Valuing a Painting Business
The painting industry was classified as nonessential during the Covid-19 pandemic, bringing revenue down 1.6% in 2020. However, this industry has bounced back in the following year and is expected to continue upward in the next few years. Residential construction has risen over the past two years, meaning higher demand for painters. This type of work brings in the most revenue, with nonresidential coming in a close second. Whether you want to sell, buy, or maximize your current business, you need to know the fair market value of a painting business.
Peak Business Valuation, business appraiser, helps business owner’s in the painting industry across the United States understand the value of their current or potential business. There are many factors that impact the value of a painting business. Learning the specifics of your business can help you focus on the things that need improvement. A business valuation for a painting business will teach you the specific success factors that impact the value of your business. Below, we discuss some general key success factors in the painting industry. For specific questions, feel free to contact us below with a free consultation.
Market Multiples for a Painting Business
- SDE Multiple Range: 1.41x – 2.84x
- EBITDA Multiple Range: 1.82x -3.81x
- REV Multiple Range: 0.37x – 0.55x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
With increased understanding, you can start to take the steps necessary to increase the value of your painting business. A business valuation is helpful whether you want to sell, buy, or grow the business you currently own. Here are some ideas to help increase your business value. If you are searching for a more detailed valuation, schedule a consultation with our Peak experts below.
Key Success Factors
Below are key success factors that can increase the value of a painting business.
Marketing Your Business
First, proper marketing is essential to your business. Finding consistent clientele is needed, as jobs come and go quickly. Oftentimes, business owners contact through inbound strategies but don’t touch the outbound realm. Being willing to cold call, advertise your business, and create connections with potential clients is important. Most importantly, reaching out to contractors who have copious amounts of work will benefit your business the most.
Once you have properly marketed your painting business, it is important to create positive relationships with your clients, whether that be contractors or individuals. Marketing isn’t just about getting your name out there but creating a good reputation for your company’s name. A great way to establish a good reputation is having professional communication between clients and employees. Another great way to create trust is always being willing to go above and beyond.
If marketing is done appropriately and connections are maintained, you will receive recurring revenue. This means you will spend less time on the marketing side and more time on increasing revenues. This brings success and increases the value of your business.
A great source of recurring revenue comes from working with housing developments or large commercial construction projects. This provides more work, increased revenue, and a stronger reputation for future clients. Pay specific attention to gaining this type of revenue as it will increase the value of your business. In addition, recurring revenue decreases owner dependency.
As a business appraiser, Peak Business Valuation will value recurring revenue higher than other revenues as it brings down owner dependency and increases the value of the business. See also, Growing your Business Through Recurring Revenue.
The more work you have, the more employees you will need. Especially when working with contractors, there are specific requirements that must be met for a house to be deemed ready to sell. Painting is one of the most important because it adds the finishing touches.
Employees need to be properly trained, even if there is a high turnover rate. Focusing on training will increase the quality of work and help your business grow. Especially when current clients speak highly of the work your business provides. Pay special attention to this key success factor.
As you can see, there are many considerations when valuing a painting business. Understanding the value of your painting business can help you improve. A business appraisal will also help you focus on the things that will increase the value of your painting business the most. Obtaining a business valuation is a great starting point whether you are buying, selling, or wanting to maximize the business you currently own.
Peak Business Valuation, business appraiser, has been helping business owners like yourself learn the value of their painting business. For specific questions about valuing a painting business, reach out. Click the link below to schedule a free consultation with Peak Business Valuation, business appraiser.
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