How can I tell whether a boat dealership is profitable before I buy it?

A single profit line says little about a boat dealership. The business has several income lines, and they behave differently from one season to the next. Your job is to see each one on its own, then see how they fit together. Ask your accountant to help with the analysis, and ask the seller for the underlying reports, not only the summary the seller has prepared.

Split the earnings by line

Ask for sales and gross profit separately for new boats, used boats, service, parts, storage and finance and insurance income. New units often bring a thin return and bring customers in, while service and storage may carry the steadier part of the profit. Knowing which line does the work tells you what you would actually be running.

Compare season to season

Weather, fuel costs, consumer confidence and manufacturer supply can all move a boating season. Ask for several years of monthly statements, so you can see the swings and what the owner did about them. Ask what a poor season did to cash and to the floor plan lenders. Ask how the dealership came through its weakest year.

Look at interest, stock and adjustments

Floor plan interest can be large in a slow year, so see it as its own line. Check whether aged units have been written down, since a stale boat is cost sitting on the lot. Then review any owner adjustments to earnings, such as family wages or personal expenses, and ask for proof of each one. Your accountant can say which adjustments are fair.