Have you ever asked yourself the question? “Is this a great time to offer my company?” That is a concern every business owner asks himself, every time he has a bad day. I then received an email from the editor of Auto Body News, asking me that key question. “What is happening in the market today? Is this a great time to offer?” My fast answer was “These are extremely fascinating times.”
Obviously, that answer does not tell you anything that you can get your teeth into.! Let me clarify my response. Given that I have been selling body look for nearly 5 years, I have actually seen numerous modifications in the body store industry. One thing that hasn’t changed is that there has actually always been an abundance of both purchasers and sellers. The purchasers have constantly been, and still are fussy about what they were looking for.
The best store in the eyes of the buyers is (A) one that has a consumer base and an earnings stream that is reliable and isn’t depending on the owner existing to retain each specific customer, and. (B) doing a volume of a minimum of $100,000 per month, however truly much more. If they have a DRP (Direct Repair Program, large volume sellers think that. This is where the insurance companies established a relationship with the body store to do all their customer’s business. Much like an HMO in a health insurance) contract, they have what the buyers want.
This may be true however the agreements are not automatically transferable, and a buyer will be really dissatisfied if the DRP leaves after paying cash for this “dependable earnings stream.” Smaller volume sellers, on the other hand, not having corporate accounts, dealers or other agreements still have hopes of getting a lot of cash for their stores. The typical shop I encounter is only doing about $300,000-$ 500,000 yearly gross earnings. What we have is a situation where a lot of purchasers are looking to purchase a shop, however, there are not a lot of stores readily available, that fit what they are interested in.
Not fewer of the big volume shops for sale, which is fairly stable, but fewer of the small mommy and pop repair work stores that have not been in heavy need. Low-volume stores are doing much better than they have in years. They still would like to get out, however, when they discover that their 5,000 sq. foot store which is making them a $100,000 net earnings, is just worth $100,000 on the open market they decide to keep on working.
As always, the stores doing $1 Million to $3 Million per year gross earnings are still in demand. The rate alone still is the primary factor, in figuring out if these stores will sell. A fine example of this is what is occurring in lower Orange County. There are currently a number of shops in Lower Orange County that are for sale, by the owners. They appear to be really profitable but the asking rate is too high and the buyers all understand it. Even the reality that these are the only shops readily available for sale in this prime location has not changed the truth that buyers simply decline to overpay.
Last year I was marketing a high-volume store, in Ventura County. The purchasers declined to pay the asking price, even though the volume was there. In this circumstance, the purchasers would not pay for the volume and stability of income unless the net earnings were there.
To clean up any confusion about what kind of purchasers we are discussing, let’s break the buyers up into categories. The very first category is the consolidators. There are 2 big ones in Southern California but they are not the entire market. I have talked to out-of-state consolidators that have actually asked about relocating to the So California market. Consolidators desire stores that fit their model. That model sometimes alters but basically, they will purchase a store if it fits their design.
They will not touch it if it does not. The cost by itself does not turn their interest on or off. We do not have enough space to discuss what this group will purchase, in this short article. It suffices to state,” If your shop fits their requirements they would have contacted you and expressed interest. If they have not called you, they are not interested.” Duration! They understand their marketplace and who remains in it.
By the way, if I owned a shop that a consolidator wanted, I would never offer it to them. I had purchasers for the same cash, or more, without the seller being at threat, however, no one asked me.
The second category is the several place shop owners. Generally with one or more DRP agreements shop that wants to broaden into more locations. They are really thinking about the sq. video footage of the shop, and its ability to manage over $2. Million Gross Income each year. This buyer just looks in restricted areas. The locations are where they have been offered a DRP contract. When they are looking, they require it now, while the window of opportunity is open to them.
Considering that I have been selling body stores for nearly 5 years, I have actually seen lots of modifications in the body store market. The ideal shop in the eyes of the buyers is (A) one that has a customer base and an income stream that is reliable and isn’t reliant on the owner being there to maintain each private customer, and. What we have is a scenario where a lot of purchasers are looking to purchase a shop, however, there are not a lot of stores available, that fit what they are interested in.
Not fewer of the large volume stores for sale, that are fairly stable, but fewer of the little mama and pop repair workshops that have not been in heavy need. Even the truth that these are the only stores available for sale in this prime location has not changed the truth that purchasers simply refuse to overpay.