How to Evaluate a Single Branch of a Multi-Location Business (When the Seller Doesn’t Track It Separately)

Byron wants to buy one location of a multi-location business—but the seller doesn’t break out financials by branch. So how can he evaluate the performance of just the location he’s interested in?

This is a common challenge in small business acquisitions, especially when the current owner hasn’t set up location-specific accounting. It may sound shocking, but many small business owners don’t track performance per branch—either because they don't know how or never felt the need. https://youtu.be/ef_vu8epGpA 

So What Can Byron Do?

Here are a few options:

1. Work in the Business Before Buying

Spend time on-site. Observe daily traffic, customer behavior, and staff activity. This is one of the most reliable ways to get a “gut-level” feel for the branch’s performance.
It’s often used in industries with poor record keeping or unreported cash sales (like bars, furniture stores, or restaurants).

note: If the business is seasonal, your observations could be skewed depending on when you visit.

2. Use Indirect Clues

If you're lucky, you might be able to estimate sales from:

• Customer invoices with location details
  
  

• Inventory shipments
  
  

• Staff schedules or payroll per location
  Still, this can be tricky if no records are kept at the location level.
  
  

Protect Yourself in the Deal

When buying a business with incomplete data, deal structure becomes your main line of defense. Use performance-based terms like:

• Earnouts
  
  

• Seller financing tied to future results
  
  

• Clawback clauses

Learn the Right Way to Buy a Business

If you’re exploring business acquisition as a way to own a profitable business (without starting from scratch), make sure you’re properly equipped.

I cover how to protect yourself and make smart buys—even with messy books—in my program at: www.BusinessBuyerAdvantage.com

Don’t forget—join my email list for early access to my latest videos and insights at DavidCBarnettList.com. You’ll even receive 7 FREE gifts when you sign up.

Talk soon,
David Barnett

More Balance Sheet Bombs

 

***New Video Alert!

You see the payables.

You agree to the payables.

But wait, there’s more… that you find after closing.

Avoid this Balance Sheet Bomb!

Watch this week’s video here: https://youtu.be/1izgWVGELOw 

Cheers

See you over on YouTube

David C Barnett

Should You Buy a Business That Relies on Bidding for Contracts?

 Lately, I’ve been working with several clients who are exploring opportunities to purchase businesses that rely heavily on bidding for contracts—particularly in service industries like plumbing, electrical work, HVAC, and similar trades. I want to share some key insights and potential pitfalls when it comes to evaluating these types of businesses. https://youtu.be/V-ejWqEQL3c 

Two Types of Service Businesses

Let’s take a plumbing business as an example. Generally, there are two ways such businesses generate revenue:

1. Retail or Repeat-Service Model

In this model, the business services homeowners, property managers, or small landlords who call them on a regular basis. Even if a customer only needs help once or twice a year, there's still a steady, recurring flow of business.

This is true goodwill—it’s based on relationships, brand recognition, and customer loyalty. When a buyer purchases this kind of business, they are acquiring not just cash flow, but also a customer base that keeps coming back.

2. Contract or Project-Based Model

The second model is where the company primarily bids on projects—new apartment buildings, commercial developments, or infrastructure projects. These tend to be one-off contracts, often awarded by general contractors or government entities based on competitive tenders.

While this model can generate large revenues, it does not foster recurring customers. Each new job must be won through a fresh bidding process, and winning depends heavily on price competitiveness and timing—not customer loyalty.

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The Illusion of Value in Contract-Based Businesses

I’ve seen many business brokers present these project-based businesses as high-value opportunities based on rising past revenues. However, here’s the problem:

• The revenues aren't recurring.
  
  

• There's often no order book—no backlog of secured contracts for the future.
  
  

• A large percentage (sometimes 20–25%) of annual sales may be tied to a single, one-off project.
  
  

• There is no guarantee those levels of sales will continue.
  
  

To make matters worse, some sellers underbid contracts in their final year to make the revenue figures look good, potentially leaving the buyer with unprofitable work after the deal closes.

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So, What Is the Business Really Worth?

Valuing a project-based business like this can be challenging. While the business might have a strong reputation and skilled employees, the uncertainty of future cash flow undermines its valuation. Unlike recurring service models, project-based businesses do not build goodwill in the same way.

This often means:

• Earn-Out Agreements: Instead of paying based solely on historical earnings, buyers may offer an earn-out where part of the purchase price is paid based on the business’s actual future performance.
  
  

• Long Seller Involvement: The seller might need to stay involved post-sale for a significant time to continue bidding, pricing, and leveraging industry relationships.
  
