Starting or buying a small garage business

[nigey]

Hi
im looking for some advice on starting or buying a small garage business, I have found a small business for sale in my local area for £30k, it has a MOT facility and the sale includes all the w/shop equipment and goodwill, is it me or does this seem very cheep ? the yearly turn over is just over £100k with a gross prof of £70k, im still waiting to see the net figs.


My specialist field is commercial vehicles but to start a CV w/shop is no easy task. I was considering light commercial repairs aswell as cars and commercial vehicle smart repair (nobody in my area does this for CV)


Any advice would be great.

Cheers

Nigel

 

Based on equipmet alone it certainly seems extremely cheap.

Have you established that you are getting clean, unencumbered title to equipment, or are you taking on debt.

As a rule I would suggest that you buy the assets of the business through a new company, not the business itself.

 

[Working First Aid]

As a rule I would suggest that you buy the assets of the business through a new company, not the business itself.

Interesting - whys that?

 

[Amazin]

only £30K for a business turning over £100k? Sounds bit too good to be true. Investigate!

 

[Rhodes100]

Forget about turnover and concentrate on profitability.

You do not mention staff wages, or indeed the "owners wage" if he works in the business. Nor Rent and Rates, Insurance etc.

If it is only making a profit of £15k and the owner can get a job earning that amount of money as a mechanic then really there is no goodwill. The only worth in the business would be the equipment it owned.

You would however consider whether it would be worthwhile effectively buying this job.

I would hope that with an asking price of £30k it would be making more money than £15k.

 

[nigey]

Many thanks for the feed back guys,
I have requested nett profit details from the selling agent but have had no responce yet (it is the holiday season)
I agree the price is to good to be true, but its worth checking out.

Any thoughts on smart repairs for commercial vehicles (nobody in my area has caught onto that idea yet)

As soon as i foind out more details I will let you all know

many thanks

Nigel.

 

[Alfa Amore]

Repairs on vans and light commercials could well work but bear in mind a lot of commercial vehicles are on lease or contract hire for the first 3-4 years so you will probably be looking at older vehicles owned by the small business owner and the driver for choosing you over someone else will be cost as well as service. Consider offering a loan van so if the customers vehicle is off the road they are not losing money. Also consider specialising in one make of vehicle

 

[Brad Haddin]

Probably you should find some one already in this business.. that may give you right advice in this regards.. others may only guess for this..

 

[Alfa Amore]

I am in the motor trade as a specialist in Alfa Romeos, I rent premises from a general repair garage - the advice given is based on that experience. A previous poster was correct when he said there is more money in mot repairs than servicing - in the current climate people are only spending on their cars when it is needed - preventative maintenance has taken a back seat against a poor ecconomic climate. Commercial vans as a speciality could be a good idea depending on your area. The garage I share with sell every small van they can lay their hands on and they fetch good money. Specialising is the key whether vans or off-mainstream cars

 

[nigey]

Again guys,
many thanks for the comments, im HGV commercial trained but there is far to much envolment to get this up and running, plus far to much OM competition in my area. Small commercial such as vans would be a better place to start.
You are right about the 3-4 year lease contracts this is no different in the HGV world, but the key comes when the vehicles need to be returned because the finance companys returns conditions are very high now and they expect a near perfect vehicle back (i know this because I now manage 151 vehicles all on ops lease) this could be a very lucrative area even in the van world especialy from a smart repair option.
What does amaze me is how people are very reluctant to undertake new ideas, Ive spoken to a couple of friends that are also into fleet management and they tell me they use people to repair vehicles and they would not change or consider smart repair ( very single minded if you ask me) also cost of premises is terible at the moment especialy finding somewere that would cater for small commercials.

 

[Alfa Amore]

It is not that fleets are small minded but that they demand warranties and want a national network of repairers who can offer a set service level and pricing, also bear in mind that lease and contract hire costs take into
account residual values which will be far higher with a main dealer stamped book, it will be impossible to break into that market. However you are quite correct that remedial work is often required before handing the vehicle back and this is always at the customers cost and if you can offer a body and interior service there will be some profit in this. I certainly was not trying to put you off because as long as you understand that your market will be for vehicles over 3-4 years old then I think there is every chance of success, people laughed when I said I was doing Alfa's but there is market, and car based vans and up to transit size is definately there in my view, just make sure you have enough height in your premises for a high top !

 

[globes]

Before buying small business, first cross check with land owner is there any liability or due pending for business, if not then purchase with all relevant documents.