Is it Time to Add a Branch Shop?

Is it Time to Add a Branch Shop?

By Carm Capriotto, podcaster, Remarkable Results Radio

With more than 1,000 episodes in hand, we always uncover trends early in their cycle or timeline. For a while now, one of those trends has been growing additional locations. A few forces have spurred the trend. One was/is the pandemic. Many top shop operators strengthened their profit position, accumulated cash, and improved their systems and processes. The top shops did not find a shortage of people; in fact, many wanted to work for them. Therefore, cash, a profitable financial position and the quality of their team allowed owners to consider growing their footprint.

The shop operators who did not keep up with changing technology, financial success, training and improved processes/systems, and did not create a strong business culture to keep their people and customers, found it tougher to do business. Many shop owners who have been at it for 40+ years either wanted to get out or found themselves aging into retirement. They put up a flag to signal that they were for sale. 

In the last seven years, I’ve had the honor to speak to so many shop owners who have added branches or bays. It takes great leadership to stay on top and meet every challenge waiting around every corner.

I’ve also found an exciting youth trend. The opportunity for young service advisors, managers and technicians ready to step up to store ownership is plentiful. They can take cues and lessons from their senior leaders and not make some of the same mistakes on their journey.

The opportunities to grow and acquire have never been higher. Many shop owners feel they are ready. But are they really? Don’t do it just to keep up with the “Jones’s.” The best advice is to listen to the stories inside the podcast, join a network with MSO (Multi Shop Operators) as members and listen to the ‘been there done that’ crowd. It is harder than you think.

Where are the stores to acquire?

Many shop owners who don’t have an opportunity to succeed their business to a current employee or family member will consider selling their business. Their best prospect is a shop owner who is looking for another location. They are out there. Sometimes a phone call is the difference maker to starting a dialogue or even having a cup of coffee with a potential seller. Be patient, but also put out that you are interested in buying.

The intention of this article is to outline some key considerations for making a growth move into a new location or even expanding your current operation. Take a yellow pad and write what you need to consider for expansion or store count. Compare your list to mine, and let’s see how well I did in helping you. This list is not necessarily in any priority order and is not complete. Some of the items on your list will be there because of personal, environmental, or market conditions. This list is compiled from hundreds of podcast interviews with some of the best shop operators. They are the first to say that they had a huge learning curve on their own and want to help share, so success happens quicker for their industry peers. Below I’ve included links to over 50 episodes that discuss this topic.

1. Establish and Build a Strong Company Culture
Your culture keeps and attracts the people who want to work for you. Also, your ethics rule inside your culture, including your mission, vision and work environment. Strong established cultures attract people who want to work for you, and customers also see and feel it. It is caring for each other personally and as members of the team. For some, it may sound sappy, but the top shop operators will point to culture as the glue of their organization.

If you don’t have a strong culture, you may find it challenging to start on your own. Hire a coach or consultant to help you.

2. Cash Reserve or Strong Financial Position
The pandemic taught us a great lesson about having cash reserves for three months in the bank to pay the bills. Yes, we are a recession-proof and essential business, but cash helped many get through the uncertain times until business picked up again. Cash reserves is built purposely. You put a percentage of your profits away into a separate account, and many use the ‘Profit First’ model to manage their cash.

One way you have the cash to put into a reserve account is by having a great handle on your finances. If you do not get a monthly financial statement, you are basically treating your business as a hobby. If you don’t know how to interpret a financial statement, again get a business coach or consultant, one who knows our industry, or find an accountant who knows our industry.

Financial statements show numbers like gross profit, sales, debt, net profit and costs. How can you manage these areas if you don’t see the numbers and understand the indicators and goals of your business and the industry? An accountant can help but may not necessarily know the performance indicators for your business and the industry. Once you ‘see’ where you are heading, you can maneuver your sales, margins and costs to produce results that can sustain your business and remove financial stress.

3. Processes and Systems
So many shop owners leaped into store two only to discover that they did not have duplicatable processes and systems. Besides solidifying a new team, marketing the business and teaching the culture, among others, you need duplicatable processes and systems to establish a new location.

I’ve learned over time that great processes and systems win wars. By wars, I mean any challenge you may have. Many great aftermarket coaches speak to the simplicity of creating great processes. They need to be created by the people who are most affected, and it only needs to be one page, bulleted and available online as a reference, and to teach when needed.

It goes without saying that a modern web-based Shop Management System can make a huge impact on your company, no matter if you have plans to grow or not. Access to data allows you to see critical performance indexes that show the team how the company’s goals are being met. Today’s powerful Shop Management Systems can become a competitive advantage for you.

