Automobile Dealerships - Valuing Blue Sky

Blue Sky is the intrinsic value of an automobile dealership, over and above the value of its tangible assets. It is sometimes equated to the goodwill of a car dealership.

Most articles regarding the blue sky value of new car dealerships cite a multiple of earnings formula, such as three times earnings, four times earnings, and so forth. The idea that blue-sky can be determined by anything times anything is just plain wrong.

Even NADA the National Automobile Dealers Association in its publication entitled "A Dealer Guide to Valuing an Automobile Dealership, NADA June 1995, Revised July 2000 bemuses, in part, with respect to valuing a dealership by using a multiple of earnings: A Rule of Thumb valuation is more properly referred to as a greater fool theory. "It is not valuation theory, however.

In its Update 2004, NADA omitted its reference to fool, but referred to the multiple fourmula as rarely based upon sound economic or valuation theory, and went on to state: If you are a seller and the rule of thumb produces a high value, then this is not a matter of great concern. Go for it, and maybe someone will be stupid enough to pay you a very high value.

A dealership's blue sky is based upon what a buyer thinks it can produce in net profit. If potential buyers think it cannot produce a profit, the store will not sell. If it can produce a profit, then variables such as desirability of location, the balance the brand will bring to other existing franchises owned, whether or not the factory will require facility upgrades, and so on and so forth, determine whether or not a buyer will buy that particular brand, in that particular location, at that particular time.

I have been consulting with dealers for nearly four decades and have participated in over 1,000 automotive transactions ranging from $100,000 to over $100,000,000 and have never seen the price of a dealership sale determined by any multiple of earnings unless and until all of the above factors have been considered and the buyer then decided he, she or it was willing to spend x times what the buyer thought the dealership would earn, in order to purchase the business opportunity.

To think otherwise would be to subscribe to the theories that (1) even though you think a dealership could make a million dollars, the store is worth zero blue sky because it made no money last year; and (2) if a store has been making $5 million per year you should pay say 3 times $5 million as blue sky even though you only think you will not produce that kind of profit. Both propositions are absurd. If a buyer does not think a dealership is worth blue sky, then what he is really saying is that he sees no business opportunity in the purchase and therefore, in my opinion, he should not buy the store.

Each dealership is unique with respect to its potential, location, balance that its brand brings a dealer group, and condition of facility. The sale is also unique with respect to whether it is a forced liquidation, orderly liquidation, arms length, insider, or a case where an anxious buyer is trying to induce an unwilling seller. There are management factors to consider, length and term of leases, possibilities or non-possibilities of purchasing the facilities and whether or not the factory wants to relocate the store or to open a new store up the street.

In the car business it is impossible to pick a dealership or a franchise out of a hat, multiply its earnings by some mystical number and predict either what the dealership is worth, or what price it would sell for - and it doesn't matter if you are talking about a Toyota, Honda, Ford, Chevrolet, Chrysler, Dodge, or any other dealership. At any given time one franchise might be considered more or less desirable than another, but they are all valued in the same manner.

John Pico is a vice president of Automotive Advisors. He has completed over 1,000 dealership transactions, and published the first books copyrighted in the Library of Congress on Buying and Selling Automobile dealerships. You can obtain his biography and more information, sources and references at http://www.automotiveadvisors.com/johnpico.asp.

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No Sale Like A Yardsale

My wife, God love her, has a problem. Ordinarily, she is a wonderful woman, always kind to animals and small children, friendly with the neighbors, loved by one and all. But every Saturday morning, just after sun up, something happens to her, something horrible! She becomes an ugly, vicious, salivating, clawing thing! No, she's not a werewolf, but that's a pretty good guess. If only it were something a silver bullet could cure (or a case of Silver Bullets, for that matter).

Her problem is no mere sickness of the blood, my friends. Hers is a sickness of the mind, the spirit and the body. It's an all-encompassing affliction, kind of the same thing you'd get the morning after downing the aforementioned case of Silver Bullets, I suppose.

