Need opinions from the smarties of M1R!

[nicksmachy]

My boss called me today and legit asked me if I wanted to buy the business--Concord Auto Spa. It's an auto detailing shop up here in NH. I've worked there for almost 2.5 years now and hes been open since 2005 I believe. He currently owns that and Capital City Limousine and runs them out of the same building.

Now I am 19 years old, turning 20 in December and am a semester away from my associates degree in accounting. I am not rich by any means so loans would have to be the way to go. I do have over a 700 credit score and some ins at the bank. Don't know if its realistic at all, but just seeing what your opinions may be.

I only talked to him for a minute because I had class, but I am going to work tomorrow and will get more info like price. I'll also try to get all the financial statements and such to see how healthy the business is.

All opinions are welcome!

[CompOrange]

You'd need to see his lists of clients and do an overall health analysis of his business. Now is not the time for a lot of banks to risk too much money on a business with no solid business model, especially with your age. You may need some outside financial backing to help pull this off if it's something you really wanted to do.

[nicksmachy]

Originally Posted by CompOrange

You'd need to see his lists of clients and do an overall health analysis of his business. Now is not the time for a lot of banks to risk too much money on a business with no solid business model, especially with your age. You may need some outside financial backing to help pull this off if it's something you really wanted to do.

Yeah, I'm almost positive he doesn't have a "client list." I know most of the regulars by now by their first name and would definitely do things a lot differently than him. I would keep a database of my customers so I can send them ads or coupons or whatever. He doesn't keep it to help dodge uncle sam.

I do have a couple investors in mind. My uncle has some money and I'm buddy buddy with one of our customers who is an investment banker who just happened to buy a new nissan gt-r by the way.

[nicksmachy]

wants 30k for the business and then rent out the bay in the building for x amount.

building is an extra 378k

[CompOrange]

30K for the detail business? Jesus, how big of an operation are we talking? Number of employees, etc?

[nicksmachy]

Originally Posted by CompOrange

30K for the detail business? Jesus, how big of an operation are we talking? Number of employees, etc?

Theres the owner, who does nothing, myself, and two other employees. They would be gone if I bought the business. I'd go in with a partner and we'd do the work ourselves and keep the money in house.

On an average week in the summertime, I pull in 300ish--to be safe working very part time. One guy pulls in 1k a week at 38% commission and the other around 500-600 at 30% (but he does a lot for free and im pretty sure the owner doesnt pay him everything hes owed)

[03mach1]

Don't get suckered in....just because it sounds good. I would ask to see the records, profit/loss, expenses, etc..
You might buy the business, and not the buidling, he then raises the rent until you can't afford it, you close, and he keeps everything......if he holds the lein on the business or whatever......

We had auto cleaning places around here same deal, but then the city raise the water rates like 40%, they couldn't stay in business and make money at it.

make sure you get ALL the details, and a good lawyer to review everything.
Good luck if you do decide.

[RPC33]

You asked for opinions so I will give you mine. At your age, your primary focus should be getting your education and preparing yourself for the future. Also, at your age it probably is not a good idea to incur any substantial amount of debt. While this offer to buy may sound good, I would doubt that you have the business experience required to make it work. If it did not work out, you will have put yourself in a very unhealthy financial situation. Good luck with whatever you decide to do.

[65fastback2+2]

screw buying it...its a detail business....start your own across the street for much less than $30k

[XB70]

Does your uncle own any firearms? Will he shoot you when his investment disappears?

An investment banker as a partner in a detail business???

Two silent partners and you = you working for your partners = exactly what you are doing now.

A business lawyer is qualified to answer questions about the purchase agreement. A CPA is qualified to analyze financial data and opine on whether or not it is accurate. Neither is qualified to ascertain how much the business is worth.

[one mach 1]

Originally Posted by RPC33

You asked for opinions so I will give you mine. At your age, your primary focus should be getting your education and preparing yourself for the future. Also, at your age it probably is not a good idea to incur any substantial amount of debt. While this offer to buy may sound good, I would doubt that you have the business experience required to make it work. If it did not work out, you will have put yourself in a very unhealthy financial situation. Good luck with whatever you decide to do.

I agree. Now is the time to finish school. Now these days a BA or BS still isn't enough. Work on a CPA degree, or a MBA that can have a lucrative and stable earning potential.

[65fastback2+2]

Originally Posted by one mach 1

I agree. Now is the time to finish school. Now these days a BA or BS still isn't enough. Work on a CPA degree, or a NBA that can have a lucrative and stable earning potential.

nba lolz


mba?

[one mach 1]

Originally Posted by 65fastback2+2

nba lolz


mba?

lol, I was watching the Lakers highlights from last night when I posted! lol

[jbrad88]

Finish school...this sounds like a good opportunity, however, too many unknowns and a lot of risk at your age. Get the education completed, then open your own detailing business.

[65fastback2+2]

i say open your own and start it along side college.

business isnt about book smarts (degree) its about experience.

[Naa-V-Doc]

Originally Posted by 65fastback2+2

i say open your own and start it along side college.

business isnt about book smarts (degree) its about experience.

