Black2003SS Posted April 4, 2007 Report Share Posted April 4, 2007 As many of you know my father and I have been looking at opening a transmission shop like an AAMCO or something of that nature. Well, we have decided that we dont want to start from scratch, but purchase something already in existance. We have an opportunity to look at not one, but two already in existance NAPA Auto Supply Parts stores. The story behind them is the gentleman owns three of them and he is 62 years old. We are looking at the books/info on them in the next week or two. The gentelman wants to eventually retire and can no longer run three stores right now. The two we are looking at have been established for 25+ years. He opened and bought the three anticipating his children would "inherit" or take over at some point, but they lost interest or he doesnt think they are capable of running them. Anyways, he wants to sell the two to us now and give us exclusive first shot at the third store. He disclosed the two stores do about $3million per year in revenue. He said he has averaged 3-5% net income off of them. The store he is keeping makes that on its own as it is in a larger market. The two we are looking at have established relationships with local repair shops for commercial orders etc. The two stores are in a smaller "home town" type market with decent walk-in traffic. Some points he said about NAPA is that they require you to carry 75-80% NAPA parts and then you can carry anythign else you want like AC Delco, etc. Retail autoparts is always hot it seems like. Direct competition would be Murrays and Autozone that would be located in our markets, but they dont support the commercial market that NAPA does. He has established employees in both locations. What do you guys think? If this goes through, I'll cut you guys good deals Quote Link to comment Share on other sites More sharing options...
SSThunder Posted April 4, 2007 Report Share Posted April 4, 2007 Net income seems kind of low to me I guess it's just the business of the store. Quote Link to comment Share on other sites More sharing options...
Black2003SS Posted April 4, 2007 Author Report Share Posted April 4, 2007 The net income is after all write offs including all expenses at home and at the business. It is what he pays property taxes on. See, the thing is that I will be able to write off my truck if I sue it for business, I can write off home expenses if I set up an office there and conduct business at home. Write off computer purchases, expenses, etc. If I buy a box of pens, that gets written off too. Alot of business owners show zero profit for the first three years and minimal after that. I have clients (i'm in mortgages) that their business takes in $1million+ in revenue but they only show $15k in net income after all deductions on their tax returns. But they buy $400k+ homes and drive cadillacs etc. Quote Link to comment Share on other sites More sharing options...
Fallen.One05 Posted April 4, 2007 Report Share Posted April 4, 2007 Net income seems kind of low to me I guess it's just the business of the store. That's still 90-150K a year.. NET. (write-offs and everything else already deducted i'm sure).. That's some pretty damn good money... : Quote Link to comment Share on other sites More sharing options...
CoolBlueSS Posted April 4, 2007 Report Share Posted April 4, 2007 Autozone is not really competition with NAPA, imho. O'reilly will give you trouble if/when they come into that market. Mainly because both stores sell parts in "white boxes". These are the cheapest pieces of crap you can find. Most people, and shops, buy them because they are cheap. This is the turn I've seen recently in this industry, and it scares me to think that some yahoo bought a set of $10 brake pads, slapped them of his hooptie, and is driving on the road with my wife and kids. Anyway, that's the only big downfall, is staying competitive with price/quality. Quote Link to comment Share on other sites More sharing options...
Black2003SS Posted April 4, 2007 Author Report Share Posted April 4, 2007 If it ever comes down to quality, I watched tommy boy and can sell...lol...I wory about price and battle that obection everyday in my job. "what's your rate?" or "I only want the best deal..." I ask them, do you care if I mess up your escrows? How about if I sneak a pre-payment penalty by you? Do you care about price then? How about customer service? Do you want to talk to someone in India? Every once in a while you get the moron who really doesnt care and is willing to take thsoe risks for a few pennies, but most see the light... Quote Link to comment Share on other sites More sharing options...
Stitches040 Posted April 4, 2007 Report Share Posted April 4, 2007 Next thing you know ... The New EMT is over on the side of the road going "Blaaaaaaah Blaaaaaaaah" ... Puking his guts out ... (sorry ... the photo made me do it) Quote Link to comment Share on other sites More sharing options...
