What's Wrong With This Ad?
[Ad]Great for new start-up or experienced plumber looking for growth. Successful well-known one-man business operated for over 30 years. Over 3,300 customers.$35,000
average gross annual income 1997-2000. Entire database with name, address, phone number and job
30-Year Active Plumbing Business for Sale
history. Established Pennysaver ad since 1970. Price includes
30-year-old phone number, 1988 van, all inventory and database.
Will assist in transition.
Price: $30,000. Call xxx-xxxx for this business opportunity. All serious offers will be considered.
Last month I wrote about the thrill of seeing my good friend, Jack Simonson, selling his business for millions of dollars at the tender age of 31. Now it's back to a reality check with an experience all too common to our industry.
The advertisement reproduced on this page came from an actual flyer sent to plumbing contractors on Long Island, N.Y., and relayed to me by one of my friends. First thing I did was call the number intending to speak with the proprietor.
I have a habit of counting phone rings out of curiosity to see how long it takes for anyone to pick up. This is a key element of customer service, and many companies in our industry allow it to ring far too long. This guy set a new record in my experience. First time I called, the phone rang 21 times before an answering machine kicked in. Twenty-one times! I don't know whether the machine was broken or this fellow programmed it to ring that many times before reaching a recorded message.
I called four more times and never could reach the fellow. The last time the phone rang 13 times. Some professionalism, huh?
There's no sin in operating as a one-man shop, and I understand how difficult it can be for a sole operator to handle calls when he is out on another job. My recommendation is to forward calls to a cellular phone that you either answer on the spot or return the call within minutes.
Some of my friends have objected that some customers get annoyed with the interruptions on their job, but I think you could turn it into an advantage. For instance, remind your customers that, as a flat rate contractor, they don't have to pay you for the time spent connecting with other customers. Also remind customers that you pride yourself on giving immediate, personalized service to all customers, and that you would give them the same courtesy if you were on a different job.
On the other hand, one look at this ad tells you that this plumber is one of our industry's many pathetic lost souls who views plumbing more as a rather expensive hobby than a business. Let's take a look at some of the selling points he seems so proud of:
- Successful, well-known, one-man business operated for over 30 years. This tells me he's up there in years, at least in his 50s and probably older. I suspect he's looking to retire, which is why he wants to sell the business. He regards himself as successful and well-known because of the next statement.
- Over 3,300 customers É I'll take him at his word that he has that many customers in his database. But is that so impressive for someone in business more than 30 years? It averages to a little more than 100 customers acquired per year. Doesn't seem very extraordinary to me.
Besides, if I were a prospective buyer of this business, I'd want a lot more detailed information about those customers before assuming them to be good prospects. When was the last time he did work for them? How often do they call him? Will they continue to call after he gets out of the business?
He claims to have "job history" recorded in his database, so the information may be present in some form. The biggest question, however, is how many people use this guy because he works cheap? The following statements suggest this is one of his major selling points.
- $35,000 average gross annual income 1997-2000. Here's a guy on Long Island - not exactly a part of the country with a low cost of living - and he thinks running a business that earns him $35,000 a year before taxes makes him "successful." Working as a one-man shop, he almost certainly has to put in at least 60-hour work weeks to earn that much. That's 3,000 hours a year. It computes to $11.67 an hour, with no overtime, and my guess is minimal if any health care or retirement benefits.
- Established Pennysaver Ad since 1970. Great. He gets calls from every penny-pinching price shopper around. Doesn't that make you want to rush out and spend 30 grand to buy this shop?
Bet he keeps busy, though. This fellow exhibits the common mindset of this industry that equates "success" with having plenty of work. Most small contractors simply can't understand that turning wrenches and hauling pipe and fixtures around for decades ought to entitle you to more than a bad back. I bet his customers love him, because he works at bargain prices, even though it doesn't afford him a decent living and some profits left over to build the business. Plumbing is not a business to these folks. It's more like an expensive hobby.
- Price includes a 30-year-old phone number, 1988 van, all inventory and database. The phone number is worth something, and so is the database, though probably not anywhere near the value he imagines. The 1988 van might be worth its scrap value, and I can just imagine what dazzling inventory he has on hand. It would probably cost more in manhours to sort it out than the material is worth.
- Will assist in transition. Oh, great, so the buyer can end up every bit as "successful" as the seller.
- Price: $30,000. I doubt there is enough value in the items listed above to justify paying this much money to take over the man's hobby. Oh, I suppose I'd be willing to part with a small fraction of his asking price for his phone number and customer list, but I'd pass on the Pennysaver ad, antique van and scrap pile he calls "inventory." I can think of a lot better ways to invest $30,000. Even if I were a young plumber looking to start my own business, I think I would be better off starting from scratch.
I guess success, like beauty, is in the eye of the beholder. But I am absolutely blind when it comes to seeing any success in this story.