At Mammoth Marketing for Plumbers, we’re dedicated to helping plumbing companies not just survive, but thrive – and ultimately, achieve their biggest financial goals. That’s why we were particularly interested in a recent conversation between our owner, Tyler Williams, and Patrick Lange of the Business Modification Group.
Patrick Lange is a highly respected business broker who specializes in the sale of heating, air, and plumbing companies across the nation. His unique expertise stems from his own experience running an HVAC company before becoming a broker. He recognized a significant gap in the market: while large corporations had ample resources for selling, small to mid-sized trade businesses often struggled to find accurate, actionable information. This personal insight led him to dedicate his brokerage to serving the trades, helping an impressive 148 business owners successfully navigate their exit strategies.
The inspiration for this conversation came directly from Mammoth Marketing’s own network. Tyler’s brother, Jared Williams, founder of Prospector Plumbing in Fairbanks, Alaska, worked closely with Patrick to sell his company. Having supported Jared’s marketing efforts from inception to sale, Tyler observed firsthand the significant mental and strategic shifts required to build a business designed for a profitable exit. This article distills key takeaways from that discussion, focusing on the essential mindset and practical steps every plumbing business owner should consider.
The Foundational Shift: From Technician to Entrepreneur with a Vision
One of the most critical insights Patrick Lange shared revolves around the initial mindset of many trade business owners. Often, they enter the industry as skilled technicians who, perhaps dissatisfied with previous employers, decide to venture out on their own. While this entrepreneurial spirit is commendable, it frequently leads to operating what is essentially a high-paying job rather than a true, sellable business.
Patrick emphasizes a crucial piece of advice for new and growing business owners: build with the intention to sell, right from day one. Many owners, he notes, get caught up in the daily operations and short-term financial optimizations, such as tax savings, without considering the long-term value of their enterprise.
The Peril of Short-Term Tax Savings
A common pitfall discussed was the practice of aggressively minimizing taxable income through creative accounting. While reducing tax liability might seem beneficial in the moment, it can severely diminish the perceived value of the business when it comes time to sell.
Consider this scenario: if a business owner re-characterizes $\$50,000$ in profit as an expense (e.g., personal vehicles or properties disguised as business costs), they might save a percentage of that in annual taxes. However, a plumbing business is often valued at a multiple of its actual profit—sometimes three to five times or more. By reducing reported profit by $\$50,000$, the owner could be sacrificing anywhere from $\$150,000$ to $\$250,000$ in the potential sale price. The math simply doesn’t favor the short game here; the lost equity far outweighs the tax savings over time.
As Patrick wisely states, “No one calls me and says, ‘Hey, I’d love to buy a business that I can work 15 hours a day in the truck and then come home and do paperwork for six hours.’” Buyers are looking for robust, independent operations, not another job. Therefore, constructing a business that operates efficiently and profitably, even without the owner’s constant presence, is paramount for maximizing its sale value.
Overcoming Growth Plateaus: The Power of Peer Support
Many plumbing businesses encounter a significant growth bottleneck after hiring a few employees. The strategies that worked in the early, lean stages often become unsustainable as the company expands. How does an owner effectively navigate these tricky transitions?
Patrick Lange highlights that success often leaves clues, and observing highly successful peers is one of the most effective ways to find them.
The Invaluable Role of Coaching and Industry Groups
Patrick has consistently observed that the most successful businesses he brokers—especially those exceeding $\$5$ million and certainly those over $\$10$ million in sales—are almost invariably part of best practices organizations or coaching groups.
Tyler Williams affirms this from his own experience, noting that joining an agency coaching group five years into his ownership was a transformative decision. These groups provide more than just tactical knowledge; they cultivate a crucial belief system. When an owner sees peers who have successfully scaled beyond their current challenges, it shifts their perspective and makes their own growth goals seem achievable. Moreover, these environments offer valuable shortcuts, as others have often already found solutions to common business problems.
Navigating the Loneliness of Entrepreneurship
Business ownership can be an isolating journey. The unique challenges faced by entrepreneurs often make it difficult to commiserate with those outside the business world. Engaging with fellow business owners provides a vital support network, offering understanding and relevant advice that general well-wishers cannot. This peer interaction is essential for filtering out well-intentioned but ill-informed advice and maintaining focus on strategic growth.
Key Growth Thresholds and Strategic Investments
Patrick identifies common revenue thresholds where plumbing businesses often face significant structural changes:
Around $\$1$ Million: This is typically the first major hurdle. Owners must transition from being the primary technician to a manager or CEO, delegating tasks and empowering others to take on responsibilities previously held solely by them.
