And some of our builders pay on the 10th of the month. So if we get it in on the 5th, they might have already had their cutoff. So we don't get paid until that next window.
Acquiring Minds
A Few Hours Per Week, a Few States Away
Excerpts · 303 segments · ~1:31:18 long
Short excerpts only — hear the full conversation on the publisher's site.
And then it takes a few days. A lot of them still mail it. So then you're just waiting for the check to arrive. Yeah, well, it's a turnaround.
So. So just to, but just to underline this for people, there are typically two working capital. Big kind of issues in construction. The first that you just named your, you know, the, the contractors, the gc, the general's contractors or the home builders in your case pay slowly for whatever reason in construction land.
That's the culture and you ain't going to break it. So they pay slowly. So you do the work then don't get paid in your case, 20 to 45 days later. Sometimes it's worse than that.
So that's one issue and we're going to return to it in a second. The other is what you don't have is the work in process. So if it's a long project, you know, you're getting paid incrementally as you complete the work.
It just, it's one more complication to, to deal with in, in working capital. And for the inexperienced searcher out there finding themselves buying a business like this and finding themselves dealing with that, it can be overwhelming indeed and you know, not a lot of room for error there. And it can, it can be, it's not to be taken lightly.
And I've heard more than one, you know, due diligence provider, CPA say a first time searcher or somebody who doesn't come from construction should not buy a business like that. It's just working capital complexity is too much. Okay, returning now, I wholeheartedly agree with that.
And to me it was, we weren't having these months long projects where you have to worry about working capital, revenue, recognition, all of the things that go with that slow pay and even realizing that you thought you did 90% of the work only to find out you actually did 60% of the work and you have all these additional costs.
We, if, you know, if an error happens, if we screw something up, then we might have to rip out our work and report, but it's an extra day of work and usually, you know, one of five or ten other things we'd be doing that day. So this business has a very low risk for if you completely screw something up and make it right, it, it's, it doesn't hurt you that badly. Yeah, yeah, no, that's great.
That's a. What a, what a great quality of the business still, Brett, the working capital, the, your receivables taking, you know, call, let's call it 45 days to arrive. That still can, that's still a long time and, and can be tricky to deal with to learn.
I'm not hearing from you any of the like, oh, you know, working capital, you think you understand it, but your first time as business owner you realize you really don't understand it until you're actually dealing with it. And it's just, it's an important feature of many searchers experiences. But I'm not hearing that from you.
Is that because you're a cpa, you've seen into these business like you're just, you're experienced with working capital or what? Most of my CPA career I, I wasn't very good at tax, I wasn't very good at audit or maybe, maybe I wasn't that passionate about it either. So I never became a great technician in either of those fields.
Want what comes before or after? Hear the full episode on the publisher's site ↗