The plumbing industry is a stable industry. There is never a shortage of people who need plumbing work on their homes, businesses or apartment complexes, and this constant demand makes owning your own plumbing company an appealing opportunity for many prospective buyers. However, starting your own company from the ground up can be difficult. Conducting market research, finding the space, finding the right people and growing your customer base can take years, which is why many investors look to buy an existing plumbing company. Buying from a plumber looking to sell their business means you have the opportunity to own a business that ideally will have good value, a good reputation and a healthy customer pipeline. However, you don’t want to just buy any company. You want to buy the right plumbing company and when you buy it you want to properly manage it. Here are a few tips for buying and managing an existing plumbing company.
Ensure the company has staff before you buy
Speak with any plumbing company owner and they will tell you that staffing is their biggest challenge. It is hard for contractors to find good people and keep them, which is why if you are buying a plumbing company, you want to purchase one with established staff. This means having enough managers and field contractors to accommodate existing clientele. Buying a plumbing company with staffing issues may help you negotiate a lower price to purchase the business, but will also put you in the challenging position of trying to find qualified contractors while trying to meet customer demand. You will pay more of a premium for a well-staffed company but it will be a boon to your ownership down the road.
It is also important to check if the employees you are inheriting from the business are good workers with the proper certifications, skills, years of experience and a history of good client relationships. Your managers should have experience managing the people under them. A full team of technicians means nothing if they aren’t qualified.
Expect some change
When you finally buy an existing plumbing company, it is important for new owners to understand that a certain amount of staff turnover is expected. New ownership and some members of the staff will not be a good personality and culture fit, and they will choose to find new work. Many workers do not like change and most new owners will make some changes that cause people to leave. You keep what works but sometimes you have to break some eggs and make some difficult changes. I would recommend making a number of positive changes that entice good contractors to continue working with new ownership. Increasing pay, including more paid holidays, or adding more vacation time are benefits many contractors don’t get, and adding them shows employees you are looking to improve the company you purchased.
Changes should be deliberate and made with input
Many business owners are confident in their leadership and want to quickly make changes; however, we would recommend against making blanket changes. Wait for a few months and observe how things operate and slowly implement the changes you would like to see. Talk to employees about their roles and duties and ask them what they think works and does not work about the plumbing company. Sit down and have a conversation with every employee. They don’t have to be formal meetings they just need to show that their input is appreciated as well as give the new owner a chance to get to know them.
Establish the company has a healthy client pipeline
One of the biggest benefits of purchasing an existing plumbing company is the opportunity to have cash coming in on day one. A preexisting client base is a boon to any business, but before you buy you have to ensure that a plumbing company's client pipeline is healthy.
A good client pipeline has a variety of new and recurring clients with various needs and different price points. Having more clients at a lower price point is better than having one large client paying you a lot of money. A diverse client portfolio means if one client leaves the business has other clients to shoulder the loss in revenue. Let’s say a plumbing company's only client is a large apartment complex that contracted them to do plumbing maintenance, if that client leaves then that company has no more clients. You can’t just look at how much money a company is bringing in you have to look at the health of its client pipeline. Only buy plumbing companies with a diverse list of clients.
Establish relationships with vendors and inform customers of new management
As the new owner, it is important for you to establish a relationship with the previous owner's main vendors and inform the customers of a change in management. Meeting with vendors is important because it gives you an opportunity to establish a professional relationship with business partners that have made your plumbing company function. It also gives you an opportunity to renegotiate contracts and potentially get a better deal. It is important to meet with customers because you either need to convince them that new ownership is just as competent as old ownership or you have to convince them that bad ownership is gone and the business will be run more professionally.
It is essential that the people who make your business run know who you are and how you will help them.
It is also important to check if the employees you are inheriting from the business are good workers with the proper certifications, skills, years of experience and a history of good client relationships. Your managers should have experience managing the people under them. A full team of technicians means nothing if they aren’t qualified.
Check reviews and equipment
This one may seem obvious but many prospective buyers ignore this step. An existing plumbing company has a reputation which means it is easy to see what customers think about them. Check online reviews and ensure they have a good reputation across multiple platforms. If you see frequent issues you can use them in negotiating price, ask them to fix the issue before you buy, or just walk away from the deal.
Lastly, make sure all of their equipment is up to date before buying an existing plumbing company. Work tools and vehicle fleets should all be fully functional and if they are not the seller should fix them before selling the business. You don’t want to buy a business only to find yourself spending money fixing the things you just bought.
Buying an existing plumbing company can be a huge boon to your existing portfolio. If you buy the right one you are purchasing a successful business with good cash flow, customers, and a reputation that you can use to expand your other ventures or become a first-time business owner. Make sure the plumbing company you buy is fully staffed and fully functional and you will find success.
