The concrete industry is directly related to the construction industry. Concrete is a necessary piece to building housing developments and commercial buildings. Throughout the Covid-19 pandemic, residential construction saw higher demand than the nonresidential industry. As such, it greatly impacted the revenue of concrete businesses. While many things impact revenue, key value drivers directly impact the value of the business. Learning the value drivers of a concrete business will help your business be successful. Focusing on these value drivers can help maximize the value of a concrete business.
Peak Business Valuation, business appraiser, helps concrete companies across the country learn the value of their business. We help concrete contractors whether they are trying to buy, sell, or grow a concrete business. For questions, please schedule a free consultation below.
Key Value Drivers
Since 2016, concrete businesses have had a 1.5% decrease in annual profits. While revenue has annually increased by 3.4%, profits have decreased. This means focusing on the key value drivers is vital to the success and survival of your business. In the following paragraphs, we will discuss the most important value drivers for the concrete industry. For specific information on your business, reach out to one of our professionals. You can contact us by scheduling a free consultation.
Recurring Revenue
One of the easiest ways to increase the value of your concrete business is through recurring revenue streams. Recurring revenue also decreases owner dependency. This is because recurring revenue is easily transferable from one owner to the other. This makes the value of the business increase.
Creating contracts with builders is one of the best ways to create recurring revenue. Spending time finding new contacts is time-consuming and expensive. By focusing energy on gaining recurring revenue and building strong relationships, you will decrease owner dependency and increase consistent revenue. For more ideas, see Growing Your Business Through Recurring Revenue.
Specialization
There are over 55,000 concrete businesses in the United States. This means you need to find a way to make your business special and unique from other concrete businesses around you. There are several ways to set your business apart. This can come from the type of service you offer, how you offer it, and the timeline you deliver your service. Finding a way to create a unique platform is a very important value driver.
The concrete contracting industry has a low level of market share concentration. This industry is mostly composed of small-scale enterprises that work in a single local area. Typically, concrete businesses have only a few employees at a set location. To operate in this environment, you must set yourself apart from the competing businesses in the same area. A business appraiser will consider the competition when valuing a concrete company. Peak Business Valuation is happy to help value your concrete business. Schedule a free consultation today!
Trained Employees
Last, laying concrete takes many trained individuals. Many concrete machines need licensed employees who are properly trained and have experience. Establishing proper training is an essential part of having a successful concrete business. If not done properly, injuries occur, machines break, and concrete is incorrectly poured. In 2019, turnover rates increased for the fifth year in a row. Employees left for several reasons whether that was management, pay, lack of work, or lack of training available. Creating a space to properly train your employees will lower the employee turnover rate. It will also increase trust between employees and management. Employees have an impact on a concrete company’s revenue and ultimately the value of the business.
Summary
Focusing on the key value drivers of a concrete business will establish a positive environment for success. Value drivers should be a company’s top priority. No matter if you are wanting to buy, sell, or grow your business, learn about the value drivers of a concrete business. Doing so will help you as the owner maximize growth. For more information see Valuing a Concrete Company, How to Value a Concrete Company, Business Valuation for Buying a Concrete Business, Business Valuation for Selling a Concrete Business as well as Valuation Multiples for Concrete Contractors.
Peak Business Valuation, business appraiser, helps business owners learn what drives the value of their business. Our trained professionals create detailed reports analyzing each aspect of your business. Peak helps concrete contractors on the regular determine the value and the value drivers of their business. Whether you want to buy, sell, or maximize, Peak is here to help. For more information, please reach out by scheduling a free consultation. We look forward to working with you!
