How do I judge a detailing studio’s dependence on dealership lot work?
Ask for sales by customer over a recent period and see how much comes from dealership lots. Then read any written arrangement, find out who at each dealership decides, and ask how promptly they pay. Heavy reliance on one lot is a risk, whatever the totals look like.
Start with the sales split. Ask your accountant, or the owner’s bookkeeper, to group sales by customer for a recent period and show what part came from dealership work and what from individual owners. Look at how steady each source has been over time, and whether one lot makes up most of the dealership share.
Then ask how that work is won. Is there a contract, a quote, or a handshake? Who at the dealership decides which studio gets the cars, and would that person stay? Ask whether the work is tied to the owner’s relationship. If the relationship is personal, a new owner may not keep it, so ask for an introduction before closing.
Next, look at payment. Dealerships may pay slowly or in batches, which affects cash. Ask for the unpaid invoices, how late they run, and any disputes over quality or damage. Ask your lawyer about any written terms that end on a change of ownership. Finally, think about the other side: if the lot work stopped, could the studio fill that time with retail customers, and what would marketing cost? Ask the owner what happened the last time a dealership changed its mind.
Key takeaways
- Group sales by customer to see how much depends on one dealership.
- Ask who decides at each lot and whether the relationship is personal to the owner.
- Check payment speed and any terms that end when ownership changes.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
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