Want to Own a dealership?
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Hhmmmm....How cool would it be for a rider group to buy a dealership. Woud it be possable to form a co-operative and all benefit from it.
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True, for the big boys (Honda, Yamaha, Suzy etc.) your credit line is established by your floorplaning finance company. On the other hand, others only require that you buy a handful of their machines and, in some cases, that you have a qualifed tech. in your employ.
Capt.
Too many cooks spoil the broth. In other words, in a cooperative situation all the members of the cooperative have equal say in all decisons and unfortunately this usually doesn't work well. But this doesn't mean that a group of people can't buy a dealership, that happens all the time. The differnce is you choose a board of directors, and other officers of the company to run it. this involvs a business plan and usually a freindly banker.
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The idea has merit.
A group could form a co-operative where each member buys the number of motorcycles they want and all order together to get dealer pricing on the bikes, parts, and aftermarket accessories. When I was a dealer the common markup on parts & acc was 40% or more. A plan could be worked out where everyone is protected but it would be difficult, and time consuming. The emerging Chinese motorcycle industry offers the best chance to start out cheap.
I liked the Capts idea about a group engineered custom also. We'd need an ironclad agreement created before anyone would risk any money to any project for sure.
A group could form a co-operative where each member buys the number of motorcycles they want and all order together to get dealer pricing on the bikes, parts, and aftermarket accessories. When I was a dealer the common markup on parts & acc was 40% or more. A plan could be worked out where everyone is protected but it would be difficult, and time consuming. The emerging Chinese motorcycle industry offers the best chance to start out cheap.
I liked the Capts idea about a group engineered custom also. We'd need an ironclad agreement created before anyone would risk any money to any project for sure.
I'm a retired accountant and have dealt with most types of business entities. My recommendation is that if you want to do that, form a standard corporation and sell stock in the company. But, keep 51% for yourself if you want to run it. If you have a good plan and can sell it to a banker, or the SBA, you might have enough capital to get your new business off the ground. Not only financing, but location is very important. That's why you see really nice Harley shops around. They're very visible and appealing to the eye. They draw customers.
I could go on for hours writing this, because there are so many considerations you must research before starting such an enterprise. In general, you need two things, a good attorney, and a good accountant.
By the way, you can tell you've hired a good accountant when you ask him what 2 and 2 is, and he replies, "What do you want it to be?"
I could go on for hours writing this, because there are so many considerations you must research before starting such an enterprise. In general, you need two things, a good attorney, and a good accountant.
By the way, you can tell you've hired a good accountant when you ask him what 2 and 2 is, and he replies, "What do you want it to be?"
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Dealerships aren't cheap, that's for sure. I've been working on a business plan to establish an Indian dealership. The requirements set forth by IMC are anything but cheap! Plan on sinking $4.5 - $5 Million into the land, building, initial capital, inventory floorplan, fixtures, etc....then plan on having negative cash flows for the first year to three years before seeing any black ink.
Alpha, there are ways around that much investment, such as lease an existing building until you have income to support a new building. I would also think that you could floor plan your inventory rather than buy it. Most manufacturers have 90 days free floor plans, which means you pay no interest on your inventory of bikes for the first 90 days they're in your possession. The name of the game in starting a new business is start with very little of your money and lots of your creditors' money. If the business goes down the tube, you lose little, and your creditors lose a lot. I know that sounds harsh, but that's business. A man I knew borrowed $250,000 from the SBA to open a grocery store. He never made it, because he fed his entire clan from the grocery store, and the SBA eventually foreclosed him. They settled with him for a mere $8,000, and believe it or not, a year later, they sent him a letter offering to loan him more money! (Our tax dollars at work)
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Oh, I've thought of every angle. Leasing an existing building won't work in this case. IMC has very stringent guidelines as to the layout, size and appearance of their dealerships. (Watch for cookie cutters.) I've opted out of the Indian dealership for now. I'm not in one of their "A" market areas (meaning my city isn't a MAJOR metro area) so I wouldn't end up with one of the first dealerships. That's OK though. It gives me a chance to build customs for a couple years, make some money, and see how well the Stellican group does with this resurrection process.
I guess my statements hold true for them, too. They want you to shell out all that money for what they think a dealership should be, and if you don't make it, you lose, not them. I think you're wise to wait and see. Let them establish their name before you jump in, and then you'll know you're selling a viable product. Whatever you do, I wish you luck! It takes guts to start a business nowadays!
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