Succession Plan

[Waxman]

What are the ways you have planned for your eventual exit from the carwash and/or detail business?

I love what I do but intend to sell some day and want to begin planning now so it can happen when and how I want it to happen.

Thoughts?

 

[MudMoney]

I like this business and my other businesses that I look forward to it everyday.26 years as ss owner and 38 years in other biz that wife says I will be going out on a gurney.I would think that the government will outlaw either one as I make a profit at both and profit has somehow become a politically incorrect endeavor

 

[chaz]

Keep accurate records. Especially financials. It's tempting to take some cash off the top, but if it's not on the tax return then you not only are you cheating the IRS, you are cheating yourself when you go to sell. Can't have it both ways.

 

[Earl Weiss]

Buying Lottery tickets

 

[robert roman]

A viable exit strategy would satisfy several conditions.

One is to define the exit strategy. For example, you intend to sell the business to a third-party buyer.

Another component is ability to identify potential buyers and strategies. For example, are you selling business-only or 100 percent of the company including R.E.? Will you offer seller financing? Etc.

Another component is ability to relate exit strategy to the industry model.

For example, current equation to value self-service is income multiple of 3.0 to 5.0. Are you a 3.0, 4.0 or 5.0 or more? Will future market conditions allow the sale to a 3rd-party buyer for the expected price?

What about the detail and used car business? How will they be valued so you can create wealth from the exit strategy?

Another condition is ability to schedule the exit strategy.

For example, norm is a marketing period of 12 months. How long will it take to sell a self-service business that also has a detail shop and used car business?

Hope this helps.

 

[JGinther]

Its a car wash? Welcome to the hotel california...

 

[Waxman]

Has anyone sold a used car or detail business and if so how did you value them?

 

[Waxman]

Its a car wash? Welcome to the hotel california...

I've playing a different song, something more like this than hotel cali: https://www.youtube.com/watch?v=0hiUuL5uTKc

 

[cebo]

Haha. We can check out but can never leave.

 

[Waxman]

i thought all business owners had a succession plan. kind of surprised by the lack of serious replies here. oh well.

 

[rph9168]

I think it is important to always have an exit plan. The main thing is to always have your business in order - accurate financials and running well. When I decided to sell my business the agent I used said he rarely saw a business's financials and operation in such good order. I was able to get top dollar in a relatively short period of time.

One thing I would avoid would be skimming your business. I had a friend that had a very good vending business. He paid himself a low wage and was always taking money out of the business which was easy because it was basically all cash at the time. He got very ill and had to sell the business. It was very difficult and he lost a lot of money in the sale because his books made it look like the business was not making much money.

 

[Whale of a Wash]

I am putting up washes for sale this week. If anyone is interested in 5 washes in high traffic areas with two vectors. A couple have the real estate valued super high. I am the only SS washes in a pop base of 170 K.
We have a real four seasons in ND. Lots of winter sports , skating, ice fishing, snowmobiling, skiing.
I found I am leaving a lot of money on the table and looking into large led signs, for off-premise advertising that may bring in an additional 4-8k a month , due to high traffic volume on these streets over 20 k cars a day.
3 washes have all outdoor lights in led, updated 3 washes this year to 94% efficient water heaters, and a couple of high efficiency boilers for floor heat. Just putting cyptopay in another wash.
I have 10 k of tokens that walk away every 9 months.
Enough of the sales pitch, but going to do a 1031 exchange on the washes when they sell, and use them as a down payments on more apt buildings. Then spend a little more time at my Florida house, and more time at my hobby of flying.
If the washes don't sell I will probably spend more time updating washes. Get my led signs, maybe put a coffe shop at one location due to extra space. Hire some one to Manage washes, because I will use equity in washes to still get more apt buildings, and still buy a new airplane, and go to Florida house more.
Or all this work will kill me, and my wife will need someone to run washes, so one of you can move to ND to fill my shoes for free, and keep my bed warm.

 

[carwash11147]

This is a good thread because I ask myself this question every day. I built my first wash (a 4 and 2) in 2003 and my second wash in 2014 (a 3 and 1 with dog wash) both in the same town with no competition. Both locations are doing quite well and produce a nice profit. My problem is how do I get out when I'm ready (hopefully in about 10 years)? There isn't any chain washes in my area, I don't have any family members involved in the business, and I don't have any employees with the financial ability to buy me out. I have about $1.8 million invested in the two locations so that would be a minimum sale price. A bank would want 20% down ($360,000) to finance this so that would eliminate a large chunk of potential buyers. Remember car wash owners are a special breed of people, so I need to find someone who is an electrician, plumber, engineer, all-around-handyman, who is willing to work days, nights, weekends, holidays and that just happens to be a millionaire, too. Yikes!!!!!!!

 

[rph9168]

I would never carry the paper on the sale. I have heard way too many horror stories about going that route. I think that while it might be difficult to find the right buyer it is not impossible. I used a business broker when I sold and felt he was worth every penny since he screened all potential buyers and even helped the guy that bought my business get financing. I think the key to any exit strategy is always be ready to sell. If a good offer comes around take it.

 

[Eric H]

A bank would want 20% down ($360,000) to finance this so that would eliminate a large chunk of potential buyers.

They can do 10% for an SBA.
AS far as finding someone who is qualified to take over...If they can come up with a downpayment and get financing they can figure it out on their own. It's no longer your problem. You did the hard work too, now enjoy the rewards from it!

 

[carwash11147]

They can do 10% for an SBA.
AS far as finding someone who is qualified to take over...If they can come up with a downpayment and get financing they can figure it out on their own. It's no longer your problem. You did the hard work too, now enjoy the rewards from it!

Yes. But my point is there are a very small pool of potential buyers out there for this type of business unfortunately.

 

[Washmee]

I have a married couple who are my key management team. They have been with me for 22 and 17 years respectively. I plan on selling to them. They are both in their mid 30s and I have great confidence in them. Over the last 2 years I have turned over more responsibility to them and they have performed well. We have had our 2 best years ever.
I created a seperate operating company and made my key employees my partners. I own the real estate and the operatingcompany pays me through a triple net lease. Over the next ten years I will sell a percentage of that company to them, making them the majority owners. At that point they will have the option to purchase the real estate and the rest of the operating company.

 

[mmurra]

I buried a friend who had not planned on checking out. Helped his wife get rid of the wash. Not pretty. Got lucky and found a buyer, small down and large note. No choice. Seems like it is working. Have an exit strategy!

 

[robert roman]

“I built my first wash….in 2003 and….second wash in 2014….both in the same town with no competition. Both locations are doing quite well and produce a nice profit. My problem is how do I get out when I'm ready….?

“i thought all business owners had a succession plan.”

Obviously, some did not have an exit strategy going in.

“….$1.8 million invested in the two locations….bank would want 20% down ($360,000) to finance…..this….would eliminate a large chunk of potential buyers….I don't have any family members involved….any employees….to buy me out.”

To get the more attractive terms and conditions offered by SBA, borrower needs at least two to three years of ownership experience. So, pool of potential buyers may be even smaller than you believe.

Also, does doing well and nice profit equate to fair market value of $1.8 million or greater?

For example, second wash won’t be considered a statement of risk until end of third year (2017).

What happens to doing quite well and nice profit if someone builds another wash?

What are these risks to a potential buyer going in?

 

[Earl Weiss]

Men plan and the fates laugh.