How to Identify & Buy a Great Residential Contractor | Alan Lochridge Interview

Consultant Alan Lochridge was mid-career, trying to figure out what was next, when a friend recommended he buy a business. Today, Alan owns a hardscaping business in Charlotte, North Carolina, that does patios, outdoor fire places, pool decks, pergolas. Now, you may be skeptical, thinking... Hmm, a residential construction business. But Alan explains why his business is a strong one: it enjoys a negative cash conversion cycle, meaning he receives payment before delivering service. Alan's days sales outstanding (DSO) is very low, meaning he collects from customers quickly. Alan's services are delivered by subcontractors, meaning his business runs lean and he avoids getting squeezed when work slows down. All of this adds up to a business that does a great job of generating cash. And with 18% margins on $6.5m in revenue, a significant amount of it.
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00:00:00. Alan’s background
00:05:58. Alan searches for the right business
00:11:43. Alan finds The Stone Man
00:16:11. Understanding the business
00:21:02. Terms of the deal
00:30:06. Getting comfortable with residential construction
00:37:45. Transitioning into ownership
00:41:44. Maintaining steady growth amid industry decline
00:46:44. Initial stressors in business ownership
00:51:24. Alan gets his general contractor’s license
00:58:44. Benefits of a negative cash conversion cycle
01:04:22. Pros and cons of subcontracting
01:09:58. Reflections on the acquisition
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Acquiring Minds is a podcast about buying businesses. Acquiring an existing business is an awesome opportunity for many entrepreneurs, and host Will Smith talks to the people who do it. New episodes 2x per week.
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[@S_W1]

W2 is not a risk free proposition. Amen! Great interview

[@joanebaptiste-cummins3207]

Good evening gentlemen. Love the POD! GREAT Information

[@AcquiringMinds]

Thank you JoAne!

[@adamlapier4520]

Would funeral homes be an attractive niche for searchers?

[@driftkingo5283]

Yes