6 Must-Ask Questions When Buying an Auto Body Shop

Posted On: / By: Brian Knoderer
Buying A Business

At one point or another, every car owner finds themselves in need of an auto body shop. In 2019, there were 284.5 million registered vehicles in the United States. As the growing number of used cars on the road drives up demand for more mechanics, now is an opportune time to enter into the industry. If you’re into cars and considering buying an auto body shop, read on as we cover the most important questions to ask before you transition into this business venture.

Your Guide to Buying an Auto Body Shop

Even if you have several years of auto mechanic experience under your belt, there are still plenty of additional factors that go into purchasing and owning a business. Before you dive into this investment, make sure you answer the following questions as a prospective auto body shop owner.

  1. What’s the potential revenue of an auto body shop?

    The auto body shop industry’s growth has risen steadily over the past five years. From 2014 to 2019, the industry experienced a 3.9 percent growth rate. Although the growth rate is expected to slow down over the next several years, its market size still stands at $50.7 billion in 2020. Plus, an increase in aging vehicles is also likely to drive demand for auto body repair mechanics.

    Ultimately, your success will depend on how you invest as a new body shop business owner and the strategies you implement. However, it’s still crucial to weigh these pros and cons before buying an auto body shop for sale.

  2. auto body shop owner and buyer shake handsHow will your auto body shop stand out from the rest?

    As the demand for auto repair shops rises, you’ll likely see several new businesses entering into this competitive market. Brainstorm ways that you can stand apart from your competitors and appeal to your target market. It might be worthwhile to invest in marketing and social media endeavors to promote new sales and incentive offers. These efforts will help retain the existing customer base while drawing in new ones.

  3. Why is the current owner selling their shop?

    As you engage with the current auto body shop owner, make it a priority to determine why they’re selling their auto repair shop. It’s reasonable for owners to sell due to health ailments, or if they’re moving or retiring. Nonetheless, there are still reasons that should stick out as a red flag. Stay wary of any financial issues mentioned. While it’s normal for any business to experience financial hardships from time to time, selling can indicate a more severe burden. Even if you have plans to turn the business plan around, it may be challenging for sales to bounce back and to recover financially.

Financial Questions to Ask When Buying an Auto Body Shop

In addition to the questions above, ask these financial and cash flow questions to the current auto body business owner.

  1. Does the sale include real estate?

    If your mind is set on residing at the current property location, determine if it’s owned or leased. If the property is owned, ask the current shop owner if they have plans to sell the real estate property with the business. For leased properties, go over the agreements with the landlord to see if you can potentially transfer ownership.

  2. Does the sale include body shop equipment?

    From collision repair tools to auto glass parts and vehicle lifts, repair shop equipment can be pricey. See if the current owner is willing to include body work equipment in the sale. If they’re unwilling to negotiate, you’ll want to calculate the startup costs and essentials required to open your shop.

  3. What is the asking price?

    Lastly, you’ll want to ask the current owner if they’ve come up with an asking price. If he or she used a valuation service, it’s likely pretty close to the true worth. Unfortunately, this could lower the chances of them negotiating with you.

With sufficient planning and a good business model in place, you’re one step closer to opening an auto body shop. For help locating a nearby auto body shop for sale, contact your local Sunbelt Business Brokers office. With years of experience, our brokers have assisted thousands of individuals like you in finding their own business. From selecting financing options to closing a deal, we’re here to guide you through every step.

Brian Knoderer is the President of Sunbelt Business Brokers. He has over 20 years of experience as a business owner and managing business transactions. As a seasoned intermediary, Brian has successfully represented companies in a broad range of industries helping business owners achieve their desired exit strategy or growth initiative.

Brian is also co-owner of Sunbelt Indiana and Managing Director of MMI Capital Partners, a franchisor focused investment banking firm.

Previously Brian was involved in several entrepreneurial ventures as well as having held corporate roles in Franchise Development for Prime Hospitality and Choice Hotels.

Brian is a graduate of Ball State University with a degree in Management Information Systems and earned his MBA from Butler University. He has received the Certified Merger & Acquisition Advisor (CM&AA) designation, holds both the Series 7 – General Security License and the Series 63 – Uniform Securities Licenses, and is a licensed Real Estate Broker. He has been affiliated with several organizations including the Entrepreneur Organization, a Member of the International Business Brokers Association, Venture Club, and a Board Member of The Entrepreneur Institute.

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