If you own a plumbing business, you’re probably not different from the millions of other entrepreneurs.
One day you wake up and realize you can’t keep working. Even if you love your job, you might not want to keep doing it forever.
There comes a time when even the most accomplished plumbers are ready to throw in the towel and try something new.
Possible reasons include exhaustion from the demands of running a business, health problems, or the desire to take on a new task.
It might be challenging for business owners to take the time to sit down and plan their exit from the company. You probably don’t have a strategy that will allow you to sell your plumbing business quickly, without a lot of difficulties, and still set yourself up with a sustainable income stream for the rest of your life.
You may be counting on the sale of your company to fund a sizeable chunk of your retirement savings. The success or failure of your business exit might profoundly impact your ability to enjoy a comfortable retirement.
That’s why it’s critical to develop a plan of action that will help you steer clear of the blunders that can cause you to outlive your retirement savings.
But do you know what it takes to make a deal like that? Will you be so stressed out, confused, and desperate when the time comes to go that you make unwise choices that cost you a lot of money?
Knowing the answers to these questions is crucial if you’re getting close to retirement and ready to start selling your business. To succeed in sales, you must find alternatives that promise a more efficient, profitable, and stress-free experience.
Suppose you run a plumbing firm in the twenty-first century and are considering selling it. In that case, you need to look into alternative techniques for selling a business that avoids the pitfalls that plague so many business sales.
I say “try” because most sellers either don’t find a buyer or let their businesses lie on the market for months or even years before doing so. There are so many firms for sale now that even if they find a buyer, they may receive far less than they had hoped.
Here are the nine most common plumbing exit planning blunders and the correct way to fix them.
It is not unusual for plumber business owners to have no plan when they decide to sell. It’s likely that they haven’t given it much thought or that they’re relying on assumptions that may not be accurate.
No preparation at all
The adage goes like this, “A plan is nothing more than a wish with a deadline.” To be practical and workable, all parties must document and review a succession plan. Any plan worth it’s salt will be straightforward and leave no room for confusion.
While a company exit strategy differs from an estate plan, both are necessary to ensure you reach your retirement objectives.
Because of this, it’s a good idea to have your certified public accountant and estate planner review the plan and provide changes that align with your objectives.
Observing how many preconceived notions business owners have regarding the selling process and the sale’s conclusion is incredible. When it comes to the long-term viability of their companies, their optimistic views are at odds with the facts.
Some plumbing business owners, for instance, assume that their kid(s), grandkid(s), or other relative(s) will eventually take over the company. They might expect that if their heirs don’t want the business, a group of senior employees will come in and buy it. Either that or a wise investment firm will see how fantastic the company is and buy it.
Another widespread misconception sellers hold is that the sale may be finalized with a simple handshake and a check. They assume that the asking price is fair and that buyers will always be in the market when they choose to sell.
None of the above may turn out to be correct. With the economy in constant upheaval and the population growing and shrinking at an unprecedented rate, selling in the 21st century is anything but easy. Your plan can’t be founded on assumptions from the past.
“Stan” ran a commercial plumbing company that was quite profitable.
His eldest son worked with him for many years, proving himself exceptionally adept at giant task bids, customer concerns, and workforce management. Even though they never had a formal conversation about it, Stan always thought his son would take over for him when he finally decided to retire.
When he decided to contact his son, Stan, Jr. surprised his father by applying to a local business college rather than take over the family firm. Neither did any of the other youngsters.
Avoiding these and other problems can be as simple as being up-front and honest with loved ones about your plans from the get-go.
You need to find out if a family member or spouse wants to take over, and if so, which family members will continue as employees or move into management.
You should NOT keep family and friends in the dark about your plans for the future of the business.
Get together with the household consistently all through the preparations. Tell them your plans for the future and what needs to happen to make them a reality. By taking these precautions, you will significantly reduce the likelihood of a family dispute delaying the sale of the business.
