What should I ask about a powersports dealer’s seasonal cash flow and floor plan?
Ask for monthly cash flow across several seasons and see how the dealer pays the bills in the slow months. Then ask how the floor plan funds stock, what interest and payments are due, and what happens when units do not sell. You want to understand the quiet season before you own it.
Cash in this business moves in waves. Ask for monthly bank statements and look at the low points. How low did the balance fall, what covered the gap, and how quickly did it recover? A dealer who plans for the slow months will have a story and the records to match.
For the floor plan, ask who the lender is, how new units are funded and how payments work when a unit sells. Look at aged units, interest charges and any curtailment payments. Aged stock drains cash in the months when little comes in.
Ask what else sustains the shop between seasons: service, parts, apparel, storage, used units. Revenue from those lines can smooth the year. Check how much depends on a few busy weeks. Finally, ask what the owner has put in personally to get through the winter. A loan from the owner may need repaying, or may have been covering a weakness. Ask the seller to walk you through the worst month of last year as if you were running the shop. Where did the money come from and where did it go? Your accountant can turn that story into a simple month-by-month picture you can plan around.
Key takeaways
- Read monthly bank statements and focus on the lowest points.
- Ask how aged units affect the floor plan and slow-season cash.
- Find out which lines keep the shop going between seasons.
Related reading
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernment4 key steps to plan your cash flow in the coming year
- 02Business Development Bank of CanadaGovernmentWhat is Cash Flow
- 03Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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