Mike AndesFounder, Augusta Lawn Care and Homeworks · Founder of Homeworks and Augusta Lawn Care

This Business Costs $130K to Buy...

13 May 2023 · 1 min

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A YouTube video (by Mike Andes) analyzing the purchase of an irrigation business listed at $130,000. The speaker states the business generates $400,000 annual revenue, that $100,000 of the sale price is equipment, and runs through an SBA 7 loan scenario: 10% down ($13,000), $117,000 financed at 9% interest for roughly $1,500/month (~$18,000/year). The speaker cites an owner-stated pre-payment profit of $150,000, which after loan payments would leave roughly $120–125K annual profit; notes the business operates about eight months/year and that hiring an operator for $60–70K could still leave $50–60K after payroll.

Questions this video answers

$130,000

$100,000

$400,000

10% down, $13,000

$117,000

Chapters

This irrigation business does $400,000 in annual revenue and is for sale for 130,000. Now, 100,000 of that is just equipment. So let's break down the numbers here. If we went ahead and purchased this irrigation business for 10% down using an SBA 7 loan, it'd be $13,000 down. With $117,000 loan, assuming a 9% interest rate on that loan, we'd be looking about $1,500 per month in payments, or $18,000 per year. Now, if we actually made the $150,000 that the owner says we're making and we take out the payments, we're making about 120, 125,000 year in profit from this business. Not bad for something that we only have to work eight months out of the year for. If you're an owner operator, you could also go hire someone for maybe 60 or 70 thousand dollars per year and still put 50 or 60 thousand dollars in your pocket.