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The Status Quo or is it Time to Expand

Tuesday, August 27, 2013 - 10:56
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One of the greatest and most obvious ways that the “American Dream” manifests itself is for some courageous man or woman to cast caution to the wind, go out on their own and start a new business. Never mind that after five years in most industries, half of these brave souls are out of business, the fact remains that the other half are surviving and maybe even thriving, contributing to the U.S. economy and employing millions upon millions of U.S. workers.

Small business truly is the engine that drives the U.S. economy and the automotive repair industry can be very proud of their contribution to this. An important consideration for many shop owners who survive those first five years is when or if we should look to expand.

The answer to that question is very complex. Certainly if your current shop is thriving and those key performance indicators like sales, sales growth, profitability, production, retention and car count trends are strong and moving in the right direction, expansion is something I would definitely consider. And just as obviously, if those indicators are not where they should be or are trending in directions other than where they should be, I would not consider expansion, or at least not until we have our first house in order.

Owning and running a business can be very rewarding, but it also can be a huge challenge. Not all, but a very large majority of the shop owners I have known and worked with over the years tend to work in their business not on it and spend little or no time developing business plans. They tend to show up to work early, work late and spend little or no time planning their next moves or monitoring and managing their business performance. They are embedded in the day to day running of their business and most typically do not have the time (or inclination) to take care of the business of the business. I only mention this because as challenging and complex as running one shop is, running two or more shops is infinitely more complex. If you have thoughts of expansion, you need to remember this.

I have a great former client who owns and operates a premier multi store tire and automotive repair business centered around Charlotte, N.C. This company is first class in everything they do and somehow operates a dozen or so beautiful, modern, high-end facilities while retaining a genuine family owned business atmosphere. They are a very visible fixture in the community. Expansion for them is a science, with a time-tested strategy that relies on an intense market survey, precise planning and flawless execution. There are no half cocked, ego driven decisions being made here, they go at expansion with their eyes wide open and very aware of market potential long before they break ground.

Expansion for them is nothing more or less than their corporate evolution, having started out on this journey back in the early 1960s. Each of their stores is a profit center in and of itself and as they have grown and prospered, they have developed a process toward expansion that allows them to go into a market with reasonable expectations for a return on investment. They have a very structured and disciplined approach to expansion, backed up by 50 plus years of experience, that has seen them go from being a very small fish in a very big pond to being a very big fish in a pond that is seeming to shrink. I have no doubt that as long as this incredible business owner would choose to grow and expand; he will do so successfully and very much to the benefit of his customers, his would be customers and his many staff members.

I have another former client and friend who operates a high end European shop in Spokane, Wash. I would tell you honestly that this is the best run stand-alone shop I have ever seen or been associated with, enjoying high sales, high profitability and strong reliable car count week after week, month after month and year after year. Their secret, in this very tough sector of the automotive repair market, is providing their customers with incredible customer service every time they are in.

This is a shop that could reasonably look at expansion, with great prospects for success, but who have instead put major effort into making their existing shop as good as it can possibly be and not seriously looked at expansion. They have explored opening an oil service facility across the street and even opened a detail shop as an extension and enhancement to their existing business but expansion just has not been a priority. I have no doubt that if this incredible owner decided to branch out and expand beyond his one existing facility, he would be successful but there is a lot to be said for making your existing operation as good as it can be. Certainly his customers have benefited from his efforts along these lines, as have his staff and community. Thirty-five years of practice has made them nearly perfect. 

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