# How much would you sell your company for



## BamBamm5144 (Jul 12, 2008)

Just a question...


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## Okiecontractor (Oct 15, 2012)

$10. That way i could buy a six pack and go fishing instead of working on a Saturday.


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## SDel Prete (Jan 8, 2012)

$1 with 100% royalty


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## world llc (Dec 9, 2008)

3 easy payments of 29.95...


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## pinwheel (Dec 7, 2009)

nfs


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## cabinetsnj (Jun 10, 2012)

I wouldn't sell my company. Well maybe for $1,000,000 that I could invest and not work.


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## world llc (Dec 9, 2008)

cabinetsnj said:


> I wouldn't sell my company. Well maybe for $1,000,000 that I could invest and not work.


today, a mil dont go too far :sad:


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## cabinetsnj (Jun 10, 2012)

world llc said:


> today, a mil dont go too far :sad:


That is why I would invest it. I could invest it in a small apartment building.


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## world llc (Dec 9, 2008)

cabinetsnj said:


> That is why I would invest it. I could invest it in a small apartment building.


very true, but you may need a loan to update the cabinets :laughing:


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## cabinetsnj (Jun 10, 2012)

world llc said:


> very true, but you may need a loan to update the cabinets :laughing:


Ha, that is funny.

But seriously, I think I could get an apartment and hire an agent. Hopefully earn $3,000 a month at sit on my butt all day.

Well actually, I would get a part time job. But only doing something I really wanted to do.


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## SDel Prete (Jan 8, 2012)

cabinetsnj said:


> Ha, that is funny.
> 
> But seriously, I think I could get an apartment and hire an agent. Hopefully earn $3,000 a month at sit on my butt all day.
> 
> Well actually, I would get a part time job. But only doing something I really wanted to do.


You could easily do that but it would be better off to leverage that money on some multi families and bring in much more money then that.


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## ohiohomedoctor (Dec 26, 2010)

Take sales and multiply it by 3. I'd get out for 3-4mil and start a restraunt on the beach.


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## world llc (Dec 9, 2008)

ohiohomedoctor said:


> Take sales and multiply it by 3. I'd get out for 3-4mil and start a restraunt on the beach.


:laughing: your supposed to multiply by your yearly sales, not lifetime :laughing:


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## Inner10 (Mar 12, 2009)

It's all bogus until somebody is willing to spend that money anyway.

If I multiplied my yearly sales I could retire...if I multiplied my yearly income I could go for dinner at the Olive Garden. :laughing:


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## Jaws (Dec 20, 2010)

None, unless there wasnt a no compete clause......

When I retire I plan to build specs. I dig my job, but it will be a lot cooler when all my chit is paid for and I have my slum rental complex paying me mail box money. Everything is cooler when you know sub conscientiously, if this day gets any worse Im going fishing.


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## jlsconstruction (Apr 26, 2011)

cabinetsnj said:


> Well actually, I would get a part time job. But only doing something I really wanted to do.


I must be lucky that. I already do what I really want to do


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## ohiohomedoctor (Dec 26, 2010)

world llc said:


> :laughing: your supposed to multiply by your yearly sales, not lifetime :laughing:


I'm at 410k right now. Finished over a mil last year too.


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## ohiohomedoctor (Dec 26, 2010)




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## jlsconstruction (Apr 26, 2011)

ohiohomedoctor said:


> I'm at 410k right now. Finished over a mil last year too.


Want to share? :laughing:


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## world llc (Dec 9, 2008)

ohiohomedoctor said:


> I'm at 410k right now. Finished over a mil last year too.


so, Matt Geddis or Ohio Home Remodeling out there in Ohio, If the IRS has to audit you, as they do every so often, when they web search and see this figure i hope they don't ask for additional tax money from you.... that and your yearly figures and all other recorded info is available publicly on such sites as mantra... :whistling

just saying


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## ohiohomedoctor (Dec 26, 2010)

jlsconstruction said:


> Want to share? :laughing:


That's sales. I pay myself $1250 a week.


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## ohiohomedoctor (Dec 26, 2010)

world llc said:


> so, or out there in Ohio, If the IRS has to audit you, as they do every so often, when they web search and see this figure i hope they don't ask for additional tax money from you.... that and your yearly figures and all other recorded info is available publicly on such sites as mantra... :whistling
> 
> just saying


That's some hateful bs right there. Get ahold of yourself. You can do it. I'd prefer you edit that bs or be exposed to the wrath...


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## Inner10 (Mar 12, 2009)

world llc said:


> so, Matt Geddis or Ohio Home Remodeling out there in Ohio, If the IRS has to audit you, as they do every so often, when they web search and see this figure i hope they don't ask for additional tax money from you.... that and your yearly figures and all other recorded info is available publicly on such sites as mantra... :whistling
> 
> just saying


Not an issue after they read about all the jobs he looses money on yearly.


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## EthanB (Sep 28, 2011)

My business isn't worth selling at the moment(one man band) but I have gone through the business valuation process before with other businesses. The nature of the business has a huge impact on how values are calculated but for small businesses you're probably looking at 3-4 times the gross earnings. That means AFTER you have paid yourself a management fee, in construction that number might go up due to equipment assets but I wouldn't count on it. 

