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Posted (edited)

Hey guys and gals,

I am in the middle of putting together an offer for the purchase of an existing shop. As you can imagine there are a lot of things and variables to consider. I was hoping to get some feedback on things people they wish they had done differently or suggestions in regards to buying a business, structuring the sale etc. For instance did you purchase the business and the real estate? Was it an asset sale or stock sale? Anyone advice on how to get a group of guys that have worked at the same place for 20 years on board with your style of leadership and plan for the future? The shop I am interested in has a good reputation in the community but also everyone is pretty close to retirement age.

 

Thanks ahead of time for advice.

Edited by Sean
Posted

Hi Sean -

 

I was involved with collision shop take overs while involved with a conversion franchise company and really open my eyes to knowing your numbers and knowing when to bring the experts in to confirm what you know. There's no crime in staying "I don't understand" or "That doesn't make sense"

 

With regards to existing staff - "Process does NOT drive people - People drive process - therein lies the challenge" the folks staying on need to be convinced to be on board and would find it hard to believe if you were to have a heart to heart with the soon to be former owner - half the is the reason for the sale was staff wanting there work environment to be what they wanted it to be and not the bosses and the other half haven't a clue or don't care.

 

Think CPA! Think an outside CPA strictly numbers not personal.

 

Good Luck Jim

  • 3 months later...
Posted

Numbers numbers numbers. If the numbers work and you are going to have the right people it's a win win. If either of those are in question then I'd reconsider. It's really hard when you get tunnel vision and don't deluxe you're buying something that is losing money then have to try and then turn it around.

Posted

There are a lot of things to think about.

 

1)Get someone to crunch the numbers and tell you what it is worth. Most owners want more for a business than what it is worth.

2) What kind of financing? Is it cash up front or will the owner finance? If the owner has skin in the game they are more likely to be helpful after the fact,

3)Is the building one that you want long term and is it in a desireable location? If the building is good and the location is good you want to lock it up long term either by purchase or long term lease. However, if building or location is not the most desireable you may want the flexibility to move on at a later date. However, you do not want to leave a location and have a succeeding repair shop steal some of your good will and customer base.

4)There should be some type of non-solicit, noncompete clause that the seller cannot re-enter the automotive business for a specified time period and distance from the current location.

Posted

You are getting valuable information from your fellow ASO members. The more information you obtain upfront, the better. You need to create a plan, study the current business model, the competition, the demographics in the area. I would advise seeking help from business people in the area, bank loan officers, your attorney, accountant, etc. I can say one thing, the fact that you are asking the right questions is a great place to start. Too many shop owners were mechanics on a Friday and a shop owner the following Monday...not good. I was one of those early on.

 

The biggest asset you will have is your understanding of the numbers and business management. Move slow and seek help from the pros. As Jim Said, there is no crime in not knowing.

 

Good luck and keep us updated!

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  • Have you checked out Joe's Latest Blog?

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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
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