SSThunder Posted April 4, 2007 Report Share Posted April 4, 2007 The net income is after all write offs including all expenses at home and at the business. It is what he pays property taxes on. See, the thing is that I will be able to write off my truck if I sue it for business, I can write off home expenses if I set up an office there and conduct business at home. Write off computer purchases, expenses, etc. If I buy a box of pens, that gets written off too. Alot of business owners show zero profit for the first three years and minimal after that. I have clients (i'm in mortgages) that their business takes in $1million+ in revenue but they only show $15k in net income after all deductions on their tax returns. But they buy $400k+ homes and drive cadillacs etc. I see what your saying. My business showed a loss for 3 years on the books. Write offs are a great thing for a business. My small eBay business should do around $100k in revenue this year and it's only a part time business ran by me, myself and I lol Quote Link to comment Share on other sites More sharing options...
CoolBlueSS Posted April 4, 2007 Report Share Posted April 4, 2007 (edited) If it ever comes down to quality, I watched tommy boy and can sell...lol...I wory about price and battle that obection everyday in my job. "what's your rate?" or "I only want the best deal..." I ask them, do you care if I mess up your escrows? How about if I sneak a pre-payment penalty by you? Do you care about price then? How about customer service? Do you want to talk to someone in India? Every once in a while you get the moron who really doesnt care and is willing to take thsoe risks for a few pennies, but most see the light... OH MY GAWD!!!!!! ICAN'T STOP!!!!!!!!!!!!! That is true that some will see the light, while others wont. Also, you'll get to hear some of the same stuff in this business as you do what you're in now. "I can get that cheaper somewhere else", "Why do you need the year, they're all the same" (my favorite), ect, ect. You seem like an enthusiast, like so many of us here, so you'll probably do fine. The big thing to seperate yourself from the competition is to make sure your people are knowledgable. Stay on top of current technology in the industry, and you'll set yourself out front in your market. Edited April 4, 2007 by CoolBlueSS (see edit history) Quote Link to comment Share on other sites More sharing options...
brobradh77 Posted April 4, 2007 Report Share Posted April 4, 2007 That's still 90-150K a year.. NET. (write-offs and everything else already deducted i'm sure).. That's some pretty damn good money... : I think that is good money as well but that maybe because I have never had a job yet that pays that well. Another consideration I always take, that many don't, is that if it is something you really want and like doing then the money is just icing on the cake. IMHO Quote Link to comment Share on other sites More sharing options...
Black2003SS Posted April 4, 2007 Author Report Share Posted April 4, 2007 The key will be to having good employees and taking care of the clients. If I take care of those two things first, the rest will fall into place. If that palce is making that kind of money, I'm the kind of guy who will buy lunch for the crew or cook out on a sunny day etc. My dad and I are also getting season tickets to the Tigers (business expense as well) and can give those out to employees as well once in a while. Making it a happy clean (as clean as a parts store can be...lol) work environment is also key. Quote Link to comment Share on other sites More sharing options...
CoolBlueSS Posted April 4, 2007 Report Share Posted April 4, 2007 That's the way things are here. A happy employee is a productive one. Quote Link to comment Share on other sites More sharing options...
GEMINIWHEELS Posted April 4, 2007 Report Share Posted April 4, 2007 The main thing you need to look at is paying off the loan you will have. I'm assuming you will not be paying cash for these two businesses. The previous owner probably has little or no debt. If that's the case then it is easy for him to show a decent amount of profit. If you calculate the amount of money you need to borrow and figure out your payment, that comes out of the amount of profit he is showing you. I'm not trying to rain on your parade , I just don't want to see you bury yourself. Ross Quote Link to comment Share on other sites More sharing options...
Black2003SS Posted April 4, 2007 Author Report Share Posted April 4, 2007 The main thing you need to look at is paying off the loan you will have. I'm assuming you will not be paying cash for these two businesses. The previous owner probably has little or no debt. If that's the case then it is easy for him to show a decent amount of profit. If you calculate the amount of money you need to borrow and figure out your payment, that comes out of the amount of profit he is showing you. I'm not trying to rain on your parade , I just don't want to see you bury yourself. Ross Got that covered! We are putting alot down. Dad got a buy out from GM and is retired. Quote Link to comment Share on other sites More sharing options...
GEMINIWHEELS Posted April 4, 2007 Report Share Posted April 4, 2007 Great that's GOOD to hear! Quote Link to comment Share on other sites More sharing options...
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