Auto repair shop staff check auto repair software

10 Tips Before You Buy Your Second Auto Repair Shop

Over the past two years, many top shop operators have learned how to improve their systems, leading to stronger profits and teams. As a result, they have started thinking about adding a second auto repair shop – or more.

At the same time, many shop operators did not keep up with changing technology, such as using shop management software. Without a strong business culture to keep their people, they struggled to thrive. In the end, they put up a flag to signal that they would sell to get out or retire after 40-plus years in the shop.

I’ve heard from them all as host of the Remarkable Results Podcast. I have also also met young service advisors, managers, and technicians ready to step up to store ownership.

As the aftermarket’s premier podcaster, I share cues and lessons from senior leaders so you do not make some of the same mistakes on your journey. It is harder than you think.

Are you ready to buy a second auto repair shop?

What do you need to consider when making a move to a new location? A nice way to overcome a runaway train is to have a solid handle on these following business principles. These are not a complete list but will give you a strong launching point to consider if you are ready for location growth.

Caliber owner Joe Richards thanks Shop-Ware after buying its shop management system and auto repair software platform

1. Build a strong company culture

Your culture keeps and attracts the people who want to work for you. It comprises your values, what we do, believe in and who we are. Also, your ethics rule inside your culture, including your mission and the work environment.

Established cultures attract people who want to work for you and customers also see and feel it. It means caring for each other personally and as members of the team. For some, it may sound sappy, but the top shop operators will point to culture as the glue for their organization.

If you don’t have a strong culture, you may find it challenging to add a second auto repair shop. In that case, hire a coach or consultant to help you.

2. Put yourself in a stronger financial position

The pandemic taught us a great lesson about having cash reserves for three months to pay the bills. Yes, auto repair is a recession-proof essential business, but cash helped many get through the uncertain times until business picked up again.

Cash reserves don’t grow by accident. You put a percentage of your profits into a reserve account and use the ‘Profit First’ model to manage cash.

  • If you do not get a monthly financial statement, you are basically treating your business as a hobby. If you don’t know how to read a financial statement, get a coach, consultant or accountant who knows our industry.
  • Financial statements show numbers like gross profit, sales, debt, net profit, and costs. How can you manage these areas if you don’t see the numbers and understand the indicators and goals of your business and the industry?

Once you ‘see’ where you are heading, you can maneuver your sales, margins, and costs to produce results that can sustain your auto repair shop and remove financial stress. Then, you can plan for a second auto repair shop.

3. Improve your processes and systems

So many owners leaped into a second auto repair shop only to discover they didn’t have duplicatable processes and systems. Besides marketing, building a new team and teaching the culture, you need processes and systems copied in the new location.

I’ve learned over time that great processes and systems win wars. By wars, I mean any challenge you may have. So many great aftermarket coaches speak to the simplicity of creating great processes. They need to be created by the people who are most affected. It only needs to be one page, bulleted and available online as a reference to teach when needed.

It goes without saying that a modern cloud-based shop management system can make a huge impact on your company. This applies no matter if you have plans to grow into a second auto repair shop or not.

Meanwhile, access to repair shop analytics allows you to see critical metrics that show the team how the company’s goals are being met. Today’s powerful shop management systems can become a competitive advantage for you, especially with a second auto repair shop.

Auto repair shop dashboard for analytics within a shop management system

4. Commit to training

Not just for technicians but for owners, managers, office staff, and service advisors. Today, a competitive advantage is getting knowledge and using it to build yourself and your team personally and professionally. Great companies pay for all training and the time away from work. How can I do that, you ask?

Set a training budget. You may need to start small if you are not financially strong, but you need to start.

Ask the shop owners who close down and take their entire team to events like Vision KC, ASTE, AAPEX, and others. They gain a huge advantage as a team and company. Anything can happen if you plan it.

Another big reason for training is technology. It is ever-changing and moving faster than we can absorb. Staying on the cutting edge of new tech may not be a priority, but it will be here sooner than you think and could mow you over if you are not prepared.

5. Network with other shop owners

Joining an auto shop peer network or 20 Group isn’t necessary to grow stores, but it can help. It can help if you are a single shop owner in significant ways. You discover that almost everyone has the same issue you have or has overcome it and will share their solution.

This gives you a perspective that you would never get if you live on your own island. You can find these groups inside your coaching company, also locally or regionally.

Many shop owners have learned so much inside their networking group that they love to give back and help others. Keep in mind if you join a local group, don’t worry about your competition. There is enough business for everyone.

Don’t be bashful about sharing your ‘secret sauce. If nothing else, sit, listen and learn, then assess how to take those ideas and make them your own.

Man in black ballcap demos Shop-Ware shop management system to a lineup of people

6. Grow into a stronger leader

Do you split your time between your first and second auto repair shop? Will the store you leave to help jump-start the new one survive without you? If yes, then you’ve done well putting others in charge. (There is an art and science to elevating your people into leaders on their own account.) If not, you must give decision-making power to others. But that does not just happen; you need to coach and lead your team to do business as you would.

Leaders are not born. They commit to reading, finding a coach and attending seminars to learn to be a good leader. They know how to:

  • be humble

  • have self-confidence

  • deal with stress

  • overcome fear

  • develop skills

  • guide change

  • stay positive

7. Learn how to buy a second auto repair shop

Many moving parts shape a deal. You need due diligence while assessing, evaluating and discovering all aspects of the business you want to buy. This is not just a day’s work of research and time spent with the seller.

If you plan to buy an existing shop, do a thorough review of finances, people, marketplace, customers, facility and equipment. Overturn every rock you find to understand just what you are buying with your second auto repair shop.

8. Plan ahead to staff the new location while getting your entire team on board

Support from your current team will make for success or not at your second auto repair shop. You may want to hire more staff while waiting for your deal to close or a new location to open. The operative word in this title is ‘plan.’

Sure, you may want to keep the transaction confidential. However, having key people helping your dream come to life will help you hit the ground running on day one of the new shop.

During your due diligence, assess the current staff at the second auto repair shop you are looking to buy.

9. Always market

Plan a marketing campaign for the new location. How will you embrace the current customer base? Are they your type of clients? What are the demographics of your market? Who will run your social media for the new location?

Always market. Never stop in good times or bad. Keep your name out there. Be sure to excite your social media sites with the new and the exciting things you do in the community. Consider hiring a marketing expert to drive your social presence and website to help drive new business.

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10. Temper your excitement or decision with a five-year plan

Above all, take time to verify your numbers. Test the temperature of your team. Do some due diligence on your current operation to be sure they are ready. Remember just because you can doesn’t mean you should. Go in eyes wide open.

A nice way to overcome a runaway train is to have a solid footing before buying a second auto repair shop. You need to create a five-year plan. Look at your financial goals for the next five years. That will reflect the time you or your lender set to pay off any loan taken to buy the business (not the property).

You will need many more pointers, but this is a good start. As always, listen in to learn just one thing on the auto repair service aftermarkets premier podcast. Thanks for listening as I wish you continued success.

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