How to Calculate the Value of your Plumbing Company
Three Key Takeaways from the January 2022 PHCC Roundtable on Revenue Growth – and how your plumbing/HVAC company can join the conversation.
Plumbing/HVAC Contractors gathered for the second of PHCC’s ongoing monthly roundtable series to solve problems they have in common.
Here’re the highlights we learned:
- The biggest challenge contractors face: 25% cited revenue as their number one business challenge, but the biggest challenge listed by two-thirds is recruiting. (Recruiting will be our topic in March 2022.)
- Contractors are taking advantage of the Employee Retention Tax Credit, and receiving substantial payments from the IRS.
- Contractors said it’s essential to know what your company is worth. We learned it’s a function of key performance indicators (“KPIs”) – including average ticket, the length of time you keep customers on hold, great reviews, the daily utilization rates of crews, closing ratios of your sales teams, and when and how to use correct marketing channels in synch with your workflows.
Where the rubber meets the road: Do you know how long your customers are on hold? Contractors recommended “calling yourself” to find out! One contractor said no more than three rings max is best practice.
Here’s an acid test from the discussion about knowing how much your company is worth: if you went away on a month’s vacation, would your company continue to thrive without you? If the answer is yes, your company is probably worth a lot!
Contractors debated whether a company should be valued on gross sales or operating income, but they said this is a great time to own a service company because private equity companies are on the hunt for good ones to buy.
When polled, 20% of the contractors said the Roundtable met their expectations – and 80% said it exceeded them. If you own or lead a plumbing/HVAC company, register for the next Roundtable here. Contractors from around the country are welcome to attend these one-hour monthly peer group discussions limited to just 30 registrants per session. Prospective members of PHCC may join one event as a guest, but will be asked to join their local chapter to continue in this free member benefit series.
Bonus recommendation: read this PHCC Solutions Magazine article about how one contractor found success through Social Media.
The Light Digital can help your plumbing/HVAC company with Social Media, reviews, lead generation, recruiting campaigns, inventory management (and much more).