Selling a business

[Fastpedaller]

I hope I've put this in the correct forum.
Can anyone give any advice on what a plumbing business would be worth if I give a few facts?
Turn over c12k a year with profit of 10k
Running part-time (about 10hrs/wk) , so lots of potential for someone younger to expand
Low-running costs as no business premises requirement, just a large car or van
Any ideas of best way to sell? I don't do social media, but thought approaching a local college could be a possibility as it would give a new starter to the trade a client base and an established company to build off.

 

[oldwheels]

I hope I've put this in the correct forum.
Can anyone give any advice on what a plumbing business would be worth if I give a few facts?
Turn over c12k a year with profit of 10k
Running part-time (about 10hrs/wk) , so lots of potential for someone younger to expand
Low-running costs as no business premises requirement, just a large car or van
Any ideas of best way to sell? I don't do social media, but thought approaching a local college could be a possibility as it would give a new starter to the trade a client base and an established company to build off.

Is there a business name as opposed to your own name?
No wish to be discouraging but according to the accountant we used it is probably worth little or nothing unless very specialsed.

 

[newts]

I'm not sure you'll achieve a high sale price for your contact list on such a small annual turnover. I've been self employed in the building trades for 38 years, those figures wouldn't be sustainable for me (circa £25/hr including running costs such as vehicle, admin & liabilty insurance etc).

 

[Fastpedaller]

Is there a business name as opposed to your own name?
No wish to be discouraging but according to the accountant we used it is probably worth little or nothing unless very specialsed.

There is a business name different from my own name.

 

[Fastpedaller]

I'm not sure you'll achieve a high sale price for your contact list on such a small annual turnover. I've been self employed in the building trades for 38 years, those figures wouldn't be sustainable for me (circa £25/hr including running costs such as vehicle, admin & liabilty insurance etc).

I have a very low-cost vehicle (my own, not the business). It is a low-overhead business, and has correct insurances in place. All income is properly accounted for (ie no cash work!). As I have said it's only part-time. I will retire when I sell it and have been reducing hours (especially after covid time). The indicated profit if run with more advertising (I spend very little) and more time devoted to the business would suggest it's viable especially to a newcomer. My circumstances have been such that I'm able to do less hours and enjoy my free time.

 

[Ian H]

The business is essentially you. Your best bet might be to sell yourself to a larger plumbing firm with a view to extricating yourself in due course. But it is unlikely to be easy to find a buyer.

 

[Sharky]

The business will only have a value if you have a client list of repeat clients, or an order book of jobs you have been contracted to do.

 

[markemark]

Business tend to sell for a multiple of profit plus the possible purchase of assets. The multiple of profit can vary between industry but x3 would not be a million miles away. That means the person buying the business would start making money (ie earn the cost of purchase) after 3 years and most would buy it with an eye to increasing profit and reducing that to 1.5 or 2 years.

You'd need to show the business is self sustaining as they buyer would be buying the goodwill of your customers. That is, they'd need to be buying something of value - ie a good book of returning customers and relationships. If it's all new people, then they're not really buying anything.

 

[newts]

I have a very low-cost vehicle (my own, not the business). It is a low-overhead business, and has correct insurances in place. All income is properly accounted for (ie no cash work!). As I have said it's only part-time. I will retire when I sell it and have been reducing hours (especially after covid time). The indicated profit if run with more advertising (I spend very little) and more time devoted to the business would suggest it's viable especially to a newcomer. My circumstances have been such that I'm able to do less hours and enjoy my free time.

Scaling it up to full time would yield £48k/annum at thes rates.
There's not much to play with in there if you add purchasing the business to startup.
I've scaled down to circa 3 days per week due to long covid. My overheads are pretty much the same (less fuel cost now).

 

[Slick]

I tried selling a business, but soon discovered that it was worth more to break it and sell off the assets. My guess would be your business is worthless unfortunately, unless you have contracts for future work. What's to stop a younger guy just starting up from scratch and taking the work of you, or even your existing customers going elsewhere once your gone?

 

[Fastpedaller]

I note all the above as being sensible comments. Yes I have long lists of repeat clients over many years. I ought to add I'm not expecting a huge sum..... Markemark suggests multiples of profit as a guide and up to 3x as being not a million miles away. I'd be delighted if I got more than 10k for it TBH.

 

[albion]

Sounds like it has some very good value for someone starting out in your area.

The price is certainly up to you. With good documentation (proof etc) it must be worth anything up to 30 grand.

 

[Slick]

Sounds like it has some very good value for someone starting out in your area.

The price is certainly up to you. With good documentation (proof etc) it must be worth anything up to 30 grand.

I'm sorry, but that is pie in the sky.

 

[markemark]

I note all the above as being sensible comments. Yes I have long lists of repeat clients over many years. I ought to add I'm not expecting a huge sum..... Markemark suggests multiples of profit as a guide and up to 3x as being not a million miles away. I'd be delighted if I got more than 10k for it TBH.

3x multiple would be a scenario where the new owner would pick up the existing business and expect to make the same margins without any major changes, especially if the new owner saw a scope to reduce that time period by improving efficiencies. Some industries are less and some go for 10x.

But that would be based on your existing customers' good will. If I wanted to buy your business, I'd look to see if I could start up in the area for no cost. The value would be the head start in picking up your existing customer base and what value that would gvie to me and how much I;d be willing to pay for it. The profit multiplier I would use for that part of your business.

A quick google throws up ltos of valuation advice:

 

[Cycleops]

Got to be worth something for someone with a plumbing skills to take on, but £12k turnover won't provide a living wage for a full time business. The only hope is to grow the business. Difficult to put a figure on that but it wouldn't be huge.