I have an opportunity to invest in a small electrical service contracting business. The area of the country is Virginia Beach, Norfolk area of Va. I have 2 questions. In order to evaluate this current business, can you tell me the average labor rate per hour for service calls? Please consider this for a master electrician and a mechanic. In addition, when pricing new residential construction by the sq ft, what is the going rate per sq foot? (to code only) I would appreciate any info you have so that I can put some numbers to the investment. Thanks.
Estimating
- Thread starter coastalhs
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highkvoltage
Senior Member
Re: Estimating
If your thinking of buying an existing business I feel you are looking in the wrong direction for evaluating the business. But there are some things we would have to know to help you:
1. How large is this shop? One man or do employees come with the business?
2. Do assets as in building(s), tools and trucks/equipment stay with the business? Have these been evaluated as far as worth?
3. What is their customer base and are they going to stay even with a different owner? Even with an owner taking a partner some clients get uneasy and deside to start shopping around.
I had to ask myself these questions to myself when desiding whether to buy into a business or start my own. I chose to start my own. I felt the amount of capital I would have to spend for a buy in would be hard to make up in my five year plan. As far as your wage question you would have to sit down with the business owner and discuss his present payroll and cost of doing business to come up with an accurate hourly rate. You could also call around in your area for pricing. Good luck in your decsion.
Please feel free to change he to she. I know that there are woman who have EC businesses and I don't what to offend any of them if they are reading this post.
If your thinking of buying an existing business I feel you are looking in the wrong direction for evaluating the business. But there are some things we would have to know to help you:
1. How large is this shop? One man or do employees come with the business?
2. Do assets as in building(s), tools and trucks/equipment stay with the business? Have these been evaluated as far as worth?
3. What is their customer base and are they going to stay even with a different owner? Even with an owner taking a partner some clients get uneasy and deside to start shopping around.
I had to ask myself these questions to myself when desiding whether to buy into a business or start my own. I chose to start my own. I felt the amount of capital I would have to spend for a buy in would be hard to make up in my five year plan. As far as your wage question you would have to sit down with the business owner and discuss his present payroll and cost of doing business to come up with an accurate hourly rate. You could also call around in your area for pricing. Good luck in your decsion.
Please feel free to change he to she. I know that there are woman who have EC businesses and I don't what to offend any of them if they are reading this post.
petersonra
Senior Member
- Location
- Northern illinois
- Occupation
- engineer
Re: Estimating
The following is not about ECs but about buying a small business in general.
1. Most (if not all) of the repeat business is based on personal relationships built up between the EC and the customer(s) over the years. When you buy the business you will not have that relationship anymore.
2. The repeat business is the only profitable part of any small business, because getting customers is the most expensive part of any business.
3. Value the business at what the equipment and material that comes with it is worth at a bankruptcy auction, plus a small premium for the name. A good premium for the name would be some small percentage of last years net profits (as evidenced by tax returns).
4. Don't buy into the "it's largely a cash business" (said with a wink) nonsense. Anyone who says that is really telling you he can't make enough money legitimately. Why buy something that's a guaranteed loser?
[ April 28, 2005, 01:41 PM: Message edited by: petersonra ]
The following is not about ECs but about buying a small business in general.
1. Most (if not all) of the repeat business is based on personal relationships built up between the EC and the customer(s) over the years. When you buy the business you will not have that relationship anymore.
2. The repeat business is the only profitable part of any small business, because getting customers is the most expensive part of any business.
3. Value the business at what the equipment and material that comes with it is worth at a bankruptcy auction, plus a small premium for the name. A good premium for the name would be some small percentage of last years net profits (as evidenced by tax returns).
4. Don't buy into the "it's largely a cash business" (said with a wink) nonsense. Anyone who says that is really telling you he can't make enough money legitimately. Why buy something that's a guaranteed loser?
[ April 28, 2005, 01:41 PM: Message edited by: petersonra ]
tryinghard
Senior Member
- Location
- California
Re: Estimating
The best way to evaluate a business is: review a "Business Financial Statement" from a CPA. This report reveals the truth of the company.
The best way to evaluate a business is: review a "Business Financial Statement" from a CPA. This report reveals the truth of the company.
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