Driving Schools for Sale: How to Assess Them Successfully?

Sometimes, starting a business from scratch is not the best entrepreneurial idea that you could get. There are scenarios in which you should think about buying a business for sale and making it successful instead. This is true for the driving school industry, as well. Why is this a good idea? Well, first of all, just because a business is for sale, it doesn’t necessarily mean that it’s struggling. Sometimes owners just want to pivot, change industry or retire. Also, you already get the necessary permits, logistics, inventory and even staff. Still, how does one recognize the right driving school to buy?

1. Focus on the profit

The first problem that the majority of potential buyers make is to focus on superficial things like a number of students, inventory, etc. Instead, they should take profit as the key interest point. At the end of the day, while a driving school is there to perform a pivotal service for the general populace, it is still a business. As an entrepreneur, you evaluate the business based on its potential to make a profit. Sure, there are a lot of factors that go into this but profit and profitmaking potential should always come to the forefront. You can analyze the following factors:

  • Positive Cash-flow: The driving school should make more money than what it pays out monthly. As a fact, the business of driving school is a seasonal one and summers are way better than winters.
  • Minimal fixed costs and low debt: The vehicles that are used by the driving school should be paid off. What is the condition of the building? Owned outright, or there is a lease involved?
  • Salary totals (management, owner or staff): Low salaries can sometimes hide slim margins – be cautious to examine whether staff costs are reliable with the industry and/or with a history of the driving school’s salary expenses.

2. Debt and fixed costs

Chances are that the business you want to buy has some debt. Now, what you’re looking for is low debt. Just because the business is in debt, this doesn’t mean that it’s not worth buying. If anything, this is something that might lower the price drastically. If the debt is manageable, you might just be looking at a great deal. The debt might increase with costs and in order to assess this trajectory, you need to choose a business with fixed costs. Being able to make an accurate financial projection of the future course of receivables and payables of your business is a pivotal issue.

3. The location

Your market is determined by your location. So, what you want is market research of the area in terms of statistics. For the sake of the driving school industry, you want a major metropolitan area. For instance, the number of people who are looking for driving lessons in Sydney is a lot higher than those in rural areas. Some may argue that the competition in these metropolitan areas is greater, as well. Still, it’s definitely worth it. The number of new drivers is growing every year and even with a competitive market, the majority of driving schools with a positive reputation have all their schedules filled and all their classes booked.

4. Accounting is in order

Hidden problems and stains from the past are easy to miss when accounting systems are not in order. Remember that it is your choice whether you want to be involved in a business that has a… complicated financial past. The thing is that this decision is only safe when it is made based on facts and rational decision-making. If there’s something you can’t see, decipher or understand, you will be prevented from making such a decision. So, if your accountant (who should always be consulted before the acquisition) is confused by their books, you might want to pass on this opportunity.

5. Profitable history

A business may decide to sell because they’re undergoing a rough patch, however, if they have a profitable history, they are more likely to bounce back. This is exactly what you’re looking for. There’s always a chance that a business has encountered a rough patch but that the current owner has no time or resources left to wait for the business to recover. If a business has a long track record of success, you can focus on finding out what went wrong and finding a way to fix the problem. It’s that simple.

6. Does it have a Unique Selling Point (USP)?

How is it possible to close more driving school sales if your staff don’t know what sets your school apart from the competition?

Video: The Competitive Advantage: How to Develop a Unique Selling Proposition | Brian Tracy

The Entrepreneur.com dictionary defines USP as…

"The factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition."

Marketing experts say that it’s not possible to be all things to all people. For example, driving schools frequently want to suggest the best programs at the cheapest prices. Another state is that they propose everything under the sun – from teen driver’s education to DUI classes, defensive driving, permit prep, on-site road tests and more.

You probably aren’t known for anything when you try to say you know everything!

Here’s a sample USP:

"We are professionals in is teaching teens how to drive. We have a contemporary high-energy package that involves students. They learn all-time good driving skills in a fun atmosphere. And you will hit the road test with us, instead of at the DMV. 94% of our students pass it on their very first try."

We just answered this question: "Why are you better?" See if the driving school has a USP, should you keep on with it? Make changes or what!?

How to find more driving school customers to increase sales

Discovering how to get more customers through your doors is the key to your school’s success! Finding new customers is always of crucial importance for small businesses.

For the business of driving schools, it’s going to be an even bigger challenge because your customer base is very narrow. Plus, it changes all the time. Driving schools cannot be of a one-size-fits-all business, like Amazon or Walmart.

Let’s think about it. Shops and stores have their loyal customers, customers that visit those particular businesses more frequently than others. After a while, they become repeat customers. When it comes to driving schools, it’s a completely different situation. Once customers purchase your services, they’re done for good.

In conclusion

At the end of the day, buying a driving school is not unlike buying any other business. It takes a lot of preparation and homework in order to ensure that you’re not getting yourself into a huge mess. Whether purchase of a business is a better idea than starting an original business depends on what you’re getting for your money’s worth. Ideally, you would do your research and consult impartial experts in all relevant fields. We’re talking about accountants, lawyers and, of course, driving instructors.

Published by ExitAdviser


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