This profitable and 60-year established Business services one of the hottest markets in the country. The company serves both residential customers seeking to upgrade their homes and commercial/institutional clients for both renovations and new construction. According to the latest U.S. Census Bureau report, home centers, hardware stores, garden centers and building materials suppliers realized a year-over-year sales increase of 22.6 percent, second only to ecommerce/online retailers.
The Company operates a distinct and profitable retail concept out of two strategically placed stores serving both commercial and residential customers seeking to upgrade their homes in the Tri-Cities Area of Michigan. The company also operates as a commercial flooring wholesaler that supplies and installs to commercial flooring contractors and general contractors a wide variety of floor covering products for commercial, institutional, and educational projects.
Much of the Company’s business is selling and installing commercial flooring to commercial flooring contractors and general contractors; however, the Company’s retail locations complement its primary source of revenue by offering parallel home improvement products. The Company’s retail brands provide various products, including paint, floor covering products, window products, lighting supplies, and more.
The Company utilizes a local advertising agency to handle most of the marketing for all the locations. This advertising agency provides the Company with better advertising “buys” and the ability to focus on current promotions and sales. Due to the Company’s excellent locations, outstanding market reputation, and expertise, it has a high percentage of repeat and referral business.
The Company is owned by a single owner. The owner is involved in the oversight and operations of the Business. Additionally, this owner oversees high-level operations, makes strategic-level decisions, makes the final decision on what commercial jobs to bid on, but he does not actively manage the day-to-day operations of each location. Instead, the management staff is in place to handle most of the day-to-day operations of the Business.
After operating the Company for 40 years, the owner would like to sell the Company to pursue retirement. Critical managerial staff has been with the Company for decades, and ownership has no concerns about their continuity. Ownership is willing to stay with the Company for a transition period post-transaction to assist the purchaser’s needs.
Buyers will be required to have a minimum of $500,000, solid credit, and preferably industry experience to qualify for SBA 7a financing.
Seller Financing Available: Yes
Seller Note: Limited Seller-Financing Available for Qualified Buyers.
Year Established: 1959
Facilities: The Company owns two locations totaling around 39,000 sq. ft.
Support/Training: Ownership is willing to provide reasonable and customary transition assistance.
Reasons for Selling: Retirement.
(1) Historical Financial Strength: The Company consistently grew top line from 2017 to 2019. In 2020, the Company was shut down for 10 weeks due to the restrictions of the COVID-19 pandemic. However, the Company managed to produce approximately $4.8M in revenue and a healthy SDE close to $500K. From 2017 to 2020, SDE margin has averaged 11.5%. The Company has established an excellent reputation amongst contractors and customers throughout Michigan, specifically Eastern Michigan, resulting in steady financial performance.
(2) Longstanding Relationships with Reputable Contractors: Due to the Company’s focus on commercial flooring sales and installation, the Company has built longstanding relationships with many commercial flooring contractors, as well as subcontractors throughout Michigan. The Company subcontracts out all its installation work to a pool of reputable and time-tested subcontractors.
(3) Diverse Customer Base: Although the Company works mainly with commercial flooring contractors and general contractors, the Company has a diverse set of commercial and residential applications. The typical customer base for flooring, paint, lighting, windows, or other home accessories could be a plethora of different customers. Residential applications, small or full remodel, can be assisted and targeted by any of the brands under the Company. Commercial applications, whether a small office or a large commercial project, can also be serviced by the Company with high customer satisfaction and cost-effectiveness.
(4) Online Presence: The websites utilized by the Company all have an established and professional platform for driving foot traffic into the stores, as well as informing its commercial contractors. Products are listed, as well as services provided by the Company, hours and addresses to the locations, and informational videos. Additionally, the Company has an active presence on all social media platforms such as Google, Facebook, Twitter, YouTube, LinkedIn, and more. The online tools used by this Company are a great value-add opportunity because of the website traffic, platform for sales, and foundation for further development.
(5) Experienced and Self-Reliant Workforce: Most of the Company’s commercial management and estimator teams have 20+ years of experience. The commercial and residential employees offer expertise on in-house brands. These employees will be invaluable to new management because of their hands-on experience, as well as the ability to train new employees for existing locations or a new location. The employees have made it so that the owner’s role is essentially in the background. He rarely deals directly with customers and does not have to maintain an on-site presence.
(1) Hire Additional Commercial Flooring Estimators and Bid on More Jobs: To escalate the commercial flooring sales and supplies side of the business, the Company could hire additional commercial flooring estimators allowing the Company to bid on and win more jobs. With additional flooring estimators, the Company could align and build relationships with additional flooring contractors, expanding its presence in different industries and regions.
(2) Convert Commercial Painting Contractors into Jobs: Currently, the Company does not bid on or chase commercial painting jobs. However, a new owner could build relationships with commercial painting contractors, as well as advertise and bid on these opportunities. Painting is done after the flooring is completed; therefore, there could be many opportunities to obtain leads to painting companies through the commercial flooring contractors. With an increase in commercial painting leads, the Company could begin to supply its products to a whole project site and obtain additional market share and revenue in the commercial construction space.
(3) E-Commerce Expansion: The Company currently has several independent websites that service all the business segments within the Company, as well as social media sites. A potential growth opportunity for the Business is consolidating into a single website or brand with a uniform website. Additionally, the Company could advertise its commercial flooring/painting applications, so contractors do not have to rely on word of mouth referrals or 3rd-party advertising. Utilizing an e-commerce platform, with product information, pricing, availability, and commercial services could significantly increase customer and contractor education, foot traffic into the physical locations, and overall brand reputation throughout Michigan.
(4) Geographically Expand in Michigan: The Company used to have three other physical locations across Michigan. The owner decided to sell these locations because he did not want to deal with the headaches that come from travel, long-distance communication, and planning. However, if an ambitious and motivated owner wanted to expand geographically, there are many opportunities to grow because the Company is not geographically restricted, especially since the Company can currently drop-ship much of its materials. The Company could expand back into its previous physical locations, where the Company had previous success. Additionally, the Company could expand to a more populated city like Grand Rapids, or the owner suggested Gaylord and Bad Axe, along with other growing areas, as tremendous opportunities to improve the Company’s commercial supply and retail presence.
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*Special Note: In a victory for small business buyers, the recent $900BB stimulus bill directs the SBA to waive all guaranty fees and pay up to the first 3 months of new SBA 7(a) loans approved between February 1 and September 30, 2021 (up to $9,000/month). Our advice: Don’t wait. Find a quality business and get moving quickly. Banks will be busy this year and buyers that wait until July/August will likely lose out.