It’s a nice business. They do about $20 million in sales with 10% net income margin. It’s been around a long time, has loyal employees, and recurring customers. And to business buyers it’s seen as opportunity.
• The owner doesn’t do much except shmooze suppliers and a few customers. The GM pretty much runs it.
• The accounting department is behind the times. When asked about a few basic things on the financial statements the answer from the in-house accountant (really a bookkeeper) was, “I don’t know about that.”
• The owner couldn’t tell you what to do to grow even 10%.
• There’s no employee handbook, accounting practices manual, sales plan, etc.
Some of the above, like the lack of an employee handbook is a problem (lawsuit maybe?) waiting to happen. The other things are an owner not wanting to work harder, take more risk, etc.
A lot of owners don’t think about improving things, especially when making a lot of money. Like another owner who said to me, “I’m very happy with the money and my life. So I don’t push it.”
If the business mentioned above grows by 10%, they probably won’t need any more people, so the gross profit of about 30 percent falls to the bottom line.
“I’m learning to fly, but I ain’t got wings; coming down is the hardest thing.” Tom Petty