How to Buy a Plumbing Business for Sale
So, you’ve mastered your plumbing skills and feel ready to open your own business? Before you start looking into equipment, branding, hiring, plumbing software, etc., you might want to look at another option. Consider buying a plumbing business for sale. There are a lot of reasons why this is a good option for some plumbers.
The Benefits of Buying a Business
Here’s why you might want to consider buying a plumbing business instead of launching a start-up.
- You won’t need to buy startup inventory and equipment.
- The business might already have skilled employees, so you won’t have to go through interviews yourself.
- The business already has an established name and customers. Many of the customers will stay loyal to the business even if it has a different owner.
- There is much less risk involved compared to a start-up. You’ll be able to go through the business records and estimate how much money you’ll earn.
- They will already have defined processes in place for managing the ongoing operations.
If you’re planning to open your own plumbing business, you probably already have some money on the side. But if this is not the case, or your savings don’t suffice, there are some other options you could take a look at. The first is seller financing. Some sellers will allow you to pay for the business over time. As appealing as it sounds, though, you might need to pay additional interest along with the price of the business.
On the other hand, you could also search for investors. By partnering up, you will lose some of your profits. But because the responsibility is divided between you and your partners, the risk of purchasing a business will be much smaller. In the end, you could also opt for a business loan. This possibility largely depends on your current financial status.
Once you settle your financials, it is time to go search for a plumbing business for sale.
How to Find a Plumbing Business for Sale
Here are the best ways to find a business to buy.
- Business Brokers
Business brokers have lists of current businesses for sale in every industry. Ask about available plumbing businesses and state your requirements. If you’re not completely certain of what you’re looking for exactly, your broker might also help be able to help you with that. They probably already have a lot of experience and can guide you to a business that will suit you best. They will also consult with you on businesses you should avoid. And once you pick a business, your broker will guide you through the negotiation process.
- Check websites and ads
There are a lot of websites that list businesses for sale. Make sure you go to a trusted and established site. These websites allow you to filter your search by price and location. You can also subscribe to many sites for alerts, so you will be notified as soon as a new plumbing business gets published on the site. You could also take a look at ads in newspapers or websites, such as Craigslist. Or publish your own ad, so other local businesses can see that you’re in the market to make a purchase.
- Contact plumbing businesses in your area
The first reason why you should call local businesses is that they can give you information about the state of the market in the area.And many businesses don’t advertise that they are willing to sell. The reason is usually that they don’t want to lose their customers or appear weak to their competition. But if you reach out to them, you might find one that is ready to sell. You might even be able to come to an agreement for the sale without involving a third party.
Before the Purchase…
Once you find a plumbing business for sale that you want to buy, go through these precautionary steps before making your purchase.
- Determine the health of the business by talking to past customers, vendors, and employees. This includes researching the satisfaction level of existing customers and the overall reputation of the business. Find out everything you can about how the previous owner managed the business. Even if you have some ideas on how improve the business when you buy it, such as attracting new customers with a loyalty incentive program, you should also keep some things unchanged if you want to keep the company’s current customers.
- Discover the reason why the current owner is selling the business. Maybe they are ready to retire, or they encountered some issues with the business they can’t handle. Ask the seller how he or she determined the price of the business and what assets are included.
- Conduct a thorough examination of the business documents, such as tax returns, contracts, and financial statements. While inspecting the business records, check if there are any tax audits, existing liens, or insurance disputes. Inspect the financial performance of the business for the past few years.
- Develop a financing strategy for the business you’re planning to buy.
- Make sure both you and the seller agree on all terms and conditions of the purchase.
- Establish who will pay for legal and inspection costs.
- Investigate the market for competitors. You should try to find a location with the least competitors nearby.
Make sure to work with your CPA or a consultant to review every detail of the business. You want to make sure you’re buying a great company that you’re ready to run from day one. If you’ve followed all the steps above and still want to buy the business, then it is time to go to the next step: buying.
Buying a Plumbing Business for Sale
As you prepare to buy your chosen business, consult with your lawyer and state officials regarding state requirements. In many states, the only requirement is to fill out a form. This form works as a notification of sale, transfer, or assignment in bulk. It consists of important information about the purchase, including the seller’s and purchaser’s contact information, business information, and details of the sale. In most cases, you can find the necessary forms on your state’s website.
You can buy a business as a sole proprietorship or any other form of business if you have partners or investors. The documents you must send to the Tax Department will vary according to your type of business.
The documents you will exchange with the seller to finalize the deal must include:
- Purchase Agreement
- Transfer documents for vehicles that are part of the purchase (if there are any)
- Bill of Sale (required for tangible business assets)
- Bulk-Sale documents (to transfer ownership of inventory)
- Business financial statements
- Confidentiality agreement
- Sales agreements
Depending on the specifics of the plumbing business you’re buying, some other documents might be required. Consult with your state officials and accountant to make sure the purchase goes smoothly.