SELL YOUR ADS HERE

Is this A Good Time To Sell Your Body Shop Business?

Have you ever asked yourself the question? "Is this a good time to sell my business?" That is a question every business owner asks himself, everytime he has a bad day. I once received e-mail from the editor of the Auto Body News, asking me that key question. "What is happening in the market today? Is this a good time to sell? " My quick answer was "These are very interesting times."

Of course that answer doesn't tell you anything that you can get your teeth into. So! Let me clarify my answer. Since I have been selling body shops for nearly 5 years, I have seen many changes in the body shop industry. One thing that hasn't changed is that there have always been an abundance of both sellers and buyers. The buyers have always been, and still are picky about what they were looking for.

The perfect shop in the eyes to the buyers is (A) one that has a customer base and a revenue stream that is reliable and isn't dependent on the owner being there to retain each individual customer, and. (B) doing a volume of at least $100,000 per month, but really much more. Large volume sellers think that if they have a DRP (Direct Repair Program. This is where the insurance companies set up a relationship with the body shop to do all their clients business. Much like an HMO in health insurance) contract, they have what the buyers want.

This may be true but the contracts are not automatically transferable, and a buyer will be very unhappy if the DRP leaves after paying money for this "reliable revenue stream." Smaller volume sellers, on the other-hand, not having corporate accounts, dealerships or other contracts still have hopes of getting lot of money for their shops. The average shop I run across is only doing about $300,000-$500,000 annual gross income. So what we have is a situation where a lot of buyers are looking to buy a shop, but there are not a lot of shops available, that fit what they are interested in.

This year, one change has occurred. There are fewer shops available than at any time in my career. Not fewer of the large volume shops for sale, that is fairly stable, but fewer of the small mom and pop repair shops that have not been in heavy demand. The reason, I believe this has happened is because of the booming economy. Low volume shops are doing better than they have in years. They are making money, and do not feel as much pressure to close down. They still would like to get out, but when they find out that their 5,000 sq. foot shop which is making them a $100,000 net profit, is only worth $100,000 on the open market they decide to keep on working.

As always, the shops doing $1 Million to $3 Million per year gross income is still in demand. The price alone still is the main factor, in determining if these shops will sell. A good example of this is what is happening in lower Orange County. There are currently a couple of shops in Lower Orange County that are for sale, by the owners. They appear to be very profitable but the asking price is too high and the buyers all know it. Even the fact that these are the only shops available for sale in this prime area has not changed the fact that buyers just refuse to over pay.

Last year I was marketing a high volume shop, in Ventura County. The buyers refused to pay the asking price, even though the volume was there. Why? The profit wasn't. In this situation, the buyers would not pay for the volume and stability of income unless the net profits were there. They didn't assume that they would make a profit where the current owner was not. It appears that buyers of today are very careful. I believe they do not trust their own ability to get business and are too careful.

To clear up any confusion about what kind of buyers we are talking about, lets break the buyers up into categories. The first category is the consolidators. There are two large ones in Southern California but they are not the whole market. I have talked to out of state consolidators that have inquired about moving in to the So California market. Consolidators want shops that fit their model. That model sometimes changes but basically they will buy a shop if it fits their model.

If it doesn't, they will not touch it. The price by itself doesn't turn their interest on or off. We do not have enough space to discuss what this group will buy, in this article. It is enough to say, " If your shop fits their criteria they would have contacted you and expressed interest. If they haven't contacted you, they are not interested." Period! They know their market place and who is in it.

By the way, if I owned a shop that a consolidator wanted, I would never sell to them. Being a professional negotiator for 20 years, I find the requested seller financing terms totally unacceptable. When I have found out about these sales, after the fact, I am amazed. I had buyers for the same money, or more, without the seller being at risk, but no one asked me.

The second category is the multiple location shop owners. Usually with one or more DRP contracts shop that wants to expand into more areas. They are very interested in the sq. footage of the shop, and its ability to handle over $2. Million Gross Income per year. This buyer only looks in limited areas. The areas being where they have been offered a DRP contract. When they are looking, they need it now, while the window of opportunity is open to them. If they can't find it quick, they will not need it at all. Recently I had a multiple shop buyer who had made an offer and was negotiating a shop in West Los Angeles. By the time we finished the negotiations, the DRP contract was gone and so was the buyer.

The third category is the buyers who have worked in the industry before, but do not currently own a shop. Also in this group are the buyers who have family in the industry, and money is no problem. This buyer believes " If it doesn't have a DRP, forget it. If it has a DRP and isn't making much money, also forget it". If it has a DRP, and it is making money, they are interested but only at what they consider is a fair price (In their eyes). This group I have successfully changed their mind at how they analyze what a good shop looks like and on occasion have bought shops with "a steady reliable income", other than insurance contracts.

The fourth category is the person that just wants a shop. They will do what they have to, to afford a shop that will work for them. This group is the working body man or auto repair shop mechanic. Because of their limited funds, this buyer will only pay what he or she feels the equipment is worth. They will pay nothing for goodwill because they believe that the seller's customers are not stable and will leave when the ownership changes. Are they wrong?

