# insane to purchase car audio shop????



## adriancp (Feb 12, 2012)

Hey guys, 

we are all quite aware of the state of the industry. However, we all have a love for this and who wouldnt want to be happy going to work everyday enjoying what they do?

Am i being a glutten for punishment and asking for disaster by delving into this business now with the way things have changed so much? I am looking at an existing business, same location for over 20 years, has a decent mix of audio, marine audio, rem starts, keyless, truck accessories, and a great amount of tint business. 

I just cant help but worry that what i would like to be a prosperous endeavor for myself and my family would just result in investing into a dying industry.

any thoughts would be greatly appreciated.


----------



## FreeTheSound (Feb 24, 2013)

There are several men on here that are business owners that can help you out.

Have you written down a series of questions to yourself?

Why am I doing this?
Can I float the business from my bank account for at least a year if the bottom drops out totally?
Is this something my children can take over and live off of?

Just some ideas


----------



## adriancp (Feb 12, 2012)

Hey FTS,

I hope there are some that can help. Any help or advice would be greatly appreciated. 

to answer some of your questions:
1. I have Always had a love for this industry. I worked at this shop for several years in my late teens and early 20's. I still refer to them as the best (work) years of my life. I very recently lost my sales position with a very large corporation. and even though i am financially concerned right now, the stress and weight off of my shoulders is amazing. I have been in sales whether retail or outside rep roles for almost 20 years. With this setback just happening and the opportunity to acquire this business coming available. I cant help but think that things happen for a reason and the timing is just right.

2. Can I float the business for a year? to be honest....Absolutely not. That is why the appeal of purchasing an established business, including all of the employees, and the customer base, is the appealing factor. I understand this is a big no-no in business, but just to be real, there is no way to acquire that type of working capital from the start. 

3. Passing down to my kids? Yes, I do believe this is something that can be worked with fresh eyes and vigor to provide them an opportunity later on down the road. Of course, I always have a hope that they turn out to be doctors, lawyers, engineers, or whatever profession suits them best!


----------



## sirbOOm (Jan 24, 2013)

If you can expand into car customization and make a name for yourself doing something that no other shop really does, then yes... go for it.


----------



## [email protected] (Oct 21, 2009)

Before you go to far into thought, you need to request that you be allowed to review all of their financials for at minimum the last three years. Have them reviewed by an accountant. Then you need to see a list of inventory orders, inventory sales, warranty replacements, demo pieces, display pieces, etc and see if these lists all match up. If they do not, something is being hidden, or just poor management. Either way it is cause for concern. 
Then the biggest and most important question is: Why are the owners selling a Profitable business, and does the asking price coincide with the annual profits. 
Anyone can say they make 100K a year after expenses but if they're only asking 200K, again something doesn't make sense. 
Be careful. Hire an attorney and an accountant to look over EVERYTHING!!! Cover your own butt. 

Also, just because it is established doesn't mean your going to make a living wage. A lot of businesses make payroll, pay the bills, and the owner still struggles.


----------



## rton20s (Feb 14, 2011)

I think Brandon offered up some good advice. Without due diligence, you might end up doing nothing more than buying someone else's headache. It could end up being a better option to start your own shop from scratch then buying into an existing struggling business. 

And if you do all of the right research and investigation only to find out the business is struggling, you need to ask yourself, "why?" Is this because of poor management or something else associated with the specific business? Or is it because of market the business is serving? In traveling around my own state, it has become apparent that a successful car audio business in one demographic might not be successful at all in another.


----------



## Chaos (Oct 27, 2005)

I don't know how many members here have actually worked in a 12v retail shop on a daily basis, but I wouldn't want to run one if somebody gave it to me.


----------



## schmiddr2 (Aug 10, 2009)

Depends on if your market is right and how much effort you are willing to put into *everything*. As an owner *you* are in charge of everything. Which is great at times and not so great at other times. Do you have the business acumen and dedication to see it succeed?

As for the stereo/alarm install side, do you know this in and out? Can you get excellent/reliable people? Will you do any kind of install: from basic to full custom builds?

If not, since the Tint business is "great", maybe this would be how you stand out or something to focus on.

It's good to be "the best" at something. Know it in and out. Have all products and relevant information ready. People appreciate individuals who are very good at what they do, and will likely tell others about them.

I'm a big promoter of owning a business, so I hope it works out and I wish you the best.


----------



## rton20s (Feb 14, 2011)

schmiddr2 said:


> It's good to be "the best" at something. Know it in and out. Have all products and relevant information ready. People appreciate individuals who are very good at what they do, and will likely tell others about them.


^^^THIS^^^

It is much better to know your craft well and be considered by your potential customers as the local "pro" than to be the jack of all trades and master of none. When I see a slow business diversifying their products and services, I do not typically see it as a good thing. It is usually a sign of desperate owners grasping at straws. If you do car audio, do car audio.