So a company that has 1 million in annual sales and 100k in gross profit(10%) might sell in the range of 300-400k.


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## Inner10 (Mar 12, 2009)

ohiohomedoctor said:


> That's some hateful bs right there. Get ahold of yourself. You can do it. I'd prefer you edit that bs or be exposed to the wrath...


Yeah World edit that BS before some arsehole quotes it.


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## ohiohomedoctor (Dec 26, 2010)

You guys are getting ridiculous, have a nice day..


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## Inner10 (Mar 12, 2009)

ohiohomedoctor said:


> You guys are getting ridiculous, have a nice day..


HAPPY 30th BIRTHDAY! :clap:


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## Jaws (Dec 20, 2010)

world llc said:


> so, Matt Geddis or Ohio Home Remodeling out there in Ohio, If the IRS has to audit you, as they do every so often, when they web search and see this figure i hope they don't ask for additional tax money from you.... that and your yearly figures and all other recorded info is available publicly on such sites as mantra... :whistling
> 
> just saying


The Hatorade thing was in bad taste imo, 

But we have been well over a mil for the last two years, we claim everything :thumbsup:

A mil isnt a huge deal depending on the size of your operation, 8 employees including 2 partners, neither of which cleared 6 figures. Depending on margins and what kind of projects , 8 or 900k is the break even point with our salarys. 

I have a buddy who makes more money operating alone at 25% of my annual revenue.


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## ohiohomedoctor (Dec 26, 2010)

What's imo?


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## Jaws (Dec 20, 2010)

in my opinion


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## Inner10 (Mar 12, 2009)

ohiohomedoctor said:


> What's imo?


In my opinion.


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## ohiohomedoctor (Dec 26, 2010)

Feel free to remove it.


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## world llc (Dec 9, 2008)

yep, the hateraid did it...


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## Jaws (Dec 20, 2010)

that's your business.


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## Inner10 (Mar 12, 2009)

ohiohomedoctor said:


> Feel free to remove it.












...at some point I really should get on with my day...:laughing:


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## world llc (Dec 9, 2008)

thats funny


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## Jaws (Dec 20, 2010)

This is one of the things that sucks about conversing on the internet. You can't read intent in a post, and people miss read the intent of posts. Then a snap back, then a fight, over nothing.


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## world llc (Dec 9, 2008)

im over it, i was just provoking him


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## BamBamm5144 (Jul 12, 2008)

You guys are useless!


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## Inner10 (Mar 12, 2009)

world llc said:


> im over it, i was just provoking him


I love provoking people.... especially when they are depressed on such a milestone birthday.


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## donerightwyo (Oct 10, 2011)

We would be better off sell all our crap at an auction. There's no way you could ever make enough money in our area to make the payments on all our stuff if you were to buy it all. With out our stuff your just another guy and a truck:thumbsup: very seldom do construction companies change hands here, almost always there is an auction.


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## BamBamm5144 (Jul 12, 2008)

I guess it is different every where.

A company should have systems in place. These systems allow you to expand and substitute people in different positions. If I were to go on a week long vacation, I would come back to find the guys still working, jobs still being sold and money still in the accounts.

So no one finds the benefit of purchasing an already existing company that has an established marketing plan, established systems and net profits near the 6 figure mark?

Basically, if someone is book smart and can manage people, they could step right into the business and have money coming in tomorrow.


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## Kowboy (May 7, 2009)

I sold my countertop shop in 2001 for $60,000.00; a business that did about 300K per year. I took 20K down and payments for 4 years. My lawyer insisted the buyer personally guarantee the note and it was a good thing he did as the buyer's cabinet shop went belly-up. He never missed a payment.

The business just hired its 30th employee and is probably worth several million now.

Joe


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## donerightwyo (Oct 10, 2011)

How much of that near six figure profit will be spent every year buying you out?


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## Driftweed (Nov 7, 2012)

Honestly bambam it depends on your market area as well. If you only cover a 100 mile radius in one state, it would be less desirable than a company that covers multiple states.

The company that covers say a tri-state area will have proven its own viabity for future expansion.

Can I buy your company and expand it to cover the 48 states? That is a company people want.


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## PCI (Jun 8, 2012)

Bamm, I think there is value in an already established company, but how how much is the key. A 3-4 x earnings is way too much in my opinion. 3-4 times profit before owners salary is still probably too much. 

I sold a company for 2x earnings (which was the same as profit) and was paid as a consultant for two yrs to make sure the transition went smoothly and the numbers stayed the same or increased. 

The new owner was trained, made money on the profit and had an up and running company.

For a contracting business, why would you buy a company in order to pay off the debt secured to buy it. You could simply work and earn less on your own because you don't have to pay off the debt.

I hope this makes sense.


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## rrk (Apr 22, 2012)

I have a friend who owns a manufacturing business, he also buys and sells other manufacturing business. Some times he will buy a business just to put them out of business and have less competition for his other companies. 

He said businesses that are worth something are ones that produce a commodity not a service unless contracts are sold for that service ( preventative maintenance contracts ). 

