How do I read a plumbing company’s mix of service, renovation and new-construction work?

Two plumbing companies can bring in similar revenue and be very different businesses. One answers service calls all week. Another installs plumbing for builders on new houses. When you read a seller’s financial summary, ask for the revenue broken out by type of work. The mix tells you how steady the business is and what you would be running.

Service and drain calls

This is the work that comes from homeowners and property managers who phone when something breaks. It tends to spread across many customers and to be paid at the end of the visit. It also depends on dispatch, reputation and being reachable. Ask how customers find the company and how many come back.

Renovation jobs

Renovations are larger and scheduled, often for homeowners, designers or general contractors. Ask how quotes are prepared, how change orders are handled and whether deposits or progress payments are used. Look at how many jobs ran over and who absorbed the cost. Ask how much of the work comes through referrals and how the owner tracks that.

New construction with builders

Builder contracts can fill a crew’s calendar, but they usually depend on a few clients and on the building cycle. Ask how long the company has worked with each builder, whether there are written agreements and how payment timing and any amounts held back work in practice. This page on whether a business can be sold when the owner is the only plumber shows how one person can sit behind the whole mix.

Put the mix beside the crew

Finally, match the work to the people. A crew built for new construction may not suit emergency calls. Your accountant can help you read the statements, and the trades buyer checklist lists other items to ask for.