Ideal HVAC Opportunity - Undervalued!

About the Business: This a great opportunity to step right into a profitable HVAC business in the growing area of Northern Colorado. The business is growing! After starting in the later part of 2016, the business has already surpassed $1.5MM in gross sales in 2018. Excellent accounting, books and records and a fair price have made the business able to be pre-approved for an SBA Loan.

The value proposition and advantage of purchasing this business is that the cumbersome obstacles to building a business have already been overcome and there is newly well-oiled machine now in place. However, the business is priced at a much lower price point as compared to if the Seller were to choose to continue to operate the business for another two years. If you are looking for an undervalued business in the HVAC industry this is the one for you!

This HVAC business provides installation and repair services for AC (Air Conditioning), Ductless AC, Furnaces, Geothermal, and Radiant Flooring. Their work is comprised of approximately 60% residential and 40% light commercial. They also specialize in HVAC for custom homes and light construction HVAC installation. They are an authorized Trane dealer amongst other additional manufacturers.

The owner of this business prides himself on being a one-stop shop that is able to meet all of the needs of their clients. His goal is to provide the highest quality design and installation services, on schedule, and on budget along with outstanding customer service. The owner understands that time and cost are crucial, and the business strives to go above and beyond their client’s expectations. The business offers valuable money saving service and maintenance contracts for their customers. The company provides a full spectrum of work of any level of complexity. The team consists of highly qualified professionals, who have been in the industry for no less than 6 years.

An excellent buyer would include an HVAC professional who would like to be in business for themselves and not encumber all of the headaches one might face if they struck it out on their own. This type of buyer should most likely have a master mechanical license and be competent in management and marketing functions. It should be noted that there is 1 employee on staff who possesses a master mechanical license but it would be a good practice for a new owner to have or be interested in obtaining this same license. Another excellent buyer would include a business in the front range that would like to expand their HVAC business, or a strategically aligned business (such as plumbing) that would like to add an HVAC division.

The owner has implemented business philosophies, advice, mentoring, and strategies by investing in industry recognized Service Nation Alliance Upfront investment was $12,000 but a new owner will enjoy being able to simply take over the weekly membership and enjoy the benefits if they choose.

A word about the profit margins and startup model…. It is understood that a business that grosses 1.5MM might expect to have a little higher profit margin than 10%. The Seller wants to address that point directly. First, consider the business has only started in the second half of 2016. Because of this, the owner elected to do higher labor work because it was there was demand for it and was also a great way to get the word out in the way of marketing and advertising. Also, the owner has transitioned himself from performing a lot of the work himself in the very beginning to moving into more of a sales/business generator for the business. Important to note: in companies that are experiencing a very high rate of acceleration, there are one-time expenses involved in decisions revolving around marketing, human resources, equipment, etc. that are difficult to capture – but these are considered growing pains and understood by most business people. Again, this reinforces the value proposition and the ability to step into to something that has already experienced the initial hardships of starting up a business. Lastly, if you compare the performance of the business on a monthly basis you will see the second half of 2017 way outperformed the first half of 2017. This is again demonstrating the acceleration that is occurring, and difficult to capture. The take away point is that 2018 is establishing the new baseline or “new normal” for the business, if a new owner chooses to operate at the current level. And of course, the business continues to accelerate through 2019 so it is an opportune time to acquire the business.

Organizational Structure/Staff Duties and Responsibilities: Besides the owner there are 9 full-time employees, 1 with a master mechanical license. There is a construction manager which is extremely helpful and provides a competitive edge in allowing the business to step into onstruction projects. There are lead service technicians, lead installer technicians, and an administrative/marketing specialist. A new owner that treats the staff with respect and uses a similar management style should enjoy the loyalty of the staff. The owner wants to make it clear that he is not a “worker bee” and performs about 10-15% of the service work himself. He has transitioned himself from the field to sales over the past 12 months.

Inventory & FFE: The sale of business includes approximately $36,000 of Furniture/Fixtures/Equipment and $6,000 of Inventory. A full list of FFE is detailed on the Schedule A.

Hours of Operation: Normal business hours are 7am – 5pm M-F. They rotate shifts so some staff is 4 days on and 3 days off. 24/7 service is set up on a rotation through the techs, and as of right now the owner is still part of the rotation.

Growth and Expansion for the Business: The owner sees the largest opportunity to grow the business is to focus on the services/replacement division of AC, Ductless AC and Furnace units, while the other parts of the business should experience linear incremental growth as the business continues to grow overall. The owner also feels that hiring a salesperson would be the next logical step in increase the revenue. Loveland and northern Colorado is slated for growth to be consistent with the current thriving Colorado economy. More and more people continue to seek refuge from other states to enjoy the high-quality lifestyle the Colorado provides.

Premises and Lease:
There is a 1,200 square foot shop with an office for the construction manager. The new owner can choose to put their office in the shop or even work out of their home, which the current owner chooses to do. The current lease is a monthly lease. The Seller has a good relationship with the landlord and a new business owner with good credit should be able to continue the relationship by obtaining a new comparable lease. Please note that SBA Loans require a lease that has terms of 10 years. Seller will make introductions to the landlord at the appropriate time and facilitate the process of lease acquisition.

Training and Transition: The owner has his eyes set on moving to Florida and continuing to work in the industry, but he is enthusiastic about sharing his recipe for success to an eager new operator. 4 weeks of training are included in the sale of the business but additional operational assistance can be available on a consulting basis. Transition can be modified pending on the type of owner.

Financing: Because of the excellent books, records, and accounting, this business has been pre-approved by an SBA Lender to a qualified Buyer with only 20% Down Payment. In order to qualify for the loan, the buyer should have industry experience, and also not be an investor or absentee owner. With only 20% of the Purchase Price as a down payment, a new owner should be able to step in the first year and have an annual adjusted net profit of approximately $120,000 after paying the debt service of the SBA Loan.

Reason for Selling: Owner would like to relocate to Florida and start an HVAC consulting business.