How much would it cost to buy a dive shop?

[adaminhongkong]

Hey everyone... So basically my plan for the past few years has been to save up and buy a dive shop in south east Asia...

I know it's a very broad question and could have many answers etc but would anyone know or have heard of price ranges of buying an old / small dive shop?

Any info would be a great help.

Adam

 

[Rhone Man]

I have never bought or sold a dive shop, but as a lawyer I have been involved in the sale and purchase of a lot of small and medium sized businesses. A dive shop is just another business - they come in all varieties and sizes.

When purchasing a business the base price is normally calculated one of two ways:

1. For a successful business it is usually prices as a multiple of its annual earnings. What that multiple will be will depend partly on geography and partly on the industry (and entirely on negotiation). Low range multiples are around 3-4. High range multiples can be 20 or even higher for exceptional growth industries. Most multiples are around 7-8. So if you have a dive shop which earns around US$50,000 a year, as a very rough guide if you agreed a multiple of seven or eight, then expect to pay around US$350 - 400,000.
2. For an unsuccessful business (ie. one that is not profitable or barely profitable), it is usually priced at the value of its assets over and above its outstanding liabilities. Dive shops don't have many trade creditors, so usually the only liabilities is any loan finance used to capitalise the business and taxes (unless they have been unable to meet payroll). So, if you imagine that the dive shops assets (stock in trade, cash at bank, receivables, goodwill, lease, etc.) are worth US$250,000 and the business has an outstanding loan to the bank of US$100,000 you would expect to buy it for around US$150,000 (again, subject to negotiation). When buying on an asset valuation basis, make sure you properly discount the assets for depreciation. Assets like dive gear and boats lose value quickly.

Obviously the key to getting a good deal is to buy a business which is not-profitable or barely profitable but where it is clear what the current owner is doing wrong, and then turn it around. That is quite common is other industry sectors, although I have never heard of it being done in the dive industry. Probably because dive shops are usually very competitive and it is hard to make an easy return.

Hope that helps.

 

[w ripley]

Possibly the biggest cost is your time.

Really doesn't matter whether it's diving or any business for that matter, as once you are the one responsible for making everything work you won't have the time to participate in the activity that attracted you to that business in the 1st place.

So, if you want to dive, then dive. If you want to stay on shore and run the business, then sell your dive gear and run the business.

 

[kaerius]

You could probably set up a small shop for under $100,000, but good luck getting it profitable. At that point you don't have your own boat.

Profitable shop with its own boat, expect to be out of pocket $500,000+, and very likely twice that or more.

I know one dive operator I worked for who had a €4 million diveboat(a custom ordered 120 foot catamaran that was basically a floating dive center).

 

[divingpyrate]

if you are in the US dont even try it until things get more pro business in this country
We just started our first small business and our overhead is next to nothing
But the regulations are killing us.

Why is the rum always gone