Selling your shop.

I'll also assume someone is willing to pay more than book value for it.

Knowing what you know about your business, if you had a pile of cash to invest, what would you pay for your business and what would be an acceptable return on that cash investment?

I have bought shops at $0.10 cents on the dollar of appraised equipment, to other where I paid a 300% premium because I identified an undeveloped opportunity.

You brought up an interesting point, in my perspective most business people I have dealt with do not have an exit strategy from the business they are in.

 

You brought up an interesting point, in my perspective most business people I have dealt with do not have an exit strategy from the business they are in.

Not only do most shop owners not have an exit strategy, they also significantly overvalue their business based on the years of hard work they've put in & customer rapport (goodwill, that generally goes away with the original owner) rather then basing a value on the numbers, KPIs or any kind of return on investment.

 

Not only do most shop owners not have an exit strategy, they also significantly overvalue their business based on the years of hard work they've put in & customer rapport (goodwill, that generally goes away with the original owner) rather then basing a value on the numbers, KPIs or any kind of return on investment.

 

Knowing what you know about your business, if you had a pile of cash to invest, what would you pay for your business and what would be an acceptable return on that cash investment?

 

I have bought shops at $0.10 cents on the dollar of appraised equipment, to other where I paid a 300% premium because I identified an undeveloped opportunity.

 

You brought up an interesting point, in my perspective most business people I have dealt with do not have an exit strategy from the business they are in.

You have both made some very important points. And it's never too early to plan for an exit by systemizing everything.

Here's something I had posted in August:

http://www.autoshopowner.com/topic/10178-if-you-had-to-sell-today-what-is-your-business-worth/

The more turnkey your business is, the more valuable it will be, when you're ready to sell!

Marcus Lemonis says, "When you add systems, you add margins."

Margins mean: you make the money now, while you own it.

And then, you make it again, when you sell it.

Related to the topic, Ratchet and Wrench posted this on their facebook page yesterday:

http://www.ratchetandwrench.com/RatchetWrench/July-2014/Determining-the-Value-of-Your-Business/

If somebody offered to buy me out the keys wouldn't hit the floor before I was out of sight. After 3 decades of this...put a fork in it

If somebody offered to buy me out the keys wouldn't hit the floor before I was out of sight. After 3 decades of this...put a fork in it

The mental picture you gave me with your comment made me laugh so hard I thought I was going to die.

The thing is, if you have the car business in the blood, you can't just walk away from it. I have built buildings from concept to turn key operation, but I never got the satisfaction I get like the one of a broken car coming into the shop, fixing it, and the customer driving it away without complaint. In over two decades of service, I have only received 3 calls from customers to let me know they are happy with the way their car runs after a repair, even then I don't see my work as a thankless job. Customers show their gratitude by returning to have their car serviced with us.

I was a great mechanic, but to make the money I wanted to make to live the life I wanted to live, I figured I had to own my own shop, just to find out that meant I had to stop being a mechanic and turn into a businessman. I also didn't have a exit strategy until one of my old employers dropped dead at 45 years of age and his shop was liquidated. That was my lesson to think way ahead and see where I wanted to go with my life and business.

Its in my blood. That's the reason I hear time and again when talking to old guys at the auctions or trade shows. "Bob, after the merger you became a multi millionaire, why do you keep woking on junk?" "Not sure really, its in the blood I guess" Its interesting.

It is in my blood too, but I think we all have to be realistic with ourselves. I been working on cars since I was 8. Entered the industry at 18. I'm 32 now, and running my own shop is my dream. However, I don't want to be turning wrenches at 50! I plan with an exit strategy so that I can take that money and invest in other ventures (rental properties, land, etc). So I don't have to be busting knuckles, crawling under dashboards etc. maybe I won't bow out of the industry. Maybe I'll supplement my income so that I can then take a much more lax approach with my business. Take in only the ham and eggs job. Who knows. I know the key is to take the revenue from the business and use it wisely.

In a heart beat, but the purchase check needs 6 zeros on it! I've been working on cars for 48 years or so, at a multi line new car dealer for about 33 of those years, my own shop for 11 of those years now. I would move on to something less stressful if I could find someone that wants to do this job but I believe the younger people are not at all interested in this occupation any more. Over the years I have seen so many guys get into this business and get out a short time later. Us old timers just did not know when to get out I guess.

Going back to work now............

Dave

I remember the summer after college doing property maintenance for one of the largest builders in northeast Ohio. The owners son was my supervisor (he ran the operation, his 82 yr old father was only the boss in title). The fall was coming to an end, I was at his 6 million dollar home cleaning gutters and getting equipment ready for the winter. He verbally gave me an offer to stay onboard. I told him thanks but no thanks. I explained to him I was opening an auto repair shop. His face looked like it was in pain. He said: Mario there are easier ways to make a lot of money, auto repair isn't one of them. The money is in construction and property management.

I opened up my shop that January, my old boss was right, there are a lot of easier ways to make money. I am currently looking for a partner or somebody to lease my building while I go back into my field of study; teaching. Ideally I would like a motivated partner to take over operations and I could be involved during weekends and summers

Anybody on here live in a 6 million dollar house??

I so want to move on................

sorry.

Dave

On 10/30/2015 at 7:35 AM, HarrytheCarGeek said:

 

The mental picture you gave me with your comment made me laugh so hard I thought I was going to die.

 

The thing is, if you have the car business in the blood, you can't just walk away from it. I have built buildings from concept to turn key operation, but I never got the satisfaction I get like the one of a broken car coming into the shop, fixing it, and the customer driving it away without complaint. In over two decades of service, I have only received 3 calls from customers to let me know they are happy with the way their car runs after a repair, even then I don't see my work as a thankless job. Customers show their gratitude by returning to have their car serviced with us.

 

I was a great mechanic, but to make the money I wanted to make to live the life I wanted to live, I figured I had to own my own shop, just to find out that meant I had to stop being a mechanic and turn into a businessman. I also didn't have a exit strategy until one of my old employers dropped dead at 45 years of age and his shop was liquidated. That was my lesson to think way ahead and see where I wanted to go with my life and business.

Well, I'm not 45 but I damm near dropped dead from a heart attack.  My shop is officially up for sale.  I priced it pretty low so it would go, but if I don't see any action in the next month or so it's going to get liquidated.  I've got other pans in the fire and can easily maintain my lifestyle with next to no change at all... even without the shop income.  So, if you're looking to buy a turn key shop, I've got one.  If you'd like to drive to Tulsa with a big truck and load the whole place up and move it... by all means come get it.  

As someone who has been actively pursuing the buy side of these transactions, I can tell anyone, and everyone, the single most overlooked aspect of the sell side is properly documented financial statements. It is truly amazing how many shops I have investigated that don't keep proper books. As a buyer, its actually really disappointing. I wonder if some of the sellers I've looked at can even count past two digits, meanwhile they think their business is worth seven figures. Stupid. Btw, I'm looking in Harris county Texas.