The Business: Honk if you're looking for a business that offers you a small-town lifestyle with big-time profit potential. This 60-year-old billboard company -- which has 154 "advertising faces" in 34 rural communities -- boasts impressively high profit margins, strong ties to both national and local corporate customers, and a record of renting out nearly all its ad space, even while it has increased its capacity by 10% a year. Another selling point: thanks to this company's long-standing arrangements with many of the farmers and mom-and-pop storekeepers who provide the billboard locations, its own leasing costs are less than 6% of sales, compared with an industry average of about 20%. The current owner, who purchased this business five years ago, now wants to concentrate on another venture, but his two full-time "operations" staffers (they're the paste-up guys) are willing to hang on to their hook ladders.

Price: $1,260,000

Outlook: All signs look good. Although competition in the outdoor-advertising market can be fierce in the large U.S. metropolitan areas, less populated regions tend to be overlooked, which is why this business has a market with a 75-mile radius pretty much all to itself. Though customer fees vary, they average about $220 monthly per billboard. Expansion would be relatively simple: since customer demand is strong (from banks, motels, restaurants, automobile manufacturers, and more), a new buyer just needs to add more billboards, at a one-time cost that typically runs about $4,000 a sign, excluding labor.

Price Rationale: Billboard-advertising companies typically sell for three to five times annual sales. If you rely on average results from the past three years -- about $336,000 -- that would make the price range $1 million to $1.7 million. Should this company be positioned near the lower end? Though its profitability level might justify a higher price tag, it doesn't serve the kind of urban market likely to attract widespread interest.

Pros: Like its region, this company is a hidden gem, thanks to its profitability, lack of competition, and potential.

Cons: If you like your billboards surrounded by all those big-city amenities (including traffic jams with "captive" motorists who'll read your ads), look elsewhere.

Gross Revenues Recast Earnings*
1998 $297,166 $165,649
1999 $333,704 $172,707
2000** $376,000 $212,605

*Before interest, taxes, depreciation, and owner's compensation.

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Victor Root, at 480-947-6144.

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