More Detailed Overview
CHC offers “whole house fans” including the industry leader, QuietCool as well as Triangle Engineering Traditional fans. Whole house fans cool the customer’s home by pushing all the super-heated air out of the attic space, removing trapped hot air in the home and creating a cooling breeze through the home. Whole House Fans run at a much lower cost than air conditioning by a system that is out of sight and easy to operate. They are perfect for the climate in Denver since it always cools down in the evenings and mornings throughout summer, and the systems make is possible to cool the home without A/C for the far majority of the season. A/C is incredibly expensive to install and run, and does not work well in homes where attic spaces trap hot air. Most attics in the Denver Metro area reach 150 degrees F on a hot day, so A/C struggles to keep up with demand, making the basements cold and upstairs still unbearably hot (See video interview in the data room for more details).
Vendors: CHC is an Authorized Dealer for QuietCool Whole House Fans. They are Colorado’s oldest QC vendor, started installing their fans in 2004, and they are grandfathered into the best Contractor Pricing available. Additionally, their volume is high enough so that they are slotted into the premium status for the best pricing available. QC is proving themselves to be the way of the future in the whole house fan industry and QC has spent a lot of time and money advertising, which helps drive customers to their fans, and CHC in turn, since they have Authorized Dealer status and are the top installer in the state.
CHC also sells and installs Triangle Engineering fans, who make the highest quality Traditional Whole House Fans available on the market. CHC is the top Colorado vendor for Triangle fans, and Triangle has a partial exclusivity with CHC. Whenever a potential customer calls Triangle directly, Triangle sends the them to CHC to buy their product. There are tens of thousands of traditional fans in CO that are old and need replacement soon. This guarantees a stream of future work since many of the customers come to CHC for replacement. In most cases it’s an easy process for CHC to replace these fans, and high profit margins exist for this work.
CHC also offers “attic fans” or “powered vents”. These fans mount on the roof or in a gable, and are thermostatically controlled to push or pull trapped hot air out of the attic space when it gets hot in the attic. These fans are smaller and less expensive than whole house fans, and are designed to make existing cooling systems run more efficiently and work less.
CHC uses only the finest materials and have great relationships with the suppliers/vendors. As in all aspects of the business, CHC has detailed instructions on the ordering process, and systems in place through Quickbooks to keep track of inventory and ordering so that nothing slips through the cracks. QC offers free training online for selling and installing their products. CHC provides the best service and highest quality products from an inexpensive easy to train hourly employees whom are all W-2’d.
Sales: CHC has more work than they can handle in the summer with their phones ringing all day from May to August. For the last few years the Denver Metro area has seen incredible growth, and because whole house fans work so well in the Denver climate they are in high demand. The majority of CHC’s work comes from referrals and from online searches. The new owner will step into a very strong reoccurring cash flow from solid relationships with individuals that refer them work. CHC doesn’t pay a sales force and have no dedicated sales people.
Web: CHC has a complete business website, updated in 2019 to WordPress and hosted by Godaddy. They have 16 years of constant website submissions to push them near the top of the organic web searches, and pay for placement ads in other platforms which puts them consistently in the top 3 for paid advertisers. CHC receives work from Angie’s List where they have received the Super Service Award for the last 8 years, from Yelp, where they have received an outstanding service award for the last 3 years, and many other review sites as well.
Testimonials: The single greatest attribute to CHC is their phenomenal reputation online. Since 2003 they have completed thousands of new fan systems and have never had one complaint that they didn’t take care of immediately. They are 5 star rated with Google, and A+ rated with the BBB with no complaints and a perfect track record. They also have a stellar worker’s safety history without one claim and they enjoy the lowest insurance and workman’s’ comp rates available due to their “perfect” safety record. The seller will agree to full Reps and Warranties to a solid legal and business standing. This will be an asset sale.
Vehicles & Warehouse: The business has 3 wrapped utility vans worth a combined of around $60K, including 2 vans that are 2016 models with custom construction internally, specifically suited for the work. The tools, furniture, equipment, and other assets (other than inventory) will be included in the sale. The warehouse is incredibly organized and stocked up with all items needed for any job. Two indoor bays are available for 9’ high vehicles, and there is parking for taller vehicles in front of the building. A showroom has been constructed where potential customers can experience 3 different whole house fan systems. Conversion rates for customer bookings after seeing the showroom are extremely high, around 90%. There are two offices, each with a phone and computer for taking sales calls and emails. Phones are set up with the option to be answered remotely as well.
Financial: A Quickbooks file has been in place for CHC for ten years now, and has been meticulously maintained which makes it easy to keep financials organized. They have also created documentation with instructions on how to run Quickbooks specifically for this business. They have tables with checklists which outline all documents needed to be filed during the year and all payments needed to be made. Insurance policies are in place for Liability, Workman’s Comp, Auto and Property, each set up specifically for the work that is done by CHC. They’ve also kept all copies of previous insurance audits with excel tables to aid in making future audits seamless and easy.
