As an HVAC business owner, you spend your day measuring things. You measure the freon pressure and the number of minutes it takes for a unit to reach temperature. How often the phone rings, customer service complaints (or satisfaction), the age of your receivables, and how long it takes for equipment to ship. You measure how many hours your techs are in the field, the average cost of repairs, and the number of miles on your trucks this month.
All important measures to your business, and every good owner I know keeps a close eye on those numbers.
But I’m always surprised at the number of owners (the vast majority) who aren’t paying attention to the most important metric of all – the value of their business. Brokers like me offer free valuations for owners, and we recommend that they get an updated valuation every year or two. But most owners don’t take us up on the offer.
For the record, we consider it a way to give back to the industry; we care about the owners, and we’re in business ourselves, so we understand the importance of having a current valuation. If something in the business were to suddenly change (such as a partnership that needs to be dissolved, the death or illness of an owner, divorce, or other family issues), having a current and valid valuation would save everyone a lot of time and stress.
It’s also a way for us to avoid the difficult conversations we often have when it’s time to sell the company. It’s very hard to tell someone who’s ready for retirement that their business isn’t worth nearly what they thought it was. We want them to have time to correct any issues that affect their business’s worth before they put it on the market.
But we understand the hesitation. Most owners have extensive knowledge of installing and repairing equipment, but they may not have received any formal training in running a business. They’ve been doing what works for them for 20 years, and they dread hearing that they’ve been doing it “wrong,” even as they’ve made a great living and support a number of employees.
They also tend to think that retirement or selling the company is too far in the future to be concerned with its current worth. For all the reasons above, you should always have a clear understanding of the company’s current value. You may be surprised, for better or for worse, but you’ll be carrying out your business strategy with open eyes. Should you acquire another operation? Should you expand your territory? Should you focus on selling more maintenance agreements? All these decisions have an impact on your value, and a broker can help you understand which, if any of these strategies will make your company more marketable. And they can help you determine if there’s enough value there so you can retire at 62 like you plan to.
Finally, we understand how hard it is to trust a stranger with your business. Some owners think the free valuation is just a scam to get them on a mailing list. For the record, our company delivers real information, backed by real data, and analysis from an experienced professional.
Even if you think your exit strategy is years off, finding out where you stand today is a smart move. To get your confidential and complimentary opinion of value, click here.
