22 Mar Acquiring Minds: 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.
