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Hello, new member here.


Alan_Beshore

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Hello, new member here.

 

So i am giving the idea of buying, or starting, an auto shop very serious consideration. One question I would like to get some input on is how easy it is to grow by acquisition. Has anyone in the room actually bought or sold an actual operating business ? Is anyone attempting to borrow to buy out other operating shops ? Assuming you have solid 12 months trailing P&L statements, how difficult is it to acquire financing ? Does anyone here presently operate more than one location ? Is it a silly idea to think you could grow from one location with say four employees, to four locations with 16, in say 3 years ?? Does that sound like total fantasy, or not likely, or reasonable, or easy ?

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I know a guy in Texas who started from 0 and has 6 stores after 15 years. They are all franchises started from scratch.

 

Thanks for the response. I have been wondering about the prospects for growth for quite a lot of time now. I am thinking most people that come up in this business tend to fixate on the actual act of repairing cars, instead of focusing on the financial metrics and the system as a whole. I'm guessing about that though, and since I haven't actually done it, I cant say for certain.

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Alan, Welcome.

 

I have a lot of experience in this area of the business. The questions you may want to ask yourself is what do you want to accomplish and what is your exit strategy.

 

Owning shops just for the sake of ownership does not seem a viable strategy to me.

 

The assumption would be that they run at respectable margins. In that case then more shops would be better. It seems like the exit strategy would be to sell the operations at some point, or maybe just cease operations and sell the assets and real estate if any. I think growth by acquisition is a viable idea because there seems to be a lot of value in some of the businesses I have investigated for sale. Some are a lot of blue sky combined with junk in the garage, but others seem to be genuinely worth the asking prices.

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The assumption would be that they run at respectable margins. In that case then more shops would be better. It seems like the exit strategy would be to sell the operations at some point, or maybe just cease operations and sell the assets and real estate if any. I think growth by acquisition is a viable idea because there seems to be a lot of value in some of the businesses I have investigated for sale. Some are a lot of blue sky combined with junk in the garage, but others seem to be genuinely worth the asking prices.

See, this is the crucial point, what is a respectable margin to you? It may be a simple answer if you already know what kind of return you are looking for your money and time, otherwise it way may not be.

 

The low interest rates the Fed has set after their 2008 fiasco has really distorted the business environment, a lot of businesses that should have closed are still crawling along, this makes it much more difficult to know where to invest.

 

there seems to be a lot of value in some of the businesses I have investigated for sale. Some are a lot of blue sky combined with junk in the garage, but others seem to be genuinely worth the asking prices.

Yes, there is lot of opportunity, specially because many successful shops have older management that is ready to retire but cannot sell.

 

Best of luck with your endeavour.

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See, this is the crucial point, what is a respectable margin to you? It may be a simple answer if you already know what kind of return you are looking for your money and time, otherwise it way may not be.

 

The low interest rates the Fed has set after their 2008 fiasco has really distorted the business environment, a lot of businesses that should have closed are still crawling along, this makes it much more difficult to know where to invest.

 

 

Yes, there is lot of opportunity, specially because many successful shops have older management that is ready to retire but cannot sell.

 

Best of luck with your endeavour.

 

It seems like between 10-20% profit margin is a reasonable expectation. Low interest rates have helped things overall, in my opinion. There seems to be a lot of opportunity. Its possible that its just an illusion. It seems like almost no one keeps genuinely accurate books, and no one has audited financials. So they can never support the asking price with actual data.

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  • Have you checked out Joe's Latest Blog?

         4 comments
      A recent study, done by Harvard Business School, concluded that the real problem with attracting and retaining employees has more to do with the workplace environment, not pay or benefits. While the study did find that an adequate pay plan and offering an attractive benefits package did help with recruiting and retention, it’s not enough to satisfy the needs of employees, especially those of front-line workers.
      The study also stated that in 2021, many companies were convinced that giving raises, sign-on bonuses, and other perks would solve the worker shortage problem and prevent people from quitting. However, this strategy did not work. So, what does work regarding attracting quality people and keeping them employed?
      Essentially, it all comes down to the culture of your company.  Management: do all it can to consider the individual needs of your employees. Your employees want to feel that they have a voice, that their opinion counts, and that their role in your company is both respected and recognized. Yes, pay and a great benefits package will go a long way toward making your employees feel secure, but that’s only financial security. People want more than money.
      To attract and keep top talent requires creating a company that people feel proud to work for. You need to reach the hearts and minds of your employees. Become a leader that people are enthusiastic about working for. You want your employees bragging to their friends and family that your shop is a great place to work!
      Step one to attracting and retaining quality employees: Create an amazing workplace environment for your employees!  Trust me, happy employees make happy shop owners too!
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