Value Drivers for a Carpentry Business
The carpentry industry includes framing, carpentry, and finishing work. As such, it makes this a very detail-oriented industry. As the pandemic depleted the need for commercial construction, it increased the demand for residential construction. The construction industry directly impacts the carpentry industry. Many features in a home or commercial building need carpentry work done. If you are looking to buy or sell a carpentry business, the first place to start is by receiving a business valuation.
Understanding the key value drivers of your business will help positively impact the value of your carpentry business. If you know what drives your business, you can better focus on those things. Peak Business Valuation, business appraiser, helps carpentry businesses across the nation understand the value and value drivers of their business. If you are looking to buy, sell, or grow a carpentry business, a valuation is beneficial. For more information, schedule your free consultation today.
Key Value Drivers for a Carpentry Business
The carpentry industry has seen a 0.5% annual revenue growth over the last five years. Finishing work includes 76.8% of the industry’s work with the value of residential construction going up 4.1%. Focusing on key value drivers is essential in this market. A carpentry business will not survive if a company does not adapt its business plan. In the sections below, we will discuss important value drivers for the carpentry industry. For information specific to your business, contact our valuation professionals by scheduling a free consultation.
Specialization
As mentioned above, the carpentry industry includes several specialized types of work. A carpentry business would do well to promote certain services as their specialty. For instance, this could include the installation of windows and doors, paneling, steel framing work, or ship joinery. Advertising specific skilled work will entice customers to work with your business. More customers create more revenue. A valuation analyst such as Peak Business Valuation will always include revenue when valuing a carpentry business.
Recurring Revenue
Next, recurring revenue will always increase a company’s value. Carpentry work does not always require maintenance repairs. This means recurring revenue will need to come from a different source. One option is to contract work with housing or commercial developers. Residential construction is projected to value at over six billion next year. It is important for carpentry businesses to assess their business model and adapt their focus. Residential work should be the top priority right now. Creating positive relationships with construction contractors is essential to receiving recurring revenue.
Stock on Hand
Resources continue to be limited due to the Covid-19 pandemic. It is important that the owner of a carpentry business remains vigilant of their supplies on hand. Lacking supplies will hurt or terminate relationships with customers and contractors. So understanding that supplies will often get delayed or out of stock is critical. This is an important value driver because it is a simple way to stay on top of other competitors. Keeping sufficient inventory at all times will positively impact the success of your business.
Trained Team
Lastly, carpentry requires trained and experienced professionals. Typically, it takes 3-4 years to become a skilled carpenter. With this length of training, it can be hard to hire enough staff to fulfill work requirements. Because of this, having a trained team is a very important value driver. The more trained your team is, the more valuable your company becomes.
In the buying process, a buyer will want a well-versed staff specifically workers with plenty of experience in the carpentry industry. Ensuring you prioritize this value driver will help the selling process go smoothly. Moreover, it will also increase the worth of your carpentry business. A great way to understand the value of your carpentry business is to obtain a business valuation. A third-party company like Peak Business Valuation, business appraiser, will help determine what your company is worth. To schedule a consultation, click on the link below.
Summary
Carpentry is projected to grow at an annualized rate of 0.5% over the next five years. While nonresidential construction anticipates recovery, which will boost the need for carpentry work, companies should not rely on that factor. Residential construction will continue to bring in most of the carpentry revenues. There are over 200,000 carpentry businesses across the country. This gives sellers and buyers plenty of opportunities. It is important to understand the value drivers of your carpentry business whether you are buying or selling.
Peak Business Valuation is a leading business appraiser in the nation. We offer business valuations for carpentry businesses on a regular basis. We would love to work with you whether you are buying or selling a carpentry business. Schedule a free consultation today! We look forward to hearing from you. Be sure to also take a look at Valuing a Carpentry Business, How to Value a Carpentry Business, as well as Valuation Multiples for a Carpentry Business.
