With today’s epidemic of litigation, factories and lenders should not offer business advice because it is the factories and lenders who will be sued if the dealership has not achieved. As a result, one must rely on oneself and advisers who do not fear contradicting the boss. Learn more about Car Dealership.
As an aside, be careful not to associate with usual “deal-breakers.” Some consultants are perpetual naysayers because consultants are not sued for telling a customer not to make an agreement. They are only sued when a customer gets into a deal that goes sour because it is never the fault of the customer. It is the fault of the bank, the factory, the accountant, the attorney, the business advisor (anyone other than the client).
The bottom line is that in buying an automotive dealer, there are two critical factors that will help ensure long-term success: (1) how it is bought; and (2) how it is managed.
There’s a storey about each factor, but those are the two keys. Its long-term success or failure will be determined by how the dealership is purchased and how it is run. We say long-term” because car dealerships provide enough cash-flow that it might take five years for some deals to fold.
Buying a Dealership Car
In bad economic times, what is the proper way to buy a car dealership?
Buyers were paying premiums for dealerships in the “good times,” based on brand names, beautiful buildings, nice locations, and so on. The fact is, dealerships should be valued in the same way in good times or bad: by how much the purchaser expects to earn after the purchase. In other words, not the brand, or the building, or the location, but the expected ROI (return on investment).
More than math is included in determining what a store can earn after its purchase. Regardless of how often the “multiple of earnings theory” has been proved wrong, the trade’s members and associates still perpetuate the myth that it can be that effortless to buy a car dealership.