What’s the Secret Sauce?
Have you ever wondered how pool companies come up with their financial numbers? In this blog post, we’ll explore the three main income sources of pool routes: pool cleaning, filter cleaning, and pool-related repairs. We’ll also uncover the deductions that pool companies consider, including chemical costs, employee wages, and transportation costs. But have you ever noticed that pool route sellers don’t have traditional profit and loss statements? In this post, we’ll explain why. Get ready to dive into the financial secrets of pool companies!
The Three Income Sources of Pool Routes
- Pool Cleaning:
– Pool cleaning is the primary source of income for pool companies. It involves regular maintenance tasks such as skimming the surface, brushing the walls and floor, and vacuuming the pool to remove debris.
– Pool companies charge a monthly fee for this service, which varies based on factors like the size of the pool and the frequency of cleaning.
– This steady stream of income provides a reliable foundation for pool companies.
- Filter Cleaning:
– Pool filters play a crucial role in maintaining clean and clear water. Periodic filter cleaning is necessary to ensure optimal performance.
– Pool companies charge a separate fee for filter cleaning, typically done once or twice a year.
– This additional service adds to the revenue stream of pool companies.
- Pool-Related Repairs:
– Pool equipment, such as pumps, heaters, and filters, may require repairs or replacements over time.
– Pool companies offer repair services, which can be a significant source of income, especially during the off-season when pool cleaning services are less in demand.
– Expertise in repairs and diagnostics is essential for pool companies to provide quality service.
Deductions for Pool Companies
- Chemical Costs:
– Pool companies need to purchase various chemicals to maintain the water quality and balance in pools. These include chlorine, pH balancers, and algaecides.
– The cost of these chemicals can add up, especially for larger pools.
– Pool companies deduct these expenses from their revenue to determine their net income.
- Employee Wages:
– Pool companies employ skilled technicians who perform pool cleaning, filter cleaning, and repairs.
– Employee wages are a significant expense for pool companies, especially during the peak season when demand for pool services is high.
– Deducting employee wages is an essential part of calculating the financial numbers for pool companies.
- Transportation Costs:
– Pool companies need to transport their equipment, supplies, and technicians to various job sites.
– This includes expenses such as fuel, vehicle maintenance, and insurance.
– Transportation costs are deducted to accurately reflect the profitability of pool companies.
Why Pool Route Owners Don’t Have Traditional Profit and Loss Statements
Pool route sellers typically don’t have traditional profit and loss statements because of the nature of their business. Here are some reasons why:
- Cash-Based Business:
– Pool route sellers often operate on a cash basis, which means that they don’t keep detailed financial records.
– This lack of documentation makes it difficult to create traditional profit and loss statements.
- Seller’s Discretionary Earnings:
– Instead of traditional profit and loss statements, pool route sellers use a metric called Seller’s Discretionary Earnings (SDE).
– SDE is a measure of the total financial benefit that a pool route provides to its owner.
– It takes into account the revenue generated by the pool route, as well as the expenses incurred by the owner.
– SDE is a more accurate representation of the financial performance of a pool route than traditional profit and loss statements.
The Market for Pool Companies and Pool Routes
The market for pool companies and pool routes is thriving, offering ample opportunities for growth and success. One key insight is the growing demand for pool services. As more people invest in backyard pools, the demand for pool cleaning, maintenance, and repair services continues to rise. The COVID-19 pandemic has further fueled this demand, as individuals spend more time at home and seek ways to stay cool during the summer months.
The US swimming pool cleaning services market is valued at nearly $8 billion and has experienced a 6% growth over the last few years. Additionally, the global swimming pool market is witnessing unprecedented growth, driven by increasing residential construction projects and the rising importance of swimming pools as lifestyle amenities.
In conclusion, pool companies generate their financial numbers through three primary income sources: pool cleaning, filter cleaning, and pool-related repairs. Deductions, including chemical costs, employee wages, and transportation costs, are considered to determine the net income of pool companies. Pool route sellers typically don’t have traditional profit and loss statements because of the nature of their business. Instead, they use a metric called Seller’s Discretionary Earnings (SDE) to measure the financial benefit of a pool route. The pool service industry offers significant growth potential, driven by the increasing demand for pool services. Whether you’re considering buying a pool route or starting your own pool service business, understanding the financial aspects is crucial for success. So, dive into the pool business with confidence and make a splash in the market!
Contact Sealey Business Brokers to learn more about how we can help you make a splash in the world of Pool Routes!