Do you want to buy a car wash stand and you need due diligence tips? If YES, here are 20 important questions to ask before you pay for a car wash business.
Entrepreneurs who don’t want to go through the rigors of starting their own car wash business find solace in the fact that they can own a car wash by buying one that is put up for sale, or the franchise of an already established brand. Buying the franchise of an already established brand gives you leverage if you want to own a car wash business of your own.
If you intend buying a car wash business in the united states of America, then it will be to your advantage to ask the right questions or else you will buy a business that is dead and can hardly be resurrected.
No doubt, you might not have the exposure to ask the right questions, but there are business experts that can help you make the right decisions. In case you don’t have a budget for that, then you might find this article highly resourceful. Now let us consider 20 crucial questions that you should ask before buying a car wash business;
Important Questions to Ask When Buying a Cash Wash Business
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The Track Record of the Company Selling the Car Wash
The first inquiry you should make on any company that is selling a car wash is to ask about their track record. If you can’t place a finger on anything the company has achieved over the years, then you should reconsider your decision of buying the business, except you are dealing directly with the owner of the car wash business.
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Why Are They Selling the Business?
Of course, there are many reasons why a business owner would want to sell his or her business and some reasons might not be what a new owner would want to deal with.
For a example, if the owner is selling the business because they have not been able to make profits, you might want to reconsider buying such car wash business. But if the owner is selling the business because of relocation, retirement or no longer interested in the business, then it makes sense.
But over and above, you don’t have to take whatever answer the seller gives to you hook line and sinker, hence the need to carry out your own investigation. You can do this by asking neighbors or customers about the business.
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How Did the Business Fare in the Last Five Years?
Another key question that you should ask before buying a car wash business is the story of the business. What are the wins and testimonies of the business that they are proud of and will be willing to share with the whole world. If they don’t have any, then you may want reconsider.
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Ask About the Profitability of the Business During Peak Period
The truth is that no one would want to buy a business that is not profitable and one of the easiest ways of knowing how profitable a business can be is to see the profitability of the business during the peak period. If the seller will be willing to let you into the company’s books, it will help you make an informed business decision. You might want to also check to see the highest loss they have recorded in during their lowest period.
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What is the Average Running Cost of the Car Wash Business?
Another good question that you should ask if you want to buy a car wash business is the average running cost of the car wash. The truth is that some businesses aren’t as profitable as they ought to be because of the over-the-board running cost of the business.
When a business owner fails to eliminate some not too necessary expenditure when it comes to running their business, they will always fall short of their profit margin or even struggle to make the business profitable. This question is important especially if the owner is selling the business because the business is not making profits.
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The Terms and Conditions Attached To Buying The Business
Please note that when you are buying any business or signing any contract, there are always terms and conditions attached to it. Some investors fall prey to dubious business owners selling their business with hidden terms and conditions that will trap them.
For example, if you buy a car wash business that has hidden debt, if the debtor shows up to claim his debt, you will be held liable as the new owner of the business. This is why it is very important to ask for the terms and conditions attached to the car wash company.
Some of the terms and conditions might not be favorable to you so ensure that you critically look into them before making your decision. If need be ask the seller to sign an indemnity that will protect you from any debt that has been incurred before you bought the business over.
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Ask if There Are Any Additional Support Available to You If You Buy The Car Wash
Aside from asking for the terms and conditions of buying the car wash, another critical question you should ask before buying the business is if you will be provided any additional support if you buy the business.
There are some companies that will provide free consultancy service and support for a period of time. Some can mentor you, recommend some key staff members, introduce you to their customers and do the proper handing over before finally exiting the business.
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The Number of Competitors in the Location
Another key question that you should ask before buying a car wash business is the number of car wash businesses that operate within same location i.e. the likely competitors that you will face in the location.
Of course, you can carry out your own due diligence to ascertain the true figure and intensity of competition, but it won’t be out of place to ask the seller. With that, you will be able to know if you should go ahead with the deal or to call it quit.
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Ask About The Mode of Payment
Most businesses that are put up for sale usually make flexible payment plans that will make it easier for buyers to buy the business.
However, some sellers would need nothing less than outright payment, anything short of that is a no deal. So, in case you don’t have all the money saved up somewhere for the purchase of a car wash business, then you should ask to know the mode of payment.
