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I'm thinking of buying a mom & pop independent auto parts store and would be interested in your take on this idea.


6/16/2009

I'm thinking of buying a mom & pop independent auto parts store and would be interested in your take on this idea. I see that NAPA, Autozone, Pepboys (and RockAuto online) seem to be taking over. Knowing what you know from your experience in the parts business, would you even consider investing in a small independent parts shop? Can these small shops survive? What things would I have to do to be successful? Or is it a lost cause and all small shops will be out of business in the near future? Thanks in advance for your thoughts.
 

I don't know about the near future, that all depends on the locale, but without strategic alliances (buying groups and marketing groups and coops) and a sizeable investment in inventory, Mom and Pop places will struggle and not make the margins they need to if competing head to head with the big guys. This does not lead to much of a standard of living if at all for the owner. Specializing and covering niche markets can help increase profits/percentages so that you are a business investor and not just a business owner.

I would look very closely at the financials of the Mom and Pop place and even hire someone to consult for you on the purchase. 

The value of these places unfortunately is a small fraction of the cost of the inventory particularly if the owner is instrumental in running it on a daily basis (a hint there for you if you someday decide to sell the business you buy). Without already being invested in one with strong alliances, I would be hard pressed to buy one now, even if the market seemed like it had no competition.

It only takes a couple of months for a large competitor to move in, then the rest come soon thereafter once the area is on their radar. Find as many current store owners you can who are succeeding today and ask a lot of questions so that you learn from their failures and successes before you even invest. Good Luck!

Harris Steinberg
Morris Auto Parts Inc.
Philadelphia, PA















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