A camper van hire business is a specialist vehicle hire company that hires out camper vans to customers. Camper van hire businesses are spreading across the globe as a result of the recent boom in the hire market. Camper van hire has become very popular in the United States, with many considering self-drive holidays to be one of the best ways to experience the landscape of rural roads which are traffic-free compared to those found in other countries. In the United State, camper van hire businesses cater to festival goers by offering a solution to the traditional rain and mud-soaked tent environment.
An investor who is not interested in going through the rigors of starting their own camper van hire business from the scratch can own a business of their own by buying a camper van hire business that is put up for sale.
So, if you intend to buy a camper van hire business in the United States of America, then it will be to your advantage to look out for key areas in the business or else you will buy a business that is dead and can hardly be resurrected.
No doubt, you might not have all the exposure to know what to look out for or to ask the right questions, questions that will position you to be at an advantage especially if it is your first time of buying a business over. Of course, there are business experts that can help you make the right decisions, but in case you don’t have a budget for that, then you might find this article highly useful.
Now let us consider 20 crucial areas that you should look out for before buying a camper van hire business in the United States.
The Track Record of the Company Selling the Camper Van Hire Business
The first thing that should compel you to make inquiries on any company that is selling a camper van hire business is to ask about their track record. If you can’t really place a finger on any first that the company has achieved or anything significant that they have achieved over the years, then you should reconsider your decision of buying the business from them except you are dealing directly with the owner of the business.
Look at the Book to Know How the Business Fare in the Last Five Years
Another key area you should look out for if you are considering buying a camper van hire business is to look at their books to know how the business fared in the last five years. You should look out for the success story of the business, what are the wins and testimonies of the business that they are proud of and will be willing to share with the world. If they don’t have any, then you may want to reconsider the decision of buying the business.
Ask About the Profitability of the Business During Peak Period
The truth is that no one would want to buy a business that is not profitable and one of the easiest ways of knowing how profitable a business can be is to see the profitability of the business during the peak period. If the seller will be willing to let you into the company’s books, it will help you make an informed business decision. You might want to also check the highest loss they have recorded during their lowest period.
Look at the Average Running Cost of the Camper Van Hire Business
Another good area to look at if you want to buy a camper van hire business is to know the average running cost of the business. The truth is that some businesses aren’t as profitable as they ought to be because of huge running costs. When a business owner fails to eliminate some not too necessary expenditure when it comes to running their business, they will always fall short of their profit margin or even struggle to make the business profitable. This area is important especially if the owner is selling the business because the business is not making profits.
Inspect the Body and Engine of the Vans
If you are buying a camper van business, the major asset you will be acquiring is the camper vans. If the camper vans are not in good shape, it will definitely be a bad business deal hence the need to first inspect the engines and body of the camper vans. When we talk about inspection of the body of the vans, we are talking about areas that cover a wide range of parts, ranging from the air compressor to the bumpers. The component parts to check here are;
- Check air system for leaks (brakes released and applied)
- Record governor specs
- Check tractor protection valve
- Test air pressure build-up time
- Check air dryer operation (purge cycle & heater)
- Inspect treadle valve operation (lube pivot and roller)
- Inspect air compressor (leaks and air filter condition)
- Inspect bumpers and license plate bracket
- Inspect camper van body floor and door seals
- Inspect camper van door locks, latches, and hinges
- Inspect roof and wind deflector mounting
- Inspect towing/hitch device (pintle hook)
- Inspect mudflaps /splash guards and brackets
- Inspect/lube lift gate (if equipped)
- Inspect fuel tank(s), mountings, crossover lines, and fuel caps
- Inspect exhaust system and mounting
- Check HVAC air inlet filters and ducts (service as needed)
- Inspect cab mountings, valve linkages, and ride height (if equipped)
- Lubricate all cab, body, and hood grease fittings
The Terms and Conditions Attached to Buying the Business
Please note that when you are buying any business or signing any contract, there are always terms and conditions attached to the contract document. Some investors fall prey to dubious business owners selling their business with hidden terms and conditions that will trap them. For example, if you are buying a camper van hire business from Mr. A and Mr. A has hidden debt that you are not aware of, you will be held liable as the new owner of the business. This is why it is very important to ask of the terms and conditions attached to the camper van hire company. Some of the terms and conditions might not be favorable to you so ensure that you critically look into them before making your decision to buy. If need be, ask the seller to sign an indemnity that will protect you from any debt that has been incurred before you bought the business over.
The Number of Camper Van Hire Companies (Competitors) in the Location Where The Business is Located
Another key area you must not neglect when buying a camper van hire business is to know the number of camper van hire businesses that operate within the same location i.e. the likely competitors that you will face in the location. Of course, you can carry out your own due diligence to ascertain the true figure and intensity of the competition, but it won’t be out of place to ask the seller of the business. With that, you will be able to know if you should go ahead with the discussions.
Look at the Mode of Payment
Most businesses that are put up for sale usually have flexible payment plans that will make it easier for buyers to buy the business. However, some sellers would need nothing less than outright payment, anything short of that is a no deal. So, in case you don’t have all the money saved up somewhere for the purchase of the business, then you should ask to know the mode of payment. Interestingly some sellers may give you the option of paying by installment over a period of time or writing out postdated checks or even paying in kind et al.