4. A Commitment to Training
Not just for technicians but for owners, managers, office staff and service advisors. Today, a competitive advantage is getting knowledge and using it to build yourself and your team personally and professionally. Great companies pay for all training and the time away from work. How can I do that, you ask; set a training budget? You may need to start small if you are not financially strong, but you need to start. Ask the shop owners who close down and take their entire team to events like AAPEX, and others. They gain a huge advantage as a team and company.

You must manage the training of your entire team. Keep a training resume on each that includes: Technician Name, Date, Class Title, Venue, Sponsor, Time Invested, Trainer Name, Tech’s Rating 1-10, Cost, Who Paid.

Another big reason for training is technology. It is ever-changing and moving faster than we can absorb. Staying on the cutting edge of new tech is a priority and arrives every day. Don’t let it mow you over if you are not prepared.

5. Networking
Joining a peer network or 20 groups isn’t necessary to grow stores, but it will be a huge help. It can help if you are a single shop owner in significant ways. You will discover that the world is small, and almost everyone has either the same issue you have or has overcome it and is willing to share their solution and outcome. This gives you a perspective that you would never get if you live on your own island. You can find these groups inside your coaching company, also locally or regionally. 

Many shop owners have learned so much inside their networking group that they love to give back and help others. Keep in mind if you join a local group, don’t worry about your competition. There is enough business for everyone. And don’t be bashful to share your ‘secret sauce’ because there is none. Don’t think that what you do is unique. If nothing else, sit and listen and learn, then assess how to take those ideas into your business and make them your own.

6. Prepare to Be a Stronger Leader, Implement EOS and Empower Your People
Do you split your time between operations? Will the store you leave to help jump-start the new one survive without you? If yes, then you’ve done well putting others in charge (there is an art and science to elevating your people into leaders on their own account). If not, you must give decision-making power to others. But that does not just happen; you need to coach and lead your team to do business as you would.

The Entrepreneurial Operating System (EOS) is the blue print from the book, “Traction” from Gino Wickman. Many shop owners have embraced EOS and their business is at a whole new level. We’ve done many episodes on the power of EOS.

Leaders are not born. They commit to reading and finding a coach and attend seminars to learn to be a better leader. They know how to be humble, have self-confidence, deal with stress, overcome fear, be vulnerable, develop skills, embrace change and stay positive.

7. Expansion: Learn How to Buy an Existing Shop
There are many moving parts in shaping a deal. Due diligence is required, as well as assessing, evaluating and discovering all aspects of the business you want to buy. This is not just a day’s work of research and time spent with the seller. If you are going to purchase an existing business, this is a thorough review of finances, people, marketplace, customers, facility and equipment. Plan to overturn every rock you find and understand just what you are buying.

8. Plan Ahead to Staff the New Location While Getting Your Entire Team ‘On Board’
Support from your current team will make for success or not. You may be overstaffed while waiting for your deal to close or a new location to open. The operative word is planning. Sure, you may want to keep the transaction confidential, but having key people helping your plan come to life will help you hit the ground running on day one of the new shop.

During your due diligence, you will need to evaluate the current staff of the business you are looking to purchase.

9. Always Be Marketing – Become Part of the Community
Plan a marketing campaign for the new location. How will you embrace the current customer base? Are they your type of clients? What are the demographics and psychographics of your market? Who will run your social media for the new location?

Never stop in good times or bad. Keep your name out there. Be sure to excite your social media sites with the news and the exciting things you do in the community. Consider hiring a marketing expert to drive your social presence and website to help retain customers and drive new business.

10. Temper the Excitement or Decision. Create a Five-Year Plan
Verify your numbers. Test the temperature of your team. Do due diligence on your current operation to be sure they are ready. Remember, just because you can doesn’t mean you should. Go in eyes wide open.

A nice way to overcome a run-a-way train is to have a plan on solid footing. You need to create a five-year plan, a look at your financial goals for the next five years. That is typically what you or your lender will want to see, and your loan term for the business would be five years unless you have seller financing. 

There are many more pointers you need, but this is a good start. These have creamed to the top from speaking to shop owners and coaches for the last seven years. I’m sure you can agree that leading and growing a great business is a roller coaster ride. Just always be aware of the tracks ahead. The ups and downs of leading and growing can produce an exhilarated feeling when everything works together.

As always, listen to learn just one thing on the service aftermarket’s premier podcast. Listen on your favorite podcast player. Search for Remarkable Results Radio and subscribe. Thanks for listening and continued success. 

Carm Capriotto is a podcaster and influencer in advancing the aftermarket. He has been in the automotive aftermarket for 40 years and has a passion for the success of the service professional. Carm moderates panels, speaks, and interviews essential industry voices, from shop owners, technicians, coaches, and trainers, among others, that offer their wisdom and insight to help build better leaders and businesses. Learn more at: remarkableresults.biz
Sept. 22, 2022

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