Listing ID: 83046
Established over forty years ago, this roofing & home improvement business is a well-known A+ BBB-rated business. They serve multiple geographic locations and have a substantial backlog of pending contracts. The owner is looking to retire.
- Asking Price: $600,000
- Cash Flow: $300,000
- Gross Revenue: $2,250,000
- EBITDA: N/A
- FF&E: N/A
- Inventory: N/A
- Inventory Included: N/A
- Established: N/A
Why is the Current Owner Selling The Business?
There are all types of reasons individuals resolve to sell operating businesses. However, the real reason vs the one they say to you may be 2 entirely different things. As an example, they may say "I have way too many various commitments" or "I am retiring". For numerous sellers, these factors stand. But, for some, these might simply be excuses to try to hide the reality of transforming demographics, increased competitors, current reduction in revenues, or an array of various other factors. This is why it is extremely vital that you not rely completely on a seller's word, but instead, use the seller's answer in conjunction with your total due diligence. This will repaint an extra realistic picture of the business's present situation.
Existing Debts and Future Obligations
If the existing company is in debt, which many companies are, then you will need to consider this when valuating/preparing your deal. Many operating businesses borrow money with the purpose of covering items such as inventory, payroll, accounts payable, so on and so forth. Remember that sometimes this can suggest that earnings margins are too small. Lots of businesses come under a revolving door of taking on debt as a way to pay back other loans. Along with debts, there may additionally be future commitments to think about. There may be an outstanding lease on tools or the structure where the business resides. The business may have existing agreements with suppliers that need to be satisfied or may cause penalties if terminated early.
Understanding the Customer Base, Competition and Area Demographics
How do operating businesses in the location attract new customers? Most times, businesses have repeat clients, which form the core of their everyday earnings. Specific aspects such as new competition sprouting up around the location, road building and construction, as well as employee turnover can influence repeat customers and adversely influence future profits. One important point to consider is the placement of the business. Is it in a very trafficked shopping center, or is it hidden from the main road? Certainly, the more people that see the business often, the higher the possibility to construct a returning client base. A final idea is the general location demographics. Is the business situated in a densely populated city, or is it located on the outskirts of town? How might the neighborhood average house income impact future revenue prospects?