Buying a fully equipped shop..Worth this money?

[sparkerauto]

Ok so im in the process of looking at a shop to start my business. I came across a shop that the owner wants to retire. He has gave me the option to buy all this stuff thats in the shop. So basically i would lease the biulding from the landlord and go to work . There is some stuff thats older and wouldnt be much use anymore, like the alignment machine is snap-on and is really old. only does vehicles up to 2001 or something. And the 4 post rack is older and its only does compact cars an f-150 or bigger wont fit on it so i would have to purchase and new rack and alignment machine. He threw me a ball park price of 40k. The shop is set up really nice, shelving and and cabinets full with assorted nuts,bolts,washers,hose clamps exc. He has inventory as well oil tanks and transmission bulk about half way full. I attached two scanned copies of the basic stuff i will be getting for the price. Let me know what you guys think. thanks

[Spence]

Ok so im in the process of looking at a shop to start my business. I came across a shop that the owner wants to retire.

 

How long has he been at this location and working this business?

 

He has gave me the option to buy all this stuff thats in the shop.

 

Fair enough

 

So basically i would lease the biulding from the landlord and go to work .

 

Is the lease transferable?

 

How much longer is the lease good for?

 

Is there an option to renew the lease at the end?

 

Are there any price increases built into the lease?

 

There is some stuff thats older and wouldnt be much use anymore,

 

Then it is not worth adding it into the price if you can't use it to make a profit.

 

like the alignment machine is snap-on and is really old.

 

It says Hunter on one of the two scans... Did I read it wrong?

 

only does vehicles up to 2001 or something.

 

This is a myth... Why can it not do newer then 2001?

 

Is it because the specs only go to 2001?

 

And the 4 post rack is older and its only does compact cars an f-150 or bigger wont fit on it so i would have to purchase and new rack and alignment machine.

 

I would agree on the rack... Does it have to be new? If so why?

 

He threw me a ball park price of 40k. The shop is set up really nice, shelving and and cabinets full with assorted nuts,bolts,washers,hose clamps exc. He has inventory as well oil tanks and transmission bulk about half way full.

 

All well and good. Look at what is worth something to you and put a value on it. Do your homework here. Look up what a used piece of equipment in the same condition is worth. Be fair in your pricing and compare to what he is offering.

 

I attached two scanned copies of the basic stuff i will be getting for the price.

 

Ok

 

Let me know what you guys think.

 

What is this business doing in gross sales?

 

What is the overhead costing so you can figure out if this business is making a profit?

 

How many employees are working at this location?

 

Will the guy retiring be staying on to help in the transfer of customers?

 

Are the customers vehicles line up with what you are trained to work on?

 

What are your plans? Remember people in business usually fail to plan not plan to fail. The ones that don't plan usually do fail.

 

Have you ran a business before and have training in doing so?

 

thanks

 

You are welcome

 

 

I hope I have given you something to think about. I'll check in later to see if you have answered this post and any others that may comment.

 

I wish you well in your quest

 

Spence

[sparkerauto]

thanks for the reply spence, Im not actually buying the business im just buying at the equipment. I would be changing the name of the current business since the owner now focused mainly on foreign cars hense name " Foreign Auto doctor". I work mainly on Ford products, i would be working on alot of cabs and livery cars. Im willing to work on any product though. He said he is willing to stick around for a month and introduce me to his customers and so on. I also would be taking over his same phone number too. Hes has his shop open for 32 years in this location. I would not be transfering the lease i would be making my own deal with the landlord. The alignment machine cant be updated anymore hunter told him that was the last update for the machine. He said his average is 30k a month. 10k for expenses, 10k parts and 10k profit. Its just him and one other guy thats been working for him for 17 years. I have never ran a business i am an auto tech trying to move on from the dealer scene and do my own thing.

[Spence]

thanks for the reply spence,

 

You're welcome

 

Im not actually buying the business im just buying at the equipment.

 

Got it

 

I would be changing the name of the current business since the owner now focused mainly on foreign cars hense name " Foreign Auto doctor".

 

Which brands does he focus on?

 

I work mainly on Ford products, i would be working on alot of cabs and livery cars.

 

Do you already do these or where is "a lot of cabs and livery cars" going to come from? Depending on how you answer this question would have me giving one of a couple different replies.

 

Im willing to work on any product though. He said he is willing to stick around for a month and introduce me to his customers and so on. I also would be taking over his same phone number too. Hes has his shop open for 32 years in this location.

 

If worked right this could be a good benefit to let you get on your feet

 

I would not be transfering the lease i would be making my own deal with the landlord.

 

Has this been done already and/or at least have it done with at least two conditions.

 

The alignment machine cant be updated anymore hunter told him that was the last update for the machine.

 

It doesn't need to be in order to do an alignment, Camber, caster, toe, SAI, IA, setback, thrust angle and so has not changed.

