Who’s Your Buyer: Auto Repair Businesses
One of the most critical things when selling a business is to know who your potential buyer is. This is often difficult, but vital to determine so that your marketing gets targeted correctly and you reach the right buyer at the right time.
This is often where a business broker comes into the picture. They often have sold similar businesses before, and have connections in various industries that can serve you well. They will help you develop a marketing plan once your business is ready to sell.
One tricky business to sell is an auto repair business. Often the buyer needs to have certain skills and certain licensing in order to be able to run the business successfully. Here is a look at a few of the most common purchasers of an auto repair business.
This person or entity does not want to run the business, they simply want to be a silent partner, providing capital when needed and sharing in profits and management duties. This can be a great opportunity for an owner who wants to exit the business, but it can also be an opportunity for employees who want to assist in running a business, but don’t want the risks associated with ownership.
Often these are angel investors, private equity groups, and even individuals. The key is that your business must be profitable and growing and in an upward moving niche to be attractive to these buyers. With the development of electric vehicles and even self-driving cars, knowledge and a foothold in these fields is one way to attract potential investors.
There are other niches that are doing well in the automotive industry as well. Custom cars and restorations always have a place, and shops who tune these vehicles and do specialty repairs and even machine work are even more desirable.
Finding an investor for the average auto shop can be challenging, but there are other options as well.
Mechanics Looking to Own Their Own Business
There are times when those who have worked as mechanics, service managers, and service writers reach the point where they no longer want to work for someone else. They want to own their own business and perhaps even run their own shop. This creates a great opportunity for both the buyer and the seller.
The reason is that your buyer already has the know how to run the shop, and if they have done management work, have an idea of the costs involved and even the profit margins necessary to keep the business afloat.
If they work at your shop, they also will have a relationship with your current employees, which can make the transition in ownership go much smoother. This is especially true if they are well liked by their peers.
There are several ways a management buyout can be structured, and a business broker can help you choose the one that is right for your business.
Large Companies Looking to Branch Out
Another possible buyer is a large company who is looking to add a branch to its existing set of stores. This can be everything from a large national concern to a regional or local chain. The company may be looking to open a second store or their twentieth one, but either way, the outcome is essentially the same.
Typically, the name of your business will be changed to that of the acquiring company, and your staff and business will be absorbed into theirs. This can have advantages for you as the seller, as often what they are really looking for is your location. If you have a good relationship with your landlord or better yet own the property where your business operates, you will have a distinct advantage.
This is often a viable solution if you have a good location and also are in an area where there is not a lot of competition.
Franchisees or Franchisors
Lastly, for the same reason that a large company may be interested in absorbing your business, a franchisee or franchisor may be interested in acquiring it. Again this is usually based on your location and the fact that your business is desirable to them because of your existing location and reputation in the community.
Like with a large company acquisition, your business name will likely change, as will your logo. The big disadvantage of these types of transactions to the buyer is that staff may not want to work for the parent company, and may choose to leave as a result. However, larger companies often have better benefits packages a small business cannot offer, and these may be an incentive for employees to stay.
Either way, there are buyers out there for your auto repair business. Finding them while still running your business can be a real challenge, especially without the experience and connections that a business broker will have. They can help you find the right buyer for your business at the right time.
Ready to sell your auto repair business or another type of business? If you are in the Sacramento area, contact Rogerson Business Services today. We’d love to talk with you about listing your business, helping you with a business valuation, and determining who is your ideal buyer. Then, we’ll help you find them, and make the sale of your business a success.