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518: Buying an HVAC Business with Patrick Lange
The How of Business - How to start, run & grow a small business.
Maximizing Cash Flow in the HVAC Business
In the HVAC business, unlike other household repairs like plumbing, most people lack the skills and need a license to fix an air conditioner themselves. This leads to reliance on professional service providers. However, HVAC businesses are not asset-intensive, requiring only minimal assets like trucks. This allows for significant cash flow generation with minimal upfront capital investment, making it an appealing business for growth despite potential challenges that may arise.
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Speaker 1
Yeah, absolutely. And and as opposed to other things that could break in your home, you know, you don't have to be a master plumber that if you're pipe leaks under your sink, you probably could go to Home Depot or Lowe's or a hardware store and get that fixed. Most air conditioning parts, you need a license to buy. And so you don't have the ability to fix it yourself. And once again, most people don't have the knowledge to do that. It would require a special skill. But you could probably know your own law. And if things got tight, you could clean your own pool, if things got tight, fix your own leaky faucet, if things got tight. But if the air conditioner breaks, chances are you've got to call somebody, which is certainly one of the one of the advantages and in another that is often overlooked. You know, there's typically it's not an asset intensive business. So when you look at the major purchases done in the heating and air space, it's typically just some trucks or vans, right? Aside
Speaker 2
from which which I could finance or lease, again, not usually a huge capital investment upfront on that part of it, right?
Speaker 1
Yeah, absolutely. And if you look at a company that's generating two or three million dollars in sales, they probably have less than $200,000 in assets. And so it's it's great when when you're looking at growing your business, obviously, it makes it a little more challenging from a financial standpoint, when you're looking to buy one, which often leads to SBA financing, because they'll lend on cash flow as opposed to assets. But but it's certainly one of the few businesses you can generate a lot of cash flow with very few assets. Yeah,
Speaker 2
yeah, well said, that's a great point. All right, let's talk about let's dive into some of the challenges or potential challenges that we have to consider with the nature act business.
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