 

How many are you thinking you are going to do?

 

Spec are available on an information system,

 

If you are going to go newer I would NOT recommend the new target systems! With a lot of places being sucked into buying them you could pick up a good 4 or 5 year old system that if you really feel the need to have the latest spec and be updated.

 

He said his average is 30k a month. 10k for expenses, 10k parts and 10k profit.

 

The numbers do not sound right. You need better proof of this. If you are not buying the business then it's really a mute point. It would play a big point to me in the consideration of if this is a valuable move.

 

Its just him and one other guy thats been working for him for 17 years.

 

Will you be retaining this employee?

 

I have never ran a business i am an auto tech trying to move on from the dealer scene and do my own thing.

 

GET BUSINESS TRAINING NOW!!! Without it your chances are greatly reduced that this will be successful. There are some basics that are not to hard to learn. Picking up 3 or 4 courses are a minimum I would suggest to enter into this thought you have. That's a bare minimum,

 

 

If you could do me a favor and break up your different thoughts of information into paragraphs instead of running them all together it would make it easier.

 

Have a good day

 

Spence

[Type S Zero]

if you are looking at buying his equipment only, make a list and see how much it would cost you with new stuff.

 

i'm also an ex dealer tech currently in the process of opening my shop, but of all the complete shop to single used equipment ads i've searched, the owners think about how much they paid 10-20 years ago and ask for ½ of that.

 

that tire machine he paid $5K 10 years ago, you can get a brand new copy for $1K (or a very nice one for $3K)

Wheel balancer he paid $8K, you can have similar one below $2K new.

on the other side, a shop press is not really something that'll break (except ram replacement maybe), but that too you can get for quite cheap now.

 

the market has changed, china manufacturing has a lot to do with cheap cost, but more accessible r&d + manufacturing technologies (faster, more precise, cheaper processes). Also anything electronic has gone down in price.

 

20 years ago, shop owners had to rely on their local tool suppliers (autopart shop, Snap-on guy, Mac Tools guy) with very limited choices in brands and models (+ they had very little competition compared to today's accessible wipe open maket). You can easily compare many brands/models/prices from your home/office.

 

I wouldn't like those Snap-on and Mac guys to loose business, but on the other hand, you are paying for his truck, his franchise fees, their marketing, those nice shiny flyers, etc....some of their offerings are really good and usually come with good customer service (usually i'm saying, not always), but some other are not, and at the bottom, we are the ones paying/have the final word where money goes.

 

buying used might look like lowering your investment cost, but when it needs repairs the same year you bought it or the next, you'll regret not buying new. (since there is already some that needs replacement right now, i guess you'll have to fork out a few bucks in the next 5 years for the other ones)

 

I'm not saying buying used shop equipment is a bad idea, what i mean to say is be careful and have a comparison point.

you need to find a good deal + how much can downtime can hurt you when it needs repairs.

 

Type that same list in an Excel chart to add up a total for new equipment (build your price list using gregsmithequipement.com - metro-lifts.com , etc) + additionnal amount for install/electrician if required (i'll do the installs myself + part of electricity as i won't be overloaded with clients when opening)

Edited November 15, 2012 by Type S Zero

[Mario]

I'd be caution of taking over any shop with $10k of expenses right off the bat.

[sparkerauto]

I'd be caution of taking over any shop with $10k of expenses right off the bat.

 

What do you mean by 10k of expenses off the bat?

[Spence]

What do you mean by 10k of expenses off the bat?

 

I think he is picking that up off of your post. If you look back at post #3 is where the comment is.

 

After all the posting you focus on this one... OooooHhhhhkay... Both of ya may need to brush up on some business training. That's not meant to be sarcastic but more on the constructive side.

 

Enjoy your day!

 

 

[sparkerauto]

spence your right i do need some business training, i have never been a busniess owner so im not denying that. Im just trying to learn as much as possible.

[IntegrityAutoCare]

Well, I am a new business owner and so I may very well be the LEAST qualified to answer this question. I will say, though, that one of the things I MOST LIKE about this industry and part of why I decided to start an Auto Repair business instead of something else is because in this line of work you literally have the ability to start the business with very little or no expenses up front. To me $40k sounds like ALOT of money up front for you to not be getting very much of the high end equipment that you will eventually want to have for your business. If you were buying his company name and customer base and felt reasonably sure that you could maintain or improve the same level of business and profit that he was already making then that might be a different story, but for what it sounds like you are wanting to do I think you would be a lot better off finding your own place, starting from scratch and using that 40K as seed money to start YOUR business. You can always build up slow....seems to me like too many shops try to open up with all the most high tech and expensive equipment from the get-go and end up flopping because they can't make the payments. Build up your customer base FIRST (my opinion) and you can always gradually add services and equipment as you grow.