This curse is called...Yardsalitis! (Please imagine an ominous musical burst here)

If you laugh it's only because you haven't been exposed to this disease. Be warned, Yardsalitis is everywhere and spreading fast! There are different levels of this disease and if caught early it can be cured. To help you identify a person with Yardsalitis, let me detail the various stages for you.

First, there are the SY's (Social Yardsalers), those who only partake occasionally and usually do so with a group of their peers. These are the lightweights of the game. They do it to look cool, to fit in, not because they have an overpowering need to prowl through other people's junk.

Then come the RY's (Recreational Yardsalers). This group considers yardsaling a fun, harmless pastime. The first symptom of this stage is denial. "I ain't hurting nobody!" is the slogan of the RY's. RY's will go yardsaling if the weather's nice and they've nothing better to do on a Saturday morning. They can live without it, but they'd rather live with it.

Things begin to get ugly as the disease progresses to the next level, known as "Progressive Yardsalitis." This is the most pathetic group because they teeter on the brink of the final stage. They feel the need to get up at the crack of dawn on Saturday morning and hit the streets, sniffing out the proverbial "good deal" like crack addicted bloodhounds. But when that high subsides and reality returns, they regret paying $200 for a Tickle-Me-Elmo that their kids aren't allowed to touch. Most have no memory of the actual purchase. They claim to just wake up with their bargain in hand.

Devastated, they vow "never again," but it's a hollow oath. Sure, there are those who can go weeks without getting a fix. But relapse is imminent. They know it, their families know it, and those cruel souls having the yardsales know it.

"We got what you need," is the mantra of the yardsale pusher.

Finally, hope is abandoned and the call of the deal must be answered. The afflicted becomes a full-fledged Yardsalaholic. This is the category my lovely wife falls into. She is the High Priestess of the Open Garage Door. She is Conan the Yardsalian!

Like a gunslinger in Dodge City, a champion yardsaler has to be quick of hand and have the peripheral vision of an iguana. And you can't be afraid to get in there and fight for what you want, either. There's more elbowing at a table covered with Beanie Babies than under the hoop at the NBA playoffs! These women are vicious, and in this scenario my wife would be Dennis Rodman.

I recently witnessed an actual yardsale. It wasn't as frightening as participating in a snake handling or going to my mother-in-law's for dinner, but it was pretty close.

This was a joint venture, make that misadventure, between my wife and sister, the Lucy and Ethel of the yardsale set. As men, I don't think we really know our wives until we see them in the yardsale setting. What I saw was educational, indeed.

What follows is an excerpt from the research paper I am writing on this experience. I'll submit the finished text to the South Hampton Institute of Technology's Hammond-Eggar Anthropological Department when it's finished. Or I may just send it to Paul Harvey, I haven't decided yet. Anyway, here's the excerpt:

"And just who are these pathetic souls who can not live without their weekly fix of mismatched Tupperware and decapitated Barbie Dolls? Usually, and this may be totally hormonal within the species, they are women. The only men present were the ones whose wives dragged them along to hold their purses while they (the women) clawed through boxes of Beanie Babies and tried on used shoes that were three sizes too small. These are the same men often seen loitering about the women's underwear section at Wal-Mart, holding purses and looking appropriately dumbfounded. Not even the prettiest of women on the pink brassiere labels can pull them from this funk.

"Scientifically speaking, this is a whole 'nother culture. People were gathering in the driveway at 6 a.m., though the signs Subjects A and B (Lucy and Ethel) plastered all over the neighborhood clearly stated that 7 a.m was the start time. It was like that movie 'Night of the Living Dead,' where the dead are stumbling across the field toward the farmhouse where the non-dead, that would be the living, are holed up. Staggering along they come, arms outstretched, fingers wiggling, a glazed look in their eyes. "Quaaaaarter," they moan. "Will you take a quarterrrrr..." End of excerpt. And therein lies the true art of the deal: it's not how much you spent on that Flowbee with the missing attachments, but how much you talked them down from the asking price. This is called "Yardsalanomics," a theory of economics not even Donald Trump can explain. The crux of Yardsalanomics is this: it's not how much you pay, it's how much you don't pay.