Interestingly some seller may give you the options of paying by installment over a period of time or writing out postdated checks or even paying in kinds et al.
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Ask About The Company’s Profile
It will be out place for you to buy a car wash business without going through the company’s profile. If it is not available online, demand it from them.
The truth is that a company’s profile is needed when accessing the business. It will give you a pointer to why the business is running at a loss or why the business is not maximizing profits or getting a fair share of the available market share in the location.
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Ask to Know The Business Tax Status
Another critical question that you must not fail to ask if you are buying a car wash business is to insist on knowing the tax status of the business. If you are buying a business in the United States, you may not want to buy a business that is defaulting in the payment of tax.
Even if you get an answer from the seller of the car wash and you see the tax certificates, you should still go ahead to do your due diligence to know the tax status for the car wash business from the Tax Board Office.
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How Often Do They Renew Their Permits and Operational License?
Businesses in the United States are mandated to renew their permits and operational license from time to time. So, it will not be out of place to ask to know how frequently the owner of the car wash business renews his or her permits and operational license. As a matter of fact, you may want know if the current permits and operational license is still up to date.
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How Long Has The Business Been Put Up for Sale?
Another important question you should ask the seller of the car wash business is when the business was put up for sale. The essence of this question is to know if the business is attractive or over priced.
The bottom line is that if the business has stayed long in the market, it may not be worth the hype and that will help you price the business below the listed price. A car wash business that is attractive or rightly priced will not last in the market.
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What Are The Liabilities and Assets of The Car Wash Business?
When it comes to valuing a business that is put up for sale, you should be able to have a clear picture of the liabilities and assets of the business. No doubt, no investor will embark on the journey of buying a business without having a true picture of the assets and liabilities.
So, if you have plans of buying a car wash business, then you must make it a point of duty to ask to know the liabilities and assets of the car wash business and what you will be inheriting.
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Debt Payment Options if Any
It is important to ask to know if the car wash business has active debts and the options available as regards paying up the debt. It is rare to see businesses especially businesses put up of sale not having backlog of debts. In case the seller of the car wash does not have any plan to pay the debt, then you must negotiate the deal to your advantage.
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Are They Willing to Leave Key Staff With You?
If the reason they are selling the car wash business is to move on to other related business that will demand that they migrate all their staff, then you need to recruit new staff, and that may not put the business at an advantaged position.
This is the main reason why you must ask to know if you are going to be inheriting some of the key staff of the cash wash business when you eventually buy it over. It will help you to continue the flow of the business without stopping to recruit and train staff.
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The Profile of The Owner, Board Members and Directors
The profile of the owner of the cash wash business, the board members and directors is also another info that you should know before buying a car wash business. No doubt, you can only request for this information if the car wash business is a standard one with a well – established business structure.
The reason why you should ask this question is to establish the pedigree of the owner, the board members and directors especially as it relates to their integrity.
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The Business model and Philosophy of the Car Wash Company
Another important question that you must not fail to ask, especially if you can’t find it in any available document is the business model and philosophy of the car wash business.
The business model and philosophy of the car wash is also a part of what you should know before making your buying decision. If the business model and philosophy of the business does not conform to your style, it means you need to create a new business model and philosophy.
Although this is not enough to deter you from buying any business, but it will help you have a proper perspective of what you are signing up for.
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The Position the Company Occupies Amongst Car Wash Businesses in Your Country
Although it is difficult to find a car wash business owner putting up his or her business for sale if the business is amongst the top performers in the industry, but the truth is that no one wants to buy a business that is at the bottom of the industry.
This is the reason why you must ensure that you know the position the car wash is occupying before buying it. No doubt, there are business experts that can buy a business that is at the bottom rung of the industry and in no distant time, push the business up the ladder. If you don’t have such expertise at your disposal, then it is not advisable to go ahead to buy such business.
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The Benefits You Stand To Gain When You Buy The Car Wash
For every seller that has a product or service that is put up for sale, there are selling points they can readily showcase to any potential buyer, and that is what is known as the benefit of buying the business.
So, if you want to buy any car wash business that is put up for sale, then you should ask the seller to list out the benefits that you stand to gain when you buy the car wash. Who knows, the benefits you stand to gain for buying the car wash might just be the extra push you need to make up your mind.