Around $\$3$ Million: At this stage, businesses often need to introduce more management layers. This can temporarily impact profitability as resources are invested in non-revenue-generating roles.
Around $\$5$ Million: Companies can reach this level through sheer hard work, but often with employees and the owner working excessive hours in a state of “constant chaos.” Investing in operational managers, general managers, or service managers at this point, while initially reducing net profit, is crucial for establishing scalable systems.
These management hires are not immediate revenue generators; they are strategic investments that build the infrastructure for future scalability. While the initial dip in profitability can be disconcerting, maintaining a long-term perspective is vital for pushing past these plateholds and ultimately achieving greater success.
Empowering Your Team: The Path to a Self-Sufficient Business
One of the most persistent challenges in the trades is the owner’s reluctance to delegate, often stemming from a deeply ingrained perfectionist mindset about their craft. The sentiment “nobody can do it like I can” is common, but it severely limits growth and makes the business overly dependent on one individual.
This over-reliance on the owner is a critical flaw when it comes to selling. A business that cannot function without its founder is inherently less valuable to a potential buyer.
The Owner as a Master Trainer
A powerful alternative perspective is for the owner to transition from being the sole “doer” to becoming the master trainer. Patrick recounted the story of an owner who, disliking the administrative and operational burdens, deliberately grew his company to a size where he could hire others to manage those functions. His new primary role? Training new technicians, instilling in them the high standards and passion for the craft that he held dear. This allowed him to maintain quality control while divesting himself of the tasks he disliked, transforming his work life into something he genuinely loved.
This strategic shift underscores the importance of self-analysis for business owners: identify your strengths and passions, and then hire people who genuinely love the tasks you dislike. This creates a balanced, efficient team and builds vital safeguards into the business.
The Cost of Neglecting a “Plan B”
Patrick shared poignant real-world examples of owners who failed to implement these safeguards. He described two instances this year where business owners, on the cusp of selling, passed away unexpectedly. In one case, because the owner was the sole license holder and the business was entirely dependent on him, his family lost significant negotiating leverage, and the company faced immense challenges in staying afloat during probate.
Conversely, a more prepared owner, who had already delegated extensively and established a strong management team, experienced a serious health crisis. His business not only continued to operate smoothly during his six-month absence but actually saw increased revenue. This level of operational independence made his company highly attractive to buyers, resulting in a significantly more favorable sale.
Building a business that can run independently is not just about maximizing sale value; it’s a responsible act that protects the owner, their family, their employees, and their legacy.
Your First Step to a Lucrative Exit: Know Your Business’s Worth
For any plumbing business owner contemplating their future—whether they’re just starting, looking to grow, or actively planning their exit—Patrick Lange’s most crucial piece of advice is straightforward: get a professional valuation of your business.
Many owners operate with unrealistic expectations of their company’s worth, often influenced by anecdotal stories or vague industry benchmarks. A formal valuation provides a clear, objective baseline—a “scorecard” that reveals the current financial health and market value of the business.
As we often say at Mammoth Marketing, “What doesn’t get measured doesn’t get improved.” Establishing this baseline is the indispensable first step toward any strategic planning. It allows owners to understand the gap between their current value and their desired exit value. For a 35-year-old, this knowledge provides a clear roadmap for the next few decades of growth and investment. For a 65-year-old, it provides a realistic picture, prompting necessary (though sometimes difficult) decisions.
Patrick passionately dedicates his time to educate owners, aiming to have fewer “Your Baby’s Ugly” conversations—those difficult moments when an owner discovers, late in their career, that their life’s work isn’t worth what they imagined.
Ready to Build a Plumbing Business You Can Be Proud Of (and Sell)?
Understanding your business’s value and building it for long-term success, including a profitable exit, is crucial. For a professional valuation and expert guidance on selling your trade business, Patrick Lange and the Business Modification Group are an invaluable resource:
Website: Find them at Businessmodification.com
YouTube: Search for Patrick Lange on YouTube for extensive video resources on buying and selling trade companies.
At Mammoth Marketing for Plumbers, we specialize in creating marketing strategies that not only drive immediate leads but also build a strong, recognizable brand and a robust customer base—elements that significantly enhance your business’s appeal and value to potential buyers.
If you’re ready to explore how strategic marketing can help you grow your plumbing business and enhance its long-term sellability, we invite you to schedule a consultation with our team. Visit us at https://mammothforplumbers.com/ today and let’s start building your legacy!