Only an idiot pays the asking price. Ask my wife.

To be fair, she is trying hard to break her addiction. She just joined the local chapter of Yardsalaholics Anonymous. YA is a "make a profit if you can" group that meets in members' garages every Saturday morning for fellowship and support. Unlike most addiction programs, however, YA has only nine steps.

It used to have twelve, but my wife talked them down.

Tim Knox
Entrepreneur, Author, Speaker, Radio Host
Check Out Tim's New Radio Show! =>http://www.timknoxshow.com
Preorder Tims New Book =>Everything I Know About Business I Learned From My Mama http://www.timknox.com/amazon/

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Commercial Mortgage Explained

Commercial mortgage provides you with necessary financial support for obtaining a commercial property or enlarging your present facilities or even for refinancing the existing debt.

Commercial mortgage is used for purchasing different types of properties: hotels, offices, restaurants, shops, storehouses, and farms.

This type of mortgage is like a residential mortgage, except some minor differences. Residential mortgage is not as riskier as commercial mortgage. These risks outcome of the fact that a commercial mortgage is for business use, not for residential purposes and usually establishing a business, itself produces a risk to the lender.

The options of commercial mortgages greatly differ from a regional viewpoint; for example, commercial mortgage policies in the US vary from this kind of policies in the UK, in features such as the length of the loan or the period permitted until total payoff of the loan etc. However, the most definite variations are in interest rates, and they are established by the local market.

In order to benefit from a commercial mortgage, it is essential to pay the right attention to the interest rates, the length of the loan and the duration of the loan repayment plan. It is essential to opt for the repayment schedule that best suits your business needs and your economic capabilities.

Applying for a commercial mortgage is fairly easy these days. There are many online brokers able to assist you. You will have to simply complete an online form. After this commercial loan consultant will contact you and will guide you through the process. In addition to this you will definitely be required to provide some supporting documentation.

When applying for a commercial mortgage, the lender will require you to use commercial building or a business real estate as collateral on the loan. Hence, your chosen lender will make some checks about the specified business before disbursing the needed amount.

After passing all these procedures you will be able to access needed funds.

Commercial mortgages cover a longer period than other business loans. This period ranges from 15 to 25 years, depending on the lender and the economic situations of your business.

There are two ways that can be used for raising a commercial mortgage capital for your business. The first one is refinancing your current commercial mortgage to take in the loan amount that you wish to borrow. And the second option is releasing the equity, which has been accumulated in your present property, specifically, the current value of the property minus any outstanding mortgages or debts attached with it.

Online broker is a person, who can really help you with a whole host of questions that you may have. So you can always ask if you need help.

Homecomings Financial offers a wide variety of home loans. You can find out more on our web site.

Fred Miller is a mortgage expert and author of many articles about home financing.

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Online FOREX Trading - 3 Common Errors That Will Make You Lose

Online FOREX Trading was seen as the way for the little guy to compete with the big professional traders but guess what?

The ratio of losers remains them same as it was before the rise of online FOREX trading.

How can this be so surely they should do better? The answer is no because traders make these common errors.

1. Blinded by technology

This happens to many novice traders they see the vast amount of news and indicators at their disposal and think they have technology on their side and will win.

Most over complicate their trading and lose.

Simplicity is the key to trading and this was so before the rise of online trading and is still true today.

There is no correlation between how complicated a system is and how much money it makes.

In fact, simple systems are best as they more robust in the face of brutal market conditions.

2. Day trading and over trading

The rise of online forex trading has seen the bulk of new traders try and make money day trading.

This is a huge mistake.

Day trading doesnt work, as the logic its based upon is nonsense.

