Thinking about opening a second location? Here’s a list of tips to keep in mind
If you’ve owned a successful shop for awhile, it’s tempting to think that you can easily duplicate your success with a second location. But there’s a lot to consider when you decide to grow. Adding a new location means double the staff, double the bank accounts to reconcile, double the equipment and twice as many vendor accounts to manage.
I’ve opened six shops and understand that figuring out how to handle the increased workload can be overwhelming. Having your processes and systems documented will help the expansion go smoother, but there are always bumps along the way. So, with that in mind, I’d like to share some “Do’s” and “Don’ts” to help guide your growth.
To get you started on the right foot, let’s dive right in with the “do’s.” I’ll cover the “don’ts” in my next column.
• Do pick the best possible location. I’ve seen too many shop owners choose a location that works for them, rather than their customers. It might be convenient to pick a shop that’s close to your original store or your home, but that’s not necessarily the location that’s going to draw the most customers. Instead, expand to the area that has the best possible customer demographics within a three-mile radius of its front door. Sometimes that means paying a bit more in rent or accepting less square footage than you wanted, but those sacrifices are worth making for a prime location.
• Do open with substantial cash in the bank. I’m not suggesting that you’ll need that money right out of the gate, but having it will help keep your stress in check and prevent you from making fear-based decisions. I suggest having a cushion of at least $25,000 and, ideally, $50,000. That will help you pay expenses, such as payroll, that you may not be able to cover from your initial revenues.
• Do make your money last. To conserve cash, use credit to open new accounts with suppliers and be creative when negotiating your lease. For example, ask about deferring your first three months of rent over a longer period of time. Typically, landlords want a steady, reliable tenant and they will bend over backward to help you achieve your goals. Since auto repair is usually a long-term tenant and occupies larger square footage, it makes sense for them to accommodate your requests.
• Do rely on experience. Try to open your new shop with a foreman and manager who have worked with you in the past and are well-acquainted with your systems and procedures. That approach will allow you to maintain consistency between stores and make it easier to replicate your culture and success.
• Do open big. Count down to the opening of your store like it’s the biggest event happening in your area. I always host a grand-opening celebration that includes free oil changes and other giveaways to draw interest. I also advertise heavily and make sure I’ve got all the signage and banners I need to get noticed.
• Do staff appropriately. I see some owners trying to run a new store with a skeleton crew. But that strategy can easily backfire if you get busy and you can’t accommodate your customers. If customers stop by and get turned away, those folks will tell their friends, which could create a negative perception about your ability to service customers. Remember, you only get one chance to make a first impression.
• Do train like crazy. My mantra is practice, practice, practice. And when I say practice, I mean everything – shaking hands, answering phones, how to fill out a repair ticket, etc. The staff should be ready to go when the doors open. They should also know the new store inside and out, so they’re not struggling to locate supplies or figuring out how to work the computers on opening day.
Implementing those strategies should position your new shop to thrive from day one. Next month, I’ll discuss the actions to avoid when expanding your empire.
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A nearly 20-year veteran of the automotive repair industry, Aaron Stokes grew his business from a one-car garage to a six-shop operation that includes a car rental agency. He is the founder of Shop Fix Academy, an innovative management coaching and training company offering AMi-accredited programs. In addition, Aaron hosts a weekly radio show on auto repair. Contact him at Aaron@ShopFixAcademy.com.