Listen to five potential small business buyers who are investigating car wash companies as they talk about the enterprises they’ve seen. Most likely you’ll hear five different descriptions of the business.

That’s because there are three basic business models in the industry and variations on those, often including a gas station, mini-market, gift shop, and lube rack. Further confusing the issue, some of those opportunities come with real estate.

The costliest and highest revenue configuration of this business, usually selling for over $1 million, consists of the long tunnel through which the driverless car is conveyed, while getting soaped and rinsed, then delivered to a crew with drying cloths and vacuums.

An automated version, but not as investment-heavy, is the small building, open at both ends, through which the car is driven or pulled, for a quick scrub, with no workers involved. Vacuuming is usually a do-it-yourself project.

Least expensive, and usually the lowest revenue producer of the three, is the self-service coin-operated carwash with individual bays, water and soap wands, and the pay-for-use vacuums and dry cloths.

Regardless of type, carwash offerings usually attract a lot of  interest from people who plan on buying  a business, and if in good condition and priced correctly, frequently sell without delay.

There always are cars on the road in need of a wash.

Another draw for much of the business buyer market is ease of operation. For many enterprises success requires an operator with experience and knowledge about the specifics of the business. But most any competent businessperson should be able to run a carwash after getting a little education from the seller. In fact, many of the business owners in this industry are able to manage on a part-time basis.

Also attractive about this industry is business expandability. Additional revenues may be available to the owner of a “tunnel” carwash by beefing up the retail sections in the customer waiting area–expanding a gift store or introducing a coffee bar–and providing auto detail service. And for operators of “drive through” and coin-operated auto wash businesses, sales might be increased by adding vending to dispense, as an example, soap and drying cloths, the vacuum service, and even fast foods.

And unlike owners of most other businesses who have to worry about a new competitor coming to the neighborhood, the carwash operator knows this is not likely to be a concern. Government officials in most communities hesitate to allow additional vehicle washing businesses to open because of land use, water use and wastewater issues.

But while investigating available businesses for sale, the potential car wash owner needs to make certain the real estate will be part of the package, or that the company will come with a long-term lease.

The tailor or gift card store operator may be able to relocate if the current lease expires without renewal. But that’s not a possibility for the owner of a car wash.

Another concern is the business volatility. Spending a few dollars to get the gunk off the family’s SUV may not seem a big investment, but belt-tightening during slow economic periods, does impact this industry. And while a few rainy days will mean a slow-down in many retail operations, the wet weather will quickly cause income stream from a carwash to “go dry” although overhead costs continue.

Among the most difficult challenges facing carwash buyers is determining the right price. Considering all of the various possible factors that go into the business, it’s hard to calculate whether the asking price is fair.

Some people appreciate the opportunity to purchase real property where the business is located. For others, however, after deducting for debt service on the real estate, the return on investment will be very disappointing. Yes, they are acquiring property also, but that property may not produce enough extra income–or rent relief–to justify its cost.

Considering the different configurations this business can take, it’s difficult to apply a pricing formula that is widely applicable. One popular approach, which might be used as a general rule for what the package is worth, separates the business from the assets. Then, a reasonable return is calculated for the business–two to three times discretionary income, adjusted for business location and condition of equipment–plus present value of equipment, inventory and, if included, real property.

The carwash business may not be the easiest business to evaluate and to buy, but it offers many very appealing characteristics once purchased.

About The Author:  Peter Siegel is a SCORE Counselor specializing in consulting those selling or buying a small business.  He is the Founder of BizBen.com – Businesses For Sale In California and has written three books on how to buy & sell small businesses. If you have questions about the buying or selling a business process please feel free to phone Peter Siegel at: 866-270-6278.

Many sellers of small businesses think they have all the right answers when it comes time to find a buyer and get a deal at the price and terms they want. Discussions with business brokers, however, reveal that even business owners who are good at selling their company’s products and services, and know about the obvious things to do in order to market their companies, can make some deal-killing errors when trying to get a buyer to say “yes.”

Here are six key things to avoid if you want to sell a business.

1.  DON’T prejudge the prospects and assume you know who is, and who is not a good buyer. In most cases your instincts are reliable when you evaluate people who inquire about your business for sale. Usually you can identify those who don’t seem suitable candidates to be the new owner of your company. The problem is that you aren’t always right. And by prejudging every person who investigates the business you run the risk of dismissing and losing someone who could have become the new owner. Every experienced business broker can tell you about possible deals lost because a good buyer was “blown off.”

