Rains: MSO Reality Check

Aug. 1, 2021
What you need to know before you buy a second location.

I recently had a shop owner I coach ask me what I thought about expanding his operation from one shop into two. He was getting excited about the prospect of becoming a multi-shop operator. With the help of his paint vendor, he had identified a couple of locations that seemed promising. One, in particular, had caught his eye. There was an aging owner with no succession plan. A solid building on the main street through a part of town with which he was already familiar. There was lots of good equipment in working order already in place. On top of that, there was a decent book of business that had been built up over many years of operating in that location. 

Now, if you’ve met me you know I tend to skew toward the hyper-encouraging. I want people to go after big things. I’m the guy who will cheer you on even when everyone else is saying, “This may not work out well for you.” But I’m also a realist. And I want people to know what they’re getting into. I’m all for the big leap but there needs to be a reality check before jumping! 

This is how I responded via email, unedited:

“I think it will be hard. Having two shops separated by that great distance will be challenging in ways you can’t even imagine yet. Revenue and profit at your current shop could dip. You and your partner will feel stretched for time. You’ll face challenges that will feel overwhelming at times. You’ll lose sleep. I could go on and on but I’m speaking from experience. It ain’t easy. You and your partner will both need to learn new skills that will stretch you. You will need a better team. And when that team isn’t there (sick, chasing a new opportunity)  you will have to figure out how to cover the gaps. 

“But, eventually, you’ll start to find a new groove and things will start flowing again and now you have two profit centers versus one. The rewards are there but the challenges are big and there will likely be times when you feel like it’s not worth it. So that’s my little reality check. I’m not saying don’t do it. I’m just saying it’s going to be very hard before it’s rewarding and you’ll have to commit to go through that challenging time.”

When I’m coaching a shop owner or manager I like to use a tool called the “Development Square.” Each side of the square represents a phase that everyone goes through whenever they’re learning to do something new. 

Top side: “We don’t know what we don’t know.” We’re naive. This is the dreamy, honeymoon stage. And I’m not disparaging it! We need this phase so that we take risks. If all we ever do is count the costs we won’t take any risks. And with no risks, there’s no reward.

Right side: “We know what we don’t know.” We become aware. Once we take the risk, there are several “Oh crap!” moments where we think “I can’t do this!” or “I never should have agreed to this!” This is where we eat a lot of humble pie. This is often the most painful stage where we get in touch with how much we have to learn and grow to be able to sustain the challenges we’re now facing. At the bottom of the right side is what some call “The Pit.” It can be the pit of despair where dreams go to die if we’re not careful. If you feel perplexed and unsure, you’re losing sleep and worrying a lot—those are good indicators that you’re in this phase. It’s time to make the turn!

Bottom side: “We know what we know.” Now we’ve made the turn and we’re competent. With a lot of effort and forethought, we know what we’re doing. We still have to think about it but we’re capable.  

Left side: “We don’t know what we know.” Mastery. Effortless execution. At this stage, we’re not even aware of how we do what we do. It’s become second nature. We make something that others find hard, look easy. We can do it with minimal effort. We don’t have to really think about the task. We just do it from instinct, naturally. 

I once had a 14-shop MSO owner tell me that running two shops was the hardest thing he ever did, and running 14 was the easiest. At two, there’s a lack of resources, time, knowledge, and skills. By the time you hit three, four, five, you’ve learned a lot and you likely have greater resources and momentum. And you can afford an experienced team of competent helpers! 

Deciding to become an MSO is a noble desire and the rewards are there! Let me be among the first to cheer you on and tell you it’s doable, you will figure it out! And I also want to tell you, it is hard and painful and feels uncertain for a long time. There is typically a big lag between the initial desire and profitability. Be prepared to hang on for an exhilarating ride around the square as you develop new skills, knowledge, and capabilities. I wouldn’t trade it! But it’s not for everyone. Please let me know if I can help in any way.

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