Car Services, Financial Model, Retail, Service Businesses

Break-Even, Business Plans, Business Valuation, Cash Flow Projections, Debt Service Coverage, Excel, Financial Model, Loans, Pro-Forma

The sign on the wall says $140 an hour. The bank funds $118. That gap is $184,410 of purchase price.

This is an acquisition-underwriting model for an independent auto repair shop financed with an SBA 7(a) loan — not a startup or operating forecast. It is built for the searcher, the ETA buyer or the first-time owner-operator who must prove to a lender that the shop services its debt.

The engine. Labor revenue is manufactured from physical capacity rather than typed in: 4 technicians × 8,000 available hours × 63.6% overall utilization (productivity × efficiency) = 5,085 billed hours, priced at the effective labor rate. Parts run off a parts-to-labor ratio at their own matrix margin, with comebacks and warranty as an explicit line. The result is cross-checked two independent ways: 2,400 repair orders at a $525 average repair order, and 2.12 hours per RO.

The number that decides the deal. A shop’s posted door rate is not what it collects. Discounts, giveaway diagnostics, comebacks and unbilled hours drag $140 down to $118.02 — an 84.3% capture. Underwrite at the sign and you overstate labor revenue by $111,870, which at a 60% labor margin drops roughly $67,000 straight onto SDE. Price that at 2.75× and the shop “costs” $773,469 instead of $589,059. The model prints both prices side by side.

The add-back the seller’s sheet skips. In most independent shops the owner is the A-technician on hard diagnostics or the service advisor who closes the estimates. A buyer who will not stand in that bay must hire it ($75,000), and must reserve for lifts, alignment racks and scan tools ($18,000/yr). Deduct both and the true DSCR is 1.35× against the 2.65× a broker’s add-back sheet implies. The gap is the owner’s own labor.

An honest down-case. In this business revenue is a technician’s hour, and the pipeline fills roughly 71% of technician demand (TechForce: about 20,780 needed a year). Car count −8% plus a 4% rate discount to hold volume drives DSCR to 0.51×, far below the 1.25× SBA program floor. Losing one of four technicians removes 25% of billed hours.

What is inside. An 11-sheet Excel workbook (Google Sheets compatible — no macros, no add-ins, no external links), 5-year projections, every assumption editable and highlighted; a 23-page PDF guide with sources; the ELR bridge, the gross-profit stack, the SDE add-back bridge, the SBA 7(a) capital stack with a full-standby vs amortizing seller-note toggle, a real amortisation schedule, the DSCR gate, labor-gross-profit coverage (4.45×), debt yield, the break-even effective labor rate ($115.39/h), cash-on-cash and a 5-year equity multiple (leverage-amplified — flagged). Three shop profiles reload the whole engine: Tire-and-Service Volume (2.40×), General Repair (2.75×), Euro/Import Specialist (3.25×). The tire shop books a bigger top line on a thinner SDE margin, because tires are pass-through: read the shop on the gross profit, not the revenue.

Honest by design. SDE is held at 17.0% and Adjusted EBITDA at 9.6% — deliberately below the “15-20% net” of trade blogs, because that is what remains once the owner is paid for and the equipment is reserved. The down-case is not a recession back-test (no auto-repair series supports one) but two defensible mechanisms, and the model says so. Comeback rate and technician productivity are user inputs with guidance bands, not invented benchmarks; the 1.25× floor cited is a standard SBA 7(a) program benchmark, not an industry rule. There is no IRR by design: on a single small deal it is hostage to the exit multiple. Benchmarks referenced from PartsTech, Ratchet+Wrench, BizBuySell and TechForce. Educational planning tool — not financial, lending or legal advice.

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