(This is a sample of a business tune-up performed by Frank Besednjak for a small service contracting business whose owner was planning on selling his business in 1-3 years. Obviously the names and information has been modified to protect the confidentiality of  the client. After meeting with the business owner, our objectives were to determine the value, look for improvement areas in the processes and make sure we make the business as valuable and attractive as possible for the potential investor and/or buyer.)

This document from Frank Besednjak is intended only for the use and viewing of Mr. Company owner listed below. This document may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient, you are hereby notified that any use, dissemination, distribution or copying of this communication is strictly prohibited. If you received this document by accident, please notify the sender immediately and destroy it and all copies of it.

Business Tuneup – Findings & Recommendations

By Frank Besednjak


Frank Besednjak performed an onsite visit on August 11, 2016. The objective of the visit was to perform an overall audit of business systems and practices and develop a list of recommendations that may enhance the business’ performance and value. Mr. Besednjak met with Company President and several members of the team. Mr. Besednjak also reviewed financials and business systems.  This report of findings is a confidential, personal and professional opinion based on the conversations, information and observation of the business during the site visit and subsequent communications. Mr. Company owner’s objective is to sell the business in 1-3 years.

The Team of Employees - Comments

  • Mike Brown - Owner

    • Runs operations as needed, based on own opinion. May need to step back – Sometimes trying to help, doesn’t help

    • Sales & service support – Not really necessary, staff doesn’t require help, prefers to do it alone. Probably runs better with less management interruptions.

    • Needs to spend more time building client relationships, managing overall systems, not people and must stop micro-managing the team and tasks.

    • Let employees do their jobs.

  • Eddie Haskell – GM

    • Had medical problems recently that impacted work and performance. This caused Mike Brown to fill in when needed.

    • Needs to be given power and responsibility to run operations. I recommend Eddie be given the opportunity to run the business without supervision. May have future medical problems again. Need to consider grooming a replacement.

    • Knowledgeable and business savvy.

  • Tom Cooper – Marketing Mgr.

    • Blurred responsibility. During discussion gave an incredibly long list of things he does every day yet I don’t really know what he is responsible for.

    • Seemed defensive when challenged. My opinion is that he doesn’t have complete responsibility for anything and just tinkers around in everything. Saw a pile of old warranty claims sitting on his desk. This is money for the business, yet it seems he does those when he can’t find something else to keep him busy.

    • I asked about website, he says he was going to update it but got busy. Asked about marketing done since he mentioned he was responsible for marketing, he showed me a Facebook page that probably took an hour to develop. I referred to website design co. for the website. Also, recommended Customer Contact System to build client relationships.

    • He has good intentions but I believe he should get specific directions and objectives with timelines and target dates.

  • Carol Wright – Administrative / Accounting / Financial

    • I did not get an opportunity to spend one on one time with Carol. I could tell she is dedicated and hard working. She sets objectives and makes them happen. A very important team member.

  • Tom Jones – Service Manager

    • I’m not sure Tom knows what he is actually responsible for. A hard worker and dedicated but I don’t know for sure if he knows what his real job is.

    • Tom is a troubleshooter. When there is a problem, he takes care of it. If he can’t take care of it, Tony gets involved. Typical for someone promoted from within. Hard to break the previous habits and take his new responsibility and handle it correctly. Recommend he attend a service manager conference or leadership classes.

    • I believe Tom needs some clear lines of responsibility and ability to make decisions and take action without permission.

  • Betty Boop – Center of everything

    • It’s rare to find an employee who has the ability to overcome any obstacle to get the job done. Betty is one of those people.She is not one of those employees who will complain about anything, she figures out a path to her goal and heads in that direction.

    • Handles calls, dispatching, follow-up and invoicing.

