Decent cash flow… but margins this thin can break the deal.
This deck and fencing contractor in Tennessee is listed at $755K, generating about $1.9M in revenue and $225K in cash flow.
At first glance, it looks like a solid small construction business with decent scale.
But there’s one number that changes everything.
Deal Snapshot
Let’s run it through a standard SBA-style scenario.
Financing Overview
After debt, you’re left with about $114K per year.
That looks fine — until you understand how fragile it is.
The Real Problem
The margin is extremely thin.
- Low margin: 11.8% vs ~20.3% industry average.
- Tight jobs: Little room for cost overruns.
- High sensitivity: Small mistakes hit profit fast.
In construction, thin margins are where deals fall apart.
Why That Matters More Here
This isn’t a stable, recurring revenue business.
It’s project-based, which means:
- Material costs fluctuate
- Labor availability changes
- Delays happen
- Jobs can go over budget
With margins this thin, those risks aren’t small — they’re deal breakers.
And You’re Still Paying a Premium
This is where it gets worse.
- Overpriced: 3.44x vs ~2.14x industry average.
- Below-average performance: Yet priced above market.
- No margin of safety: Price doesn’t compensate for risk.
You’re paying more… for a weaker business.
Risk Profile
There are multiple layers of risk here.
- Elevated default rate: ~4.36% vs ~3.53% overall.
- Project dependency: No guaranteed recurring revenue.
- Execution risk: Profit depends on job management.
- Thin buffer: Limited protection against downside.
Everything has to go right for this to work.
What This Really Is
This is a fragile deal.
- Decent cash flow
- Weak margins
- High price
That combination doesn’t give you much room to operate.
BizHub Verdict
This deal scores a 5.7 / 10.
The cash flow works — but the margin and pricing make it risky.
One bad stretch, and the numbers fall apart.
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