Value Drivers for a Fence Construction Business
There are over 50,000 fence construction companies in the United States. Over two-thirds of those businesses specialize in metal fencing. While the others focus on wood, plastic/vinyl, and concrete fencing. The fence construction industry is currently experiencing difficulties due to supply chain issues. These issues caused by the COVID-19 pandemic have led to many changes. For example, although there have been increases in revenue in 2021, there have also been increases in the cost of materials. The fence construction industry experienced a growth rate of 3.6% from 2016 to 2021. Because of these changes, the growth rate is anticipated to be 1.1% from 2021 to 2026. More than ever it is important to know the value of a fencing business and key value drivers for a fence construction company.
The best way to discover the value of a fencing business is by obtaining a business valuation. Valuing your company with an accredited business appraiser is beneficial whether you plan on selling or buying a fencing business. Understanding key value drivers for a fence construction business can help increase the value of a fencing company. Peak Business Valuation, business appraiser, will help you understand key value drivers for your fencing business when valuing it. For questions, schedule a free consultation below.
Key Value Drivers for a Fence Construction Business
The following are some of the key value drivers for a fence construction business. Understanding these value drivers can help you maximize the value of your fencing business. For questions, schedule a consultation with Peak Business Valuation, business appraiser. Be sure to take a look at Valuing a Fencing Business as well.
Online Presence
Customers look to the internet for pricing and other information. Someone in need of a new fence or fence repairs will likely look to the internet for help first. Not only is it important to have an online presence, but a good reputation online is also crucial. There are a few key elements that are essential to developing a good reputation online.
- Great website – A great website doesn’t require thousands of dollars. All you need is a website that is easy to navigate to generate leads. Pictures of previous projects help these leads know what to expect if they chose to work with you.
- Reviews – This is a key way to establish the credibility of your fence construction company. Clients want to have the best idea possible of what they are getting before they pay for it. This is a simple way to organically grow your business online.
- Contact – Make sure your contact information is easy to find online. If your info is hard to find then potential clients will look elsewhere. This applies to your Google page, website, social media, etc.
See The Value of SEO for more information.
Communication
Good communication within your fencing business will help you avoid potential problems. Many of these problems can decrease the value of your business. Communication is not a quantitative factor taken into consideration when valuing a fence construction company. Yet, good communication will become evident in various qualitative measurements. These qualitative measurements become evident in quantitative indicators. For example, uncontacted leads are not considered when valuing a fence construction business. However, uncontacted leads will reflect in the gross revenue generated by the fencing company.
Estimating and Scheduling Software
Using third-party software to schedule and price projects adds immense value to your fence construction business. There are several software companies (Acculynx, JobNimbus, etc.) that provide these services. They provide a streamlined way for fence construction companies to operate more efficiently. Software allows you to easily schedule projects and estimate the cost. These services can expand the operational capabilities of your fence construction company. This is a great way to increase the value of a fence construction company.
Reliable Quotes
It is important to know how your pricing compares to your competitors. Customers want to know what they can expect to spend before pulling out their wallets. They will gather quotes as they consider their options. The value of your company will rely heavily on the percentage of the market share you can capture. Customers will continue to choose your company as you provide reliable quotes.
Quality of Work
Providing excellent service for your customers is largely determined by the quality of the end product. If customers are dissatisfied with your services, revenue will decrease and the value will plummet. The opposite is also true. Accurate turnaround times and attention to detail will lead to increased business. This will in turn increase the value of your fence construction company.
Reliable Suppliers
Having a good relationship with the supplier(s) pays dividends. Having multiple suppliers can reduce the risk of supply shortages. Your fence construction company will benefit from this. More than one supplier will help secure the longevity of your business. Furthermore, having a good relationship with each supplier does more than reduce risk. It also encourages more timely transactions. This is key to not interrupting operational workflow. When Peak Business Valuation, business appraiser performs a valuation they will look at the concentration of your suppliers and assess the risk.
Profitability
It is important to know the profitability of your company. When valuing a fence construction business, profitability is taken into consideration. One key component to understanding profitability is considering scenarios that can improve profitability. It is beneficial to consider the product offering of your fence construction business. Consider offering a variety of materials or one material to be more profitable. Simple calculations of different profit margin ratios can determine this. Peak Business Valuation, business appraiser will analyze your financial statements when performing a business valuation. A business appraiser will look at many financial and profitability ratios when determining the value of a fencing business.
Summary
Consider how to implement these key value drivers for a fence construction business. They will help you increase the value of your company. Every fence construction business has areas in which it can improve and a unique set of needs. These value drivers can provide a framework for how to meet those needs and grow your business. You must understand the value of your fence construction company to know where to focus.
Peak Business Valuation, business appraiser, can help you know the value of your fence construction business by performing a valuation. A business valuation is a key to determining a listing price when selling a business. If you plan on buying a fencing business, a business appraisal can help negotiate a fair purchase price. We are happy to answer any questions you may have. Please reach out by scheduling a free consultation below.
For additional information see Valuing a Fencing Business, How to Value a Fence Company, as well as Valuation Multiples for Fence Construction.
