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Am I crazy or ambitious? Or both? Looking at opening 3rd location, just opened 2nd 3 weeks ago...


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Long story short, been in business about 2 years and started mobile. Current location for about a year, just opened up a second location about 3 weeks ago- HUGE step for me.

In my area, auto shop locations are REALLY REALLY RARE. There'll be months before a single shop will pop up for lease.

Well.. I was looking for auto equipment on craigslist and stumbled upon a listing of a shop moving and selling all his lifts. Found the location on loopnet- 5 bays, previous business extremely successful, great location, great price too....

1st location hit record sales this past week, 2nd new location held its own (divided by week, came out on top after expenses). I got both stores running self sufficiently. I am pretty much maxed out and I hate taking out loans but I have a line of credit available. 

Am I crazy to want to do this? 

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5 hours ago, xrac said:

The answer is BOTH?  I would not consider a third location unless I have all my procedures in place including the back office and have a strong manager for the location available. 

Thanks. Yea  I've been lucky and got some good people lined up. Main thing is cash flow - I have yet to take out a loan or pay any interest with this whole ordeal of opening a shop. I have a credit card maxed out but I always pay it all before interest hits. With this third one, because of the abrupt timing, I might have to take out a small loan.

 

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I agree with xrac, Get your feet solidly on the ground and be able to rise to the challenges at a more reasonable pace. Too many balls in the air could be a real problem in the near future. Just my opinion with fairly limited information.

 

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Thanks guys. Few other people have said the same thing, to wait. I did put in an offer and heard back today. I asked for first 3 months free for setup, they came back with giving me 2 months. I was adamant for 3 months- should hear back again next week. I feel like I have a formula that works so we will see.... if they dont take my deal then it makes it an easy decision

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What is your end goal? Are you growing for the sake of growing?

Growing is not a problem if you know what you are doing, this is one of those ironies of life, and the only way to learn how to grow in to plow forward.

What are you going to do once people are stealing from you?

How are you going to make payroll when you don't have enough sales to cover payroll and you are over extended?

With whom do you have enough shared experience to trust them when you are not around to run the whole enchilada?

How much net profit is enough per location to call it a success?

What if your crew gets sick and you have to close the doors for a few days?

What is sales are rocking and spending gets out of control?

How many shops are enough, how many employees do you want to help feed? And their families?

The hardest, dry, and boring step is the planning and drawing phase, what if? What if that, what if this, or that...? What if the city doesn't allow my sign? What is the city doesn't agree with this or that, etc.?

See if you can plan for one shop, two shops, five, ten, twenty, one hundred. If you get good at this, you will see that you can grow as big as you wish, but will it be worth it? What are you willing to sacrifice? Time, health, family, youth, etc...?

If it is in your blood, there is no other answer than to do what you have to do, just as you can't tell a Lion not to do Lion things, he must do what Lions do.

Whatever you choose, I wish you a fun, prosperous, and exiting journey.

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22 hours ago, HarrytheCarGeek said:

What is your end goal? Are you growing for the sake of growing?

Growing is not a problem if you know what you are doing, this is one of those ironies of life, and the only way to learn how to grow in to plow forward.

What are you going to do once people are stealing from you?

How are you going to make payroll when you don't have enough sales to cover payroll and you are over extended?

With whom do you have enough shared experience to trust them when you are not around to run the whole enchilada?

How much net profit is enough per location to call it a success?

What if your crew gets sick and you have to close the doors for a few days?

What is sales are rocking and spending gets out of control?

How many shops are enough, how many employees do you want to help feed? And their families?

The hardest, dry, and boring step is the planning and drawing phase, what if? What if that, what if this, or that...? What if the city doesn't allow my sign? What is the city doesn't agree with this or that, etc.?

See if you can plan for one shop, two shops, five, ten, twenty, one hundred. If you get good at this, you will see that you can grow as big as you wish, but will it be worth it? What are you willing to sacrifice? Time, health, family, youth, etc...?

If it is in your blood, there is no other answer than to do what you have to do, just as you can't tell a Lion not to do Lion things, he must do what Lions do.

Whatever you choose, I wish you a fun, prosperous, and exiting journey.

Thanks Harry. Those are some solid questions and there are some I have not thought about so thank you for that.

