Chance to have waiting room/street front visibility?

[sparkerauto]

Hello Everyone! So I'm looking for some input. I have the opportunity to rent out the adjacent building to my shop. My shop is located in a strip plaza but in the back so I have no street visibility (only a main sign and I put out a sidewalk sign to let people know we are back there). The business that is connected to my shop just went out. The landlord is now renting the building out. I'm debating on if I should rent it out and have the street visibility and be able to change that into my waiting room and front desk area. I'm thinking the street visibility alone will attract more customers and pay for the rent and what not. I currently have a 4 bay shop tucked in the back with no waiting area. He is looking for around $1,500 for rent a month. Please let me know what you guys think. Thanks!

Edited August 24, 2017 by sparkerauto

[Wheelingauto]

According to the benchmarks I follow rent should be 5% of sales. If I were to add it to current rent and then benchmark it would it equal more than 5%? If so how much more do you have to do in sales to account for the increase in rent. Will the visibility bring in that much more business?

The space sounds like it will not produce but maybe give the ability to produce more out of the current space? Will it give you better image not based on visibility but perception when a new customer walks in? All of these things should be considered.

-also-

You currently are a tenant in this complex and I suspect in good standing. I would attempt to negotiate a better rate (possibly giving longer terms) and using that to my advantage. You've proven to pay rent and be a responsible tenant, the landlord should prefer to rent to you and give that more consideration than someone off the street.

Good luck!

[xrac]

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[AndersonAuto]

I looked at Google maps for your location, and I'm skeptical. I'm assuming you're referring to the Key Credit Repair location. You're talking about doubling your square footage, and it doesn't look like you could add additional bays there. It doesn't appear to be deep enough to do much with aside from a waiting room and an office for you, plus a whole lot of JUNK that will inevitably accumulate. Your service desk would now be up front with the waiting room, and would be a real PITA to get to the shop. Although maybe not as bad as what you would have. It looks like you'd have to go out a back door from the office to get to the shop. You or your advisor will be less likely to make that trek as often as you should. It's an inefficient way to do things. Been there done that.

A little quick math based on my experience. I'm going to assume you're probably doing right around 45-50K per month in sales. I'll also assume that since you're in similar square footage to Key Credit, that you're paying essentially the same rent. Assuming 50K sales, adding this space puts your rent factor at about 6%. A little high, but doable.

Assuming you do 50K a month in sales, at a $450 ARO, that puts you right at 5 cars per day. If you increase your business due to the increased visibility and no other marketing effort, you can at best expect another 2 cars per day. That puts you at 7 cars per day in the parking lot, plus your carry over, so figure on 12 customer cars in the parking lot on any given day. Add to this your car and your employee cars. Figure 3-4 more parking spaces consumed. So that's 15 or so parking spaces needed, not including any abandoned junk. If you take your boat home, I count 13 places to put cars, assuming you're jamming cars into the empty space near the dumpster and double parking behind at least one of your 4 marked spaces in the back, and parking along the east side of the front building. Assuming that at least a couple of cars will be inside the building, again, doable. Not easy but possible.

The real question is, are you doing at least 50K per month in sales, and how are your profit margins? If you're not doing 50K or more in sales with good net profit, why not? I can assure you, lack of visibility is only a small part of the equation and if the rest of the operation is inefficient, adding the extra expense will make it worse, not better. I've been in your situation, only worse.

My old shop started out with 3 lifts plus 2 flat stalls. I did have a waiting room and office, but I was behind a construction company in the back of an industrial park one building away from the dead end. No street visibility, no drive by traffic, plus an inefficient operation. The one thing I had that you don't is parking. When the construction company went out of business I took over their space. The main driver was that I could add 2 bays where my old waiting room was. My marketing was complete crap back then, and it took YEARS to increase my car count to make proper use of the space. I was also now far removed from the shop, but not as far as you will be, and it made the operation even more inefficient. 

Unless you have the money to burn every month, plus cash laying around for the remodel, and have an efficient operation that doesn't require your constant input in the shop, I would advise extreme caution.

 

[sparkerauto]

The building actually connects to my shop. landlord said he would open the wall and add a doorway right into the shop so there would be no walking outside and around to get to the shop. Yes parking is tight but not as bad a you think we have plenty of parking on the other side of building also. (the boat is home now).  Our sales is right around 50k a month. I was hesitant on doing this that is why I'm asking for opinions. I just figured it could be an opportunity to get street presence and also have waiting area to cater to customers. 

[AndersonAuto]

So the next question is, what are you going to do besides "visibility" to drive the extra traffic to your shop? Remember, your expenses are not just the rent. Utilities and insurance are going to go up, and not just a little. I'd figure on doubling your current utility bills. Maybe more since the new space will be air conditioned in the summer. Then if you're going to do the necessary marketing, it's expensive. On and on it goes. It won't be cheap. It could be made to be worth it, but it won't be cheap, quick, or easy.

