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When it comes to business growth, most owners face a tough decision—should they scale their business for long-term profitability, or build it up for a potential sale? In the latest episode of The Site Shed, host Matt Jones sits down with trade business mogul Tom Howard to dive deep into the strategies that make a business not only successful but also valuable to buyers.
Tom, a seasoned entrepreneur and Vice President of Customer Experience at Service Titan, has built and sold multiple businesses in the trade industry. In this conversation, he unpacks the core principles of growth, acquisition, and long-term sustainability, helping business owners understand the crucial elements of their next big move.
Understanding Business Growth for Profitability or Sale
The conversation kicked off with a discussion about what makes a business truly valuable. Tom emphasised that many business owners focus solely on day-to-day operations, but when it’s time to sell, they realise they haven’t built something attractive to buyers.
He shared a crucial piece of advice: “Run your business as if you’re going to own it for another 10 years.” This mindset shift ensures that whether you choose to sell or retain your company, you’re in a strong position.
A few key factors play a role in making a business valuable for acquisition:
- Efficiency in Operations: Buyers look for businesses that run smoothly with minimal owner intervention.
- Consistent and Scalable Profits: A company showing steady growth is far more attractive than one with fluctuating revenues.
- Strong Management Team: Businesses that rely too much on the owner often struggle during transition.
Tom pointed out that many business owners only start taking their company seriously when they think about selling it, but in reality, that mindset should be present from day one.
How to Make Your Business Attractive to Buyers
The biggest mistake that business owners make, according to Tom, is trying to cut costs in ways that hurt their company’s growth potential.
He provided an example: If you move to a smaller office space to save $500 a month, but it limits your ability to expand, you might be losing more than you’re saving. Instead, the focus should be on maximising efficiency and increasing the value of your business.
Key areas that make your business more attractive to buyers:
- Documented Systems & Processes – A business that runs on documented procedures rather than the owner’s memory is more appealing to buyers.
- Scalability & Growth Potential – A company with room to grow is always worth more than one that has peaked.
- Recurring Revenue & Customer Loyalty – Businesses with repeat customers and subscription models are more stable for future buyers.
Tom also touched on private equity buyers, explaining that they often seek businesses that demonstrate strong financials, clear operational efficiencies, and a repeatable success model.
Optimising Costs Without Compromising Business Growth
One of the standout moments in the episode was Tom’s approach to cost-cutting versus smart investments. Many business owners think that reducing expenses is the key to making their business more profitable. However, Tom argues that blind cost-cutting often does more harm than good.
Instead, he recommends:
- Auditing existing expenses and eliminating unnecessary ones, like underutilised software tools or redundant staff layers.
- Investing in efficiency, such as centralising warehouse operations or leveraging automation to reduce admin overhead.
- Evaluating payroll structures to ensure you’re not overpaying for tasks that could be outsourced or streamlined.
A great example Tom shared was how he hired a night-time warehouse worker at minimum wage to clean and restock company vehicles instead of having expensive field technicians do it on overtime. This saved thousands in labour costs while improving efficiency—a win-win scenario.
Another key takeaway? Not all spending is bad spending. Investing in the right areas—like upgrading office space for growth, hiring key personnel, or implementing better software—can make a business far more profitable in the long run.
Key Takeaways
- Think like a buyer, even if you’re not selling. Running your business with efficiency and profitability in mind ensures you have strong options in the future.
- Cutting costs doesn’t always equal success. Focus on optimising processes rather than slashing essential expenses.
- Build a business that doesn’t rely on you. Buyers want a well-structured company that can run smoothly without heavy owner involvement.
- Systems and processes increase value. A business that operates efficiently is far more attractive to potential buyers.
- Invest in the right areas. Growth-driven spending is often smarter than extreme cost-cutting.
Conclusion
Whether you’re planning to sell your business or keep it for the long haul, the principles shared by Tom Howard in this episode are invaluable. By focusing on efficiency, smart investments, and long-term growth, you can ensure your business remains profitable and attractive—no matter what your future goals may be.
If you’re in the trade industry and want to hear the full conversation, be sure to check out this episode of The Site Shed podcast. And if you’re keen to optimise your business for success, consider implementing some of Tom’s proven strategies today.
Ready to dive deeper into these topics? Don’t miss out on our full podcast episode with Tom Howard. Click the button below to start listening!
Resources:
- Part 1 – From $1.5m to $100m in 12 years. Meet Tom Howard – https://youtu.be/SfkKE1dj8EQ
- Part 2 – What is the process for buying or selling? How long does it take. – https://youtu.be/VOlUgUFbyEk
- Part 3 – Pay plans to drive performance when marching toward a sale. – https://youtu.be/9yrbSvGMWfs
- Part 4 – How to grow your business for a potential sale or to retain profit. https://youtu.be/eK2RrnznzSY
- Get the Acquisition Guide for FREE at https://www.howarddeals.com
- ServiceTitan’s World of Titans Event – https://bit.ly/WorldofTitansAU
- Website: https://www.howarddeals.com
- Social: https://www.instagram.com/howarddeals
- Email: [email protected]
- 🛠️Ready to bring AI into your trade business? Discover the future at tradiehub.net!
- Join a global community of 6000+ trade professionals https://www.facebook.com/groups/TheSiteShed
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