Roofing, siding, windows, painting, driveways, flooring are considered commodities in this business. More complex remodeling involves a personal relationship with the owner/manager/designer and more value is placed on the person who sells the job.

So if Mr. Smith thinks Joe from Acme Co. did a great job, he was always available, he was a nice guy, he made sure everything went well. Now Joe leaves and so does Mr. Smiths warm and fuzzy feeling.
Joe was in his house for weeks/months at a time and now he is just going to let someone else in? No way.

Maybe a painter/roofer etc. for just a few days, he will stay home for that, but that's it.


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## Jaws (Dec 20, 2010)

BamBamm5144 said:


> I guess it is different every where.
> 
> A company should have systems in place. These systems allow you to expand and substitute people in different positions. If I were to go on a week long vacation, I would come back to find the guys still working, jobs still being sold and money still in the accounts.
> 
> ...


I bought into this company, when it was un established and still relatively cheap. It was worth it, but I wouldnt buy my company now. Too much money, better to just start my own. Its not equitable. 

A roofing company is different to me. Being a GC is about personal knowledge and skill sets, atleast for a small operation like ours. The builder is the brand, not the company.


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## EthanB (Sep 28, 2011)

We're completely talking in hypotheticals here but there can be great reasons for someone to want to buy an existing business. Investors do it all the time because an established business is far less risky than a startup and you are eliminating a major competitor at the same time.

An example of a situation where this would be a good thing is figuring a biz with $1mil in sales and 10% net profit. That's a pretty dreamy situation in today's economy but not unheard of. Say the biz is for sale for $350k and that includes $75k in assets. If it's a 10 year financing structure then the investor could be paying $55k per year and pocketing $45k(assuming no growth because I don't feel like doing a spreadsheet). That's an 80% return on investment. I know a lot of guys who would like that. Obviously there would be additional costs, probably a higher management or consulting fee, down payment, etc. that would reduce the amount but they aren't just getting the ROI, there's the total asset of the business that is accrued in the process.

That's why some people would buy a business rather than starting one.


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## Jaws (Dec 20, 2010)

EthanB said:


> We're completely talking in hypotheticals here but there can be great reasons for someone to want to buy an existing business. Investors do it all the time because an established business is far less risky than a startup and you are eliminating a major competitor at the same time.
> 
> An example of a situation where this would be a good thing is figuring a biz with $1mil in sales and 10% net profit. That's a pretty dreamy situation in today's economy but not unheard of. Say the biz is for sale for $350k and that includes $75k in assets. If it's a 10 year financing structure then the investor could be paying $55k per year and pocketing $45k(assuming no growth because I don't feel like doing a spreadsheet). That's an 80% return on investment. I know a lot of guys who would like that. Obviously there would be additional costs, probably a higher management or consulting fee, down payment, etc. that would reduce the amount but they aren't just getting the ROI, there's the total asset of the business that is accrued in the process.
> 
> That's why some people would buy a business rather than starting one.


Good points. :thumbsup:


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## Tom M (Jan 3, 2007)

I dont get it....I thought of this a few times.. Your company is your skills and your tools. Your skills are sales, knowledge and personal investment. They are only worth something to you unless as stated you have service contracts with predictable revenue.

Without that its just assets. IMOP


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## EthanB (Sep 28, 2011)

Tom M said:


> I dont get it....I thought of this a few times.. Your company is your skills and your tools. Your skills are sales, knowledge and personal investment. They are only worth something to you unless as stated you have service contracts with predictable revenue.
> 
> Without that its just assets. IMOP


So you think that if the principle of a 30 man construction company steps down the whole thing falls apart? Or are you assuming that we are all one-truck chucks(I am, btw)?


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## Tom M (Jan 3, 2007)

I just think without service contracts your only selling assets and potential.
Your example is a good one name recognition/branding has value but maybe only at a "franchising level" but I could wrong. 
If I were an investor it would be a lot cheaper to buy into an established,equipped well organized and manned operation than buying all new and building from the ground up.

So that's maybe the key. Systemize a company that can operate with changing players would have value.


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## Inner10 (Mar 12, 2009)

Tom M said:


> I dont get it....I thought of this a few times.. Your company is your skills and your tools. Your skills are sales, knowledge and personal investment. They are only worth something to you unless as stated you have service contracts with predictable revenue.
> 
> Without that its just assets. IMOP


No it's workforce, goodwill, clientbook etc.

Problem is you can't sell a one man construction company, people are paying you for your service not for your company.


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## Jaws (Dec 20, 2010)

Bill Milburn, sold his home building company for 28 million dollars in Austin, last year or the year before. they build 100 to 700 homes of year. No one is hiring bill Millburn, they are buying a Milburn home. Doubt anyone who is buying one of his houses ever meets Bill. 

With a small patatoes company like Jaws Builders, Inc, they are hiring you the person, and /or your craftsmanship and your crew.


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## Stephen H (Feb 18, 2011)

In the roofing business,
a "one truck chuck" as someone so colorfully phrased it-------------can clear OVER 6 figures a year if the apply themself

so what exactly would they gain from buying bams business?

they would be MUCH better off concentrating on their core business as a one truck chuck-and investing the money they would have been paying bam-----------in actual marketable investments---
Stocks,bonds,real estate ,bank accounts etc.

not to insult anyone in this thread-but I haven't seen anyone describe a business in this thread I would WANT to buy.

