Business Valuation for Buying a Moving Company
People and businesses are constantly on the move, and softening economic conditions will only increase this movement. Buying a moving company is a great way to capitalize on this thriving industry. If you are looking to buy a moving company, you should start with a moving company valuation. A professional valuation for buying a moving company will help you understand the fair market value of a moving company. It also assists in making better business decisions.
Peak Business Valuation, a business appraiser, is happy to provide you with a valuation for buying a moving company. We have years of experience valuing businesses nationwide and working with future business owners. Our team of valuation experts will work with you through the valuation process to help you understand how to increase the value of a moving company. Schedule a free consultation with Peak below!
What is a Business Valuation for a Moving Company?
A business valuation for buying a moving company is an analysis of the fair market value of a moving company. It also assesses the key value drivers and risks of a moving company. This information is important for interested buyers because it will help them understand the value of a moving company. Knowing this can help you maximize the value of a moving company post-transaction as well. Check out How to Value a Moving Company to learn more.
Moving Company Valuation Methods
To determine the fair market value of a moving company, business appraisers use different valuation methods to value a moving company. This process includes analyzing financial documents and selecting a combination of valuation methods. The most common methods are the income approach and the market approach. The income approach values a moving company by its income potential. Whereas, the market approach uses valuation multiples to determine the fair market value. See Valuing a Moving Company and Valuation Multiples for a Moving Company for more information.
Negotiating a Fair Purchase Price for a Moving Company
Part of the buying process usually involves determining the right asking price for the business. For a buyer, negotiating the purchase price is essential. Failing to negotiate a favorable purchase price can lead to unnecessary costs and diminished value. A valuation for buying a moving company can help you negotiate a fair purchase price by providing you with the fair market value of a moving company. Using this to negotiate ensures that you don’t overpay for a moving company.
Building a Strong Moving Company Business Plan
Obtaining a moving company valuation will help in many ways, but one big area that it helps with is creating a business plan. A strong business plan will set you up for long-term success and help you maximize the value of a moving company. A valuation for buying a moving company identifies value drivers and risks, as well as the fair market value of a moving company. With this, you can build an effective business plan that is specific to your moving company. Read Using a Business Valuation for a Business Plan to learn more.
Understanding Opportunities of a Moving Company
If you are looking to maximize the value of a moving company, you must first identify opportunities for growth or improvement. Using a moving company valuation can help you identify areas for improvement by identifying key value drivers. Key value drivers are factors that increase the value of a company. Implementing key value drivers is a key step in maximizing the value of a moving company. Key value drivers for moving companies include:
Brand Reputation and Customer Loyalty:
Moving companies tend to be locally owned and operated, and there isn’t a large national presence that dominates the market. Because of this, good brand reputation and customer loyalty are essential to the success of a moving company.
Diverse Client Base:
One way to increase the value of a moving company is to diversify services and customers. Involvement in different sectors such as residential moving, commercial moving, warehouse services, and partnerships can minimize reliance on any one industry.
Technology & Systems:
Implementing new technologies to create more efficient systems and processes is a great way to increase value. Online features such as truck tracking and online ordering can also enhance operational efficiency and thus increase company value.
Employee Retention:
Moving companies are very customer-facing. Good employees that interact well with customers and create value can be hard to find and keep. Hiring and retaining high-quality employees is essential to increasing long-term value.
Identifying and implementing key value drivers can be complicated. Peak Business Valuation can guide you through a moving company valuation and identify key value drivers in your company. Using this information can help you increase a moving company’s value and prepare for future success. See Value Drivers for Moving Companies and schedule a free consultation with Peak to learn more!
Identifying Risks of Buying a Moving Company
A business valuation for buying a moving company includes an analysis of the risks of a moving company. Preparing for and minimizing potential risks is important for any business owner. A business must do so to avoid financial losses and avoid decreasing its value. Using a moving company valuation can help you identify and mitigate potential risks. Common risks for moving companies include:
- Housing Market Dependency:
According to IBIS World, about 70% of moving industry revenue stems from residential housing. That means that moving companies are reliant upon strong housing markets for their business and that some may struggle in housing lulls. - Competition:
Moving companies have low barriers to entry and are typically locally owned, creating higher competition. Moving companies can leverage search engine optimization (SEO) to set themselves apart from the competition. See The Value of SEO to learn more. - Trucking Regulations:
Larger moving companies are subject to regulations surrounding their trucks and truck drivers. Truck drivers have regulations that govern their eyesight and sleep, while trucks have different EPA and other standards that you must meet. - Interest Rates:
Because residential housing is such a big revenue stream, changing interest rates can adversely affect a moving company. Low interest rates and high new home construction are good for business. Moving companies can mitigate this risk by diversifying their customer base.
Securing Financing for Buying a Moving Company
Many potential buyers need external financing to purchase a moving company. Frequently, buyers look to the Small Business Administration (SBA) for their financing needs. The SBA has loans with benefits such as low interest rates, low down payments, and extended repayment terms. Many SBA loans require a business valuation as part of the loan application. Peak Business Valuation works with over 90 SBA lenders nationwide and can provide you with an SBA business valuation and connect you with an SBA lender.
Obtaining a Moving Company Valuation Report
As part of a moving company valuation, you will receive a valuation report. The valuation report includes the fair market value of a moving company as well as the strengths, weaknesses, opportunities, and risks of a moving company. The valuation report can be useful in all aspects of a business. You can use it to build a business plan, negotiate the purchase price, apply for an SBA loan, and maximize the value of a moving company.
Conclusion
Buying a moving company can be a great way to capitalize on a strong moving industry. If you aren’t prepared, it can also be stressful and costly. A valuation for buying a moving company will help you prepare to buy a moving company and maximize its value. With the information provided in a moving company valuation, you can reduce unknowns and make strategic decisions.
Peak Business Valuation is a professional business appraiser that can provide you with an expert moving company valuation. Peak has a team of experienced professionals that can help you in the valuation process. We can help you through the buying process and give you the needed knowledge to maximize the value of a moving company. If you have questions about how to value a moving company or are ready to get started, schedule a free consultation below!