I don't know if anyone else feels this way but I don't want to just make a living. I want to leave a legacy. If it was just about money or a comfortable living, I think I would have just stopped with my first shop. I'm not sure as of yet how many shops I want to have but I do know that I want 1 out of 4 people in my city (Raleigh, Durham, CH) to have heard of my shop and recognize the logo by next year. It's hard or almost impossible to gauge that but that's what I want

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I will throw out another thought. Buy the land and rent it to someone else. I have done that several times because I didn't want to deal with running another shop. If you do this you will hold all the cards so you can do what ever you want down the road.

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3 minutes ago, OOOooo said:

I will throw out another thought. Buy the land and rent it to someone else. I have done that several times because I didn't want to deal with running another shop. If you do this you will hold all the cards so you can do what ever you want down the road.

Yea I'd love to own the land bc that would be ideal. I just need to save enough money for the down payment, roughly $200,000

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26 minutes ago, alfredauto said:

Go big or go home. If you have the gut for it why not? I don't have the ability to relax with 20 or 30 people waiting on a paycheck. 

Thanks! Exactly what I needed to hear. My plan is to work hard, full speed ahead for the next 10 years. I need to take over the Raleigh Durham area

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If I didn't have 200K laying around, I would probably not take on another shop. I like to have a good cash cushion for unexpected slow downs or any occurrences that may pop up. Having a good cushion allows me to sleep at night. I am currently building a new 8 bay facility that has an additional 8 covered bays and the only stress I have is dealing with the city and the contractors. I am not too worried about any cost over runs because I have cash set aside. The way the new shop is set up is I am actually relocating a current shop that is sharing space with another business I own.  I let both my manager and lead tech buy into the business at 20% a apiece, I set up a new LLC to facilitate this. There is a buy sell agreement as well as protections for me and them as well. I had an attorney set up all the documents. Both of the employees have felt that I have always been generous to them and that this was a great opportunity to own a shop without having to come up with a couple hundred thousand dollars. They have both been with me over 10 years and they had to put cash in the deal, the business financed the remainder of their buy in for 10 years. They each draw a salary plus benefits and then they share in the net profit. I currently draw $1K a month for the little accounting and paperwork that I do.

Now they are owners which has a psychological effect because they treat the business a little different and there is something to be said for being able to say "I am an owner". I let them be involved in all decision making as well as the sales forecasting, budgeting hiring and firing. Some people say I was crazy for thinking about and doing this when I started discussing it. I just felt like if they could share in the wealth then I don't have to worry about someone stealing them and the other employees are aware of the overall deal. I still get 60% of the profit and the actual payback on the buy in. Their loans are funded by the 20% share of profit they receive at the end of the year. They only own part of the operating business and I own the real estate and all major equipment which is leased to the operating company. So I make money on the lease as well. I do not get very involved in day to day operations as they handle it all. I have a 10 year plan for them but I have also talked about speeding up the plan as well as sell them the real estate at some point.     

Shortly after the new location is in operation I will probably acquire or build another location as I have 2 more individuals who I may set up on a similar same plan.  

Remember cash flow is king. 

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Marksas, that is an excellent idea. I am in the process of doing something like this on a different business. I am going to fund it and let them do all the work and build the business for me. They will get paid and receive 6% equity each year if the hit their targets up to 24% each.

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The reason I had them do a cash buy in is so that they have "skin" in the game, plus they are benefiting from my years of building the business although they have been on board for most of it. Lots of legal with buy/sell agreements for the protection of both parties. I kept 60% for a control position and the only way that this could be jeopardized is I live in Texas and my spouse could team up with the other two owners and out vote me since she owns 50% of my 60%, or at least that's they way I understand it. The way I see it is that I worked for a shop for 10 years and treated it like my own. Most people thought I was the owner and the owner was very clear that I nor his children would own any part of the business. I wanted to be an owner and if he would have let me buy as little as 5% I would have never left, so I never wanted my top employees to feel the same way. They can still leave but it comes at a great cost to them and I don't have to pay for their shares immediately, it gets spread out over a number of years, so there would be no windfall of cash should they want to leave. 

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Marksas, congrats on the new shop. I'd love to be able to build my own 8 bay shop one day. I know you've put in a lot of hard work and it's paying off as successful people are not successful by luck.

As an update to the original post, I heard back from the broker for the third location. I didn't hear from them in a while so I thought it was going to fall through but we came to terms and I should be signing the lease sometime next week. 

To recap, not much more than 2 years ago, I quit my job as a service advisor and advertised on Craigslist and worked out of my garage, HOA stopped that and I went mobile, then rented 2 bays, moved to my own 6 bay shop, and then opened my second location last month.....