Edit: to clarify my remark, By OVER 6 figures I mean to say more than 100K---NOT to imply 7 figures or 1 million)
Stephen


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## EricBrancard (Jun 8, 2012)

Only a small percentage of businesses in our industry are worth anything to investors. Obviously I have read all the "how to" books like everyone else. They talk of developing systems, etc, etc. End goal to cash out by selling your business, etc, etc. For most companies in construction, this just isn't going to happen.

If it was as simple as taking a 1-2-3 approach to running these businesses and making millions, then why wouldn't investors be all over them? Because it doesn't work like that. Nobody's roofing or siding or window company is going to be the next facebook. Nobody really wants to sink money into a business where their competition can be anyone who can buy a truck and some tools. 

I don't ever plan on selling my company. I plan on making a living with it and eventually using money I make to fund other ventures. That's just looking at things from a realistic perspective.

It's a little late in the game for me to take my company from what it is now and get to the level of Toll, DR Horton, Pulte, etc or Walsh, Tutor Perini or Turner. My goal is to do $2-3 million in revenue and provide a good living for my family.


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## Stephen H (Feb 18, 2011)

that's well said Eric.

I don't know anybody personally who has sold a business of this nature and really made any money from that sale---- but I know many people who worked in these fields and used their business as a means of producing cash which was very successfully invested into other things.

I have already done it-and it seems to be your plan as well

Best wishes,
Stephen


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## J L (Nov 16, 2009)

I looked into what it would take for me to successfully sell my business a few years ago and I put myself on the right path to sell it. I had documented all systems and had guys in place to essentially run without me. Then I got burned out on all the paperwork. I took a long hard look at where I was with the company and where I had to be to make it sellable, and I realized I no longer had the drive to get it there. Creating systems for everything is much more difficult as a GC than if one were to just specialize in a single trade. 

So I put my bags back on, got rid of my guys, and am now much happier with much less stress/drama. Also, I've accepted the fact that if and when the wife and I move, I'll just be closing up shop and moving, not trying to sell.

Bam, you're in a different place. I think you could sell your business. You specialize and you've got people in place to run it without you. You've worked hard to get a solid online presence. I would guess that you could see 2 times the gross profit for a sales price. 

So the question to you is how much would you sell your company for?


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## Tom M (Jan 3, 2007)

Like you say the difficult nature of making a system is incredibly demanding. I made dozens of contract formats and spreadsheets and data that I hoped to use for systemized estimating and billing so I can employee even a family memember to help. Very hard to keep updating monitoring. I shelved the whole thing when work slowed.
A single service contractor...flooring..roofing blahblah blah can be dot.com'd and easier to do this than a multi trade builder with subs. Service work can also be storm driven..


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## rrk (Apr 22, 2012)

it would probably work in homebuilding as long as the builder has say 4 different designs, limited extra selections and no custom items. Not having that much input from home buyer would help.

Like pick 1 from column A, 1 from column B, trim pkg A or B etc.

Now we have to help them choose between 100 different sinks and 500 faucets


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## Tom M (Jan 3, 2007)

Well at that level of homebuilding it works. New construction.


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## BamBamm5144 (Jul 12, 2008)

There are home builders here doing over 150 homes a year.

I highly doubt that a change of ownership would affect anything whatsoever.


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## skillman (Sep 23, 2011)

My question is selling your company is to retire or $$$$$ . So if you can't get what you want what's the point of selling it . Brand is all someone what's and needs . Brand is the key or nothin .


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## Jaws (Dec 20, 2010)

BamBamm5144 said:


> There are home builders here doing over 150 homes a year.
> 
> I highly doubt that a change of ownership would affect anything whatsoever.


Trac level quality , not custom, as someone else stated.


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## BamBamm5144 (Jul 12, 2008)

Jaws said:


> Trac level quality , not custom, as someone else stated.


Okay there are also custom builders doing over 40 a year and I'm sure the owner could sell the company and everything still be fine because all the same employees and subcontractors would still be in place.


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## rrk (Apr 22, 2012)

But the guy telling them what to put where and communicating with the homeowner is the most important guy


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## Jaws (Dec 20, 2010)

rrk said:


> But the guy telling them what to put where and communicating with the homeowner is the most important guy


To the product, yes. To the business, no. Not at that level. Superintendents can be hired.

I have no desire to be that big, but Bam has a point.


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## Driftweed (Nov 7, 2012)

I don't see why roofers, remodeler's, etc can't be that big. 

Why can't the field salesman bring along design software (or set up a session with an in house designer) to assist in making the sale.

Window companies, siding companies, flooring companies already do this.

Setup a showroom where trained employees can help design the "project". Have a salesman go out in the field to sell your brand and give ballpark estimates to screen serious buyers. They can then come into the showroom talk to a designer (or the designer can come to them) and nail down the details.

I have had the above trades do this to me when I was a consumer. It can be done.

Personally I'd like to sell out for enough to never have to work again (roughly $50 mil).


