Running a Shop Operations Multi Shop Operations (MSOs)

MSOs: Big Threat or Overlooked Opportunity?

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It happened again two weeks ago: A large MSO—one of the “Big 4” and the second national MSO to enter our market—came to town; what many shops dread the most. However, whenever there is a big challenge like this, there is also opportunity. I’ll tell you about a big one I’m considering at the end of this column.

There’s a rather well-worn tale among entrepreneurs about two shoe salesmen from competing companies going to a village to sell shoes. When they arrive, they both look around and realize that no one in the village of several thousand people wears shoes. So, they each call back to their headquarters. The first salesmen says, “This trip has been a complete waste of time!

No one here wears shoes! There is absolutely no market for shoes here!”

The second salesman calls home and excitedly tells his boss, “You won’t believe this but no one here has any shoes! This is a completely brand new, untapped market!”

The moral of the story is about seeing opportunity where others see none. This applies in our industry right now. What many people see with the pace of consolidation is nothing but negatives. But are there opportunities hidden in plain view that might be worth considering?

First of all, one thing I have observed on both occasions national MSOs have entered my market is that talent starts to move around. Many of the employees in shops that have recently been acquired are leery of the new corporate structure, and the culture of the shop starts to change. New rules are put in place, they no longer work for the people that hired them, and they may see their shop as a “sellout.” All of this causes them to start looking elsewhere. Our family shops in Cincinnati have already picked up two great techs that wanted out immediately after the sale of their shops to a consolidator was announced.

The second opportunity is to market your business’s local ties. MSOs cannot make claims that only apply to independents. Things like “locally owned” or “family owned and operated” tap into an ideal of American business that is both nostalgic and true. I’ve long been a proponent of shops telling and retelling their “founding myth”—that special story of not only how they got into this industry, but also why they got into it in the first place. It’s important to tell this story in writing on your website, in a video that you can attach to your email signature, and in any networking settings where people ask, “So, what do you do for a living?”

Lastly, there is opportunity for some shops—especially smaller, local MSOs—to sell as an exit plan. I know there are some that will consider this equivalent to making a deal with the devil. There are varying perspectives on MSOs among owners, vendors and consultants in our industry. However, as one shop owner who recently sold his shops said, “I wasn’t planning to sell and saw myself as an owner for many years to come, but what you will discover is that everything is for sale.” In other words, they made him an offer he couldn’t refuse. All I can say to that is, “Congratulations!” He made a deal that was great for him and his family and he found a way to profitably exit his business.

In my city, Cincinnati, a national MSO came to town and bought 10 shops all at once. The moment I found out about the purchase, I had a decision to make: Was this a threat or an opportunity? In the complexity of human life, it certainly has elements of both. But the one I focus on and what I do about it is my choice. The 10 shops that sold were part of the CARSTAR network. That meant that CARSTAR would be looking for new partners in my market and I had an opportunity to step up to that plate. What initially drew me to CARSTAR was that I could continue to own my business but could leverage national buying power with our vendors, draft off their insurance relationships and learn from their operating expertise and benchmarking of nearly 500 shops. I’m drawn to their model as a hybrid of local ownership with a national perspective and leverage.

We have decided to go down that path and hopefully by the time you read this, we will be fully on board with CARSTAR. If not, something went very wrong. Either way, I’ll update you in next month’s column.

If you can’t wait to find out, reach out to me at the contact information below and I’ll be happy to give you an update and tell you about my experience with CARSTAR.

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