You’ve worked decades building your construction company. Years of blood, sweat and tears have gone into it. It’s your baby, your pride and proof of all your hard work. But it’s time to move on, to experience new things, to take a bit of a break. It’s time to sell your company.
But here’s the question: will you have something valuable when you’re ready to sell?
I talk with dozens of contractors every week. They’re in different phases of their company growth, from newbies to established veterans. But one thing they all have in common? They want to build a business with value, an asset if you will, not just run a company and pay themselves a nice return until they run out of steam.
I’m convinced far too many construction company owners get to the finish line and realize their company is not sell-able. And that’s tragic. Here’s four signs your construction company is valuable to a buyer.
You Have An Established Brand
Your company brand is important to a potential buyer. After all, assuming you’ve built a strong reputation your brand will be synonymous with quality, craftsmanship and execution.
One critical error a lot of construction company owners make, however, is associating their company brand with themselves. If you named your company after you and/or a co-founder (Burkett Construction, Inc., for example) it’s almost impossible to make the case that your brand can endure without you being a part of the company.
Furthermore, no matter whom you sell the company to, your name will be in their hands from that moment on. Do you want someone else representing your last name for the next 30 years? Most would prefer this not be the case.
Lastly, for a brand to have maximum value, it must have regional awareness. Sure, it’s great if those in your city or county know about your company, but how much better would it be if folks moving into your region had already heard of you. That, my friends, is an established brand.
You’re Company Can Exist Without You (Forever)
In order to sell your company for maximum value you must also have an established project delivery system that can function, forever, without you.
Lead generation, lead screening, estimating, sales, design, construction and close-out systems must be well-established and proven for a buyer to derive value.
Once again, most contractors I speak with embed themselves deeply into their organization. They can’t take a few weeks off, let alone forever off. When they hand the keys over to the next owner (assuming they can even find a buyer) the wheels fall off. Why? Because the crew chief has left the pit and no one else knows how to do his job…
You Can Prove Your Profitability, Both Now and Later
A valuable company has clear proof of not only profitability, but historical profitability, as well as a clear path to future profitability.
The historical profitability is pretty easy. After all, you’re books are clean and you can show many consecutive years of strong net return, right?
But when it comes to “proving” future profitability, things get a bit dicier. Can you prove a consistent lead flow? Do you have a Customer Relationship Manager (CRM) software that produces lead reports for auditing by a buyer’s CPA? Can you prove your conversion rate of leads to customers? Can you prove a consistent job profitability? Can you forecast your revenue and profitability out multiple months or years? Can you show how seasonality affects your business, or even if it does?
Without this type of data you’ll rarely get top dollar for your business. Consider tracking it immediately!
You Can Easily Find Multiple Interested Buyers
Let’s say you have a strong brand, you’ve built a company that can operate very well without you, the owner, and you can prove historical and forecasted profitability. You have one last major hurdle: finding a buyer!
A single, private construction company can be very difficult to put on the market. There’s a high barrier of entry for a buyer (contractors license, insurance, bonding, cash flow, etc.) and most qualified buyers already own their own company.
To get top dollar for your company you must start looking for multiple potential buyers, perhaps even having them compete for your asset. Assuming you’ve built an asset worth competing for, right?
One Possible Solution
The above challenges are key reasons why a home improvement franchise can help a construction company owner maximize their sale upon exit.
Franchise systems are inherently strong brands not only in the region in which the operator operates, but regionally or even nationally. They by definition are a plug-n-play system that can exist without the owner operator and any good franchise system has a ton of metrics on lead generation, conversion and franchisee profitability. Furthermore, franchisors keep detailed records of qualified candidates in each territory, as the good franchise systems are flooded with inquiries from potential franchise operators.
Perhaps a franchise like kitchenCRATE and bathCRATE is your best bet for maximizing your company’s value upon sale. Perhaps…
CRATE Franchise Systems helps existing contractors explore new opportunities and become part of a network of individuals intent on growing their business assets. We’d love to talk with you about a CRATE Franchise in your location. Click here to download our complete CRATE Information Guide, or click here to schedule a phone call with me at a time of your choosing.
Scott Monday is Co-founder + CEO of CRATE Franchise Systems, the franchisor of the kitchenCRATE & bathCRATE remodel products. You can follow him on Linked-In or email him at scott[at]cratefranchisesystems[dot]com.