How to evaluate a business

[nmikmik]

There is so many factors that go into selecting the "right" business for "me"

I have searched on the site and could not find a definitive (or close to) answer to my question.

 

Maybe someone has general formula for evaluating the business.

 

For example:

 

If the business does ~ $$$$$k gross a year and the parts mark up is %%

then the net should be $$$$$, the car count should be ### with ARO $$$, and the brake-even should be $$$

 

If the actual shop deviates from the formula a %% it's a go/no-go or re-evaluate.

 

I realize this is overly simplified, but at least it gives me idea what to look for when evaluating.

 

Thank you,

[Joe Marconi]

Premium Member Content 

This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

[nmikmik]

Thank you Joe!

 

I know exactly what you mean, sometimes it's like comparing apples and oranges.

 

I guess, what I am really asking is your opinion on what the net should be in relation to the gross of the shop.

Let's say it the similar two 6 bay shops with same rent and equipment. Both gross a $600k a year, but one of them nets $200k and the other does $120k. Obviously the first one looks a lot more attractive, but...

My question would be, is the 30-33% gross to net a "norm" for this size of a shop? Should it be higher/lower?

I am just trying to gauge it for myself roughly before I hire a professional ( I found one, but he charges on a per-business basis) to evaluate the business I am going to concentrate on.

Thanks,

[phynny]

If we're talking labor and parts you need to make a far better percentage than that. I will not go below 60% combined profit margin.

[nmikmik]

Thanks,

 

that is my problem at the moment (amongst many) is finding a shop with higher profit margin.

This has been a job all by itself

[phynny]

Thanks,

 

that is my problem at the moment (amongst many) is finding a shop with higher profit margin.

This has been a job all by itself

You lost me, what exactly do you mean?

[nmikmik]

Sorry,

 

I meant that shops I am looking at right now are not even close to 60% margin, and looking and evaluating and dealing with brokers etc. has been a chore.

Just pretty much complaining for no good reason