What buyers ask a tire shop owner
- How much of your revenue is service, not tires?
- Alignments, brakes and repairs carry better margins than tire sales. Buyers want the split by month for three years.
- Do you have fleet accounts?
- Trucking companies, delivery fleets and contractors bring repeat work. Buyers ask for the list and how long each has used you.
- How is inventory handled at closing?
- Buyers usually count tires the day before closing and pay for them on top of the agreed price. Agree on the method early.
- How much is cash, and is it all on the books?
- Only reported sales count toward the price. Card and invoice records help buyers and lenders trust your numbers.
Service mix sets the margin
Selling tires alone is a thin margin business. Shops that also do alignments, brakes, suspension and light repair earn more on each car and see the same customers again.
Break out your sales by tires, labor and parts. Buyers will look at gross margin on each and see which side carries the shop.
Fleets and repeat customers
El Paso has a lot of trucks on the road. Freight carriers moving goods between the ports of entry and the warehouses, local delivery fleets and contractors all burn through tires. Fleet accounts give a buyer work they can count on.
Show each fleet account, its yearly spend and how long it has used you. If one carrier is a big share of sales, say so and show that the account has lasted.
Retail customers count too. Military families from Fort Bliss, students and commuters come back when they trust the shop. Strong online reviews and a bilingual counter staff are things buyers notice.
Inventory and supplier terms
Tire inventory is usually handled apart from the price of the business. The buyer pays for usable stock counted near closing, and typically gives a resale certificate for it instead of paying sales tax.
Agree in the purchase agreement how old or used tires are valued.
Distributor programs, rebates and credit terms may be tied to you. Ask your suppliers whether they will offer the same terms to a new owner.
Equipment, the bay and the lease
Tire changers, balancers, an alignment machine, lifts, compressors and a service truck make up the hard assets. Keep a list with ages and repairs. See our guide on sales tax on equipment in a business sale and confirm with your CPA.
Location matters a lot for a tire shop. Buyers want a lease with years left and renewal options, enough bays, and parking. If you own the property, decide whether to sell it, lease it to the buyer or keep it.
Also show how scrap tires leave your lot and who hauls them. Clean records there save questions in diligence.
The owner behind the counter
If customers ask for you by name and you write every ticket, the buyer worries. A shop with a manager who opens, prices jobs and handles fleet calls sells for more.
Keep your trade name in good order too. Our guide on assumed name filings after a sale explains what the buyer files and what you abandon.
To see how cash flow turns into a price, read how buyers price a business.
Thinking about selling your shop? Request a valuation or call (915) 555-0193.