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Small contracting businesses typically sell for 2 to 3 times their Seller's Discretionary Earnings (SDE). A shop netting $150k is worth roughly $300k to $450k.
To get commercial maintenance contracts, pitch facility managers with preventative schedules that stop costly downtime. 3 contracts can cover base overhead.
When comparing commercial vs residential electrical, the difference comes down to cash flow. Commercial offers $100k+ contracts with Net-60 terms, while residential yields 45% margins paid immediately.
A healthy general contracting business should aim for a 30% to 40% gross profit margin and a 10% to 15% net profit margin after paying the owner's salary.
To learn how to subcontract work out profitably, general contractors must apply a minimum 20% margin to every sub-bid to cover liability and warranty risks.
To scale a contractor business from $80k to $300k, you must stop swinging the hammer, delegate admin work, hire a lead tech, and shift to sales and management.
The exact moment to switch from sole proprietor to LLC is when your net profit hits $80,000. Operating as a sole prop beyond this costs you $6,000+ in taxes.
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