Planning for Shop Transition
What is your end game? How do you envision exiting your business? I have heard some shop owners say, “I’ll be working until the day I die! Then they can escort me out of here in a pine box!” While that may get a chuckle and reinforce the point that body shop owners are not afraid of hard work, it is not a strategy that benefits them or those they will leave behind.
Have you ever really thought about how you could exit your business in a way that most benefits yourself, your loved ones, and even your current employees?
I’m being forced to wrestle with these long-range questions lately as we are seeking to acquire another shop. That decision forced me to think through things from a long-term perspective. Things like co-branding, for example. Should I carry on the Center City Collision name that has existed for 40 years, or bring the shops under a new banner that ties them together? If my plan was to sell both shops in the next few years, then I would likely just keep the names they have and keep drafting off the great reputation they have had in their respective neighborhoods for decades. However, if I plan to stay in it for many years and become a regional multi-shop operator with more than a few shops, then eventually branding all the shops under one name might make more sense.
It seems like the end-game strategies could be simplified to just a handful:
- See what happens
Not surprisingly, the worst option of these is the latter. What typically happens—and I’ve seen this many times as I’ve interacted with aging shop owners—is you end up selling at a fraction of what your shop is actually worth. Or worse, the shop fades away with almost nothing to show for your years of effort. It’s your blood, sweat, tears and equity. Why leave that to chance?
Under each one of the other categories there are myriad options. If your plan is to sell a single location to a family member, that will look much different than if you plan to sell to a consolidator. And if you decide to scale, do you want to be a small, regional MSO or do you aspire to be a national franchise? Those early decisions dictate radically different strategies from the outset. The set up and leadership will be very different depending on what you intend to do.
One sure way to win no matter which course you take is to become process driven. As I move toward this acquisition, I’m realizing a very simple truth: I cannot be in two places at once. That means I’ll have to have trustworthy people and proven processes for all my operations.
The great thing about being process driven is that it allows you to scale or sell at a much higher price. And if you decide to stay until the end, it can also allow you to make more money with less effort. All of those are good outcomes, no matter what direction you ultimately take.
Let’s look at each of those in turn.
Sell: If your business depends solely on you, the owner, then that salary and all the benefits have to stay in place. If there are trusted people and proven processes leading the business, then investors are willing to pay more, as that frees up all the owner benefits and compensation once the sale is complete.
Scale: If you decide to scale to another location, or to many others even, then having proven processes in place promotes consistency of operations across the locations.
Stay. If your goal is to maintain your operations as they are, consistent and documented processes will help you do that with much less effort. The absolute worst outcome of being process driven is that you will make the same amount of money with less effort, less conflict, more clarity. Not a bad outcome.
So whether you plan to sell, scale or stay, becoming process driven has long-range benefits. Whatever you do though, don’t just hope for the best and “see what happens.” The only thing you can count on there is that you will likely be disappointed in the end.