How can you value a small plumbing and heating business?

[A1P]

A wise old gent once told me "There is no such thing as a customer list. What you have in your hand is a list of people who bought stuff off you LAST month."

I would be very wary of buying a domestic plumbing business for all the reasons other posters have listed.

A commercial business with existing contracts, or even a service company with a large number of boiler services on the books might be worth something, but in the latter case, be sure to check how many actual services were generated by the database. Its one thing to know when a boiler needs servicing, its another matter entirely to persuade the householder to pay for it.

Excellent quote Ray which somes up the warnings about value of customers/goodwill.Your comments re-boiler services are also spot on.We have customers who have chosen boilers with 5 year guarantees where it was explained that annual services were required to maintain the guarantee.They still have to be persuaded to have them done.
I rang a very well known business seller who have been around 50+ years Ernest Wilson.I posed the question 'What is a 1 man plumbing business with a good turnover of at least 50k worth?'The reply, nothing more than the value of van and tools.In the best case scenario it might make enough on the goodwill to cover our costs.Basically the owner is the business.The only way that both sides might make something would be for the owner to remain involved to some extent and in return receive a percentage of profits over 1 or more years.The only firms that have value are on a larger scale,employees,large contracts,premises etc.

 

[Plum Bob 66]

I think a close look at the books for possibly upto 5 years would be essential.I think I heard a quote that Turnover was vanity,Profit (Net ) was sanity.

I agree with the quote but i think most of us are hanging on to the first as the second one, profit is a myth and only in Fairy stories.

Profit = reality , and yes we probably are !