals, and personal vehicle expenses. These adjustments will provide potential buyers with a more transparent view of your business’s financial health and profitability after you leave.
4. Create an exit plan
Before selling your plumbing business, you'll need to develop a clear and logical exit plan – For both you and your business. You'll need to calculate the taxes, expenses and hiring costs associated with the sale; for example, legal and broker fees. As a responsible business owner, you should also account for contingency plans, such as clear communication with your staff and customer base throughout the process - particularly if there are likely disruptions to business. As part of your handover, the new owner may wish for you to provide a plan for:
- Hiring: Will the new owner need to hire additional staff or train the existing workforce?
- Equipment: Does any equipment need replacing or repair?
- Management: Can the remaining management staff manage the business admin after your departure?
- Staff: Are your staff prepared?
- Money: Are your current charge-out rate and profit margin properly set up?
- Plan: Do you have a clear business plan for the new owner to follow?
- Communication: How will your customers be notified of the change in ownership?
5. Market your business
Using a professional business broker often means you don't have to take the time to find a buyer yourself, as they usually have networks of buyers and the experience to negotiate on your behalf. However, if you choose to market your business yourself, or in addition to professional brokers, options to explore include;
- Plumbing associations: Post the sale on plumbing industry-specific forums to target buyers within the plumbing sector.
- Social media: Share the news of your desire to sell on platforms like LinkedIn, Facebook, and Instagram.
- Emails: Send out an email to your business network, including suppliers, customers, local business groups, or even your competitors, informing them of your intent to sell.
- Open house: Organising an open house is a great chance for potential buyers to see your business operations firsthand, meet your team, and assess the facilities and assets.
- Networking events: Attend industry trade shows, conferences, and networking events to meet potential buyers and spread the word informally about your plan to sell.
- Word of mouth: Tell your friends, and family about the sale. Sometimes, personal connections can lead to serious inquiries.
- Press releases: Issue a press release through local business news outlets and trade journals, highlighting the best qualities of your business, such as your plumbing business years in business and market position.
- Targeted advertising: Use targeted ads on platforms like Google Ads or LinkedIn to reach potential buyers based on specific demographics, interests, and professional backgrounds.
6. Choose a buyer
The last step in selling your electrical business is to identify and connect with potential buyers. This will be determined by the size of your business and what it can offer, as different buyers have distinct motivations and interests.
Individual buyers are often in search of a turnkey operation they can easily take over with little need for adjustments. Strategic buyers, on the other hand, may be attracted to your existing client base, the location of your business, or specific services you offer that could help them expand their operations. Private equity firms might be interested in the opportunity to scale your business with their capital and expertise.
Employing a business broker can help streamline this process, matching you with the most appropriate buyers. A broker also plays a crucial role in ensuring confidentiality during the early phases of the sale, helping to keep your business operations stable and uninterrupted.
Getting prepared to sell? Get your admin sorted and start experiencing the benefits of an organised business. To run a successful electrical business, try Tradify free for 14 days. Or, pop into one of our free walkthroughs for a demonstration. 
