5 Ways to Secure Your Future
Dreamer; head in the clouds; idealist; trusting to a fault; doesn’t know when to give up… Each of these traits (and more) have been used to describe me as well as countless other shop owners. In some cases, they may be taken as negatives, but I believe they are truly positive, because they give us the courage to press on against resistance. Some days we face less, but many times it’s greater than most. Shop ownership isn’t for the faint of heart, despite the many postings you’ll see on a popular Facebook group.
Shop ownership requires the brute strength of Atlas and the lightest touch of Mother Teresa. Each day, you put on the face of a warrior heading into battle, as you rally the troops, make your plans and execute them, sometimes to perfection. The day ends, you head home and start the next day all over again. In many cases, you can’t even think past tomorrow.
Unfortunately, if that describes you, you are heading toward the rocky cliffs seen in many maritime disaster movies. It’s time to think about not just tomorrow but 5, 10, 15 and even 25 years into your future.
No matter where you are on your journey of shop ownership, one thing is sure: you will sell your shop. It could be for a variety of reasons, including retirement, change in careers, a decision to step down to hand the reins to the next generation and (though we never like to talk about it) don’t forget the Grim Reaper.
When it came time for me to sell, I was one of the fortunate ones. I had purchased my dirt, built my business and had an offer I couldn’t refuse. Not unlike many of you, I felt I would be in the shop for a long time and eventually sell, but things inside me changed. I began to feel a desire to start working with others to build their organizations and help them grow personally. The timing to sell was perfect, someone’s hand was on me and I feel more than blessed. As it relates to all shop owners, the reality is that life changes, so preparedness is key. Decide if you will sell on your terms, or someone else’s…it’s completely up to you!
Here are five things you need to do today to set yourself up for tomorrow. You never know when tomorrow, in this case the sale of your shop, will come. It could be right around the corner; more likely though, it’ll be years from now.
Transparency and documentation are key. Having accurate, detailed and audited financial statements will make the difference. Audited statements can mean hundreds of thousands of dollars’ difference in the value of your shop and their absence could kill the deal. Plan on having three years of audited statements. Remember, you will want the buyers to get a complete picture of the shop’s financial health. You’re sure to draw tire kickers who want a deal, as well as a savvy businessman/woman who sees the value in what you’ve built over the years. A strong relationship with a CPA who understands the nuances of running an automotive shop is a plus. There are several leading CPA firms who work solely with auto shops across the nation. Finding a CPA who both understands the business and is someone you like is key!
Growth and Business Performance
Predicting future growth can be kind of tricky these days, as we have just experienced unprecedented growth in our sector (our clients are experiencing growth rates of greater than 20% annually). A sound and repeatable target should be 5-8%, so if your shop’s sales are flat going out of this period, it’s time to look at your marketing and inspection processes.
Business performance should be strong and operationally efficient. Maintaining expenses while boosting revenue and gross profit is a great carrot for a potential buyer. Even if selling over the next few years isn’t in your plans, you’ll reap the financial reward each year as your well-oiled machine generates income you should be investing to build your nest egg. When the sale time comes, you’ll have already laid a solid financial foundation. Investing in yourself should start today, not the day you close the deal to sell your shop to the next generation.
Up-To-Date Tools, Equipment and Skills
Stay current with trends, but don’t chase the shiny things. It’s easy to focus on the new and sexy things like EVs and get bogged down and overloaded, all the while missing out on current opportunities that are in your bays today. R-1234yf refrigerants and ADAS service offer real opportunities right now.
For future planning, follow trade publications that track production numbers for vehicles built. Toyota, Ford and Chevrolet were the top three automakers for the 2022 model year. In 2 or 3 years, perhaps sooner, your shop will see each of these brands. Are you and your team ready for the host of new technology these cars are equipped with? A better question is, what are you doing each year to keep pace?
Culture is one of the cornerstones of any successful business and team and the culture in your shop can attract or repel upcoming and talented team members. With you at the top, you determine what that culture is, so be careful not to delegate this critical element to an employee. You create it, you nurture it and you add to it.
When I consult with potential buyers of repair shops, one question is always asked: “What is the culture like?” Is yours full of life with happy employees who are fully engaged in the success of the shop? Or, are they putting their time in, collecting a paycheck, all the while waiting for the next big thing to come along?
What’s Next, After The Shop?
One of the most important questions you should ask yourself is, “What fulfills me and how can I use that to the benefit of others?” The answer might not come right away but give it time, because it is a critical element to the next phase of your journey!
You are the author of the next chapter in your life – how will that read? Will it be full of adventure from traveling, joy from spending well-earned time with family, or satisfaction from giving back in ways you haven’t thought of yet? Having an idea of what tomorrow could look like will pull you through both the good and challenging days!
I had no idea how rewarding and fulfilling it would be to work with shop owners as their business coach! I had an inkling I might be good at coaching when I took a gig teaching college a few years before I sold my shop. Over that time, I found a passion I didn’t know was there and when the offer to sell my place came in, I already had an idea what the first few pages of my next chapter would look like.
Remember, these are only five of the many factors that are part of a thriving shop, but they are the start to building a fantastic future for you and your family!
Finally, ponder this poem from Poet Edwin Markham as you work to make your dream true!
“Great it is to believe the dream, as we stand in youth by the starry stream; but a greater thing is to fight life through and say at the end, the dream is true.”