It almost seems like the logical thing to do is not open a third shop now but opportunities don't come too frequently in life, especially automotive spaces in this area. 

I have been reading A LOT of books lately and one thing that really hit me is what Henry Ford said. Something in the lines of successful people are quick to decide and slow to change their mind. 

Anyway I am committed and for me failure is not an option.

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Jay, it's interesting to see the rapid expansion and wish you the best of luck.  Just curious as to how you are finding enough people to staff all your locations?  We had an opening last year that took almost 10 months to fill and that was just for a general service tech.  I talk to other shops in the area and they are also challenged with finding solid talent for any of the positions.

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Jay,

Owning the real estate is where you will make easy money. In my opinion there are two basic schools of thought when it comes to owning or leasing the real estate. They are both applicable in various situations and I could see using a combination of both strategies to your advantage. 

1. It is a drag on your balance because of the capital required to purchase  The asset is appreciating over time so it's a longer term investment with a stable return.

2. Leasing allows you to expand rapidly with less cash. In many cases you can lease a building and get 1-3 months discounted or even at no charge to ease cash flow on start ups.

I prefer to own the properties in a separate company and lease to buildings and equipment to the operating companies. Part of that strategy is then I can set a reasonable (high cap rate) lease rate for the store which the manager can see and make them responsible for the entire P&L of the company. I don't run any type of personal expenses to his store, I do it through the property company. That way we have clean books in the operating companies and the managers don't feel like I am "stealing" profits from their company that they are responsible for operating. Any type of rebates, gift cards, or cash that is given to me for the store, gets handed to the center manager. This is so that they understand I am not taking anything from their company and I expect the same level of integrity from them. 

A couple of items to note is a number of owners run a great deal of personal expenses through their company and then wonder why they are not making any money. When you go to sell or think about selling you have dirty financials and the sales price will be discounted. All those personal expenses that you ran through the company ends up costing you much more than the actual benefit. I try to run financials as if I was going to sell the business today.  Some of it is also physiological as I hear owner talk about how hard they work and that they are not making money yet the business is paying for all their toys, vacations and entertainment. They then cry to employees about how they are not making any money which hurts morale.

By setting a higher lease rate then you can run your expenses through the property company which typically have very few expenses and it makes it much easier to value the operating company because you can make an easy adjustment to what you "overcharged" on the lease. 

My disclaimer is that I am not a CPA, Tax Attorney, Financial Advisory or anything of the sort, and you should consult with professionals before making any decisions affecting your future. 

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Another advantage to the Holding Company / Operating Company strategy is for asset protection.  The real estate and all permanently installed fixtures are owned by the Holding Company.  Should the operating company get sued, the liability is contained in that company.   Further, in my 18 page lease I have defined (expensive) lease rates.   The current defined operating company has negotiated a discounted lease rate.   This discount ceases if there is any change in ownership of the operating company, except thru inheritance.   It acts as a poison pill should the operating company get sued and ownership change hands forcibly.  The goal is for any lawsuit to eat up the insurance proceeds only and then go away.   They could find better lease rates anywhere else.   The holding company has the most value and is isolated thru separate LLCs.  The separation and asset protection is maintained by separate books, good insurance and most importantly by good operations practices inside the operating company.

Since we can be sued for anything, having a layered approach is useful.   With Marksas' approach, there is no comingling of the books, which is critical for proving that the Holding Company is simply a landlord and not involved in operations.

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I like the poison pill aspect and had not thought of that. We are working on a separate "License" agreement for use of the shop name. Should we get sued then we could possibly lose the assets of the operating company which may be a few small tools and maybe a desktop computer but the name as well as the web domain is owned by the holding company.

If an owner has an SBA loan then it changes how you can charge because the SBA only allows you to charge a very minimal amount above the actual loan repayment schedule (or so I am told). They individual I spoke with stated that you then just charge a separate management fee which in my opinion defeats the purpose and pretty much co-mingles the operating company and the holding company.  I do get concerned because I don't want my holding company to own vehicles because it then puts everything at risk. So we leave the shop vehicles as well as the rentals in the operating company. It's not the best solution but I don't want to create another company. 

If you think all this is confusing and overwhelming  try and follow this. I was researching some companies that I invest in and this is from an SEC filing.