Day traders have no reliable data to work with.

It's obvious that daily moves are random as daily volatility is random!

Day traders argue that trading short term is possible with online forex trading but this is not true you cant win if you cant calculate the odds.

Dont believe me?

Ask any day trader for a real time track record of profits, they have made over the longer term and you wont get one because it doesnt work PERIOD

3. Money management

The speed of the Internet in delivering information has increased volatility.

This means that traders have to be far more careful with money management than before.

Most traders in online forex trading are trying to restrict risk so much that they almost guarantee they will be stopped out and lose.

If you want to make money in forex trading your stops cannot be to tight or volatility will simply stop you out.

You need to take risks to make profits and this is as true as its ever been.

Placing stops close to entry may keep your losses small, but whats the point of that if you are almost guaranteeing yourself that you will are stopped out?

To make money you need to risk it Its as simple as that.

The tools need to be applied correctly!

Online forex trading is seen as a way for the little man to compete on an equal footing with the big players but nothing could be further from the truth.

Online forex trading has lured many traders into a false sense of security where they think because they have all the tools they can win (but they dont learn how to apply them)

Additionally, they think they can now catch short term moves and engage in the best way to lose money in forex day trading.

Finally, they think they dont need to take big risks to make big gains and end up eroding their accounts with consistent losses - all small but they add up.

Online forex trading has not seen any increase in small speculators winning and the three reasons above are the major ones why

MORE FREE TRADING INFO PDF'S & COURSES

On all aspects of becoming a profitable trader including articles, feature, downloads and systems and an exclusive Gann Trading Course visit our website at http://www.net-planet.org/index.html

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Brand Dilution: GM's Real Problem

Throughout General Motor's post World War II history, the company has managed to sell various products across its entire line up, thereby offering visitors to its showrooms a wide variety of models. This custom of "brand dilution" was an acceptable practice at GM, Ford, and Chrysler for several generations, but the practice has had its pitfalls.

More...The cost of rebadging models to cross the entire GM spectrum is much more than you might think be. No, I am not talking about the price of slapping a different name on various models to market them under different brands, instead I am talking about the "cost" to the brand: the consumer's perception that there isn't anything uniquely sold with that brand.

I, for one, am okay with General Motors keeping all of its brands, but I would like to see the company distinguish each brand from one another. Only Saturn and Cadillac seem to have a clear identity, with Pontiac and Buick being little more than divisions carrying rebadged versions of other GM cars. Chevrolet, with its broad line up, partially escapes the brand dilution problem but it is often their models which eventually migrate to Buick and Pontiac to be sold as rebadged versions of Chevy vehicles.

Word has it that now GM's niche division, Hummer, may also branch out. This would be unfortunate as it is the brand's "nichieness" which gives it an edge.

Here are my suggestions for GM: Keep Cadillac going as it is; don't mess with success. Distinguish Buick as a true "near luxury" marque...the Lucerne and LaCrosse are both good sellers, but consider bringing back the Regal...yes, you read it right to spark interest.

Pontiac needs real excitement...invest in the GTO and really make it go. Drop all minivans, SUVs, and concentrate simply on sporty models. Chevrolet absolutely needs the Camaro. Also, a potent Impala along the lines of the Dodge Charger would be a big help. Is it too much to ask for an exciting Malibu?

Saturn must keep tapping its Opel relationship in order to affordably distinguish itself from its American counterparts. The SKY is a hit, the new Aura looks hot and the upcoming VUE replacement looks like it'll sell well.

Leave Hummer alone. Not everyone can or should be able to afford one! GMC will probably plod along as reskinned Chevys. GM could consider dropping GMC and ramping up Chevrolet trucks as the real world leader that it is.

Saab. Pity poor Saab. Neglected and almost not worth keeping. Still, if GM allowed Saab to thrive as Ford has given Volvo plenty of autonomy, then Saab could also make a difference for the general.

