Taking steps now to build wealth through your plumbing business can help when you’re looking for an exit strategy in the long term
You might be good with your tools, but can you turn profit into wealth? Being a plumbing business owner can be the key to future financial health, but only if you think strategically. You already know how to be a plumber. To succeed, you need to think like a strategic business owner.
Every plumbing business owner can think ahead to next year or the year after that, but what about 10 years down the road? Developing a long-term exit strategy is vital to establishing a secure future for yourself. Once you’ve started a business, you’ll eventually want to get out of it. Figuring out your financial goals for when you sell the company will let you develop a map to get to the finish line.
Reach financial security
Financial success takes more than plowing all your profits back into your company. If you’re not using your business to better your personal financial situation, you’re selling yourself short. As a strategic business owner, the best way to grow personal wealth is by using your plumbing business as an investment engine. Once you’ve met the operational and strategic investment needs of the company, you can begin using excess profits to invest in yourself.
What is wealth-building?
Once the basic needs of the company have been met, a business owner can start setting aside a portion of profits to invest in their own futures. This could be by making outside investments or funding a retirement plan. One option would be for the business owner to finance the purchase of rental properties through the income from the company.
Don’t lock all those funds inside the company. You have a life to live. Transferring a portion of the profits outside of the business and into an investment vehicle will benefit you personally. Your current success can be the means to ensuring you have a happy life that is financially healthy after you’ve left the industry.
Franchising as an exit strategy
In addition to investing in yourself directly, another method to build wealth is by maximizing the value of your company for its eventual sale. Although you might have a long-established and well-regarded local business, you have to consider what would make it most attractive to buyers. Brand matters, and your company may not have the name recognition and market share you think it does. By converting your existing plumbing business to a franchise, you can capitalize on the franchise’s established brand recognition. Having that broader recognition will help increase the resale value of your business when it’s time to exit.
The advantages of franchise systems
A franchise can bring you more than just a recognizable name, though. The best franchises provide their partners with extensive back-end business processes that help them succeed. When it comes to wealth-building, the owners of many plumbing companies do not have a sufficient grasp of important business metrics to truly grow the business. The financial systems provided by a franchisor can change that.
A successful franchise is more than just a name. It means comprehensive support operations for marketing and sales, finance, operations and management. These systems give the franchise partners tools to increase the financial stability and profitability of their businesses.
If you’re thinking about your future, joining a franchise can be a wise way to help future economic security. You can position your company to sell for maximum value when the time comes and you’re ready to exit. A long-term wealth creation strategy pays off in the end.
About the Author
Jeff Moody is president of bluefrog Plumbing + Drain, one of the fastest-growing plumbing franchises in the U.S.