Value Drivers for a Painting Business
Residential painting has overtaken the painting industry, at 41.5% of the entire work. At the start of the pandemic, the painting industry was classified as nonessential. Overall revenue decreased 1.6% in 2020. The painting industry is particularly sensitive to movements in residential building construction. This is because it generates most of the industry’s current revenue. Over the last year, there have been dozens of transactions of painting businesses. An important part of this process is understanding the value of a painting business and value drivers.
Peak Business Valuation, business appraiser, helps owners in the painting industry understand the value of their current or potential business. Several drivers impact the value of a painting business. Learning your business’s specific value drivers can help your company increase value and profits. A business valuation will discuss specific value drivers for your painting business. For questions, contact us below for a free consultation.
Value Drivers for a Painting Business
Below are specific value drivers for a painting business. For questions, schedule a free consultation with Peak Business Valuation, business appraiser.
Product & Service Mix
The first value driver is the service mix of your painting business. It plays a big part in the value of the company. A painting business’s services can range from residential to commercial. While the pandemic has injured commercial revenues, it has increased residential demand. With low-interest rates and increased consumer spending, residential demand projects continue to increase. A valuation expert at Peak Business Valuation, business appraiser, will compare your business model’s product and service mix to the average of the painting industry.
Marketing
Next, marketing is a great way to increase revenue and profits. As a new business or newly purchased business, getting your company’s name out there is essential. If marketing is done well, your painting business should gain consistent clientele and revenue. Most often, marketing is done through inbound strategies such as networking. If this does not bring in enough clients, outbound strategies should be used. This can include cold calling or advertising through social media, billboards, or ads. Reaching out to contractors is one of the best sources of revenue as it will bring consistent work for your painting business.
Recurring Revenue
While repairs or repainting can happen, it is more common to see recurring revenue come from contracts with contractors or housing developers. If a painting business markets itself properly, it should start incurring recurring revenue. This will only happen if work is done in a professional and proficient manner. Recurring revenue shows a certain level of trust to potential clients. It also shows that your painting business is reliable and good to work with.
Recurring revenue is worth more than a single project because it brings in consistent revenue. It is also valuable because it easily transfers from one owner to the next. When buying or selling, this type of revenue will become very important. The first step to buying or selling is receiving a business valuation from a third-party valuation company such as Peak Business Valuation. For specific information on your business, please contact us by scheduling a consultation.
Low Owner Dependency
Heavily relying on the owner of a business can be damaging to the overall success of a painting business. Implementing processes and training will help the business rely less on the owner and more on the structures in place. When a painting business relies solely on the owner to do the work, the business cannot grow. This is because the business can only take on as much work as the owner can handle.
A self-reliant painting business is worth much more than a high owner-dependent business. When receiving a valuation, whether buying or selling, a business appraiser, such as Peak Business Valuation, will take into account the level of owner dependency. For more information see Reducing Owner Dependence.
Summary
The best way to improve your painting business is to focus on key value drivers. Whether you want to buy or sell, value drivers should be a top priority. There are over 200,000 painting businesses across the nation. With this many businesses, it is important to find ways to promote specialization and create a unique value proposition for your geographic location.
Peak Business Valuation, business appraiser, values painting businesses across the country. One of our main goals is to help you understand the value drivers of a painting business. For more information, schedule your free consultation today. We are also happy to answer any questions you might have about valuing a painting business. For more information, read Valuing a Painting Business, How to Value a Paint Business, as well as Valuation Multiples for a Painting Business.
