In the final of this three-part series, it’s time to figure out which route to expansion is best for you
OK, you’re profitable and your shop is running without you, like a well-oiled machine — congratulations, that in itself is a huge feat! Now, it’s time to make a big decision: Buy an existing business or get a building and start fresh.
Both options have pros and cons, it just depends on your time and finances.
Buying has some great pros: You will have staff, customers, a building and equipment all wrapped up in one purchase. While this all sounds like a dream come true, there is the possibility that the staff don’t want to do things your way, the customers are not your ideal clients, the building is not in the best location and the equipment is outdated. These are all things that you will need to take into consideration when going through the due diligence stage of the purchase.
In addition to these operational pieces of the puzzle, you need to evaluate the business’s financial viability. The business should be profitable enough to pay all the bills (including payroll), pay your business loan and allow you to save for upgrading equipment in the future.
As well, the business will need to produce enough profit to hire a replacement for the owner, if they work in the business as a tech or service advisor. Hiring an accountant to go over the business’ finances with you will ensure that you have all the information necessary to make an educated decision about your potential purchase.
In addition to these operational pieces of the puzzle, you need to evaluate the business’s financial viability.
Starting fresh also has some pros: You have more control over where the shop will be located, you can outfit the shop with equipment that is specific to your needs and you can hire fresh new staff, who are excited to start a new chapter with you. As well, you could open a shop with lower out-of-pocket costs, considering that you could lease a building, lease equipment and basically run like a start-up, buying what you need as you go.
The major downside to starting fresh is the likelihood that this process will take more time and money than you budgeted for. Locating a building that works for you, setting up equipment, training staff and finding the right clients can be very time consuming and costly.
Use the resources you already have, such as staff and suppliers, to help you find a great building, source equipment and train a new team. Also, keep in mind that you have already built a great client base, so increasing your advertising budget and adjusting your message to include your second location, will drive the right clients to your door.
Ultimately, the choice to start a second location is a big one whether you choose to buy an existing business or start fresh. Make sure that you have a strong support system at home and at your first location, as you will need to lean on the people around you in many stages of this project. Most importantly, have fun, this is an exciting new adventure.
Happy Holidays to all of you, I hope you have the chance to rest and spend time with loved ones at the end of the month. Looking forward to another great year in 2025!
Erin Vaughan is the owner of Kinetic Auto Service in Regina
This article originally appeared in the December 2024 issue of CARS magazine.
Leave a Reply