Taking over an small business?

Question

i am thinking about taking over a small auto repair shop that is part of a franchise. does anyone have any tips, warnings or advice that they can share with me?

Answer 1

I would suggest that you do your research. If it's a franchise look up info about them especailly on the web. You want to know if they have a good reputation and also get to know as much of all of their litttle rules. As a franchise you don't get to set up the rules, so you need to see if their rules are okay with you. Especailly check to see how much they charge you because you are using their name. Is it once a month at 3-20%? Forever? Only a limited number of years? Do they require you to go train somewhere far way for many moons? And can you afford that extra money for all of that?
Also the question you should ask yourself is can you open your own little repair shop? I mean would it be more advantaged for you to not have a franchise to listen to? Or is a franchise better because you don't really know how to run a small business?
Please take note of the location and see if it is a good location. The owner may not tell you the truth but check with the other neighboring businesses. It's priceless to talk to the people who have businesses nearby because they could give you a good scoop as to how that repair shop did and the overall area.
I would also call or visit another store who is under the same franchise but in a different city to ask their opinion on how they feel about that particluar franchise.
Are you well budgeted for this? Most businesses fail in 1-3 years. Are you financially stable enough that if business is slow for a couple of months you can still handle it?
Lastly what does your guy feeling say? Trust your guts. If you are passionate and honest you should have no problem opening the repair shop. But if you're only doing it because you only know how to fix cars and you just want to make a little more and your heart isn't in it 110%, then don't go for it.
A smart person is one who knows a good opportunity when they see it and goes for it and also knows when there's a better one up the road.

Answer 2

First of all find reputable accountant or CPA to review business financials.

The net income (adjusted - it can include officer's salaries and other expanses that will go away with the current owner and depreciation and amortization) )must not drop more than 5% from year to year or it is a turn-around business that does not worth much. Don't be cough by "sales goes up" pitch. Sales might be up but due to poor management expenses might be up too.

The purchase price is basically equal current assets value (real estate, equipment, etc) plus one - two annual cash flow (adjusted net income). If business is good and business has personal working in it - you can add two annual cash flow.

Good luck,
Marina Lando
President
Business Loan Quest
http://www.blquest.biz

Answer 3

Make sure you understand the franchise requirements beforehand - that can be very demanding AND expensive. Other than that - you'll have fun - good luck!!