Build to Sell: Cashing Out on Your Plumbing Business with Patrick Lange
Hey everybody, Tyler Williams here, the owner of Mammoth Marketing for Plumbers—you can find us over at https://mammothforplumbers.com/!
I’m stoked to share this conversation with you because it touches on something that most business owners, especially my fellow folks in the trades, don't think about until it's almost too late: cashing the check at the end.
On my last podcast I spoke to Patrick Lange of the Business Modification Group. Patrick is a business broker who specializes in the sale of heating, air, and plumbing companies nationwide. He’s seen it all—from the businesses that are an absolute dream to sell to the ones that… well, let’s just say he’s had to deliver the tough news.
Patrick got into this specialized brokerage after running his own HVAC company. He realized something crucial: when he was trying to sell his business (which was under $\$2$ million in sales), accurate information was a nightmare to find. If you’re a giant doing $\$20$ million or $\$30$ million, people line up to help you. But for the small to mid-size guys like a lot of you, finding the right help is a real challenge. That's why he decided to dedicate his business to helping the trades.
He’s now helped 148 people cross the finish line and sell their businesses. That’s an incredible track record!
The way Patrick and I connected is through family: my brother, Jared Williams, owned Prospector Plumbing in Fairbanks, Alaska, and Patrick helped him sell it. Since I was Jared's marketing guy from inception to sale (he definitely got the nepotism discount on my help early on!), I got a front-row seat to the entire journey. What I saw was more than just setting up SOPs or checking off a tactical list. I saw a huge mental shift in Jared.
And that, my friends, is what I really want to dive into: the brain space required to build a business that someone actually wants to buy. It's not just about the numbers; it's about the mindset.
The Crucial Mindset Shift: Building a Business, Not Just a High-Paying Job
When I asked Patrick what mentality he sees people missing in the beginning, he nailed it: most people in the trades didn't have formal business training. They got a license, hated their boss, and went into business for themselves.
In the beginning, it's just a job. A high-paying job, thankfully, but still just a job. The owner is essentially a highly paid technician.
Patrick’s biggest piece of advice to younger folks is simple: from day one, build a business to sell.
The vast majority of owners start off with the dream of being self-employed, and they never think of cashing the check at the end. Instead, they focus on things like how to save on taxes.
This brings us to a huge, often-fatal mistake:
"Running a business to save taxes and running a business to sell are two different businesses."
🎯 The Math Just Doesn’t Work Out
When you start to get “creative with accounting”—expensing everything from the ex-girlfriend's beach condo to your Porsche payment—you’re doing yourself a massive disservice when it comes time to sell.
Let’s say you re-characterize $\$50,000$ of profit as an expense. If you're in the top tax bracket, you might save $37\%$ of that in taxes—around $\$18,500$. That's some decent savings, sure.
But when you sell a profitable trade business, it might go for a three to five times multiple of its profit. You’re potentially giving away five times $\$50,000$, or $\$250,000$ in sale price, to save $\$18,500$ in taxes.
The math doesn't work out. It's a classic case of playing the short game versus the long game. You’d have to save taxes for many, many years to make up the difference in the lost sale value.
“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.’ It doesn't happen.”
The other fatal flaw? The "Chuck in a Truck" scenario. You’re making great money, maybe a couple hundred thousand a year, but if you don't show up, there’s no income. When Patrick asks people, "Would you buy your business?" the answer is often a resounding "No!"
You have to build a business that someone else would want to buy. Even if you never sell it, running a sellable business is far more profitable and fun than slaving away in a job you created for yourself.
Breaking the Bottleneck: Getting Out of Your Own Way
A common point in the growth journey is when a contractor, working from a truck, hires two or three people and then hits a bottleneck. What worked at a small scale suddenly stops working.
How do you break this pattern?
Patrick’s advice is spot on: Success leaves clues.
Surround Yourself with Success
The most successful companies he sells—especially those over the $\$5$ million and definitely over the $\$10$ million mark—are almost always part of a best practices organization or a coaching group.
I can confirm this from my own experience! I didn't join an agency coaching group until five years into owning my business, and it was one of the best decisions I ever made.
It’s not just about the tactical "how to do it" stuff. It's about the belief. When you’re stuck working in your own box, it’s hard to imagine something different. But when you’re in a room with people who were in your exact position last year and are now doing double or triple your revenue, it suddenly becomes believable. And frankly, it’s a shortcut—they’ve already solved the problems you’re facing!
The Loneliness of Ownership
We also talked about how being an owner can be incredibly lonely. Your problems are different from everyone else's. You need to be around other "nut jobs" like us who decided to be self-employed! Getting into those groups gives you people to commiserate with and, crucially, to help you filter advice. Sometimes you have to realize that a well-meaning friend or family member just doesn't have the perspective to give you good business advice.