"The Reporting Person may be deemed to beneficially own such shares as he is the manager of Bluescape Resources GP Holdings LLC, which is acting as the manager of Bluescape Energy Partners III GP LLC, which is acting as the general partner of Bluescape Energy Recapitalization and Restructuring Fund III LP ("Main Fund"), and Main Fund is acting as a managing member of BEP Special Situations 2 LLC."

You think there is some asset protection as well as tax strategies going on there? I'm having a difficult time even following this one.  Reminds me of "who's on 1st".

Another thing to remember if you create all this stuff then you need to have great notes for your spouse so they can follow it should you get hit by a truck tonight. I keep and encrypted document that is updated pretty much daily of every web log on, every account, company information, points of contacts and any important information. She has a hard copy which also has the information of where the live document is stored with the most up to date information. My daughter has a copy also and pretty much is a signer on all bank accounts. Part of the struggle of being a business owner is that everyone tells you how to make money and then when you do it gets a little more complicated in trying to figure how to keep it. 

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Guys, thank you so much for your invaluable input. I am new in this game and I have a lot to learn. I am lucky to be surrounded by so many successful people.

This post has really opened my eyes and being only 31, I have not thought about a will, but I think I will definitely have to make some plans for my wife and newborn baby boy. 

I would very much like to own my own land and building and completely agree that is where the money is and that is one of my goals.

The reason for expanding quickly is this: I want to capture the market. I live in the Triangle - it's called the Triangle because Raleigh, Durham, Chapel Hill are the 3 major cities and make a triangle. (Duke, NC State, and UNC)

I feel like the way to make money is to spend money and I am sacrificing for long-term goals. I have put 90% of what I make back into the business. With 3 locations covering the Triangle (my locations will make a Triangle with with 20-25 mile average between the 3), I am wanting 1 out of 4 people living in this area to recognize my name and my logo. I read a book today and love this quote: Don't be competitive in your market, DOMINATE your market.

As to the question how I am finding good people, luck has some to do with it. I have had bad employees that I have had to let go but all in all I think of my guys as family. Having a ASE master tech on staff really helps, not only that but he is a generous one and has a great attitude. Helps everyone he can and all my guys get along well (they all go out to lunch, meet outside work, etc)

I'm signing the lease tomorrow and excited about this location, there are like 7-10 dealerships within 1 mile location. Carmax is down the street- I used to work for them, always swamped and I know they will need help. Our Durham location just got RepairPal certified and they outsource work to RepairPal shops. We'll see how it goes

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Jay,
Owning the real estate is where you will make easy money. In my opinion there are two basic schools of thought when it comes to owning or leasing the real estate. They are both applicable in various situations and I could see using a combination of both strategies to your advantage. 
1. It is a drag on your balance because of the capital required to purchase  The asset is appreciating over time so it's a longer term investment with a stable return.
2. Leasing allows you to expand rapidly with less cash. In many cases you can lease a building and get 1-3 months discounted or even at no charge to ease cash flow on start ups.
I prefer to own the properties in a separate company and lease to buildings and equipment to the operating companies. Part of that strategy is then I can set a reasonable (high cap rate) lease rate for the store which the manager can see and make them responsible for the entire P&L of the company. I don't run any type of personal expenses to his store, I do it through the property company. That way we have clean books in the operating companies and the managers don't feel like I am "stealing" profits from their company that they are responsible for operating. Any type of rebates, gift cards, or cash that is given to me for the store, gets handed to the center manager. This is so that they understand I am not taking anything from their company and I expect the same level of integrity from them. 
A couple of items to note is a number of owners run a great deal of personal expenses through their company and then wonder why they are not making any money. When you go to sell or think about selling you have dirty financials and the sales price will be discounted. All those personal expenses that you ran through the company ends up costing you much more than the actual benefit. I try to run financials as if I was going to sell the business today.  Some of it is also physiological as I hear owner talk about how hard they work and that they are not making money yet the business is paying for all their toys, vacations and entertainment. They then cry to employees about how they are not making any money which hurts morale.
By setting a higher lease rate then you can run your expenses through the property company which typically have very few expenses and it makes it much easier to value the operating company because you can make an easy adjustment to what you "overcharged" on the lease. 
My disclaimer is that I am not a CPA, Tax Attorney, Financial Advisory or anything of the sort, and you should consult with professionals before making any decisions affecting your future. 