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## Tom M (Jan 3, 2007)

BamBamm5144 said:


> Okay there are also custom builders doing over 40 a year and I'm sure the owner could sell the company and everything still be fine because all the same employees and subcontractors would still be in place.


It means nothing. We have relationships, that doesnt carry over to an unknown.


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## Five Star (Jan 15, 2009)

BamBamm5144 said:


> Okay there are also custom builders doing over 40 a year and I'm sure the owner could sell the company and everything still be fine because all the same employees and subcontractors would still be in place.


That's not true, most businesses take a turn once ownership switches hands, because the new owners want to see immediate returns they will cut corners,subs and employee wages, etc.
Take pizza places they often flip hands and the old owners usually stay on for 3-6 months so the old customers won't leave, and as soon as they do you notice a change in service,quality of food,etc


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## Jaws (Dec 20, 2010)

Tom M said:


> It means nothing. We have relationships, that doesnt carry over to an unknown.


Depends on what "custom" means. I think what I refer to as custom is not what many do.

Tilson Home Corp. Is a build on your lot semi custom builder. Its ownership has changed hands several times, so have its presidents. Its 50 years or so old, they are a Texas company. Eddie Martin is co owner/president, they have 170 on the ground statewide as of 4/1, and 100+ more sold. All build on your lot. 

I know the company somewhat, one of their supers is on my board at the HBA, Eddie is the president of TAB and we talk some, and more importantly, I trimmed Tilson houses on the side for 3 years before I became a GC. 

A super does 7-25 houses at a time. They are not what I consider custom, but if Eddie wanted to sell that to someone and teach them their systems, he would make millions and the company wouldnt miss a beat if you had a seasoned and educated business guy at the helm.


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## Morning Wood (Jan 12, 2008)

What's to sell. My trailer of tools and the ones that don't fit and ladders and staging. $75k maybe. I could throw in a bunch of paperwork too


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## dom-mas (Nov 26, 2011)

What i believe and have seen personally. A company of less than (somewhat random #) 5 employees cannot be sold. A company that does custom but not highly specialised work cannot be sold. A company that does not charge out at least 1/2 their rate in equipment can be sold but it's tough. Also companies that don't have a service or contract aspect are tough to sell. Employee loyalty (to the company not so much the owner) is also super important.

All this is probably self evident


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## cabinetsnj (Jun 10, 2012)

dom-mas said:


> What i believe and have seen personally. A company of less than (somewhat random #) 5 employees cannot be sold. A company that does custom but not highly specialised work cannot be sold. A company that does not charge out at least 1/2 their rate in equipment can be sold but it's tough. Also companies that don't have a service or contract aspect are tough to sell. Employee loyalty (to the company not so much the owner) is also super important.
> 
> All this is probably self evident


I agree. If you don't do highly specialized work, someone else can come a long and do the same thing.


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## cabinetsnj (Jun 10, 2012)

jlsconstruction said:


> I must be lucky that. I already do what I really want to do


When you have to do it to pay the bills it isn't as much fun. You have to worry about making a profit, etc.


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## world llc (Dec 9, 2008)

^what he said^


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## WarnerConstInc. (Jan 30, 2008)

Sissy men having birthday party's. 


I will sell mine by the pound.


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## cabinetsnj (Jun 10, 2012)

WarnerConstInc. said:


> Sissy men having birthday party's.
> 
> 
> I will sell mine by the pound.


Real men have birthday parties and invite some hot ladies.


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## GCTony (Oct 26, 2012)

dom-mas said:


> What i believe and have seen personally. A company of less than (somewhat random #) 5 employees cannot be sold. A company that does custom but not highly specialised work cannot be sold. A company that does not charge out at least 1/2 their rate in equipment can be sold but it's tough. Also companies that don't have a service or contract aspect are tough to sell. Employee loyalty (to the company not so much the owner) is also super important.
> 
> All this is probably self evident


 
Agree, the only thing a lot of GC companies would be selling is a client list. People buy assets not liabilities.


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## cabinetsnj (Jun 10, 2012)

GCTony said:


> Agree, the only thing a lot of GC companies would be selling is a client list. People buy assets not liabilities.


Some GC companies have assets. They have a business plan and marketing plan that works.


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## GCTony (Oct 26, 2012)

cabinetsnj said:


> Some GC companies have assets. They have a business plan and marketing plan that works.


How do you show a potential buyer the real value of a business and marketing plan? I guess I'm asking how do you prove that with a number outside of past P&L's?

Take out the larger GC's (say more than 10 people) and the shop businesses like a cabinet shop/show room:

Most of us rent office and shop space. A liability
We own office equipment and tools. They are assets but in most cases only for a short period of time. (they depriciate)
Company vehicles are a liability in my opinion but at best they are short term assets as they depriciate.
Staff can be an asset but not wise to consider an asset when buying or selling a company. People can come and go as they wish.
A home builder may have real estate assets but when the do own the land in say a subdivision, a lot of times that is structured to be under another company.

In my case, the only substantial asset my company has with any real value someone would want to invest in is our reputation and relationships. At the end of the day, my company is worth what someone would be willing to pay. On paper, you may have say $50K listed under assets, that doesn't mean someone will give you $50K once the go down the list and discover they are mostly short term.


