During the interview with Janke, we were discussing the
things that shop owners can do to get top dollar for their shops, and towards
the end of the interview we started talking about how shop owners should go
about establishing the value of their businesses. As you can imagine, Hal said
that there are a number of things you need to consider.
Although your location, the tenure of your staff,
and your day-to-day responsibilities as the owner will all have an impact on
the value of your business, he said nothing will have a greater impact than the
earnings history of your shop. According to Hal, in today’s economy most auto
repair shops will sell at a multiple of 1-3 times annual earnings. The shops
that sell at the higher end of the scale (2.5 3) typically have a stable crew
with good tenure, they have a strong and active customer base, they are well
equipped, they are located in growth areas that have the right demographics,
they have a good reputation, and of course, they show strong earnings.
The bottom line is this: Most shop owners
think that the values of their businesses will be primarily based on their
sales, their inventory, their equipment, and the number of customers they have
in their customer database. According to Hal, that’s far from the truth. It all
comes down to one thing: Your history of reported earnings.
article was contributed by Elite Worldwide President Bob Cooper. For additional
tips on sales, marketing or shop management, visit the Elite website at www.EliteWorldwideStore.com.