How a plumbing subcontractor bought a bigger business from a retiring customer WITHOUT using his home as security
Situation
A solo plumbing subcontractor was offered an opportunity too good to refuse. One of his main customers was retiring – and looking for someone to buy his business.
The business was a good one – a general maintenance plumbing business that did “a bit of everything”. They installed hot water services and did maintenance plumbing, and had both hospital and industrial customers.
Problem
It was a great opportunity – but it was going to take a LOT of money to turn it into a good earner. The new business owner would have to come up with:
- The large lump sum required to buy the business from its current owner, AND
- The money to pay a whole lot of outstanding suppliers’ bills for the new, bigger business and stay afloat until customer payments on longer credit terms came in.
Fortunately, the subcontractor’s accountant knew expert Cash Flow Strategist Martin Cattach from Finance for Business.
Solution
Martin’s solution for this situation was to set up a Line of Credit that the new business owner could draw on – one – based on the record of the existing business.
The Line of Credit was set up quickly with Finance for Business doing all the paperwork. That made getting the finance easy, so the new business owner could focus on running the business and getting to know his employees – not filling out application forms and talking to bankers. The approval took just 12 days.
The timing of the deal was excellent – as the business qualified for the government SME Recovery Loan Scheme. This meant that the government provided security for the loan, interest rates were lower AND the plumber’s home wasn’t on the line.
Results
Business is booming, keeping the new business owner and his four employees all working hard.
The Line of Credit was paid off within 12 months, and is sitting in the background ready for use if further opportunities arise.
It’s super busy – and learning to “be the boss” is a bit stressful – but worrying about “where will we find the money?” and “is our home at risk?” ISN’T part of that stress.