The day before selling is not the time to realize that records are disorganized and essential paperwork is missing. Maintaining orderly records is necessary whether you plan to sell the firm or retain it in the family.
Potential buyers will want to see your company’s financial records going back at least five years, preferably ten. Everything that has to do with the company, including marketing materials, customer lists, employee records, leases, and so on, should be neatly filed and easy to find at any time.
Reduce your anxiety during the selling process by immediately getting your records in order.
The website at the bottom of this post offers a free exit planning checklist specifying the types of documentation buyers will want to see when valuing your business.
Fifthly, neglecting to improve the company’s “curb appeal.”
After deciding to sell and retire, business owners often make the mistake of not reinvesting enough money into the firm to keep operations running smoothly until the sale is finalized.
They may put off or skip maintenance on equipment, wash fleet vehicles less frequently, and let the appearance of their facility and grounds deteriorate.
Owners may delay necessary improvements, such as purchasing new personnel uniforms and identification badges or updating safety equipment and signs.
A firm given some basic TLC before being put on the market usually fetches a higher selling price and a more selective pool of purchasers.
Investors who are interested in purchasing companies are in short supply. They have the luxury of being selective about the companies they acquire.
If the owner of a plumbing business wants to sell it fast and for a higher price, they need to put in some effort and money to make it look presentable and credible.
Sixth, failing to maintain a succession planning emphasis
When plumbing business owners finally realize they need a succession plan, they often dive headfirst into creating one.
They consult with loved ones, reliable advisors, role models, organize official planning review sessions, etc.
The process of succession planning then withers and dies due to unknown causes. The owner and his most trusted workers and advisors are growing increasingly frustrated with it.
To what end does this occur? The reason for this, in my opinion, is that business owners treat succession planning as an isolated event rather than an integral component of the company’s overall strategic planning process.
If an exit plan is not incorporated into a company’s overarching strategy far before the departure date, it risks collecting dust.
Without a solid succession plan, it will be impossible to achieve long-term business goals. Your company’s culture must embrace this strategy as much as it welcomes your mission statement and assurances.
If you have an established exit strategy, you can rest assured that your most valuable employees will remain with your firm even if you decide to sell.
Managers and key staff are less likely to leave a firm that has been established with the expectation of an orderly succession that maintains the organization intact and growing.
You would not rush into a complicated plumbing job without first planning it out; the same logic applies to selling your business. Your level of success is proportional to the amount of effort you put into the process.
What constitutes a successful sale in your mind? Jot it down. How do you envision closing a deal? Explanation of the steps involved in making this a reality.
What you consider a successful exit from your business should be clearly defined and communicated to your key actors, employees, and family members.
You’ll need to put some serious thinking into this. But it’s not something you want to speed through to “get it over with.” After all, if you’re like most people, you’ll only get one shot at selling your company and retiring rich. It’s essential to take your time and avoid making any blunders that could negatively affect your retirement.
In many respects, selling your plumbing company requires more effort than starting it. There are a lot of moving elements and complicated duties that need to go off without a hitch.
You must ensure that everyone in your organization, including family members, is committed to your vision and carrying out their responsibilities.
If you want to improve upon the dismal 3% success rate of selling a firm in the United States, you’ll need the backing of all relevant parties.
Maintain consistent contact with the people you’ve entrusted with your safe departure, and insist they deliver on their promises to get you out of there on time.
Even if you think you’ll never wish to sell your plumbing business, you should start preparing for a sale immediately.
If you take the time to put together a solid plan in advance of an emergency, you may alleviate stress for yourself, your loved ones, and your employees.
Call or write to Delta Business Services anytime during the planning phase for help. There is no business brokering going on at Delta Business Services. We are a group of businesspeople with first-hand experience in buying and selling companies.
We actively help plumbing, HVAC, and other business owners prepare for retirement, with a focus on those in the Baby Boomer generation. Please get in touch with us by phone or email if you have concerns about this checklist or need help getting started.
Business Services by Delta
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