A comprehensive Business & Viability Analysis can give business owners and lenders insight into the performance and health of a business, corrective change measures, and the predictive impact from the changes.

Situation

Situated in Northwest Atlanta is a family-owned commercial and industrial HVAC business generating $600K in revenue through offering service/repairs, dehumidification, and energy solutions to the greater Atlanta area. Purchased from the original owner using an SBA loan, in addition to intense competition in the metropolitan area, the new owner was inadequately informed of the prior owner's challenges, which lead to an inflated price of the business due to booked Accounts Receivable that were not actual contracts at the time of the sale. Whereas sufficient cash flow was reported at the time of the transaction, in fact, less than 20% of the reported A/R materialized. Upon completion of the transaction, recourse from the new owner was limited as the former owner’s estate would have been charged. Realizing the complexity and possible outcome of the legal path was dire, the new owner decided to forge ahead and make the business work. When note payments started coming in, however, cash flow tightened causing the owner to test pivoting the strategy to converting into a service-based project management organization under a variable cost model, an equity/profit share model with incentive-based compensation plans to lower operating costs, and utilizing sub-contractors. The owner also sold his house and moved his family to pay down the SBA loan.