Marketing / Growth: The owner has grown the business from 0 in 2003 to 800K + currently in revenue, while spending 6K a year on advertising. This is less than 1% of the revenues. It took many years to get to this point, but currently CHC turns away work every day during the peak season because they cannot keep up with demand. This is one of the best parts of this listing, and there are literally dozens of ways to grow this company. They specialize in a minimal amount of products to accomplish the goal of making customers comfortable in their homes and saving energy, so adding products that are popular year-round and can be installed in the winter like insulation, bath fans, ceiling fans, solar lighting tubes, etc, would be a relatively easy task. Working in the solar arena makes sense because Colorado is the 2nd sunniest state in the nation with over 300 days a year of sunny weather a year. The products listed above require the same knowledge, equipment and tools to install as whole house fans. Also, depending on growth, it would be easy to add offices in other locations since the business is so organized and streamlined. The seller says, “The new buyer can grow this company throughout the front range by just leveraging our 5 star online reputation”. CHC currently advertises in many areas online, and encourages word of mouth and positive testimonials with each installation.
They have a 34% net profit margin which is also extremely valuable.
Employees: Since the work at CHC is seasonal, they keep some workers employed year-round but several leave for winter and come back each spring when needed. CHC has developed detailed Operations Manuals + slideshows for employees that outline company policies. This business typically has 9 or 10 employees in the busy season and 2 or 3 full time employees through the off-season. The fan season coincides very well with school schedules, so the work is ideal for students on summer break. For any hiring that may need to be done, online profiles exist with detailed job descriptions that make filling positions a much easier process. CHC has always held back on hourly pay in order to offer Profit Sharing at the end of the year, but if wages are increased and Profit Sharing eliminated, it would be easier to find qualified candidates each spring.
On the Operational / Install side, CHC has checklists for all items needed in each work van and technical slideshows to instruct and refresh installers on the correct way to install and troubleshoot fans. Each slideshow includes detailed photos taken on jobsites over the last 16 years. Written tests exist for Installation Technicians (“IT) who are interested in becoming Project Managers (PM). Jobsite “prep” checklists go out with every job so that no steps are missed, working toward the goal of getting jobs completed in one day with no follow-up appointments needed. Google calendar is set up for each employee in order to manage and notify employees and define teams for each day’s work. Clipboard systems are also in place with job details for the day. A mobile merchant account app is on each PM’s phone so that payment can be processed once the job is completed.
Jordan has been with the business for over 11 years. He started as an IT, moved to the PM position and is now the Director of Operations. He is on salary, works year-round and is flexible and available to perform installs whenever they come up. He is completely self-sufficient and skilled in training new employees.
On the admin/sales side of the business, detailed systems are in place to maximize efficiency. To aid sales, each sales team member has a binder with information that makes all aspects of selling fan systems very easy and provide a consistent message to each customer. The binder includes information sheets, which make it easy to collect information from customers and make the estimation process seamless and easy. Sheets also exist with pricing and technical information to relay to potential customers, or “leads”. CHC has internal documents that have every possible question and answer, making it easy to answer detailed questions via email and doubles as a study guide for new employees. Sales employees are easy to train because the owner has an efficient model that his employees follow which covers everything from the incoming phone call to processing the final paperwork.
In 2019, Chris and DJ worked on the sales side of things and performed other duties while answering the phones. Chris has been with CHC for over 6 years, and he is more than willing to sign a legal document at the closing, offering a minimum of 6 months of future work with the new owner. The current owner pays this employee very well because they are personal friends and also because Chris has brought a lot of great attributes to the business. The owner allows Chris flexible hours for family obligations, recreation and volunteer work, and the owner believes that Chris will stay long-term if a new owner is open to that arrangement. If a new buyer wants to hire or promote instead, this employee makes the equivalent of $90K and a new manager would cost approximately $60K with the extra money now going to the bottom line. DJ is off for the winter, but anxious to come back in the spring of 2020.
The current owner of CHC will stay on for several months as needed. This will ensure a comfortable transition of employee, vendor, and customer relationships. The seller has a wealth of knowledge and many ideas to grow the business. In short, he is committed to help the new owner take the business to the next level, he’s passionate about the work accomplished by CHC, and is dedicated to setting the new owner up for success in every way. The owner works out of his house, the office, and in the field installing and/or meeting with customers. He does a lot of installing which is not the best use of his time. A new owner should be more focused on growth.
There are at least 7 potential employees that have worked for CHC over previous years who are eligible for rehire. There is also an IRA plan set up for employees who have been with CHC for at least one year.
Records: There is a CRM database program in place that has detailed information from every job completed. Every completed job has a paper invoice on record, which has been signed by the customer. The invoice used has evolved over 16 years to cover and protect the business owner, as well as to keep customers informed. Thousands of jobsite photos exist that are dated and labeled. Detailed voice recordings have been done for each job since 2009. Most importantly, there are thousands of existing detailed leads in the database. These leads include specific details and pricing for each customer’s home. It’s easy to sort these customers out in order to follow up with them in the Spring, and when they call it’s very easy to bring up their information and take up where you left off when last you spoke. Many of these leads will call in the spring to book an appointment to have the previously estimated work done.
In summary, CHC is an incredibly organized turn-key business with amazing growth potential, a stellar track record and a high profit margin. Colorado is the best state in the country to own a business like this based on both weather and growth of population. Colorado is #1 for Economic Growth in the US says US News and World Report. Many magazines and articles have rated Denver #1 for leading locations for economic strength. Here is “Area Developments” top 10 U.S. “Leading Locations”: 1. Denver. 2. Houston. 3. Grand Rapids, Michigan. 4. Greeley. 5. San Francisco. 6. San Jose. 7. Seattle. 8. Columbus. 9. Boulder. 10. Austin. CHC currently performs installations in the 3 cities from that list in bold.
Jeff Chapman Eisnaugle
Businessbrokercolorado.com & Jeffchapmaneisnaugle.com