How to increase your construction company business profitability and business value

My friend Victoria Downing at Remodeler’s Advantage recently posted a video on a simple tool that improves business profitability and business value when used by construction contractors, subcontractors, material suppliers, engineering firms and re-modelers.  The tool is an annual budget.  While Victoria specializes in residential remodelers the principle applies to all construction contractors (really all businesses).  Click here to watch this short video now.

Want to know more about building value and selling your construction company – Click here to download a 20+ page e-book. 

Gregory Caruso, JD, CPA, CVA
Harvest Business Advisors
Business Brokers, Business Valuations, Succession Planning


How Your Balance Sheet Affects Your Business Sales Price and Business Value in Merger and Acquisition Transactions

Or, In Business Planning such as: Business Mergers and Acquisitions, Business Valuations,  M&A Business Valuations, Exit Planning, Succession Strategies, Business Strategic Planning, Business Brokerage, for Companies Such As, Construction Contractors, General Contractors, Engineering Companies, Sub-contracting Companies, Distributors and Supply Houses, Service Firms, how your balance sheet will affect your ultimate business sales price.

Connect with Harvest Business Advisors today – email or call 443.334.8000

 We mainly focus on the income statement in order to determine earnings and company value.  But your balance sheet is an essential component of any transaction.  This article will briefly address how your balance sheet impacts your business market value in the sales process.

 A strong balance sheet can keep you in business in tough times.  That can be true in business sales also.  After all, if you are running out of cash or have had a loan called – how strong is your negotiating position?

 When selling any business the theory is that the buyer should get the assets necessary to produce the income that they are buying.  These assets may be trucks but they may also be cash and receivables (working capital).  Just like when you sell your house and pay off your mortgage (whether it is more or less than the sales price) debt will be paid off by the seller out of the sales proceeds or at least count as part of the sales price. 

 General balance sheet tips – Have cash.  Manage accounts receivable.  Try to collect as rapidly as possible.  Put systems in place to collect.  This includes making sure your requisition package is complete, all insurance certificates are current and whatever else is required.  Keep inventory as low as possible.  Do you really have savings after handling, storage, loss, etc. from buying in bulk?  The squeaky wheel does get the grease.  Manage accounts payable.  You must pay but do your best to obtain extended terms when possible.  Keep bank debt to a minimum if possible.  I was once told and the saying has never failed me, “A banker is someone who gives you an umbrella and when it starts to rain asks for it back.”

 Have lines of credit but do everything you can to not NEED to be in them.  Keep physical assets in good repair but do not overinvest in the 3-2 years before a sale.

 If you have real estate owned by your company (review with your advisors then in 99% of the cases) get it into a stand-alone entity now.

 In this time of low profits and high receivables many businesses – particularly many contractors are worth more dead than alive.  Namely many contractors have more due to them in accounts receivable than the value of their company.  A market buyer will not give them a price as high as the accounts receivable.   An uncomfortable place for any owner to be.

In summary, maintain a strong balance sheet with plenty of current assets and working capital in order to strengthen your negotiating position in a business sale and tide your company through any short term rough waters. 


 Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver the highest price in the smoothest sale transaction possible. Harvest provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.


Construction Contractors, Sub-contractors, Engineering, Specialty Trade Firms Growing Fast, Work On Succession Plan or Exit Strategy Now

Construction, Sub-contracting, contracting, engineering, specialty trade contractors etc. are again the fastest growing small businesses.  Owners of these cyclical businesses should start planning for their succession plans and exit strategies while the economy is supporting growth. A time of growth is a great time for mergers and acquisitions, M&A – as either a buyer or a seller.  After the difficulties of the last four or more years now is the time for construction contractors and related engineers, specialty trades, supply houses and the like to both grow and work on their succession plans, exit strategies, and begin the M&A or business sale process.

Cat Clifford, small business expert at Entreprenuer Magazine, says that Sageworks did a study and found the below list to be the fastest-growth industries.

She writes, “Past performance is no guarantee of future results, as the old business truism says. But you also may have heard that you can’t know where you’re going without knowing where you have been.”

Time to Sell Your Construction Business? Please click here to download the e-book, “A Contractor’s Guide to Succession Planning”.

Fastest-Growth Industries for U.S. Small Businesses in 2012

1. Residential building construction: 14.77 percent
2. Building custom software and servers for businesses: 14.29 percent
3. Machinery, equipment, and supplies merchant wholesalers: 13.75 percent
4. Management, scientific, and technical consulting services: 12.31 percent
5. Architectural, engineering, and related services: 11.40 percent
6. Foundation, structure, and building exterior contractors: 11.37 percent
7. Building finishing contractors who make additions, alterations, maintenance and repairs: 11.32 percent
8. General freight trucking: 10.41 percent
9. Services to buildings and dwellings, including pest exterminators, janitorial services, and landscaping: 10.11 percent
10. Other specialty trade contractors, including site preparation activities and other specialized trades: 10.04 percent

To see Cat’s article, Click here

Connect with Harvest Business Advisors today – email or call 443.334.8000