This is the first in a new series. Each one takes a single trade and breaks down how the business actually works: the numbers, the hard parts, and who it's right for.
I'm starting with plumbing for a reason. Beyond painting, it's one of the trades I know best from the inside: I represented the seller of a plumbing company doing about $2 million in revenue, and I learned a lot about how buyers actually look at these businesses. More on that below.
The snapshot
Startup cost: Getting a plumbing business off the ground can run $15,000 to $50,000 or more depending on equipment, licensing, and marketing.
Licensing: You don't have to be a licensed master plumber to own the company, but if you're not, you'll need to hire or partner with someone who is. Rules vary by state, so check yours first.
Gross margin: Depends almost entirely on the type of work. Service and repair should run 50-60% or higher, while new construction typically lands around 20-30%.
Recurring revenue: Membership programs, often $25-50 a month, can produce 60+% gross margins on maintenance visits.
Demand: The Bureau of Labor Statistics projects plumber employment to grow about 4% over the decade, with roughly 44,000 openings a year.
What they sell for: Most plumbing companies trade between 3x and 5x EBITDA. Smaller shops under $500,000 in revenue usually see 2x to 3x, companies doing $1.5 to $5 million can reach 4x to 5.5x, and businesses with recurring service contracts and real management depth can go past 6x.
What the work actually is
Plumbing is really two different businesses wearing the same truck.
The first is service and repair: the burst pipe, the water heater, the drain backing up at night. This is where the money is. Material costs are low, the work is efficient, and when a customer's sewer is backing up at 9 p.m., they aren't collecting three bids.
The second is new construction. The project totals look big, which is why a lot of owners chase it. But margins are thin, can be as low as 15-28%, and payment can take 60 to 90 days to arrive.
The owner's real job is deciding which of those two businesses you're running.
Why it's attractive
Pricing power. Emergency and repair work is urgent and essential. That gives you control over price in a way most trades don't have.
A real moat. Licensing is a barrier. Anyone can start a painting company next week. Not anyone can pull a plumbing permit. That makes the trade harder to enter, and more valuable once you're in.
Recurring revenue. Membership plans turn one-time customers into predictable monthly income, and they're one of the first things a buyer looks for.
Active buyers. Private equity wants this trade. Plumbers that fit the multi-trade model: HVAC, plumbing, and electrical in a large metro — can get pulled into platform pricing of 9x to 14x. That's not where a small shop starts, but it tells you where the demand is coming from.
The hard parts
Licensed labor. This is the big one. In painting, I can subcontract to skilled crews. In plumbing, licensed people are the business, and they're hard to find and hard to keep.
The new construction trap. Big contracts with thin margins and slow payment can quietly starve a company of cash while it looks busy.
Equipment. Jetters, camera systems, and truck stock cost real money up front.
The emergency lifestyle. Emergencies don't keep business hours. Someone is answering the phone at night — and early on, that's probably you.
What I learned representing a plumbing seller
The company I helped sell did about $2 million a year. Here's what that process taught me, and most of it applies to any trade.
Demand was never the problem. This business did $2 million in revenue almost entirely through word of mouth. No real marketing engine, just a good reputation in a growing area where plumbers were in short supply. That's a powerful thing to show a buyer, and the location was a genuine selling point.
But word of mouth cuts both ways. Buyers immediately wanted to know whether those referrals would keep coming once the owner stepped away, or whether they were tied to him personally.
Messy books cost buyers. The financials were somewhat disorganized, and it gave a lot of potential buyers pause. When a buyer can't clearly verify the numbers, they either walk away or assume the worst and price it in. In commercial plumbing deals, buyers' diligence teams commonly cut 40-60% from earnings adjustments the seller can't document.
Clean books aren't paperwork. They're part of what you're selling.
New construction inflated the top line. The company did a fair amount of new construction, and the margins showed it. Revenue looked strong, but profit didn't keep pace — the exact trap described above. A buyer pays for earnings, not revenue, so every dollar of low-margin work was worth less at the closing table than it looked on the income statement.
The team was always the question. Finding good people was a constant challenge for the seller, like it is for nearly every service business. And buyers knew it. Underneath every conversation was the same question: who does the work if the owner isn't there, and will they stay?
The lesson I took away: the things that held this business back weren't about demand or the trade itself. They were fixable: cleaner books, a shift toward service work, and a deeper bench of people. And they're fixable years before you ever sell, which is exactly when you should start.
Who it's right for
Plumbing fits someone who wants a business with a real barrier to entry, pricing power, and a clear path to recurring revenue, and who's willing to either get licensed or build the business around licensed people.
It's a harder start than painting. You can't just subcontract your way in. But the moat that makes it harder to start is the same thing that makes it more valuable to own.
See you next week where I will talk about my own painting business numbers from September.
Zac
P.S. Know a trade owner who'd open their books for a feature? Reply and let me know.