In Conclusion: There are a lot of buyers out there. My database has over 250 current names of body shop buyers. There is currently a shortage of shops for sale but mostly in the properly priced category. Most days I feel like a marriage broker with a lot of plain brides and a few beauties. The dowry for the beauties is more than most good-looking boys will pay. The balance of the girls may not be pretty, but some of them can sure cook. . Anyone want to get married? "Have I got a girl for you"

About The Author

Willard Michlin is an Investor, Business Broker, California Real Estate Broker, Accountant, Financial Distress Consultant, Well known Public speaker and Administrative/Business Consultant. He can be contacted at his Ventura, California office by calling 805-529-9854 or by e-mail at kismetrei@earthlink.net. See other article by Willard at http://www.kismetgroup.com; kismetrei@earthlink.net

Work at Home, Mom!
Bach Flower Essences
Alzheimer Disease Advice
Bach Flower Essences Shop (German)
Where to buy Original Bach Flower Remedies
Bachblüten Doc Nature
How to use Bach Flowers
J-5 WebKatalog - Web Catalogue
Living after Divorce

MORE ARTICLES:

AdMonsters Launches Ad Operations Training Division for Online Ad Ops Industry Professionals
AdMonsters' Ad Operations Training Curriculum offers Publishers, Agencies, Ad Networks, Portals and other technology companies' practical, hands-on ad operations professional development resources to grow ad operations teams and to expand their recruitment capabilities and audiences.

How to make money selling ad space in your newsletter
If you would observe the company that delivers the daily paper to your doorstep for a business case study, you will come to learn that the newspaper publisher hires reporters, writers and other important staff to create the contents and deliver the papers to their readers.

Book Release Announcement -- Selling the Fuzzy Widget: Secrets of Selling Professional Services
"Selling the Fuzzy Widget: Secrets of Selling Professional Services" provides a plain language guide for consulting, legal, engineering, financial, staffing, information technology, and other service firms and departments to ensure that all employees understand key concepts of business development that drive revenue growth.

Imagine Renting or Selling Real Estate for $3 Ad Listing Cost
Text4Homes.com presents a low variable cost option to real estate advertising which integrates Internet and mobile technologies. This novel approach highlights tremendous ROI, convenience, immediacy, reach and variety for users.

Ads Dont Sell - People Do !
More about advertising by BIG Mike McDanielAdvertising is not a substitute for good sales technique and superb customer service. Inserting an ad in a handy newspaper to call attention to a line of goods will not sell those goods unless you can back it up with intelligent, well directed sales efforts in the store.

Content Ideas for Ads and Brochures When Selling Your Home
Even in this hot real estate market, selling your home requires a bit of marketing effort. Ads and brochures are important and powerful tools.

Website For Selling - A List Of The Best Website Selling Places
Today, websites for the sale can be all over the Internet. In fact, sales website has established itself as one of the most profitable online ventures. People create Web sites and sell them to buyers to earn profits. Do you have a website for the sale? If so, why now the first steps for these sites to sell?

Email Advertising - How Ad Tracking Helped Create a Killer Ad
I recently undertook an email advertising promotion, using a number of advertising media. The exercise involved a program of mine called the Magical Marketing system.

Classified Flyer Ads Releases Mobile Ad Creation
ClassifiedFlyerAds.com, a leader in online ad creation for real estate, auto, products, and services, has released a new mobile option for creating advertisements.

Studying Historical PPC Ad Trends to Optimize Your Seasonal Ad Campaigns
Nowadays, a lot of online businesses rely heavily on certain seasons for increased sales volume. As of this writing, the month of September for most industries indicate a significant time for sales --- it's back-to-school in the US; it's the early start of Halloween and Christmas preparation for Christian nations; it's the beginning of vacation booking for some travel enthusiasts. If you are an online marketer that could benefit from such events, then you might just want to invest on the trend when the demand is in full bloom, because if you're not prepared as a seasonal marketer, you will not reap the fruits of a demanding market during this buying season.

Wanmo Begins Selling NetEase's Online Ad Inventory on a Pay-Per-Click Basis
Leading online advertising solutions provider Wanmo Performance Advertising recently announced it has signed NetEase (NASDAQ: NTES), one of China's top Internet portals and online game services providers, to its performance advertising network, and has already begun selling its remnant ad inventory on a pay-per-click basis.

African American Ad Network Grows, Selects ZEDO for Ad Serving
African American online advertising services company continues to grow. Strengthens leadership position in their category

Super Bowl Ad Bounty - $1000 For Birth Footage in Introfee Ad
In its upcoming Super Bowl ad, introfee.com is offering a $1000 bounty for clear video footage of live baby birth to use in its ad, announcing the birth of its website & service on Feb 3.

Advertising: 10 Powerful Secrets To Help You Sell Your Ad Space Like Crazy
If you want to sell more ad spaces, you must read and use the secrets I am revealing here:1. Give your customers a discount when they spend over a certain dollar amount for ad space.