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## GCTony (Oct 26, 2012)

Ya know....this is something we all should seriously think about. What is the value of my company?

Most of us have wives and children. What would happen to your business if you got run over by a bus today? We all would be wise to have wills that protect our families. What would they do with your company when you're pushing Daiseys? Are you leaving them with a burden?


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## dom-mas (Nov 26, 2011)

GCTony said:


> Ya know....this is something we all should seriously think about. What is the value of my company?
> 
> Most of us have wives and children. What would happen to your business if you got run over by a bus today? We all would be wise to have wills that protect our families. What would they do with your company when you're pushing Daiseys? Are you leaving them with a burden?


That's what life insurance is for.


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## cabinetsnj (Jun 10, 2012)

dom-mas said:


> That's what life insurance is for.


Yes, it is a good idea to have life insurance. But it is good to know how much your company is worth.


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## carolinahandyma (Jan 6, 2006)

Interesting thread. I think any businesses with a positive cash flow can be sold. What is of real value to a buyer is are things like reputation, good will, client lists, web presence, etc. It amazes me to hear about how someone would work for years and years to build their business up and then simply close-up shop when they were ready to retire or move on to something else!


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## GCTony (Oct 26, 2012)

dom-mas said:


> That's what life insurance is for.[/QUOTE
> 
> Life insurance is personal, Totally unrelated to the business. A death benefit paid to my family should not go toward paying liabilities of the company I happen to be the majority share holder of.


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## Jaws (Dec 20, 2010)

....


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## dom-mas (Nov 26, 2011)

GCTony said:


> dom-mas said:
> 
> 
> > That's what life insurance is for.[/QUOTE
> ...


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## J L (Nov 16, 2009)

dom-mas said:


> I guess if an owner died in the middle of a $1mil job that they had already taken large draws from and owed dozens of subs it could be more of a problem


Sounds like that contractor is screwed anyways :laughing::whistling


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## EthanB (Sep 28, 2011)

GCTony said:


> How do you show a potential buyer the real value of a business and marketing plan? I guess I'm asking how do you prove that with a number outside of past P&L's?


This is pretty much why someone would buy a business. In big business I imagine that companies would buy a company and liquidate it to procure specific assets, personnel, or patents but in small business it's all about past P&L's and future sales forecasts. If removing the owner from the equation will negatively impact the business then that is addresses by either contracting the owner's services for a period of time or by reducing the sales price.


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## Jaws (Dec 20, 2010)

...


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## Jaws (Dec 20, 2010)

[/QUOTE]Life insurance is personal, Totally unrelated to the business. A death benefit paid to my family should not go toward paying liabilities of the company I happen to be the majority share holder of.[/QUOTE]

Not necessarily. Our company has key man life insurance ($200, 000) on my dad and I. Reletavily cheap.


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## dom-mas (Nov 26, 2011)

RemodelGA said:


> Sounds like that contractor is screwed anyways :laughing::whistling


I guess what I was getting at was that a business, even a moderately successful business, shouldn't be a liability. It may not be worth much or even anything to someone else but it shouldn't be a liability. And if it is I would hope that family is distanced enough from it so that it doesn't effect them


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## tedanderson (May 19, 2010)

Maybe this doesn't make a whole lot of business sense but I doubt that I could sell my business for any price due to the fact that I've built up personal relationships with my clients over the years. I've seen their kids grow up, I've seen new additions to their family as well as deaths, marriages, etc. 

And through some of my clients I've also gained their extended family as clients as well. So for me to up and sell the business only for my clients to be served by some larger corporation that cares more about their money than the customers would be negligent on my part.. (for lack of a better word)

All in all I'd rather sell my company to an employee or a competitor who shares my passion, my values, and interests even if it isn't for a fair price.


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## BamBamm5144 (Jul 12, 2008)

I know my thinking of a business is different but I think every business should have systems that when one person leaves, another can simply enter.

When someone starts a business, I always assumed the goal was so that they could eventually either sell or barely have to be involved, not so they could work doing it until they're no longer able to.


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## dom-mas (Nov 26, 2011)

BamBamm5144 said:


> When someone starts a business, I always assumed the goal was so that they could eventually either sell or barely have to be involved, not so they could work doing it until they're no longer able to.


I know many like that but it has never been my goal.


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## ohiohomedoctor (Dec 26, 2010)

That's my goal. To have a machine that doesn't run on my oil..


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## dom-mas (Nov 26, 2011)

BamBamm5144 said:


> I know my thinking of a business is different but I think every business should have systems that when one person leaves, another can simply enter.
> 
> When someone starts a business, I always assumed the goal was so that they could eventually either sell or barely have to be involved, not so they could work doing it until they're no longer able to.


I was thinking about this comment last night. I know 5 or 6 guys who own construction companies that are worth at least 10 mil and while none of them have done any hands on work in a couple decades none of them are "barely involved". They are all highly involved (one not so much because his son has taken over and he's mostly retired). They all have their freedoms, they don't have to be in the office if they don't want but I doubt any of them ever turn their cellphones off.
One of the guys is actually a roofer. He bought some property from me and wanted to buy some more. In the 45 minute meeting we had his phone rang half a dozen times. He only answered one of those calls but as I was leaving the meeting he was returning all the calls he missed. 