----------



## adriancp (Feb 12, 2012)

thanks to everyone for the input!

Of course I will be reviewing all the financials with an accountant. That goes without saying. And I will have an attorney review the deal and make sure i am free and clear of any possible past mis-doings. 

The reason the owner is looking at selling is simply because he has done this for a little over 25 years and is just ready to piddle around on his property. He is adamant about the employees being taken care of and the business being looked after/successful. He has even offered to help out for about a year to ease the transition with customers and vendors alike. 

With that being offered, it makes me feel much more confident in the possibility of the success of this venture. And no, the expanding of offerings wasn't to cover for the shop's primary mission, it was a natural progression into things that accompany the car audio side. For the most part, what the shop offers now has been the same the entire time. Just that some aspects have grown (marine audio, truck accessories) while others have naturally faded due to competition and staying on top of technology (vinyl sign shop, vehicle graphics)


----------



## ChrisB (Jul 3, 2008)

[email protected] said:


> Before you go to far into thought, you need to request that you be allowed to review all of their financials for at minimum the last three years. Have them reviewed by an accountant. Then you need to see a list of inventory orders, inventory sales, warranty replacements, demo pieces, display pieces, etc and see if these lists all match up. If they do not, something is being hidden, or just poor management. Either way it is cause for concern.
> Then the biggest and most important question is: Why are the owners selling a Profitable business, and does the asking price coincide with the annual profits.
> Anyone can say they make 100K a year after expenses but if they're only asking 200K, again something doesn't make sense.
> Be careful. Hire an attorney and an accountant to look over EVERYTHING!!! Cover your own butt.
> ...



Not only do I support requesting their financial statements, but I also suggest requesting copies of their income tax returns. I can't tell you how many people said, and showed, clients of mine how well the business was doing in QuickBooks, yet the business income tax return told a whole different story. That story was usually NOT because of deferred revenue and bonus depreciation either.


----------



## Angrywhopper (Jan 20, 2010)

It has its good days and it has its bad days. 

You have to be a people person.

If you're ok with the above two, then proceed with it..


----------



## SSpade19 (Nov 14, 2014)

AdrienCP,
Did you end up buying the shop and if yes how did it work out or why you decided not to? 

I am in the same boat and was wondering how to properly value a shop based on gross income and cash flow. There is a shop available for around 300k. What kind of gross and cash flow would you expect for a shop on sale for that price?

Also to those in the business. What are the major challenges these days with using a car audio store?


----------



## Angrywhopper (Jan 20, 2010)

SSpade19 said:


> AdrienCP,
> Did you end up buying the shop and if yes how did it work out or why you decided not to?
> 
> I am in the same boat and was wondering how to properly value a shop based on gross income and cash flow. There is a shop available for around 300k. What kind of gross and cash flow would you expect for a shop on sale for that price?
> ...


Internet
Cheap people
Everyone thinks they can install 
New cars coming with better tech
Nobody cares about sound anymore
People are spending their money on iPhones and tablets
Difficult finding good sales people
Difficult finding good installers
Race to zero


----------



## Coppertone (Oct 4, 2011)

Answer to the question, yes.......


----------



## troutspinner (Nov 8, 2013)

Regardless of business choice, like Brandon said, you need to see the financials and see if the buy-in or buy-out amounts are even worth thinking about a purchase.

Another thing you have to understand is that if you are the boss, you will spend little time actually doing the stuff you love. Rather, you will manage people, books, inventory, advertising and at the end of the day, you'll probably hate it.

I've owned my own business for 15 years, not in this industry but I have been down this road, be prepared to give up a portion of what you love to do.


----------



## adriancp (Feb 12, 2012)

Hello All!

my appologies for not responding sooner, Work has been very hectic and it totally slipped my mind. 

To answer your question, No, I have not purchased the shop (yet) due to some financial setbacks on my end. My plans have not changed, just delayed. I continue to maintain my close relationship with the owner as well as the employees and we bounce ideas off each other as far as making improvements etc...


----------



## SQLnovice (Jul 22, 2014)

I had a great finance professor in college and he said that he wants us to remember 2 things after finishing his course. 
1. Do not pay someone else to manage your money.
2. Do not buy a business from another person. Because there are always one reason for selling a business and almost always, it's never a good reason. He said there are few exceptions to this, but it will almost never happen.


----------



## adriancp (Feb 12, 2012)

SQLnovice said:


> I had a great finance professor in college and he said that he wants us to remember 2 things after finishing his course.
> 1. Do not pay someone else to manage your money.
> 2. Do not buy a business from another person. Because there are always one reason for selling a business and almost always, it's never a good reason. He said there are few exceptions to this, but it will almost never happen.



I don't disagree with this one bit. Actually, I don't disagree with any of the advice that has been given.


----------

