Most dealer/owners are so busy running the day-to-day operations of their business they don’t think about selling the dealership when it is performing at its best. The only time to sell is when you want to retire or devote significant time to other endeavors. It is very difficult to find a better return on investment than the automobile business.
In order to add value in any market, you should address the following items:
- Investigate the transferability of all contracts including leases, suppliers and sales.
- Make sure all company equipment is in good operating condition.
- Spruce up the physical aspects of the business facility.
- Standardize and document all company processes and procedures.
- Resolve any outstanding litigation and eliminate any liens or liabilities.
- Make sure key employees have employment contracts in place and eliminate low performing employees.
- Establish a management team that can operate without you.
- Have clean, verifiable financial statements for the past three years.
Take the following actions to improve your cash flow:
- Reduce unnecessary inventory.
- Insure financial controls are established.
- Renegotiate unfavorable key supplier contracts.
- Reduce adjustments on income statements.
- Make sure to collect outstanding receivables.
Ideally you should plan to sell a business 3 to 5 years in advance of putting the property on the market. You need to demonstrate a track record of maximum profits to increase your proceeds.