Observation of Systems and Processes

  • Service / Dispatch / Scheduling

    • Work orders come in and entered in system

    • Betty takes a picture of the order and texts it to the tech

    • Betty calls customers to announce arrival times

    • Techs call Betty to clear calls

    • If a part is purchased, order is on hold until a PO is entered

    • Once PO is found and matched, invoice gets entered

    • All invoices are brought in to Betty to enter

    • Comments: Wow! There are so many ways this could be easier. Too many steps. I recommend using the Software system up to its capabilities. Techs may need training and hand holding at first to go paperless. Due date of September 30 to go paperless per Business owner

  • Marketing / Customer Retention

    • Website was obsolete – Recommended Web Design Co. need for follow up

    • Facebook has some new items, no client interaction, nothing of value on Facebook.

    • No other customer retention programs in place

    • Recommend a marketing company software program to improve retention

  • Leadership / Management

    • If Business owner is to be transferable, a business leadership strategy needs to be in place

    • Current climate is confusing as to who handles anything

    • Clear leader is not obvious

    • Recommend a strategy to employ or turnover leadership to a strong employee

    • Business owner needs to let go of reigns and allow hired leaders to manage business

  • Valuation for sale or transition notes

    • Before anything happens a business strategy with obvious systems and clear tasks of employees needs to be established

    • Customer retention program needs to be in place

    • Employee training & updates need improvement


Market Analysis

Company has a well-deserved reputation for quality and reliable customer service and competitive prices in the community. Being that there is very little competition locally for clients’ services, Company will probably remain the leader in their geographical area. However, faced with current employee limitations and knowledge prevent taking full advantage of improvements in technology, Company faces the possibility of serious competition if a well-run organization were to move into this geographical area.

The fact that their location is an attribute that keeps competitors from taking over the market is also a disadvantage to potential investors. The market currently enjoyed by Company is very limited in growth potential and does not have any potential for significant growth in the foreseeable future.

Business Leadership

Although Mr. Business Owner has a good grasp of the business and its processes, there is no clear leader who can jump in and take over within a moment’s notice for a long term need. I believe Mr. General Manager has the capability and skills to successfully run the operation if need be. However due to his health, the potential for this to continue long term may become a problem for any potential investor or partner. I would recommend finding another general manager who may be able to take over in three to five years.

Financials – Reviewed YTD stats as of 07/31/2016

The business gross sales percentage break down as follows:   

Residential Installation – 35.4%

Commercial Installation – 22.6%

Residential Service – 14.3%

Commercial Service – 13.9%

Residential Service Contracts – 4.8%

Commercial Service Contracts – 5.3%

Other – 3.7%

Gross Profit margin for each group are:

Residential Installation – 11%

Commercial Installation – 43%

Residential Service – 63%

Commercial Service – 58%

Residential Service Contracts – 29%

Commercial Service Contracts – 30%


Based on the data, I would recommend focusing the business on continued growth outside of the current area especially in the commercial market. Even though residential margins are high, attempting to run residential long distance does not pay off. Commercial work is not that geographically sensitive. As far as commercial work, I would recommend evaluating a Commercial pricing and estimating software to streamline operations.

Company enjoys very good margins with an excellent bottom line. Hourly Cost per hour per tech is above average number for a HVAC service businesses, however this is offset due to pricing strategy using flat rate. The productivity of technicians was a bit difficult to determine because I could not determine unbilled time accurately. Based on the information I had, the costs per hour for technicians averaged $65.95. Assuming a markup of $20 per hour, the average per hour charge should be at least $86 per hour. The average gross income of $689 per day is in line with this number.

Revenue is not a problem, and would be attractive to investors, however the business as it stands today will be difficult to market. Minimal growth potential, lack of a clear leader, no customer retention programs, geographical location not desirable create a problem to attract investors. As far as improving customer retention and eliminating the possibility of future competitive problems Company should consider Customer Lobby system to handle the customer communications and retention programs. Assuming the leadership, process and marketing issues are addressed, we would still have a problem with the geography. So that leads me to lower the overall value of the business.

Based on the data I received the annual net profit will be approximately $175K. Using rule of thumb values in the industry as three to five times the net profit, the value will be approximately $525K on the low end and $875K on the upper end. As mentioned earlier, the value will probably be around the $525K range simply because of the location and current market.

Should Company owner desire additional assistance. I am always available. I do have connections with investors and business valuation organizations if you find it necessary to seek another opinion.

Thanks so much for allowing me the opportunity to help!  Frank

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