Well said

Sent from my SM-N900P using Tapatalk

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  • 3 weeks later...
On 3/21/2017 at 4:29 PM, Marksas said:

I like the poison pill aspect and had not thought of that. We are working on a separate "License" agreement for use of the shop name. Should we get sued then we could possibly lose the assets of the operating company which may be a few small tools and maybe a desktop computer but the name as well as the web domain is owned by the holding company.

If an owner has an SBA loan then it changes how you can charge because the SBA only allows you to charge a very minimal amount above the actual loan repayment schedule (or so I am told). They individual I spoke with stated that you then just charge a separate management fee which in my opinion defeats the purpose and pretty much co-mingles the operating company and the holding company.  I do get concerned because I don't want my holding company to own vehicles because it then puts everything at risk. So we leave the shop vehicles as well as the rentals in the operating company. It's not the best solution but I don't want to create another company. 

If you think all this is confusing and overwhelming  try and follow this. I was researching some companies that I invest in and this is from an SEC filing.

"The Reporting Person may be deemed to beneficially own such shares as he is the manager of Bluescape Resources GP Holdings LLC, which is acting as the manager of Bluescape Energy Partners III GP LLC, which is acting as the general partner of Bluescape Energy Recapitalization and Restructuring Fund III LP ("Main Fund"), and Main Fund is acting as a managing member of BEP Special Situations 2 LLC."

You think there is some asset protection as well as tax strategies going on there? I'm having a difficult time even following this one.  Reminds me of "who's on 1st".

Another thing to remember if you create all this stuff then you need to have great notes for your spouse so they can follow it should you get hit by a truck tonight. I keep and encrypted document that is updated pretty much daily of every web log on, every account, company information, points of contacts and any important information. She has a hard copy which also has the information of where the live document is stored with the most up to date information. My daughter has a copy also and pretty much is a signer on all bank accounts. Part of the struggle of being a business owner is that everyone tells you how to make money and then when you do it gets a little more complicated in trying to figure how to keep it. 

You should write out your entire business plan and philosophy on what to own, and how to best own it, employment, finding great managers. All of it.

I'm not kidding. I'd buy a copy, and not cheap either.

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  • 2 months later...

For those of you who have a second location, when did you decide it was time to open another shop?  Was your 1st shop at capacity?  

In my area there are very limited auto spaces for lease and even less (close to 0) which are on a main thoroughfare.  We currently lease our location but we are on a month to month lease with the landlord not open to signing a longer term lease.  We have been operating like this for probably at least the last 15+ years but with the area growing and continuing to change I always have the lingering thought in my mind that we could "be gone tomorrow."  I know this could also be the case if we had a lease, the property could still be sold but you walk away with a little more but the location is a prime spot, our customer based is well established (the business has been here for 40+ years and we are located accross the street from an nice community where a larger amount of our customers can walk home when they leave their car.  We are also infront of the license plate office which helps drive our 170+ state inspections per month. 

We have a customer who owns a vacant shop about 10 min away.  The shop has been empty for several years and prior to that was a rent a bay location so there hasn't been an operating shop there for well over a decade.  She has been asking us to consider leasing from her and is open to various lease options.  Including free rent for x months, fractional lease and % of sales until we decide, try out option with no strings attached etc.

She has not been publicly advertising the space is for lease and I always considered that as a backup option if something happened with my current location however; last week she was in and told me she was going to start advertising it and may even be open to selling it in the future.  If I had a "guarantee" on my current location for some period of time I don't think I would open a second location however; with the lack of certainty I have considered opening it primarily so I can still keep it as an backup plan.  

The location is on a very busy street and according to her traffic data is >120k cars per day.  It would take some updating to get it to the value my current location offers.  Some of my other issues with the property is the difficulty to get out of the parking lot (4 lane road with 120k cars per day), and a dated less than perfect cement slab for minimum parking in the front and a grass lot behind the shop as a backup which I would have gravled but I have heard that there is data supporting less customers with a gravel lot.  

My overall question is what thoughts do you all have about this and how would you handle a similar situation?

More specifically, for those of you who have a second location:

1. How did you pick your location?

2. Did you initially fully staff and fully equip the second location?  Considering the proximity of the 2 shops I thought about only purchasing the essentials and letting the shops share the resources until I was certain the second location could self sustain.

3. How did you staff the location?  Did you hire all new people or did you roll out some of your employees from the first location?  And similarly how did you maintain your culture between the 2 locations?  My current location is staffed with people I completely trust and who have been with me for years but when they started new I had veterans there who I could rely on the keep me informed and up to date if I wasn't there.

