Shop succession planning: Moving on with confidence

Jan. 1, 2020
Unless your literal intention is to be taken out horizontally and to die with a ratchet clutched in your hand, the sooner you begin planning for that day the better.

I will be forever grateful to the tire and automotive repair industries for what they have done in allowing me, not necessarily the brightest bulb in the box, to make a good living for most of my adult life, to raise a handful of kids and to be able to look forward to a retirement that will not have me having to work until I am 83 nor worry about where I will live or where my next meal will be coming from.

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I would sadly note that where I have been fortunate and can be reasonably confident when I decide to hang up my labor guide up for the last time, far too many of the shop owners and service managers I have known over the years have no plan.

Unless your literal intention is to be taken out horizontally and to die with a ratchet clutched in your hand, the sooner you begin planning for that day the better. One of the greatest frustrations I suffered in my years as a leadership coach and business consultant was in getting owners to change their behaviors and do the things they needed to do to assure the viability of their shop. The one glaring exception to that were those shop owners who were getting to the point where they wanted to retire.

These guys were rapt and attentive to any and all the recommendations I would make and very willing to fix and fire anyone in sight to get their shop in a position where the owners could retire. In far too many cases we did not arrive at this state on compliant urgency until way late in the game. Suddenly deciding that you wanted to retire in three or six months or even a year is creating a near impossible expectation and the reality is that unless the owner is very very lucky and happens to run a very profitable and appropriately staffed operation, realistic chances toward retirement are very unlikely.

A much easier and more effective strategy is getting that plan in place early and work toward that succession long before you would think about retirement.

It is a fact that most shops in the US are not as profitable as they need to be, with net operating profit numbers in the low single digits, or about a quarter or more of where they need to be to assure the viability of the business. Too many shop owners have hired or inherited the wrong type of Service Manger or technicians and rather than doing what is right for the business, put up with these poor performers, hopeful that they will come around over time.

In the same way, rather than assuring a great service experience for our customers and thereby developing a strong customer base over the years, far too many owners go to market striving to be the cheapest guy in town and discover far too late that it is hard to be profitable when there is no profit. It is just as hard to retire.

Rather than suffer that eleventh hour shock when you go to retire, my strong suggestion would be to start running your business with an end in mind and whether you would sell it outright or develop a succession plan that transferred ownership of your shop to your service manger or other party through a buy-out mechanism, work out those details and get that plan in place as soon as is possible. Even before that I would have you work very hard to hire the right people. I can promise that you will not want to turn your business over to a lazy assed slacker with your retirement dependent upon the business being profitable.

The very same would apply to your techs and other staff. If they are not up to snuff than they are a threat to that far out end date and you do not have the luxury of waiting for them to come around. Remember, if they are not contributing to the success of your shop than they are a liability. Do yourself a favor and find the right people to plan your retirement around.

A final important step would be in giving your people incentives toward performance. No matter whether you are selling the business or a long term buy-out, performance at the counter and in the bays will pay the bills and finance your retirement. Pay for that performance.

 A final but very important step in all of this is getting with your CPA, or financial advisor, involved and getting that plan on paper and working toward that end game today. Peace of mind has value and having a great and well thought out plan is worth the time and effort.

Of course we could put it off for another day or year or just not worry about it. Working until you are 83 wouldn't be that bad would it?

I know I will be whacking golf balls somewhere in Florida long before I am 70. What do you think you will be doing? If you don't have that answer my advice is to get a plan. 

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