Suppose your dream is to own a car wash business, you probably have the knack for sizing them up and be able to do a rough car wash valuation on the fly. Dreams have a way of becoming reality in ways that we least expect and to make sure you do not get caught out and miss your golden opportunity, let’s compare notes on what we feel are some of the questions to ask if you were a prospective buyer.
Car Wash Valuation Questions
- Why is the business being sold? Are the owners retiring or are they being forced to sell because of burnout? Perhaps it has become less profitable for the owner or could it be key staffs have left?
- Does the business model fit in with your expectations of the kind of (hands-on or absentee) business owner you want to be? Everyone has their preference of how they want to run the business. If this is your debut into the industry, you will want to ask other car wash business owners and industry experts their insights on the feasibility of such an arrangement.
- How does the selling price compare with the industry average price? If it is noticeably underpriced or overpriced, you will want to make the effort to understand why and what is it you are getting for the asking price.
- How profitable has it been in the last 5 years? And are the financial statements you are being shown, audited?
- Can their success be attributed to the well-structured and developed systems they have in place? If so, do they have it properly documented, as in the case of franchise concepts? Granted that they do, they are in fact selling you their secret success formula, which would have been priced into their asking price. But, you can take their formula and run with it from day one of opening up.
- Are there incumbent staffs that are included in their car wash valuation? What are their compensation and benefit packages?
- What are their main sources of revenue – apart from car wash, do they offer detailing services? Is it a mix of private and commercial clientele that they serve? How scalable is the business?
- What is its local market share? Who are their competitors? What is their profitability in comparison?
- What is the state of the local economy – is it dominated by a major industry or by a good mix of potentially strong ones?
Other Ways To Conduct Car Wash Valuations
In addition to the questions to ask, it pays to get other perspectives on the venture. Nowadays there are business evaluation applications written by industry experts that walk you through the many dynamics of car wash valuations, some of which you may have missed.
You too can seek out business consultants or brokers who are industry watchers and have their fingers on the pulse as to whether the prospects of the business you are presented with are realistic or over-embellished.
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