What should I check before buying a shed building business?

A shed builder takes an order, often a deposit, builds the structure and delivers it. Between the deposit and the delivery the business owes customers something it has not yet made. A buyer is stepping into that position, so the first job is to see what is owed, what it will cost to build and who will do the work.

Orders, deposits and seasons

Ask for a list of open orders with the date, the customer, the deposit taken and the build status. Ask where the deposit money is held and how it will be handled at closing, so customers are not left unprotected. Sales usually peak in one part of the year, so ask for monthly sales over several years and plan for the quiet months.

Lot, yard and equipment

Read the lease for the display lot or build yard. Ask how long it runs, whether the landlord must consent to a new tenant and whether the display units belong to the business. List the trailers, forklifts and tools, and ask about their condition, maintenance records and any loans on them.

Lumber suppliers and plans

Material is a large part of each job. Ask which suppliers the business uses, what credit terms it has and whether those terms stay in place for a new owner. Find out who owns the designs and plans, and whether any are licensed from someone else.

Crew and owner dependence

• Who builds, who delivers and who talks to customers?
• Do key workers plan to stay, and are they ready to meet the buyer?
• Do customers and referral partners know the owner by name?
• Could the business run through a short absence of the owner?

For a general approach to testing the numbers, see how to verify a seller’s financials.