How can I tell if a parking lot sweeping business is profitable before buying?

A sweeping business can look busy and still earn little. Trucks are costly to run, work happens at night, and a few weak contracts can swallow the profit of the good ones. The tests below are about whether the business earns money, not what it is worth. Ask for records, check them against each other, and bring in an accountant to review what you find.

Contract by contract

Ask for revenue by customer and by site. Beside each, set the hours the truck and driver spend, the travel between sites, fuel and the dump fees for what is collected. A contract that looks large may take far more hours than a small one. Ask which sites the owner would drop if he or she could, because that answer shows where money is lost.

The owner’s own time

Many owners drive a truck themselves and take a modest draw. If you would hire a driver, that wage is a real cost. Ask how many shifts the owner works and what a hired driver would cost to replace them. Ask also about repairs: sweepers wear brushes, hoses and engines, so look at several years of maintenance bills, not only the latest.

Seasons and winter work

Sweeping usually slows when snow arrives. Ask how the seller fills the winter, whether through snow clearing or another service, and whether those revenues and costs are kept separate. A business that looks strong in summer can be flat across the year if the gap is not filled. Ask for monthly figures for at least a full year.

Returns against deposits

Compare the tax returns, the financial statements and the bank deposits. They should tell the same story. If cash is taken or personal costs run through the company, ask your accountant how to treat them, and do not rely on the seller’s summary alone.