So you’re having a brain fart and want to be a Long Island HVAC repair business like this one? You’ve done the hard yards for someone else and feel that’s time to be your own boss. You may have already been working in air conditioning servicing or furnace servicing, or you may be new to this also. It’s an exciting time, but where do you start?
One option it could be a very good idea to consider heavily is buying an established business, as opposed to starting completely from scratch. There are some excellent options to buy when looking at air conditioning or furnace services in Long Island. Buying an existing business will come with established goodwill in the company, with a list of regular customers and ongoing contracts, and with booking already in place so you can hit the ground running. It will also already have all the equipment and tools that you need so you’re not starting from nothing in building up your arsenal.
Because of this it will be a more expensive purchase than if you completely built your own company, but it does mean you’ll be making good money straight away. How do you work out exactly which business is the one to buy?
How much money do you have, or how much are you willing to spend? Do you have an idea about what a business is worth?
What are your goals with buying the business, what do you want to achieve? Are you looking for just work for yourself or are you willing to have employees? Do you want to increase your income, grow your assets or market share, or advance into a new territory? What do you see as your exit strategy at the other side of all of this?
There are a number of ways to value a HVAC business that you’re considering purchasing. The average price paid when buying a HVAC business is reportedly 32% of sales. You would benefit from reviewing the company’s financials for the last three years. As a good you rule you should value the business at how the current owner operates it, not what you think you can do. Avoid buying a business with any liabilities.
In an ideal world you would have cash on hand to buy your business fully upfront. But if you live in the real world you probably need to acquire some finance to make this little air conditioning dream come true. Fortunately there are a number of different options available.
One option which the owner might go for because it ensures that the sale goes through, is for him to provide owner or seller financing. Through this process you pay a portion of the price as down payment, and then borrow the rest from the owner which you pay back incrementally with interest. The owner has to be someone you trust and would consider having a longer term relationship with.
A bank loan is an easy answer, but can be a lot harder to actually get your hands on. Most banks will require your business loan to have security behind it, such as your house.
Another option is an online lender, which you can apply for quickly and easily, and get a response and access to the funds quite quickly also.
SBA Insured Loans (Small Business Administration)
Small Business Administration is a great service and offer loans which can be a lot easier to get approved for one when compared to the banks, however customers are finding it increasingly competitive to get one of these also. Through this process you borrow the money from a private lender and up to 80% is provided by SBA financing. The different types of collateral you can use for the loan gives you much more freedom, you can use a wide variety of things including life insurance policies.
Using Business Brokers
It can be a good rule of thumb to remember when buying a business through a broker is that the broker is being paid by the owner. However a good broker can get to know you, and help you narrow down your search and access those businesses that really meet your personality and requirements. Make sure that the broker is licensed, and you can check what fees they are being paid. No matter how much information the broker provides you on the business, make sure you do your own due diligence and fully review their figures and books.
So whether you plan to corner the Long Island market in air conditioning repair or furnace repair make sure you do your research and make your decisions with your head, your heart and your hip pocket.