The Million-Dollar Hurdle
Patrick sees three common sales-volume thresholds where owners get stuck:
Around $\$1$ Million: This is the first and often hardest hurdle. The owner does everything, is always in the van, and answers their cell phone at all hours. They have to stop being just a technician and become a CEO.
Around $\$3$ Million: This is where you usually have to bring in more layers of management. Profitability often drops temporarily as you invest in people and infrastructure.
Around $\$5$ Million: Companies can get here on sheer force, but everyone is running ragged—a "constant chaos." When they finally bring in management like a General Manager or Operations Manager, the numbers drop drastically (e.g., from $20\%$ net to $10-12\%$ net) because these roles are an expense, not an immediate revenue generator.
Most people freeze here and fall back, reasoning they made more money at a lower volume. But this is the moment you must embrace the long-term view. These management roles are the bigger pipes that allow you to scale and multiply your profits later. They make the business less dependent on you, which is the whole point of building to sell!
The People Problem: From Perfectionist Plumber to Master Trainer
In the trades, the most challenging part of scaling up is the people problem. The owner is often a perfectionist when it comes to their craft. They have been in business for 30 years and are convinced: "Nobody can do it like I can do it."
"Everybody's too lazy. Nobody wants to go to work. They just can't tighten that screw as well as he can tighten the screw."
This is a dangerous fallacy. They end up hurting their business because they can’t take care of customers fast enough, and their inability to delegate makes the business reliant on them—which kills the sale value.
Reframing Your Position
I love the concept Patrick shared of an owner who reframed his position. He hated the admin, hiring, and buying trucks. So, he built a big enough company to hire people who loved those jobs.
What was his job? He became the master trainer.
He spent three days a week training young plumbers with no bad habits, showing them the beauty and artistry of the trade. He controlled the quality, which was his badge of honor, and loved coming to work.
Your business forces you to perform a degree of self-analysis. You must figure out: What am I good at? What do I want? Then, you hire the people who love to do the things that you don't love to do. That's how you put buffers in place to keep you from screwing up yourself!
The Two Worst-Case Scenarios
Patrick shared two heartbreaking, real-life stories that happened to him this year, which perfectly illustrate the lack of a "plan B":
An owner was getting a valuation. He wasn't thrilled with the low value because he was the entire business. He said he’d hire people and come back. A year later, he was ready to sell and about to send the final paperwork when he died. Since he was the sole license holder and owner, his wife lost all negotiating leverage, and the company had to go through probate.
Another owner died while filling out the valuation paperwork. Thankfully, his wife was in the corporation and someone could temporarily hold the license, but she lost all leverage, and the employees panicked.
The counter-example? An owner who had a GM in place, was living out of state six months a year, and had a major health issue that landed him in the hospital for six months. The business hummed right along; the income increased. When he recovered, he had a business with a waiting list of buyers because it wasn't dependent on him. The sale price difference between these two scenarios was night and day.
Building to sell is responsible ownership. It forces you to take care of the people under you, build safeguards, and create a business that can run without you.
The Next Step: Know Your Worth
If you're reading this and thinking, "Okay, I get it, I need to be thinking about building to sell," or even, "I think I'm ready to sell," Patrick has one key piece of advice:
Get a valuation done.
"What doesn't get measured doesn't get improved."
Most people have no clue what their business is actually worth. They hear someone on a stage brag about a 20x multiple without mentioning it was all owner-financed with an earn-out and they'll likely never see a dime of it. They base their expectations on bad data.
A valuation establishes your baseline. It's your scorecard. Once you know where you are, you can plan where you need to go.
Patrick’s most watched video on his YouTube channel is called, "Your Baby's Ugly." It's a joke with a painful truth—the business is the owner’s baby, and sometimes you have to tell a 70-year-old owner they did it wrong.
If you find out your business isn't worth what you thought when you're 65, you might not have the gas in the tank to hire, train, market, and implement systems. If you hear it at 35, you have time to fix it!
Your Next Action to Grow Your Business
Patrick is truly passionate about giving back to the industry with information, so you don't have that "baby's ugly" conversation later.
To get in touch with Patrick Lange:
Website: Find the Business Modification Group at Businessmodification.com
YouTube: Search for Patrick Lange on YouTube for around 70 videos covering the ins and outs of buying and selling trade businesses.
If you’d like my crew—the people at Mammoth Marketing who understand how to build the kind of marketing and brand that increases your sellable value—to take a look at what you need to focus on to grow your plumbing business, schedule a consultation at my website: https://tylerwilliams.net/!