I'm going to guess that you're still the lead tech in your shop, plus you do the bulk of the advising. When you move the service counter to the front, you'll be removing yourself from being a tech, or you'll be hiring an advisor. What's your plan for replacing yourself in the shop? How much will an advisor increase your expenses? If you don't increase your sales right away, can you afford adding 50-60K to the expense side of the ledger and still take a paycheck home?

Trust me, I'm not risk averse. I've been there and done that. The president of my old bank told I'm crazy for even thinking about it, so I'm not saying don't do it. I'm saying to go into it with your eyes wide open and know that it's going to kick your ass for a while.

 

[sparkerauto]

I send out flyers every 3 months or so, Facebook, google ad words and what not. I do have a lead tech, I still fix vehicles but also am the advisor too so If I did make this happen I would have to hire a full time advisor or give up fixing cars and hire another tech. so yes it would be a big decision and drastic change of how things are run here currently. thank you for your input. 

[Wheelingauto]

3 hours ago, xrac said:

 

5% seems low to me.  Are you able to do that in the Chicago market?

5% was the benchmark used for both RL Oconnor and elites 20 groups. Our rent is less than 5% of sales (currently 110k annually)but we also are triple net and in Crook county Illinois where property taxes support the finest crooks there are (currently 60k per year). Overall we are at 6.8% and paying average rental rates for our area.

I own the building as well.

[Wheelingauto]

12 minutes ago, sparkerauto said:

I send out flyers every 3 months or so, Facebook, google ad words and what not. I do have a lead tech, I still fix vehicles but also am the advisor too so If I did make this happen I would have to hire a full time advisor or give up fixing cars and hire another tech. so yes it would be a big decision and drastic change of how things are run here currently. thank you for your input. 

In your vision, how will this move improve the business other than visibility and waiting room? How will the business grow? What are the projected numbers and how will you afford the increase in rent and people? How well is the business doing now?

Like Anderson, I once rented 2200 sq ft. I expanded into 12.5k sq feet overnight and was able to survive the growth but it was not easy. It also dramatically changed my role in the business.

[Wheelingauto]

Anderson did you a favor by looking on Google Maps. I suspect if you do expand people will be encouraged to park in front of the glass shop, or on the edge of the front parking lot to access the new office. Wont take long before someones bitching because you have too many cars are up front or there's no more parking. Look at my lot, we have like 8 spots up front and we handle like 24 cars per day. We are constantly shuttling cars in front and in back

https://www.google.com/maps/@42.1248906,-87.9506014,194m/data=!3m1!1e3

 

[aysauto]

What is your appetite for growth?  Will landlord let you make structural changes to these buildings?

Like the others, when I look at these two buildings I see a space much larger than your current building that could go mostly unused... or if the answer to the questions above are positive I can see the opportunity to turn your garage into a 6-bay operation. You could poke two holes in your current building and move out all your office/storage space to turn that into a five-bay garage. Storage space and service desk would move into the back of the new building to take more advantage of that footprint. Your lobby and other offices would sit up front. As a bonus you could add an alignment bay in the corner of the new building that juts out into parking lot.

This doesn't fix parking situation (likely makes it worse), but does add a way to grow your business into decision of other building.

[mspecperformance]

I would ask for a lengthy rent concession if you go with it. Consider time for construction and explain to the landlord that you are LONG TERM but the space you are taking over is not for direct profit generation but rather indirect (location, marketing, waiting room). Crunch the numbers and make an educated decision. Fortune favors the bold!

[carolinahigear]

Hello!

I also looked at your place on Google Satellite. If you sign a lease you will be LOCKED IN for rent, power, maybe insurance and taxes (depending on your lease), so I am offering my thoughts and coaching tips.

1) We're all in this business to make money, so I recommend investing $800 to $1200 per month on marketing to increase car count and sales. You will not be LOCKED IN to this expense: it will be optional. I do recommend at least six months commitment to make it work.

2) Also, at my shop, we make our most money on cars that are dropped off and no one waiting. WE do ALL WE CAN to keep people from waiting. We use Uber, our driver, and whatever it takes to take them home, to work, shopping, to the Library, Etc. so we can do a quality inspection and sales job.

3) On your marketing, just tell them your shop is right behind the cleaners. Are all the parking spaces along the back lot line yours? It looks like you have plenty of parking right at your shop. If the prospect were to come to the front door on the street it looks like they would have a hard time figuring out where to park.

4) Many of us have shop layout and land situations that are not ideal, so I know how you feel about wanting a street location, but I have a feeling if you spend $1500 a month on that space you will tire of it very quickly.

 

Best Regards,

 

Hi-Gear