Whats your business worth?

[plainpainter 217]

But Ken - don't you think you do higher quality work than your workers? Don't you have some customers willing to pay for a premium ultra deluxe service? I just worry about volume work - other contractors in the painting trades who focus on volume work - never do work with any lasting value - pretty much are peeling badly at yrs. 2 & 3. I focus on doing residential repaints that will look great for at least 5 to 6 years - and build a customer base who want higher quality work. But no crew I have seen that does volume can do this kind of quality. I am all for making money - heck, I was thinking how nice it would be to do 6 lawns a day for $50 a pop for a $300 payday. I will be getting the trailer so who knows maybe sitting on lawnmowers may be a way of living - painting is rough work.

[PressurePros 248]

I thought quality would fall as well but.. my chems are dialed in. My procedures are easy to follow and they are enforced by an operations manager. I act as final QC by random checking work. Its all in the systems. No customer complaints thus far. My guys don't know how to cut corners because they were taught right.. apply this chemical, use this tip, start from the outside and work your way in, apply soap from bottom to top etc...

[Greg R 82]

First one with $500K takes home TIMBERSEAL

:lgmoneyey

Can't say she's worth that much but IMHO the name/logo kicks butt and business is good.

Single file line please..... lets not all call in at once.

:lolsign:

[Greg R 82]

By the way...... you cant make money with perfection. It just never pays enough.

A systematic approach to completing work orders in a quality mannor seems to get the goat. High end finishes (sikkens, etc..) and baby butt smooth decks while gorgeous just don't make the hourly rates needed to sustain a 3 or 4 crew business. Ready Seal has gone a long way to helping me realize where we need to be. Quality finish, easy to apply, easy to fix, hard to screw up, etc...

It also dawned on me after a few years of traveling around doing log homes that we can be more profitable staying locally doing nothing but deck work.

Sorry - kinda off topic

[PressurePros 248]

Greg how do you manage three or four crews and a high work load using stain that requires three dry days before every deck is done? One rainy day and I would think you would have 6-8 guys sitting around for half a week. I guess you could strip/clean more decks but then another rain now sets you back again. Have you found an effective way to work around that?

[Tmrrptr 164]

GREAT thread guys!

I guess everyone's figured out how to KEEP most of the money...

It's not how much you gross that counts.

Daniel says, sometimes he might be better off with a mower doing 6 yards a day. And he could be right. There's a lot to be said for a simple life.

Painting is a tough job. All too few clients realize what prep really is.

But its the satisfaction of walking away from a beautiful building that will be saved from the elements for another 5 - 10 yrs that makes it worth it.

I just don't think Daniel would get that level of satisfaction from mowing.

...and the pressure washer won't make his biz necessarily worth much more, but it will keep him working when other things might fade a bit... so there it is, yes, it IS worth more!

And Ken can see where he excels in setup, training and management.

Ha! But he still wants to get his hands dirty and get out there and do a few!

Greg is leaving the glory of travel to beautify log homes, stay local and make reasonable bucks on decking.

A composite of the thread would show you are all right on top of things and flexible enough to see that your businesses will succeed !

GREAT thread!

r

[MMI Enterprises 289]

Ken, If I may comment within to help clear up misunderstanding...you have me backwards due to the simple little word "monthly"..

Originally Posted by Pressure Pros

Originally Posted by MMI Enterprises

Don't kid yerselves too much...ACCOUNTS AND ROUTES CONTRACTED OR NOT ARE ALWAYS WORTH MONEY.. A business up and running that can show gross receipts with proper profit & loss info and an active ongoing schedule is going to be worth at least it's depreciated asset value plus some factor of it's monthly gross receipts. (3 to 6 is common).

(EXAMPLE- A 120k per year gross business = 10k per mon. "monthly gross receipts".... so common accounts value is at least 30-60k)

I want some of what you're smoking. I offer one times a company's annual gross and that's if it is an established bricks and mortar retail operation. -(Here I agree and say your right on if established and can run on its own with management..If let's say yearly profit for service business is somewheres between 20-40% then we get these figures:

120k

20%=24k

40%=48k)

I have always used that formula. Some businesses might be worth more, but I wouldn't buy them. (because it becomes about speculation?.. which was my main point) You might be thinking of 3 times net earnings? (Net earnings at 20%=24k x 3= 72k or at 40%= 48k x 3= 144k ...so no for me since I was speaking of really only the account value. It be close for you though as a fully intact self supportive business that requires only a little bit of baby sitting. Equals about what you would pay- 1 times the gross of 128k as you state above) For a service business I would probably offer .25 times its gross earnings if the company ran tight with good margins. (Don't understand this at all as it conflicts- 120k x .25 = 30k = not even it's account value)

Originally Posted by MMI Enterprises

To say that a business without much size has no name value would not be true. It's customers and it's potential customers of its service area place a name value to it.

Yes, but not much value. A business has value when:

• It has been narrowed down to a group of hands-off systems.

• When every problem has been solved before it arises.

• When management and internal structure are honed and efficient. (ie every job title is defined) (I sort of agree in the sense that for a business to be worth more then it's assets it must be self supportive to the point of being able to withstand trying times or be able to limit or manage tangeable or untangeable market effects..They all have problems no matter the size)

Originally Posted by MMI Enterprises

Profit is profit and in the end when someone is buying a business the end numbers is what matters as to whether it is profitable to buy.

Not totally true.. More important to me (ie more valuable to me) is how well an investment generates income with minimal interaction on my part. (aka. non participating investor.. a savvy one would not over pay for speculations beyond a certain amount unlesshe is already filthy rich and wants a toy like a baseball team..)

Pressure wahsing businesses have two major downfalls working against giving it sellable value.

1) Cheap startup means the market can get flooded and drive down net earnings (This applies to almost every service business. Remember I am coming from a janitorial back ground which is almost the king of such flooding theory...we should not worry about that as folks like us are of high quality work, planning, and we limit our material risks..people (mom/pops) still buy franchises galore from Janiking or the like don't they?)

2) 98% of them have very high level of owner interaction for daily operation. That's a job, not an investment. (A job doesn't entail owning assets (accounts, equipment, etc.) nor can it be passed onto others or sold...but I get your point :)

....

My view point is not much different than yours if you boil it down really. Difference being that I would seriously boil the numbers down into consideration of what goes on withthe numbers monthly and work up from there on value of other assets. I would never look at a company on the surface and think it in order by looking at the people first then the money figures second. I have seen plenty of business sold for heaps and actually worth less then account/sales value due to legal burdens that follow the new owners or changing trends not accounted for. You can loose shirt if you buy a company that makes buggy whips.. But so anyways my view of the boiled down figures comes from speaking with folks that actually sell business's out here on left coast. Has to be taken with a grain of salt I suppose.