2. DON’T think your repair shop has to look like an operating room where heart transplants are performed. While it is important that the place of business for sale is presentable, as many brokers suggest, there is such a thing as looking “too good.” Buyers are turned off not only by businesses that look like disaster areas, but also by for-sale offerings that have been scrubbed down and “dressed up.” The company has to appear to be a place where business is conducted. Neat and organized is a better look for a business for sale than “immaculate”

3. DON’T be too aloof toward prospective buyers. It’s natural to feel a bit distrustful and act cautiously when meeting people who claim to have an interest in your business. But in just about all sales situations, the buyer is going to make a decision, in part, based on the relationship with the sales person. It’s important to try and act friendly toward every prospect. The rapport you establish not only will encourage the buyer to do business with you, it will set a good tone for relations after you reach an agreement and work together during the post-sale period when you provide training and consulting.

4. But that doesn’t mean sell hard. A seller with an over-bearing attitude and high-pressure style has ruined as many potential small business sales as a financial report showing unsatisfactory revenue and profit performance. If you’re using a business broker, it’s his or her job to “close” for a commitment. Pushing someone for a “decision,” or even an answer to “well, are you interested?” is not likely to elicit a truthful response, and could well chase away the prospect.

5. DON’T forget to do your homework. That means finding out what the prevailing price formula is for your type of business and geographic location. Learn about the best places to advertise the company for sale and take advantage of other opportunities to become informed about what you want to do, talking with knowledgeable professionals and participating in educational events such as the free online webinar, Selling a Business, October 28 at 8:00 p.m., Pacific Time.

6. DON’T wait until there is a good buyer candidate before you get your act together. When there’s an interested and qualified buyer asking for more information, it’s too late to start talking to the landlord about a new lease, assembling a set of books and records for inspection, and compiling the list of assets to be included in the deal. While you’re doing that, and finding out that the process takes more time than you’d expected, your “buyer” is examining–and perhaps getting interested in–other for-sale offerings.

Business consultants and intermediaries are full of advice about what a business owner should do when he or she wants to sell out. The “dos” include having a lease, being able to substantiate claims about performance, and asking the right price. The important “don’ts” covering less obvious factors need to be followed as well if you want to convert a prospect to a buyer.

About The Author:  Peter Siegel is a SCORE Counselor specializing in consulting those selling or buying a small business.  He is the Founder of BizBen.com – Businesses For Sale In California and has written three books on how to buy & sell small businesses. If you have questions about the buying or selling a business process please feel free to phone Peter Siegel at: 866-270-6278.

Climbing unemployment rates are driving an unprecedented number of people to seek self-employment by purchasing their own business for sale.

Whether that’s a smart or a foolish economic plan depends on the individual–whether he, or she is suited to the challenge and responsibility of business ownership.

Good performance in a corporate setting doesn’t necessarily require the same characteristics needed to succeed as a business owner. And some traits thought to be assets for one who is self employed, may actually be liabilities in today’s economic environment.

If you think business ownership may be the solution to your economic needs, ask yourself if you possess these three characteristics, needed for business success.

But first, consider what are thought to be key ingredients for success as an entrepreneur.  Prospective business owners who think they need to have a high tolerance for risk might be advised that it actually can be riskier these days to sign on as an employee than to have your own company.  And the idea that the best self-employed people are independent thinkers does not coincide with a description of successful franchise owners. In that type of enterprise, it’s often advantageous to be good at carefully following a business plan provided by others.

What then, are the characteristics of a person who is likely to do well as a small business operator?

1. Broad Perspective: In many companies, employees are encouraged to focus on their particular jobs and not think too much about how their functions impact the work of others in the organization. That attitude is a detriment to a business owner who has to pay attention to detail, but also must keep the  “big picture” in mind at all times.

2. Persistence: Another behavior commonly needed in a corporate setting is satisfying the boss–carrying out his or her wishes, even if one disagrees. Meanwhile, the successful business owner is balancing the sometimes-conflicting requirements of customers, employees, vendors, landlords and government agencies. That calls for a level of tenaciousness usually not tolerated from employees.

3. Willingness to sacrifice: People who think that business ownership entails greater freedom than a 9-to-5 job, are in for a surprise. Individuals in business for themselves, whether lone-operators or those with a staff, will tell you that they spend more time working than they did as employees and that some benefits of employment, such as a steady paycheck, may not be available to the man or woman in charge of a small business.

Success at performing your duties while working for others might condition you to be a good employee, but provide poor training if you want to own your own business.

Before singing up to purchase a franchise or independent company, or to start an enterprise from scratch, ask yourself how your personal characteristics correspond to those needed for successful self-employment.

When possible, learn what it takes to be successful as a small business operator. Check out resources such as the free webinar for business buyers, October 21.

And ask yourself if you are able to conceive of the “big picture,” if you are known to be persistent–even if you have to override objections of others, and whether you are willing to make significant sacrifices to insure survival of your business.

About The Author:  Peter Siegel is a SCORE Counselor specializing in consulting those selling or buying a small business.  He is the Founder of BizBen.com – Businesses For Sale In California and has written three books on how to buy & sell small businesses. If you have questions about the buying or selling a business process please feel free to phone Peter Siegel at: 866-270-6278.