I doubt anyone in Auburn Hills is paying much attention to my words. For GM's sake, I do hope that they are examining this whole brand dilution practice closely and will put something into practice to get the world's number one automaker moving again.

Copyright 2006 -- Matt Keegan writes extensively about automotive topics on his The Auto Writer blog. For the best selection of Exhaust Flow parts as well as Magnaflow muffler and Magnaflow catalytic converter parts, Matt urges you to shop online today for the best deals.

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Van Insurance - Do You Really Need It?

Van insurance is important and it is compulsory to have it when driving on British roads. Although you only need basic cover third-party, this will do you fine to stay on the road and run your business. Part of your commercial vehicle (vans, lorries, buses or cars) insurance usually has to include public liability insurance. Then your business will be covered for people who are hurt in the event of an accident for any damages caused to them by anyone employed by your company.

You will need to have your vans (or other vehicles) covered for fire, theft, and windscreen repairs. Most commercial insurance companies do not insure you for acts of god (as they say). So if you live anywhere in the UK that is known for flooding or bad storm hot spots and your vehicles are damaged by the weather, you will have no right to claim.

There are some benefits that can be removed from a van insurance policy to help you reduce the cost of your policy. The best ways to discover the benefits you dont need is to go thought your policy and remove the benefits you do not need for your business. Oh I forgot to say, by increasing your excess on the policy, you could reduce the cost of the policy.

If you have more than one commercial vehicle, you have a choice of fleet insurance so you can manage all your vehicles more effectively and reduce the risks involved in your business. If you are looking for insurance for more than one vehicle and you do take out a fleet insurance cover try keeping your drivers over 25 with at lease two years driving experience with a clean drive licence.

Do you want more tips and information to help you find cheap van insurance for your business. For free quotes and advice on van insurance I invite you to http://www.van-insurance-britain.co.uk

By Robert Mcleary - The Commercial Insurance Expert

Copyright 2007 - Robert Mcleary. All Rights Reserved Worldwide. Reprint Rights: You may reprint this article as long as you leave all of the links active, do not edit the article in any way, give author name credit and follow all of the EzineArticles terms of service for Publishers.

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Online Traffic Schools: Investigating the Four Five Schools on the Google Search

For many people, bettering their lives is often a question of time. For the case of drivers, many drivers do not have the time to go to classes at a local defensive driving or traffic school. This has lead to the creation of online traffic schools. One of the first ways many individuals attempt to find something on the internet is through search engines such as Google. Thus, this article will be investigating those online traffic schools that are in the top five positions of Google when the phrase "online traffic schools" is searched. These include Go to Traffic School, Traffic Interactive, DMV.org, and Web Traffic School. For the purposes of this article, the top five are those found below the Sponsored Link section.

Go to Traffic School

One of the first traffic schools that is offered online is the Go To Traffic School.com course. Offering a variety of courses including fleet driver safety, safe driver points, ticket dismissal and insurance reduction, the program offers a little something for everyone. The school offers end of chapter quizzes as well as examinations.

Traffic Interactive

Next on the list is Traffic Interactive.Com. While this school is online, they have programs that are focused on specific areas. The program currently offers the only %100 interactive program in California, and also has programs for Los Angeles, San Diego, Ventura County. There are also programs for Texas and Florida.

DMV.org

The next option for drivers is the DMV, Department of Motor Vehicles. A great guide to accessing driving schools all around the nation, DMV.org begins by asking you to choose your destination. The DMV assists you in finding the perfect traffic program for you and in some states offering programs of their own.

Web Traffic School

Then there is the Web Traffic School. The Web Traffic School also wants you to be sure that their program is acceptable by your state, thus they make you pick in which you live. An example of a lesson is that on Alcohol and Driving. In addition to the lessons, Web Traffic School also offers interactive visual demonstrations to show what could happen depending on the choices you make out on the road.

John Mancini writes about defensive driving online and offline. You can read more about matters like online traffic schools and defensive driving courses on his websites.

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