---------------------------------------------------------------------------------------

Look at it this way. If that company was making money and the owner does not do the physical work and paperwork is not his strong suite; why on gods green earth would he be willing to sell it???

Start you own detailing business. It could be a moble unit (out of your trunk), this way you use the customers water, elect and your overhead is - products, a bond (just in case you make a mistake - type of ins.) and your time. If you are good - the word will get out. Take an elective (marketing for small bus.) at the college yu attend.
That my 2 cents and the bill is in the mail.

[65fastback2+2]

Originally Posted by Naa-V-Doc

---------------------------------------------------------------------------------------

Look at it this way. If that company was making money and the owner does not do the physical work and paperwork is not his strong suite; why on gods green earth would he be willing to sell it???

Start you own detailing business. It could be a moble unit (out of your trunk), this way you use the customers water, elect and your overhead is - products, a bond (just in case you make a mistake - type of ins.) and your time. If you are good - the word will get out. Take an elective (marketing for small bus.) at the college yu attend.
That my 2 cents and the bill is in the mail.

thats why i suggested starting his own....dont buy someone else's problem

[CompOrange]

Given that it's starting to sound like a bad deal. If he was trying to sell you a larger outfit for 30k I could see it being worth it, but that small of a deal? Start your own and finish school.

[03AV8R]

The way things are in NH right now.. One month its really busy & the next month its dead.. literally... Winter is basically here so that biz is prolly gonna get way slower.. IMO its a no brainer to finish school, do whatcha gotta do to make a livin in the meantime, & start your own biz for 1/3rd that cost in the spring/summer of 2010/2011 or whenever after you finish school..

[nicksmachy]

All good opinions and I've considered them all already. I would never do this without looking at the financial statements expecially the statement of cash flows. Net income means nothing without knowing what the effect of cash was. I know quite a bit, but not all so someone else would have to be brought in to advise me in this purchase. I have already started thinking of ways to make the winter better ie different services, maybe not even detailing. I have taken a marketing class and am currently in business management and law.

Ive taken accounting 1 and 2 and am intermediate accounting now along with cost accounting which really helps. I basically run the business now so i have the experience to run it. It would be absolutely no different except my balls would be on the line instead of his and id be making the profit.

I wouldn't stop with the education completely. Id get my associates degree in accounting since im 5 classes away after this semester.

By no means is it going to happen overnight and I'll keep your opinions in mind and keep them coming!

[XB70]

Originally Posted by nicksmachy

All good opinions and I've considered them all already. I would never do this without looking at the financial statements expecially the statement of cash flows. Net income means nothing without knowing what the effect of cash was. I know quite a bit, but not all so someone else would have to be brought in to advise me in this purchase. I have already started thinking of ways to make the winter better ie different services, maybe not even detailing. I have taken a marketing class and am currently in business management and law.

Ive taken accounting 1 and 2 and am intermediate accounting now along with cost accounting which really helps. I basically run the business now so i have the experience to run it. It would be absolutely no different except my balls would be on the line instead of his and id be making the profit.

I wouldn't stop with the education completely. Id get my associates degree in accounting since im 5 classes away after this semester.

By no means is it going to happen overnight and I'll keep your opinions in mind and keep them coming!

Every business owner has three set of books:

1. For the IRS.

2. For potential buyers.

3. The real books.

[Naa-V-Doc]

Originally Posted by 65fastback2+2

thats why i suggested starting his own....dont buy someone else's problem

------------------------------------------------------
As noted, I agree 100%.

[nicksmachy]

Originally Posted by Naa-V-Doc

------------------------------------------------------
As noted, I agree 100%.

I don't totally agree. While that would probably be the most fulfilling in the long run, it would be really hard to do around these parts. It's hard to pick up and start a detailing shop in new hampshire with a few established ones already around. It'll be especially hard because I would probably continue going to school, have to work an actualy safe job to pay the bills, and commit time to get the business going. It just wouldn't work with what I have going on in my life right now. The clients just aren't there to drag along with me without slashing prices to almost no profit, which again means maintaing another job to pay the bills.

I'd be buying into a business where I get all of the equipment, including a brand spankin new pressure washer haha, the customers, and advertising (mostly word of mouth) waiting for me.

[Roy]

If I had a business where I did nothing and it was making me decent $$$ I sure as hell wouldn’t sell it for 30K.

[nicksmachy]

Originally Posted by Roy

If I had a business where I did nothing and it was making me decent $$$ I sure as hell wouldn’t sell it for 30K.

He makes decent money but blows it on stupid stuff like is 78 piece of crap trans am. Oh it needs some brake work, ill just get it fixed and write a Concord Auto Spa check to pay for it even though it has nothing to do with the business. He would make a hell of a lot more money if he did what im going to do and actually detail himself. He does no advertising. Go to car shows and get yourself out there. Go to dealerships and get commercial accounts. there are more ways to make money. sell detail products. Dont fight the fact that people do it on their own, embrace it. Keep your friends close and your enemies closer. there is definitely more money to be had.