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what sort of earnings can one expect with an auto repair and tire biz?

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Answers (3)
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Freedom Business Brokers
Orange County, CA

I don't agree with Don's point of view. When you buy a mom & pop store you evaluate it as if you are paying cash for it even if you are getting it financed. Although the ultimate decision for sales price is in seller's mind ( whether it is right or wrong that is a separate matter) yet there is a multiple factor generally
applied to this kind of business. I would apply a 24 months formula to net sales. In other words all the money invested ( other than tires inventory) should come back in the investor's pocket in 24 months.
This is industry rule of thumb. However this may differ depending on sate of art of lease ,or a hot location
like a smog station adjacent to a DMV or a repair station next to Test Only, where a slight higher number
may apply as it is challenging to attain this kind of situation and eventually costs more, or there is a
franchise transfer fee is involved.So it should take more time to get your returns back.......Sid

Nov 20, 2009
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The BAF Group LLC
MD

I guess the point is the question is not a rational one. You need to study the business you are buying and determine whether the Costs are consistant with the market, whether the Revenue offers profitability when Debt Service is added into the Expenses, and then decide whether it makes sense for you. Looking for rules of thumb is a potentially dangerous and misleading method of making inquiries and decisions.

Nov 20, 2009
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The BAF Group LLC
MD

It depends on the number of bays, the number of Mechanics, whether your Mechanics are paid a percentage or a wage/salary, the rent, the utilities, how many jobs you turn a day, whether you are getting more Mercedes or Focuses, whether you have a Service Manager or you act as a Service Manager, whether you are one of the Mechanics, whether your equipment is leased or conveyed to you as a product of your purchase price, how much you paid for the business, the loan term and interest rate...

Nov 20, 2009

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