Selling a trades business is a complex task. Whether it’s plumbing, electrical or a building/ construction business, many factors contribute to an eventual sale. It may require that you enlist the assistance of a business broker, accountant and/ or attorney as you proceed with the sale process. Whether or not you profit as a result of the sale depends on several considerations, including:
- Your reason for selling
- The timing of the sale
- The overall strength of your business
The sale of a trades company is also very time consuming and will require much of your attention while negotiations are proceeding. This is one reason many trades businesses hire a business broker to handle the bulk of that work they can continue focusing on day-to-day operations during the negotiation period.
Transferable Client Relationships
Because the success of trades businesses relies so heavily on the needs of customers and clients, it needs to be determined during the sale process whether or not those client relationships are transferable. If a company’s relationship with clients is established and on solid ground, it’s likely that they’ll continue to use the company after ownership has been transferred. It’s important to provide established clients with confidence and assurance of the financial strength of the business even though it is changing hands. This helps to give them peace of mind as the transition occurs.
Reason for the Sale
Consider your reasons for wanting to sell the business, because it’s likely one of the first questions a potential buyer will ask. In addition, any trades business will be much more attractive to buyers when the following criteria are addressed:
- Strong financial statements that show growth and profit
- A strong customer base
- Existing long-term contracts with suppliers or customers
Timing
Consider the timing of your decision to sell your trades business. Preparing to sell should ideally start one to two years ahead of time before you want to sell. Taking this valuable time to prepare can help improve financial records and your customer base to make the business more profitable.
Also consider the current market in your specific trades industry and the existing competition. If there’s a lot of trades businesses for sale in your area, it may be more difficult to dictate a competitive price.
Deciding Whether to Sell on Your Own vs. Using a Broker
If selling to a trusted family member or highly valued employee, then selling on your own may be an option, but there are numerous benefits to using a business broker instead to help streamline and simplify the process. A business broker can free up time for you to help keep the business up and running. A broker also assists with getting the highest price for the company based on research and third-party valuations of your business.
Business Structure and Operations
A final consideration when selling a trades business is determining whether or not the business operates with its own internal management structure or if it is reliant on the owner to keep it running. If it relies mostly on the owner, then it should be established during the sale process that the owner will be expected to take over all management duties or create a new management structure.
Although selling a trades business is definitely grueling, hopefully it’ll be worth it in the end when ownership has been transferred successfully and the former business owner has profited enough to enjoy free time gained from selling the business.
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