Valuing a Lumber and Building Material Store
Due to increased housing starts and growing disposable income, the lumber and building material store industry is experiencing healthy growth. As disposable income continues to rise, we may see an increase in home improvement activities. This could boost the demand for lumber and building material stores. However, this industry faces intense competition from home improvement retailers. Due to their convenience and product diversity, consumers prefer stores like Home Depot and Lowe’s over lumber and building material stores. As such, it is important to understand how to differentiate your lumber and building material store. You can start by learning about the principles of valuing a lumber and building material store.
When valuing a lumber and building material store, there are many factors to consider. Peak Business Valuation, business appraiser, values lumber and building material stores often. By receiving a business valuation with Peak, you can learn the value of a lumber and building material store and how to increase it. During this process, valuation experts can identify the strengths and weaknesses of your lumber and building material store. A business appraisal also determines the fair market value of a lumber and building material store.
This article discusses various factors that make a lumber and building material store successful. A valuation expert may consider these factors when valuing a lumber and building material store. Keep in mind this is only a guide. For specific guidance, receive a business valuation for a lumber and building material store. Start today by scheduling a free consultation with Peak Business Valuation, business appraiser.
Market Multiples for a Lumber and Building Material Store
Below are average valuation multiples for a lumber and building material store. A business appraiser uses valuation multiples when valuing a lumber and building material store.
- SDE Multiple Average Range: 1.58x – 2.43x
- EBITDA Multiple Average Range: 2.04x – 3.95x
- Revenue Multiple Average Range: 0.23x – 0.37x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
For more information see Valuation Multiples for a Lumber and Building Material Store.
How to Value a Lumber and Building Material Store
There are various methods that an expert uses when valuing a lumber and building material store. One method an appraiser often uses is multiples for a lumber and building material store. Generally, cash flow multiples – SDE and EBITDA are most applicable. However, this can vary according to the need for the business valuation. When valuing a lumber and building material store, a business appraiser will use their expertise to determine what is best.
Whether you are buying, growing, or selling, it is important to understand how to value a lumber and building material store. Below, we share a few success factors for lumber and building material stores. These success factors can help increase the value of a lumber and building material store.
To learn more about valuing a lumber and building material store, receive a business valuation. Peak Business Valuation, business appraiser, is happy to provide a valuation for a lumber and building material store. In addition, we can answer any questions on valuing a lumber and building material store. Schedule a free consultation with Peak today!
Key Success Factors
Peak Business Valuation, business appraiser, values lumber and building material stores on a regular basis. We are happy to help you understand what makes a lumber and building material store successful. The following success factors can help make your lumber and building material store stand out. In addition, these factors are key to maximizing the value of a lumber and building material store.
Online Presence
First, having a strong online presence is becoming more important as consumers shift to online shopping. According to IBIS World, about 21 percent of the top 100 lumber and building material stores include online operations. This makes the shopping experience more convenient and potentially more affordable for clients. These factors increase the demand for a lumber and building material store. As such, creating a strong online presence can lead to an increase in sales revenue and profitability.
Additionally, lumber and building material stores can use their online presence as a marketing tool. With marketing strategies such as SEO, you can make your lumber and building material store more visible to online shoppers. To learn more about SEO, see The Value of SEO. When valuing a lumber and building material store, Peak Business Valuation, business appraiser, considers your online presence. They may also consider the split of revenue between online and in-person sales.
Eco-friendly Materials
Next, it is beneficial for lumber and building material stores to offer eco-friendly materials. This is crucial as consumers become more concerned about the environment. By having eco-friendly materials, you can increase the demand for your lumber and building material store. Eco-friendly materials include the following:
- Lumber that is certified by The Forest Stewardship Council (FSC)
- Recycled plastic lumber
- Salvaged or reclaimed lumber
- Products that are non-toxic and recyclable
Offering eco-friendly products can make your lumber and building material store more diversified. In addition, eco-friendly lumber and building material stores can receive support from the government. This can come with special benefits including tax exemptions. As such, providing eco-friendly materials can lead to increased profitability. This plays an important role in the value of a lumber and building material store. Peak Business Valuation, business appraiser, may analyze the quality of your materials and product supply mix when valuing a lumber and building material store.
Location
Furthermore, when learning how to value a lumber and building material store, it is important to consider its location. Demand for lumber and building materials is highly correlated with the housing market. As such, it is best to locate in dense populations with developing residential areas. It is also beneficial to locate close to suppliers of your lumber and building material store. By taking these steps, you can maximize sales revenue and minimize costs. This has a positive impact on the profitability of your lumber and building material store. Peak Business Valuation, business appraiser, evaluates location when valuing a lumber and building material store. Schedule a free consultation with Peak Business Valuation today!
Diverse Revenue Streams
Last, having multiple revenue streams comes with many benefits for a lumber and building material store. Many operators in the lumber and building material industry struggle to increase profitability. This is due to various factors such as increasing lumber and production prices. To combat this, lumber and building material stores can create additional revenue streams such as:
- Custom products for contractors and customers
- Tool rentals
- Delivery and installation services
- Contractor services
- Interior design services
There are many different ways to diversify revenue streams at a lumber and building material store. Doing so helps operators increase the value of a lumber and building material store. Peak Business Valuation may consider revenue streams as they value a lumber and building material store.
Summary
There are many other factors to consider when valuing a lumber and building material store. Knowing the value of a lumber and building material store can be complex. But it is vital whether you are buying, expanding, or selling your lumber and building material store. The best way to start is by obtaining a business valuation for a lumber and building material store. During a business valuation, an expert determines the fair market value of a lumber and building material store.
Peak Business Valuation, business appraiser, values lumber and building material stores across the country. If you are looking to increase the value of a lumber and building material store, we are happy to help! We are also happy to answer any questions about valuing a lumber and building material store. Schedule a free consultation with Peak Business Valuation below!
Be sure to also check out Value Drivers for Lumber and Building Material Stores, How to Value a Lumber and Building Material Store, and Valuation Multiples for a Lumber and Building Material Store.
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