There are many different types of businesses that fall under the category of building maintenance, such as property restoration, gas and electricity inspections, plumbing services, kitchen fitting, and so on. This means there are plenty of opportunities for entrepreneurs looking to buy a building maintenance business.
There are also specialised services, which could include locksmiths, pest control, oven cleaning, lawn care, energy efficiency solutions, etc.
There are also different sectors within building maintenance that you should consider before making an offer on a business; these include corporate, domestic, education, hospitality, retail and social housing. This article will inform buyers of the current growth and performance of these sectors; provide a checklist for buyers considering a business proposition and highlight what to consider during due diligence.
A buyer’s profile
If you have prior experience in a specific field, you may consider buying a business that suits your existing skills. For example, if you’ve completed a plumbing apprenticeship, consider extending your abilities and complete relevant training courses and NVQ qualifications.
As well as the necessary skills, you need to have the physical ability and manual dexterity to be able to manage the workload. Even if you intend to take on a managerial position, you will still need to get your hands dirty when you first take over the business.
You will need to have general entrepreneurial qualities such as financial management, communication and marketing skills. If you lack the confidence and know-how of training your team and delegating tasks, then consider attending a business management course.
Finance and statistics
There was a slight 0.1% decrease in the repair and maintenance sector as a whole in the last quarter of 2019. This was driven by an almost 3% drop in private housing maintenance; whereas the non-housing sector grew by 1.6%, and social housing repairs rose close to 1%.
There has been an increase in construction output for private commercial properties and new public housing; however, no there is no growth for newly-built private homes. There are also a large number of homeowners who carry out improvements themselves to cut costs.
Some vendors may offer financing options, which is when the seller offers you – the buyer – a loan to cover a portion of the business cost. A buyer is usually required to make a down payment, which is typically one-third of the sale price after a deal is made.
If you require financial assistance to buy a business, weigh up your options carefully as there are many routes. If you opt for debt financing, you have the choice of applying for a secured or unsecured loan. You may consider a commercial mortgage, asset finance, or combination loans.
What to look for in a business
Reputation is important in the building maintenance industry, find out how many years the business has been operating and the performance/growth rate, particularly over the last three years. You should also establish whether you will be taking over any regular contracts.
Request a comprehensive list of what assets will be included in the sale; these can be both tangible assets, such as machinery, equipment and materials; or intangible assets such as branding, goodwill and contracts.
Shadowing the current business owner for a few weeks is hugely beneficial as it allows you to
evaluate the current infrastructure and operations. You can then determine what aspects should be improved, and assess the performance of individual employees.
You should consider how much time and money you will save if you buy a business with a fully-trained and reliable team. Find out whether the seller is opening up shop elsewhere and taking any employees with them? Who are your main competitors are within a 10-mile radius?
You will need to investigate key figures and potential issues thoroughly before making an offer. Due diligence involves studying historical trading figures, expenses, profits, future forecasts, financial risks, legalities, safety measures, contracts and potential deal-breakers.
Find out if the business has any liabilities or debt that you will be taking on. Outstanding debt is an indicator of high-risk and instability; however, if you’re a seasoned buyer up for a challenge, buying a failing business means you have the upper hand during negotiations.
Hiring an accountant to assist with due diligence is advisable; they will highlight any potential red flags, request information that may have been omitted and check for consistency with the seller’s income statements, balance sheets, accounts receivable and gross profits.