I've been at this plumbing business for 52 years, started with my Dad at 12, now at 64, I'm looking for a gracious way out the exit. How have you experienced guys gone through it? Thanks for any thoughts!!

By the way, I'm loosing many customers to death, selling their houses, but still working for 3rd generation family's.

I hate to give up on them, but my body is failing me, just don't know how much I can go on.

We are headed that direction, too...no advice as yet beyond having the 401(k) in place and searching for a buyer for the biz. I’ll be watching this thread with interest.

Haven't even thought about selling the business. How would I do that when my name is the business?

quote:

Originally posted by wreckdiver:
Haven't even thought about selling the business. How would I do that when my name is the business?

The answer to that depends on your type of business structure and local business laws. There are solutions to nearly every situation though.

You'd basically be selling your customer list. Probably doesn't seem like a fair value for all the loyalty (both ways) and goodwill you have built over the years, but reality is reality. I hope you have a fair amount of money saved for your post-earning years.

If you are still a few years out, you might consider trying to hire/mentor a successor who will come to appreciate what the business is actually worth, and will take it over from you, paying you for it on an installment basis. Of course, the time to do that was 20 years ago, but it is a tried and true succession plan, usually to a child. Finding the right person would be the tough part.

quote:

Originally posted by architect:
You'd basically be selling your customer list. Probably doesn't seem like a fair value for all the loyalty (both ways) and goodwill you have built over the years, but reality is reality. I hope you have a fair amount of money saved for your post-earning years.

If you are still a few years out, you might consider trying to hire/mentor a successor who will come to appreciate what the business is actually worth, and will take it over from you, paying you for it on an installment basis. Of course, the time to do that was 20 years ago, but it is a tried and true succession plan, usually to a child. Finding the right person would be the tough part.

Agreed!! I would love to turn it over to family, but I only ended up with girls

Also in the plumbing, sewer and drain business. Started on my own back 25-30 yrs ago.
I have been slowing down as well. I'll be 68 this summer.
I have had some of the same customers since I started.
I got rid of all the rental and apartment stuff. Less head aches and stress. No more crawl spaces, no roof work.
I do the work I want to do and tell others I am retired.
I plan to work for a few mores years as long as I am healthy.
I tell people I am "practicing retirement"

First you have to come to the decision that you "are" going to give it up. Thinking about it is something completely different.

Once you make the decision stop taking on more work. Give your precious customers notice in case they need your services one last time.


If you do not have a buyer for the business. Hard assets. Then advertise. You are not obligated to provide a customer list. You can advise your customers who to contact if you wish.

That is about it.

The rest of it is pretty much common sense.

It is not uncommon for guys like yourself to keep their license and do small jobs when you feel like for friends and really, really good customers.

I definitely plan on keeping on smaller and smaller stuff, that's what I have been doing for the last 5 years. The shutting it off is what I'm concerned about. Right now, I just try to do small stuff, water heaters, boiler replacements are the biggest things I do.

I just hate giving up on these great people!!

Re-read my first sentence. You are not there so just carry on and don't sweat it.

He’s right, you know. ^^^^

Per the previous posts, yes, you are selling your customer list, but also your goodwill. It can mean a lot to a previous customer to know that you stand behind whoever buys your biz. As mentioned, it’s an idea to get it appraised, and put it out there.
Another idea that we keep returning to, is just continuing on and doing it til we don’t want to anymore, then just flipping off the lights. The complicated part would always be the details of closing a business entity with the state and federal. No harm in doing want you want for as long as you can.

Our family plumbing business started in 1926. My Dad first cut off all commercial work in his 50’s and slowly trimmed back to just small repair work. He struggled with ideas on selling...he had multi-generational customers and a high level of pride in his work. He could not find anyone he felt was suitable to take over, sold off his stuff and retired. That’s just how he was. I asked him about it 10 years later and he had no regrets.

I’m not sure how much a list of customers would go for, but I can say we had had something similar happen to us as a customer and we did not elect to use the new persons services...so that customer list would need to be pretty fat in order to offer the buyer a worthwhile retention ratio and command the type of money to make a material difference in my lifestyle.

All that being said, that was over 20 years ago. Personally, I’d test the water on what I could get for my business and if I found I could get an acceptable amount, I’d probably do it and then notify my customers of my retirement and they can vote with their dollars as whether or not to keep the new guy.

Just one thing to consider. You are 64, not sure of your wife's age but I would strongly consider waiting until you are both 65 so you can get Medicare. Private health insurance is extremely expensive! Even Medicare is not free especially when you add a supplemental policy! Just be aware and check prices!

My dad sold his plumbing business in the mid 80s, he partnered with the hvac guy who rented space from dad, taught the guy and his brother everything and helped them get their license, he started about a year out from our projected move to NC.

Last year dad decided to retire, he had migrated into low pressure sewage systems and community water systems. He sold his contract with e-one pumps (sewage) to a guy in the area, and just refers callers to him. With the low pressure and water testing etc, he knew others in the business and just handed over the calls to Dan.

Dad still goes to “work” every day, but he helps Dan run the business and doesn’t really do any labor anymore. Dan pays my dad for the business monthly and my dad is still seen on jobs or in the office so the old customers hear from him and know Dan is taking over. I’m sure that will taper off eventually.

Sounds similar to what my situation was for retirement.

I was a consulting engineer, selling my expertise and reputation. Sounds like the OP is doing the same.

That being the case, you may or may not be able to make much money selling the company.

When I decided to sell my business after 23 years I looked at my competitors. One of them bought me out. I would also ask venders if they know of someone. You can try brokers but they may not give it the effort you want them too. I'm assuming that you have been saving for this day. When we pulled the trigger we went over our finances at least 100 times and it always looked like we could do it. Even so we walked on egg shells the first year not knowing we would make it. If you have done the math it is probably right! Good luck

Jim

quote:

Originally posted by Boat Fun:
Just one thing to consider. You are 64, not sure of your wife's age but I would strongly consider waiting until you are both 65 so you can get Medicare. Private health insurance is extremely expensive! Even Medicare is not free especially when you add a supplemental policy! Just be aware and check prices!

not necessarily true (depending on you location)

price out policies on healthcare.gov

the recently passed stimulus bills made the private insurance even cheaper (removed the 'subsidy cliffs')

https://www.forbes.com/sites/d...sts/?sh=2ae16e571fe5

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Wreck,

A question: Do you need to get money out of the sale of the business in order to retire comfortably? Or are you just worried about cutting off loyal customers you've had for decades?

It's always complicated for owners of a service business to pass on the business.

First question - do you have a true customer list? If yes, then you have something of value. At a minimum you can send customers a letter (or email) that you've sold the business.

If you don't have a list (and rely on calls for service appointments) you can either sell the phone number or you can book appointments for one or more other companies and get some sort of commissions.

Or, follow the advice above and find someone that you can work with for a few years. If you like the person they can buy you out. Advantage, they can help you on current jobs and your customers will met them and hopefully like them. (This is the approach our heating/air conditioning guys are taking)

It was more complicated than this explanation sounds but...

I just walked away and turned it over to the oldest/best employee.
I gave him the service van he had been working out of outright and since he didn't have the resources to purchase the remaining tools or shop building I just let him use them as needed so he could make a living. In return our customers... many long time and loyal... didn't get left out in the cold.