 

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  • 4 weeks later...
On 6/17/2017 at 8:38 PM, nge said:

For those of you who have a second location, when did you decide it was time to open another shop?  Was your 1st shop at capacity?  

In my area there are very limited auto spaces for lease and even less (close to 0) which are on a main thoroughfare.  We currently lease our location but we are on a month to month lease with the landlord not open to signing a longer term lease.  We have been operating like this for probably at least the last 15+ years but with the area growing and continuing to change I always have the lingering thought in my mind that we could "be gone tomorrow."  I know this could also be the case if we had a lease, the property could still be sold but you walk away with a little more but the location is a prime spot, our customer based is well established (the business has been here for 40+ years and we are located accross the street from an nice community where a larger amount of our customers can walk home when they leave their car.  We are also infront of the license plate office which helps drive our 170+ state inspections per month. 

We have a customer who owns a vacant shop about 10 min away.  The shop has been empty for several years and prior to that was a rent a bay location so there hasn't been an operating shop there for well over a decade.  She has been asking us to consider leasing from her and is open to various lease options.  Including free rent for x months, fractional lease and % of sales until we decide, try out option with no strings attached etc.

She has not been publicly advertising the space is for lease and I always considered that as a backup option if something happened with my current location however; last week she was in and told me she was going to start advertising it and may even be open to selling it in the future.  If I had a "guarantee" on my current location for some period of time I don't think I would open a second location however; with the lack of certainty I have considered opening it primarily so I can still keep it as an backup plan.  

The location is on a very busy street and according to her traffic data is >120k cars per day.  It would take some updating to get it to the value my current location offers.  Some of my other issues with the property is the difficulty to get out of the parking lot (4 lane road with 120k cars per day), and a dated less than perfect cement slab for minimum parking in the front and a grass lot behind the shop as a backup which I would have gravled but I have heard that there is data supporting less customers with a gravel lot.  

My overall question is what thoughts do you all have about this and how would you handle a similar situation?

More specifically, for those of you who have a second location:

1. How did you pick your location?

2. Did you initially fully staff and fully equip the second location?  Considering the proximity of the 2 shops I thought about only purchasing the essentials and letting the shops share the resources until I was certain the second location could self sustain.

3. How did you staff the location?  Did you hire all new people or did you roll out some of your employees from the first location?  And similarly how did you maintain your culture between the 2 locations?  My current location is staffed with people I completely trust and who have been with me for years but when they started new I had veterans there who I could rely on the keep me informed and up to date if I wasn't there.

 

 

Hi NGE,

This is a bit off on a tangent but I would be concerned with trying to open a second shop while your first location is in "limbo." I know 15 years without a lease doesn't seem like limbo but there are no legal guarantees of staying there. If you pursue a second location and in the middle of building getting that started and you have trouble with your original location I would be very worried. 

Also food for thought, do you have a staff member who could pick up the reigns as the manager at a second location? Or would you consider  yourself the manager of both? 

 

 

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Hey guys, so here's the update. A LOT has happened in the last few months and I have learned TONS. I have been super busy and haven't been on the forums at all - but I saw a lot of activity on the post and there's actually a worthwhile update.

First thing to note was that once I opened my second and third shops, my car count went up as well. My Google rankings for the first shop is pretty good but it went up after opening 2nd and 3rd locations (not sure if google has algorithms for this). I opened 2nd and 3rd back to back months.

All 3 shops I have running and self sustaining. I just drive from shop to shop to shop making sure all goes well and I fill in where needed. What I have learned is, location and demographics are really really really important for opening multiple shops.

I've had customers drive 30+min away to come to me so I have a lot of loyal customers. Whether I have just the 2nd shop or just the 3rd shop, 75% customers would come anyway as they live between the 2. In my experience in these past months, I gained 25% new customers that were local to the new shops. The third shop has been doing much better because the demographics are better- my second shop is in a poorer neighborhood and sales have been abysmal from local customers - absolutely not able to upsell - even metal to metal rotors, they reject rotors and we have them sign a waiver.... I actually have had a few homeless customers. Now there are a small handful that drive from further South that are good but they would have came to me no matter what. I realized this last month so I decided to close the 2nd location and keep the third. It worked out because it wasn't too difficult to get out of the lease- worked it out so that I just had to pay 2 months rent upfront. Last official day open is this Friday. I keep my customers anyway and the 25% I lose out on are the customers that I don't want....