Not the life fore me.


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## ohiohomedoctor (Dec 26, 2010)

Amassing 10 mil in equity and handing it over to my son sounds nice to me. .


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## cabinetsnj (Jun 10, 2012)

ohiohomedoctor said:


> Amassing 10 mil in equity and handing it over to my son sounds nice to me. .


That sounds like a good goal. How old is your son? Is he currently working for you?


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## Jaws (Dec 20, 2010)

dom-mas said:


> I was thinking about this comment last night. I know 5 or 6 guys who own construction companies that are worth at least 10 mil and while none of them have done any hands on work in a couple decades none of them are "barely involved". They are all highly involved (one not so much because his son has taken over and he's mostly retired). They all have their freedoms, they don't have to be in the office if they don't want but I doubt any of them ever turn their cellphones off.
> One of the guys is actually a roofer. He bought some property from me and wanted to buy some more. In the 45 minute meeting we had his phone rang half a dozen times. He only answered one of those calls but as I was leaving the meeting he was returning all the calls he missed.
> 
> Not the life fore me.


Im not worth any 10 million, and my phone rings all day.


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## dom-mas (Nov 26, 2011)

ohiohomedoctor said:


> Amassing 10 mil in equity and handing it over to my son sounds nice to me. .


He worked very hard for it. He was the companies engineer when the original owner wanted to sell. Bought it with maybe 15 employees, 2 dump trucks 2 or 3 various excavators and 1 or 2 piling machines. Now has largest piling company in the city and 2d largest excavation company. That business is probably worth a lot more than 10 mil. But for 20 years or more he worked. Not running an excavator or anything but he worked, and still does. 

And his son didn't walk into the business either. he worked for a national maybe multinational company as a CFO for a dozen years before moving back home to take over the business. And he works a lot. 

I guess what I'm saying is that the dream of having a business that makes mad cash but you aren't involved much is probably a pipe dream.


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## cabinetsnj (Jun 10, 2012)

dom-mas said:


> He worked very hard for it. He was the companies engineer when the original owner wanted to sell. Bought it with maybe 15 employees, 2 dump trucks 2 or 3 various excavators and 1 or 2 piling machines. Now has largest piling company in the city and 2d largest excavation company. That business is probably worth a lot more than 10 mil. But for 20 years or more he worked. Not running an excavator or anything but he worked, and still does.
> 
> And his son didn't walk into the business either. he worked for a national maybe multinational company as a CFO for a dozen years before moving back home to take over the business. And he works a lot.
> 
> I guess what I'm saying is that the dream of having a business that makes mad cash but you aren't involved much is probably a pipe dream.


I agree. The only person you can trust to do the job right is yourself.


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## BamBamm5144 (Jul 12, 2008)

cabinetsnj said:


> I agree. The only person you can trust to do the job right is yourself.


Not really.


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## Jaws (Dec 20, 2010)

BamBamm5144 said:


> Not really.


Depends on what kind of business you want. I want a business I am actively involved in running and actively running projects. I want to make enough money to provide a decent living for my family, and put some back to buy rental property. Thats it. 

I didnt get into construction to be a business man. Id go into a better paying business. I am a business man so I can work so we can operate a family business doing what I like doing. 

In the words of Howard Roark, I dont build in order to have clients, I have clients in order to build.


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## BamBamm5144 (Jul 12, 2008)

Jaws said:


> Depends on what kind of business you want. I want a business I am actively involved in running and actively running projects. I want to make enough money to provide a decent living for my family, and put some back to buy rental property. Thats it.
> 
> I didnt get into construction to be a business man. Id go into a better paying business. I am a business man so I can work so we can operate a family business doing what I like doing.
> 
> In the words of Howard Roark, I dont build in order to have clients, I have clients in order to build.


So you don't trust any of your guys to do the job right?

That's what he said.


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## dom-mas (Nov 26, 2011)

BamBamm5144 said:


> So you don't trust any of your guys to do the job right?
> 
> That's what he said.


Don't trust anyone to run your business. For a week or 2 while you're on vacay maybe but just give your business to someone else to run while you golf or fish all the time is asking for trouble. I don't think he was commenting on not letting someone else bang nails or hang drywall.


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## Jaws (Dec 20, 2010)

BamBamm5144 said:


> So you don't trust any of your guys to do the job right?
> 
> That's what he said.


No, I trust my guys to do their jobs. Just dont ever plan to hand mine over to an employee so I can play golf.


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## dom-mas (Nov 26, 2011)

Jaws said:


> No, I trust my guys to do their jobs. Just dont ever plan to hand mine over to an employee so I can play golf.


I think i beat you by 15 secs


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## BamBamm5144 (Jul 12, 2008)

What the ??? 


What is in the water around here lately?

I quoted a post where a guy said to never trust anyone else to do the job right except yourself.

That means everyone needs to do the whole job themselves.


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## dom-mas (Nov 26, 2011)

BamBamm5144 said:


> What the ???
> 
> 
> What is in the water around here lately?
> ...


But he was in turn quoting my post which was about running a business, not doing the actual jobs


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## BamBamm5144 (Jul 12, 2008)

Oh my god. I can't take it anymore.

