Business purchase advice

[Sean]

Hello I am thinking about making the switch from mobile repair to purchasing a shop and have found a shop I am interested in. Here are some of the facts about the shop:

Established for over 25 years. Two techs an A &B tech that have been here almost that long. Very dirty shop environment with piles of car parts everywhere. No employee manual or SOPs to speak of. Owner not showing a profit to not have to pay taxes. I could go on about the red flags. On a positive note there is a ton of potential for increased profit due to the shops repair and not repair and maintenance mindset. At this point my biggest concern would be the current state of the shop and the techs willingness to change. What y'all think so far ? Thanks

[Rambiss]

Look at my post a few down. These guys will give great advice, research everything they say and you'll be in a good spot. From what you have described so far, my first thoughts are that you better be getting a smoking price and you'll want to have a solid understanding of what you'd be getting yourself into.

[bstewart]

Look at my post a few down. These guys will give great advice, research everything they say and you'll be in a good spot. From what you have described so far, my first thoughts are that you better be getting a smoking price and you'll want to have a solid understanding of what you'd be getting yourself into.

Agreed. This place sounds so bad, that I'd be looking to pay for basically the inventory + 10-25% of what he thinks his equipment is worth (because it's probably all over 10 years old and obsolete, he more then likely thinks it's worth what he paid for it).

No cash flow = no business value. Database/customer list & location isn't worth anything, it falls under goodwill in a business sale.

Just like Rambiss found out in his other thread, be prepared for both techs to jump ship if you try to change anything, and be prepared to have a very difficult time replacing them as well.

[phynny]

I have recently done something similar and I can tell you that you will probably lose/fire the techs. Out of the 11 at the place I just took over I'm down to 3 and a couple of those are going soon too...

[Sean]

Thanks for all the replies everyone. I really appreciate it. Rambiss I did see your post and that was a good one with lots of good info. It was strange in fact how similar our potential shops are, I.e. messy and outdated. I think the moral of the story is that change is hard for people and techs have wheels on their toolboxes for a reason .

[Sean]

Thanks again

Edited March 20, 2014 by Sean