I think I will open another 3rd location though, but I think I have to be more strategic on the location - I will wait longer for better cash reserve and spend more on a nicer looking location with higher end clientele.

Just to give you guys some numbers- my first current shop opened last Feb. Last month the first shop was around $6-$7k profit - (after all expenses including payroll for myself).
2nd shop which I opened Feb lost $3k
3rd shop which I opened in March showed profit just south of $1k (after all expenses)

If you are planning on opening a second location, I'd do it as long as the location is good. I would make it at least 30 min away from the first one though and I'd only do it if your first shop is profitable. 

Do I regret opening the second location? Not at all, yes I lost money but going from 3 shops to 2 shops... 2 shops is now a cinch. 

 

 

 

 

Edited by Jay Huh
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Jay,

You do realize [or maybe you don't] that having those customers sign a waiver won't do you any good in court. The court will state that as the professional, you knew it was an unsafe situation and you will still be responsible. I always laugh when a customer says that they will sign a waiver relieving me of any liability. I then ask them if they can relieve me of the liability of the other person that they hit when they have an accident.

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1 hour ago, tyrguy said:

Jay,

You do realize [or maybe you don't] that having those customers sign a waiver won't do you any good in court. The court will state that as the professional, you knew it was an unsafe situation and you will still be responsible. I always laugh when a customer says that they will sign a waiver relieving me of any liability. I then ask them if they can relieve me of the liability of the other person that they hit when they have an accident.

I have a different experience from you that in court, waivers have worked for us, they are grown ups and they have to take responsibility for their actions. we always make sure they sign a work order, as it has notices, terms, and conditions under which we provide service.

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4 minutes ago, HarrytheCarGeek said:

I have a different experience from you that in court, waivers have worked for us, they are grown ups and they have to take responsibility for their actions. we always make sure they sign a work order, as it has notices, terms, and conditions under which we provide service.

Well it depends on what you're having them sign a waiver for. If the frame is rusting in two and you're working on the brakes you could have them sign a waiver that they know there is something unsafe about the vehicle apart from what you worked on. Or you could have them sign a waiver about a non safety item part that is failing but they are declining repairs. But when it comes to safety items, you are indeed the professional and you will be held responsible. Example: A customer brings tires in that have a lower load rating than is required for the vehicle and wants you to install them. Waiver or not, you will be held responsible if a tire fails due to overloading. And as I said before, the customer cannot sign a waiver protecting you from the liability of the other guy he hits.

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15 minutes ago, tyrguy said:

 Example: A customer brings tires in that have a lower load rating than is required for the vehicle and wants you to install them. Waiver or not, you will be held responsible if a tire fails due to overloading. And as I said before, the customer cannot sign a waiver protecting you from the liability of the other guy he hits.

How is this a valid example of not being responsible if someone gets hurt? We come across this very issue all the time with contractors and their light trucks, they register the trucks for 5k pounds but label them for 10,000GVWR and overload them over the rated capacity from the manufacturer's. You betcha we are on alert on this issue, an many a time I have a customer leave for the shop down the road that will install parts that are not rated for the vehicle. If you teach them and they don't want to hear it, good ridance I say, those are the type of people that hurts others out of stupidity.

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It's a perfect example. As long as you put a tire that has at least the load rating of the OEM tire you're good to go. It doesn't matter how  much they overload the truck. But put a undersized tire on that doesn't meet the OEM load rating and you've created a big liability for yourself.

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Hey tyrguy, definitely appreciate your concern. Yea it's tough when you have a car with ball joints about to pop out or severe tie rod play and they can't afford it. 

Once, I had a customer with the front inner pad completely gone - gone as in MISSING. I have actually seen several of those but only one situation where they declined the work!!! I think back then, I was only charging like $140 for pads and rotors...... $60 for pads including parts..... they ignored my advice and demanded their car back. The husband gets in a newer car, the wife and kid gets in the car with no brakes.......

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  • 1 month later...
On ‎7‎/‎20‎/‎2017 at 8:43 AM, tyrguy said:

 Example: A customer brings tires in that have a lower load rating than is required for the vehicle and wants you to install them. Waiver or not, you will be held responsible if a tire fails due to overloading. And as I said before, the customer cannot sign a waiver protecting you from the liability of the other guy he hits.

First, I realize this is an old thread, but in your hypothetical situation you would want an indemnification agreement. A liability waiver is something different, and like you said, wouldn't help.

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