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BUYING A SMALL BUSINESS

Business for Sale: A Motorcycle Accessories Shop
 

Would you pay $1.3 million to buy this Arkansas retailer?

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HITTING THE ROAD: The founders moved from Indiana to Arkansas to be closer to bikers.

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After buying a BMW touring motorcycle back in 1999, Sean Franklin couldn't find a good website from which to buy accessories for his new wheels. So he and his wife, Laurene, started their own, CycleGadgets, and ran it from their home in Plymouth, Indiana. The business took off, selling two-way radios, GPS receivers, and other mostly electronic gear.

In 2007, the Franklins moved to Eureka Springs, Arkansas, to escape the harsh Indiana winters and to open a store close to customers, many of whom drive from all over the country to cruise the curvy roads of the Ozark Mountains. "For motorcyclists, it's like heaven," says Sean. The couple bought 40 acres near town and built an 11,000-square-foot facility with a showroom and parking for 50 motorcycles.

Store sales have been growing, but the Web business, which accounts for 75 percent of sales, suffered during the recession and has yet to bounce back. Laurene, 60, who handles the company's finances and inventories, says she's ready to retire. Sean, 43, would like to keep working for a new owner. "The business has been good to us, but it could really take off with the help of someone who has more business savvy than we do," he says.

Price Rationale: The price for the Web business, at $541,000, is three times income, compared with an average multiple of 2.5 for similar businesses. Real estate and inventories would cost an additional $615,000 and $160,000, respectively, or could be left off the table.

The Pros: The Franklins have not spent money for online marketing, so an investment in search-engine optimization could yield dividends. The deal includes domain names such as rvgadgets.com, scootergadgets.com, and airplanegadgets.com. There is little competition.

The Cons: A buyer would have to live in Arkansas or relocate the store. The products sold by the company could become vulnerable to new low-priced competitors.

The Bottom Line: CycleGadgets could appeal to a buyer interested in expanding the market for its products. The price seems fair, but it could probably be whittled down a bit.

Inc. has no stake in the sale of the business featured. The magazine does not certify the accuracy of financial or other information provided by the seller. Inquiries should be directed to Chris or Barbara Taylor at barbara@synergybiznwa.com or 479-254-7887. Inc. also publishes paid business listings in the back of the magazine.

Last updated: Jun 1, 2010

DARREN DAHL is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.




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