Actually this could be a good topic for discussion. Considering we all boats or aspiring to have one, etcetera.
1.) I owned a used car dealership in Toronto. A simular business up the street and became friends of mine. Well they bought an established used lot from someone else. They laid out more money
to buy an existing business over mine started from scratch. The old owner had a semi bad rep and had business practices that most associate with used car dealers. They had to change their name and move locations. Start from scratch. Most private business are priced low because most times its less expensive to just start your own. A girl I dated recently. She got a job at an espresso place. Learned what the business entailed. Then went out on her own and started from scratch. At 19. People buy existing business because they think all the right buttons to success are all ready in place. If you can't create your own buttons--how can you run a business? Really your buying
training that can be less expensive getting a job in the industry to learn the ropes.
Would it cost less to start on your own? Is the seller selling because he has a bad rep? In other words the real value is existing customers. That part is near impossible to determine. Hence why a franchise has better value most times over other private business. Buy a bad one and your going to need to attract new customers and clense yourselves of past bad word of mouth experiences created by someone else. Again easier to create from scratch and build your own.
2.) Another car dealer that I borrowed cars from to resell. He had high end cars that he collected and sold. Things like Rolls Royce's. A very wealthy individual. Once he said that the car business was tough--my son lost
half a million of my money
. No his son lost
that money for your company I said. Puzzled he wanted an explanation. Did his business still cover expenses and pay the owners salary? Yes, he still had a salary and paid all the operating expenses. Even though his son wasted half a million of business capital--he just did not generate a bonus or a return of capital.
3.) over crowded markets. Car dealers are a dime per dozen. I semi specialized and carved out a niche market. Would tend to specialize in cars that other dealers didn't bother with. Like exotic used dealers mostly buy lease
returns that are a few years old. Off lease
3 year old BMW', Mercedes, Jaguars, Porsches, etcetera. Id buy the older yet still popular models. Carved out a niche including 1970's Rolls Royce Silver Shadows, etcetera.