Hello, new member here.

[Alan_Beshore]

Hello, new member here.

 

So i am giving the idea of buying, or starting, an auto shop very serious consideration. One question I would like to get some input on is how easy it is to grow by acquisition. Has anyone in the room actually bought or sold an actual operating business ? Is anyone attempting to borrow to buy out other operating shops ? Assuming you have solid 12 months trailing P&L statements, how difficult is it to acquire financing ? Does anyone here presently operate more than one location ? Is it a silly idea to think you could grow from one location with say four employees, to four locations with 16, in say 3 years ?? Does that sound like total fantasy, or not likely, or reasonable, or easy ?

[xrac]

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[Alan_Beshore]

I know a guy in Texas who started from 0 and has 6 stores after 15 years. They are all franchises started from scratch.

 

Thanks for the response. I have been wondering about the prospects for growth for quite a lot of time now. I am thinking most people that come up in this business tend to fixate on the actual act of repairing cars, instead of focusing on the financial metrics and the system as a whole. I'm guessing about that though, and since I haven't actually done it, I cant say for certain.

[xrac]

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[HarrytheCarGeek]

Alan, Welcome.

 

I have a lot of experience in this area of the business. The questions you may want to ask yourself is what do you want to accomplish and what is your exit strategy.

 

Owning shops just for the sake of ownership does not seem a viable strategy to me.

[Alan_Beshore]

Alan, Welcome.

 

I have a lot of experience in this area of the business. The questions you may want to ask yourself is what do you want to accomplish and what is your exit strategy.

 

Owning shops just for the sake of ownership does not seem a viable strategy to me.

 

The assumption would be that they run at respectable margins. In that case then more shops would be better. It seems like the exit strategy would be to sell the operations at some point, or maybe just cease operations and sell the assets and real estate if any. I think growth by acquisition is a viable idea because there seems to be a lot of value in some of the businesses I have investigated for sale. Some are a lot of blue sky combined with junk in the garage, but others seem to be genuinely worth the asking prices.

[HarrytheCarGeek]

The assumption would be that they run at respectable margins. In that case then more shops would be better. It seems like the exit strategy would be to sell the operations at some point, or maybe just cease operations and sell the assets and real estate if any. I think growth by acquisition is a viable idea because there seems to be a lot of value in some of the businesses I have investigated for sale. Some are a lot of blue sky combined with junk in the garage, but others seem to be genuinely worth the asking prices.

See, this is the crucial point, what is a respectable margin to you? It may be a simple answer if you already know what kind of return you are looking for your money and time, otherwise it way may not be.

 

The low interest rates the Fed has set after their 2008 fiasco has really distorted the business environment, a lot of businesses that should have closed are still crawling along, this makes it much more difficult to know where to invest.

 

there seems to be a lot of value in some of the businesses I have investigated for sale. Some are a lot of blue sky combined with junk in the garage, but others seem to be genuinely worth the asking prices.

Yes, there is lot of opportunity, specially because many successful shops have older management that is ready to retire but cannot sell.

 

Best of luck with your endeavour.

[Alan_Beshore]

 

See, this is the crucial point, what is a respectable margin to you? It may be a simple answer if you already know what kind of return you are looking for your money and time, otherwise it way may not be.

 

The low interest rates the Fed has set after their 2008 fiasco has really distorted the business environment, a lot of businesses that should have closed are still crawling along, this makes it much more difficult to know where to invest.

 

 

Yes, there is lot of opportunity, specially because many successful shops have older management that is ready to retire but cannot sell.

 

Best of luck with your endeavour.

 

It seems like between 10-20% profit margin is a reasonable expectation. Low interest rates have helped things overall, in my opinion. There seems to be a lot of opportunity. Its possible that its just an illusion. It seems like almost no one keeps genuinely accurate books, and no one has audited financials. So they can never support the asking price with actual data.

Edited September 15, 2016 by Alan_Beshore