No wonder why everyone complains about the industry so much. No one is building an actual business, just happy working for themselves their whole life, until they can no longer physically do the work then ending up without a pot to tinkle in.


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## dom-mas (Nov 26, 2011)

BamBamm5144 said:


> Oh my god. I can't take it anymore.
> 
> No wonder why everyone complains about the industry so much. No one is building an actual business, just happy working for themselves their whole life, until they can no longer physically do the work then ending up without a pot to tinkle in.


No one is saying that. Do you think the CEO of any major company doesn't work? Of course they do, they work a lot, they have freedoms but they are still tied to their job.. Sure sell your business if that's what you want to do, but the comment about having a successful business that you aren't involved in much, yet you still make a good living, that's were I personally think you are wrong. And many here do not have sellable businesses. They have successful businesses but their business is themselves. 

And selling a business is not the only way to have money when you aren't able to work anymore. There are a thousand things to invest in while you are working that can provide you with an income when you are older


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## BamBamm5144 (Jul 12, 2008)

dom-mas said:


> No one is saying that. Do you think the CEO of any major company doesn't work? Of course they do, they work a lot, they have freedoms but they are still tied to their job.. Sure sell your business if that's what you want to do, but the comment about having a successful business that you aren't involved in much, yet you still make a good living, that's were I personally think you are wrong. And many here do not have sellable businesses. They have successful businesses but their business is themselves.
> 
> And selling a business is not the only way to have money when you aren't able to work anymore. There are a thousand things to invest in while you are working that can provide you with an income when you are older


When CEOs of major successful companies are done, they get a compensation package of millions of dollars.

A business isn't technically a business if its yourself. If you're out of work for a month, do you still bring in money through the company or does it just come to a complete stop? I know a few guys who got injured and their income was done for.

There's a exterior remodeling company here that does 4-6 million a year. The owner (after 10 years of being involved) now goes on vacation 3 - 4 months of the year with his family. No one knows when he's gone because things still operate smoothly because of systems in place.

How many guys here (I can think of maybe 3 who have at least said it) that invest in anything?


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## dom-mas (Nov 26, 2011)

BamBamm5144 said:


> A business isn't technically a business if its yourself. If you're out of work for a month, do you still bring in money through the company or does it just come to a complete stop? I know a few guys who got injured and their income was done for.
> 
> There's a exterior remodeling company here that does 4-6 million a year. The owner (after 10 years of being involved) now goes on vacation 3 - 4 months of the year with his family. No one knows when he's gone because things still operate smoothly because of systems in place.
> 
> How many guys here (I can think of maybe 3 who have at least said it) that invest in anything?


A one man show not being a business? News to me. 

That guy who goes on vacation 3-4 months of the year sounds pretty lucky to me and not the norm. 3 to 4 months without any hiccups because of systems seems farfetched. I'm guessing he has his phone with him at all times and that it rings often enough. If not he's probably losing a lot of money to his manager who is likely skimming huge amounts of money since the owner obviously doesn't have to sign any cheques.

i couldn't comment on what what other member do or do not invest in. I know dozens of guys who were one man shows all their lives and are now retired and are doing just fine. Not rich but just as comfortable as when they were working


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## BamBamm5144 (Jul 12, 2008)

A one man show is being self employed.


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## dom-mas (Nov 26, 2011)

Self employed business owner? So I have one employee, a helper, do I have a business? I think so, so does my bank and so does the gov. Could I sell the business, no, I could sell my equipment but that's it. Would it be any different if my helper wasn't around? No

I have a business just not a sellable business, and there are many like that. Not everyones goal


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## BamBamm5144 (Jul 12, 2008)

dom-mas said:


> Self employed business owner? So I have one employee, a helper, do I have a business? I think so, so does my bank and so does the gov. Could I sell the business, no, I could sell my equipment but that's it. Would it be any different if my helper wasn't around? No
> 
> I have a business just not a sellable business, and there are many like that. Not everyones goal


Technically yes you are a "business".

Now let me ask, I assume you're the sales guy for your business. Do you pay yourself a commission after each sale?

When working on the job sites, do you pay yourself an hourly wage?

When working in the office do you pay a hourly wage?

After paying that, do you still collect a weekly salary just for being the owner

When all that is done, did your company still profit?

If you do all that, then you're ahead of 90% of the one man shows. Most of them think if there's $500 left after a job, that's all they made. If they were smart, they would realize after all the hours put in, they'd be better off an employee.

Since most don't, that's what makes it harder for businesses with those things. I want to bash my head after I read someone's ad that says "no salesman commission here, owner quotes the work".


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## Jaws (Dec 20, 2010)

BamBamm5144 said:


> Technically yes you are a "business".
> 
> Now let me ask, I assume you're the sales guy for your business. Do you pay yourself a commission after each sale?
> 
> ...


We pay ourselves a salary, pay our hands a wage. End of the year we take share holder distribution and invest the rest into the company (operating capital or equipment). I make a good living, and more importantly, I am saving for future investments that will allow me to pick and choose what I do when Im old. 

I have a line item on my bid sheet for estimates. I just dont pay myself the commision.


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