Why Rural Acquisitions Makes Sense
I’ve had many conversations in the past 30 days with potential first-time buyers around rural acquisition opportunities and I thought this would be a great topic for discussion. I completely understand that most first-time buyers aspire to purchase that great profitable brand in a major market. Unfortunately, that is not always feasible, in fact, I’d say it’s almost impossible. The closer you get to a major market, the more the sale value increases (you may think you have a big enough budget); the closer you get to a major market the more buyers are at the table (you may believe you are able to compete); but what you may not have considered is OEM APPROVAL. The closer you get to a major market, the harder it is to be approved by an OEM, because the OEM is looking for experienced, proven and well capitalized current owners that reduce their risk of losing market share in the specific market.
So, why rural? Opportunities in a rural setting are typically less expensive due to location and give a first-time buyer the flexibility and opportunity to succeed. You operate in an area that may be less populated which allows you to make mistakes without jeopardizing your business externally and internally. Rural opportunities, for the right individual, gives them the platform in a less competitive environment to turn an underperforming store around and improve on all metrics to impress not only your current OEM but a future one you might be pursuing. And rural stores can be highly profitable!
Also, in recent years and definitely the last few months, working from home has gained in popularity thanks to developing technologies that allows us all to be connected at all times. Some employers may have had a difficult time letting go of overseeing their employees’ productivity first-hand, however, the recent confinement due to the COVID-19 pandemic forced them to embrace it fully. Employees successfully demonstrated that less socializing and commuting undeniably leads to greater productivity. The recent months have proven that urban living is no longer a must and have accelerated the urban exodus trend to live in more rural areas where house prices are lower, and properties are larger. This movement will be sure to create much value to rural businesses in coming years.
Now let’s face it, if you’re considering buying your first store you’re not looking to retire anytime soon, so you have the time to build your business and invest in your portfolio and yourself. I look at it as a young adult graduating from university and entering the corporate world, you don’t walk through the front door one day one as the CEO. You build up to that role with time spent in the trenches.
I am currently working with one individual that initially bought a rural store and is now working on securing another. We have developed a plan for his growth, and I have no doubts he will be at 5 rural stores in no time. When you work with me or any other DSMA Associates, we look after you not just today but tomorrow and well down the road.
Are you ready to take the big step into business ownership? DSMA often advises on dealership transactions appropriate for first-time buyers all over North America. Reach out to us and your local Associate will help you achieve your ownership dream.