  

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Key Takeaway: Buy Stability, Not Just Revenue

If you're choosing between two similar businesses—one with regular, returning clients and the other dependent on new contract wins—the one with repeat business almost always offers greater long-term value and less risk.

Before you buy a business that’s driven by bidding on contracts:

✅ Look for an order book with future work secured.
✅ Understand whether the past revenue is repeatable.
✅ Be wary of underpriced contracts that may burden you post-purchase.
✅ Consider earn-out structures if the future income is uncertain.
✅ Expect to keep the seller involved longer than usual.

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Thinking of Buying a Business This Year?

If you're planning to buy a profitable business within the next year, check out my Buy a Successful Business Accelerator Program. It’s a small, exclusive group where I personally work with participants to:

• Analyze real deals
  
  

• Structure offers
  
  

• Navigate financing and negotiations
  
  

Don’t forget—join my email list for early access to my latest videos and insights at DavidCBarnettList.com. You’ll even receive 7 FREE gifts when you sign up.

Talk soon,
David Barnett

PREMIERE- Peter Roth Small Business Call Centres Unlisted

 

PREMIERE- Peter Roth- Building Call Centres

New YouTube Premiere interview guest- Peter Roth

I’m happy to have Peter join me for a conversation.

Peter has years of experience in sales and marketing for home service companies and, in particular, setting up and running outbound sales call centers.

Peter and I discussed the value of a call center in 2025, what they look like, what the metrics look like and whether this should be something you want to consider.

It’s all about controlling a ‘wholesale source of leads to your business’ as Peter puts it.

This is a ‘must see event’ for business owners or those who will one day.

Set yourself a reminder on YouTube here: https://youtu.be/qxtMumX0uGg 

Premiere will be live Monday May 26, 2025 at 1pm Atlantic Time and 12 Noon Eastern Time 

See you there!

David C Barnett

How Terms Can Matter More Than Price in a Business Sale

 When it comes to negotiating a business sale, the price tag might not be as crucial as you think. Sometimes, the terms of the deal can carry more weight than the actual dollar amount—for both the buyer and the seller. https://youtu.be/iqo5EngtGa8 

A Lesson in Smart Deal-Making

Recently, I worked with a consulting client who gave me one of the best testimonials I’ve ever received. After a short phone conversation, I helped him restructure the terms of a deal he was already negotiating—and the result? An extra $250,000 in his pocket.

This isn’t a one-off story. I’ve previously discussed similar situations, like the time a business owner sold for more than expected by simply offering better vendor financing terms to the buyer. The buyer couldn’t find comparable terms elsewhere, which made the higher price acceptable.

Canadian Share Sale and Tax-Free Gains

The client I helped recently was selling shares of his Canadian business, a type of sale that qualifies for tax-free capital gains under certain conditions. He had smartly prepared with his accountant over the years, combining his tax-free allowance with his spouse’s.

The Catch: Interest Income

However, when sellers finance a portion of the sale and collect interest, that interest income is taxable. We discussed structuring the deal to offer low-interest vendor financing in exchange for a higher overall sale price. This made the offer more attractive to the buyer and more profitable (and tax-efficient) for the seller.

Outcome

The seller met with the buyer, proposed the new terms, and the buyer accepted. The deal closed with an additional quarter-million dollars in the seller’s hands, purely from creative thinking and flexible negotiation.

How You Can Do the Same

If you’re thinking of selling your business, it's crucial to:

1. Prepare Properly – This seller had been working with a tax advisor for years.

2. Get the Right Help – Strategic advice can uncover value you didn’t know was possible.

Visit www.howtosellmyownbusiness.com to learn about the five-step process I use with clients:

• Education

• Evaluation

• Preparation

• Advertising

• Coaching

Final Thoughts

If this story inspired you, please like or share this post. It helps others discover useful content and boosts visibility through platform algorithms.

And don’t forget—join my email list for early access to my latest videos and insights at DavidCBarnettList.com. You’ll even receive 7 FREE gifts when you sign up.

Understanding Inventory Turns

 

***New Video Alert!

How do you know if you’re being efficient with your operating capital?

Inventory is cash tied up in your business. 

By calculating ‘turns’ we can understand if you’re doing a good job or not of managing this money.

Watch this week’s video here: https://youtu.be/ipPItWeKowc 

Cheers

See you over on YouTube

David C Barnett

2025 SBA 7 a Loan Changes Good or Bad

 

***New Video Alert! The new US administration has made changes to the SBA small business loan program. Today, I give a quick rundown of the changes and then tell you what I and others think of them. Watch this week’s video here: https://youtu.be/CaVXLuVNqFk Cheers See you over on YouTube David C Barnett