I entered the due diligence period, and I have until December 31st to back out. This is my first business purchase, and I want to make sure I am making a good decision. Here is some information over the business. Established in 2013. Over 300 Google reviews (4.5 stars). In 2023, approx $6m in revenue, $1.5m in A/R. currently showing negative $100K loss ( $1.4m net if all A/R is collected). The business has 14 employees.
The purchase price is $1m + $75K from A/R.
The owner says he is selling because he wants to focus on real estate and will sign 3 year non-compete.
A way I can see improving the business is by trimming the unnecessary expenses (currently $270K per month) and focusing on keeping A/R account low.
Does anyone have any experience or advice in purchasing a business for the first time, or in roofing/ construction? What are the most important questions I need to ask the current owner? Are there any red flags I should be aware of?
This is a huge decision and I am looking for any advice or guidance!
I’m definitely not expecting to be able to trim all expenses. Just lean them out. About $135k is in wages and 45k for marketing per month. I’ve reviewed some leaner construction companies that are getting by with not too many op expenses. I will be reviewing each expense and consider if necessary or not.
That’s a great idea about calling them a few times as a potential client. I’ll try that after thanks giving.
Such good nuggets of advice you gave me. Which sound like great ideas to implement.
These next few weeks I’m going to learn about how exactly they are generating leads, and what software they are using for CRM. Do you have any that you used that you like?
I’d love to find only one software that can do all aspects of operations for a roofing business.