Look at the Company’s Profile
It will be out of place for you to buy a camper van hire business without going through the company’s profile. If it is not available online, demand it from them. The truth is that a company’s profile is needed when accessing the business. It will give you a pointer to know why the business is running at a loss or why the business is not maximizing profits or getting a fair share of the available market.
Look at the Business Tax Status
Another critical area of the business that you must not fail to look at if you are buying a camper van hire business is the tax status of the business. If you are buying a business in the United States you may not want to fall victim of buying a camper van hire business that is defaulting in the payment of tax. Even if you get an answer from the seller of the business and you see the tax certificates, you should still go ahead to do your due diligence.
Look at the Frequency They Renew Their Permits and Operational License
Businesses in the United States of America are mandated to renew their permits and operational license from time to time. So, it will not be out of place to know how frequently the owner of the camper van hire business renews his or her permits and operational license. As a matter of fact, you may want to know if the current permits and operational license is still up to date. You just have to know what you are going into before committing to it.
What Are the Liabilities and Assets of The Camper Van Hire Business
When it comes to properly assessing and valuing a business that is but up for sale, you should be able to have a clear picture of the liabilities and assets of the business. No doubt, no investor will embark on the journey of buying a business without having a true picture of the assets and liabilities. So, if you have plans of buying a camper van hire business then you must make it a point of duty to know the liabilities and assets of the camper van hire business and what you will be inheriting.
The Position the Camper Van Hire Business Occupies Amongst Top Camper Van Hire Businesses in Your Country
Although it is difficult to find a camper van hire business owner putting up his or her business for sale if the business is amongst the top performers in the industry, but the truth is that no one wants to buy a business that is at the bottom of the industry. This is the reason why you must ensure that you know the position the camper van hire business is occupying before going ahead to buy the business. No doubt, there are business experts that can buy a business that is at the bottom rung of the industry, and in no distant time, push the business up the ladder. If you don’t have such expertise at your disposal, then it is not advisable to buy such a business.
The Benefits You Stand to Gain When You Buy the Business
For every seller that has a product or services that are put up for sale, there are selling points they can readily showcase to any potential buyer and that is what is known as the benefits of buying the business. So, if you want to buy any camper van hire business that is put up for sale, then you should ask the seller to list out the benefits that you stand to gain when you buy the business. Who knows, listing the benefits might just be the extra push you need that will help you make a good business decision of buying the business.
Understudy the Normal Daily Operation of the Business
Another very important area you must not neglect if you are looking towards buying a camper van hire business that is put up for sale is the normal daily operations of the business. To have a full grasp of what you are getting into, you should be able to at least understudy the normal day’s operations of the business. With the information gathered from this task, you will be able to figure out what to do to make the process efficient when you eventually take over the company.
Debt Payment Options if Any
It is important to know if the camper van hire business has active debts and the payment options available as regards paying up the debt. It is rare to see businesses especially businesses that are put up of sale not having a backlog of debts. In case the seller of the camper van hire business doesn’t have a plan to pay the debt, then you must negotiate to your advantage if you are going to be inheriting the debt of the business
The Profile of The Owner, Board Members, and Directors
The profile of the owner of the camper van hire business, the board members, and directors is also another piece of info that you should know before buying the business. No doubt, you can only request for this information only if the camper van hire business is a standard one with a well – established business structure. The reason why you should look out for this information is to be able to establish the pedigree of the owner, the board members, and directors of the business especially as it relates to their integrity and if you should trust all the answers they give to you.
The Business Model and Philosophy of the Camper Van Hire Company
Another important question that you must not fail to look out for especially if you can’t find it in any available document is the business model and philosophy of the business. The business model and philosophy of the camper van hire company is also a part of what you should know before making your buy decision. If the business model and philosophy of the business does not conform to your style, it means you would have to create a new business model and philosophy. Although this is not enough to deter you from buying any business, but it will help you have a proper perspective of what you are signing up for.
Take a Look at the Business Documents
What will eventually determine that you have successfully purchased a business is not the fact that you are the one running the business, but the fact that the documents are up to date and has been transferred to you legally. So, if you are looking at buying a camper van hire business that is put up for sale, then you should make it a must to take a look at all the business documents before making any business transaction.
Some of the documents that you should examine are;
- Organizational documents (e.g. incorporation docs, certificates of good standing, business licenses, etc.)
- Previous 3 years of business tax returns
- Current year income statements, balance sheets, and cash flow statements
- Revenue broken out by customers for the last 3 years
- Information on existing business liabilities
- Customer lists with proprietary information blocked out as necessary
- Existing contracts – can these be assigned to the new owner?
- Commercial lease or other property documents
- Rent rolls if the property has tenants
- Uniform franchise disclosure document (if the business is a franchise)
- Employee and manager information
- Marketing and advertising materials
- Legal records for pending litigation, if any
Aside from the key areas listed above that you should look out for when buying a camper van hire business that is put out for sale in the United States, it is always advisable to hire the services of experts to help you in making an informed decision especially if you have the money. But if you don’t you can make do with the information provided above and perhaps leverage on your instinct as well.