Value Drivers for a Recreational Vehicle Dealership
Since Covid 19, demand for recreational vehicles remains at record highs. Revenue has continued to rise as a result. Despite delays in the supply chain, recreational vehicle dealerships fared the pandemic immensely well. In the United States, there are nearly 7,000 recreational vehicle dealerships. Very few of these dealerships have multiple locations. Many of them are individually owned and operated. As such, there are many transactions of RV dealerships each year. With demand peaking, now is a great time to consider selling a recreational vehicle dealership. Whether you plan on buying an RV dealership, or selling an RV dealership it is important to understand the value. And, what drives the value of a recreational vehicle dealership. Peak Business Valuation, business appraiser, is here to help. Below we discuss key value drivers for a recreational vehicle dealership.
Key Value Drivers for a Recreational Vehicle Dealership
The following are key value drivers for a recreational vehicle dealership. Peak Business Valuation, business appraiser, is happy to answer any questions you have about valuing a recreational vehicle dealership. Schedule your free consultation today! For additional information, see How to Value a Recreational Vehicle Dealership.
Type of Inventory
You can focus on small Expandable Trailers, large Class A Motorhomes, or anything in between. It is important to understand what the demand is for your target market. Peak Business Valuation, business appraiser, has seen the difference this can make. This is especially true when it comes to cash flow. Having performed many business valuations, we have observed how inventory can affect cash flow. The less time a recreational vehicle sits on the lot the better. This leads back to selecting the right inventory for your recreational vehicle dealership.
A recreational vehicle dealership must first decide if its inventory will be new or used. At times a mixture of the two is effective. Next, you must determine the optimal number of inventory you will maintain at any given time. This will ebb and flow with seasonality. Inventory size will also tie into cash flow. At Peak Business Valuation, business appraiser, we look at the cash flow of recreational vehicle dealerships when performing a business valuation. Cash flow issues can be detrimental to the success of a business. This is true for its value as well. Thus, it is important to determine inventory levels accordingly.
Many recreational vehicle dealerships have found value in using dealership management software. Companies like Lightspeed and Blackpurl seek to help recreational vehicle dealerships automate operations. Understanding the value of your recreational vehicle dealership will help you to know whether this is a worthwhile expense. You may find that is too costly for your business now. However, you might find that it adds value to outsource and automate some of your operations.
Flooring is also known as inventory financing. As such, flooring allows recreational vehicle dealerships to expand their inventory. It allows greater buying power with less capital. But, it also impacts the debt and cash flow of your recreational vehicle dealership. As is the case with all financing, it is important to know your options. Higher rates can put a greater strain on the cash flow and margins of your recreational vehicle dealership. Lower rates can require more capital or stricter terms. It is crucial to know what options are available to your recreational vehicle dealership.
It’s difficult to sell a recreational vehicle if no one knows about your dealership. Marketing your recreational vehicle dealership can be done through various channels. You must choose which marketing strategy fits your budget and goals. For example, many recreational vehicle dealership owners have reached their target market through YouTube. Recreational vehicle dealerships are increasingly using digital advertising to reach potential customers. A well-thought-out website can be instrumental in your marketing strategy. Marketing is key to reaching your target market and maximizing demand.
Parts & Repair Services
In the automotive industry, many dealerships earn revenue by offering parts and repair services. This allows for another source of revenue within the business. With a recreational vehicle it can be more complex but can add significant value. The valuation expert will analyze your revenue streams when valuing a RV dealership. Parts & repair services often contribute significantly to the revenue of an RV dealership.
The recreational vehicle dealers industry is subject to many economic factors. Gas prices and the ability for consumers to obtain credit can all contribute to the success of a recreational vehicle dealership. Consumer’s discretionary time and income have an impact as well. This is evident in heightened levels of inflation within the United States. Your recreational vehicle dealership should have a contingency plan for economic downturns. Obtaining a business valuation can help you understand your dealership’s current value. This can help you plan for the future. Peak Business Valuation, business appraiser has extensive experience in helping recreational vehicle dealership owners understand the value of their company.
Last, being upfront about fees and additional costs can help avoid lost revenue. Nobody likes to see a price tag increase out of the blue. Many customers can become disgruntled if they discover hidden fees. After agreeing to buy a recreational vehicle, customers don’t want any surprises. You can avoid this by being upfront and reasonable with any fees. For example, many customers might expect there to be a dealer documentation fee. That same customer might not expect a preparation fee as well. Managing these expectations can help your recreational vehicle dealership avoid lost revenue.
Think about how your business can implement these key value drivers for a recreational vehicle dealership. They will help increase the value of your RV dealership. Every recreational vehicle dealership has room for improvement and its unique set of needs. These value drivers can provide a framework for how to meet those needs and grow your business.
Knowing the value of your recreational vehicle dealership helps you focus where needed. It is also an important component when buying an RV dealership or selling an RV dealership. Peak Business Valuation, business appraiser, can help you understand the value of a recreational vehicle dealership through performing a business valuation. We are also happy to answer any questions you might have about valuing a RV dealership. Please reach out by scheduling a free consultation.
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