When to expand

[ncautoshop]

We've got an opportunity to expand, in a big way. The expansion would require a somewhat significant investment in equipment, and monthly rent. That being said we're maxed out at our current location, with 2 week wait in some cases. This would allow us to have 10+ vehicles inside at any given time.

Any advice? The opportunity was dropped in my lap out of no where. The building owner is a family friend, which scares me a bit.

The building is on a major highway, lots of traffic, and no other shop for 5 miles in any direction. Another plus is the location is very close to our current location. I'd be concerned he'd market it to another shop which could possibly impact our walk in sales. Our profit numbers are the best they've ever been, and we're finding production (revenue) to be limited by shop size. When big jobs come in it literally can bring our shop to a halt.

I'd rather not make a rash decision or a decision I won't be able to pay for, so I'll be taking a hard look at the numbers prior to making a decision as well.

Just curious if you guys had a guideline for expansion.

 

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[xrac]

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[ncautoshop]

Car count could exceed 150-200 with of a aro of 500+. We're right in a college town and popular vacation area with skiers bouncing us up through the winter months. I own my current shop, so no fear of it going elsewhere. We only have 2 bays (one upstairs and one down stairs) and one lift. Both bays are fairly small and the setup limit production. We can easily turn 40+ hours a week with good weather but we're severely limited during the winter months. If you ever intend to visit let me know. We've got cabins we rent!

 

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[xrac]

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[FROGFINDER]

My only issue is I like to own the property I work out of.

[John Pearson]

If you can afford it as of right now with no extra business go for it. I am having the same problem right now, the only problem is there isnt anywhere to move to.

[ncautoshop]

The last two comments bring up two concerns of mine. 1:not in a position where the business can run without me and my wife - if something were to happen that would be mess and could possibly damage a long term family relationship. I really like being where I am, if something happened little harm would come from it. (Were working on the policy's and procedures to make the business self sufficient but I don't think the building would be available when we're done at the pace we're moving)

2: the work to pay for the building rent is literally in the parking lot. I couldn't pay for the building with current workflow (as in the weather and work mix currently at the shop for the next month), but the increase in volume should address that. That's why I was so astonished by your revenue with one bay - then some things came to light 1 our work mix falls on the heavy side and many shops here won't take on the work we do 2. I've got a little girl and she comes first. I leave work at 5pm. No exceptions.

 

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Edited November 16, 2014 by ncautoshop

[xrac]

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[ncautoshop]

Will you have to add employees and hiw hard would it be to find the right help? Would there be a problem cash flowing the business during the snow months?

Cash flow should be fine with additional space/lifts, but it's still a concern for me. I'll do some planning and mock budgets and see what it looks like when I know more specifics on electric/heating bills, equipment financing etc...

Employees are going to be hard to find, and even harder quality employees. With our current work mix we could continue to move bigger jobs, maybe even more productively and be OK on the employee front. If we were to take on alignments and possibly more tire work I'd have to do some hiring. Valid concern here - I can think of 4 local independent shops with 2 openings or more for techs/tire guys

 

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[xrac]

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[FROGFINDER]

Double your prices for a month or two to see who really is loyal to you before you expand. Always give customers something good to see. Buy and Own along the way. Overhead is your enemy.

[Shopcat]

I had a shop owner a couple years ago that had a similar situation. I noticed that a disproportionate amount of time was spent moving vehicles around to accommodate new arrivals or to park vehicles that were ready for pick up. The shop production was impacted by this constant "parking rodeo". My advice to him was get a shop with more parking, and a larger shop. I advised him that bottom line is you get to a point and your shop is like a root bound plant. After careful analysis, the shop moved and now grows at a healthy pace.

 

You mentioned looking hard at the numbers. Consider what will happen if you don't move as well. Do your ROI and make an informed decision that works for you.

[mspecperformance]

ncautoshop, do you have an active living business plan? I made a move about 2.3 years ago and its something I would highly suggest to be done thoroughly before a move is made. I didn't and I have to figure things out as I go along.

[Joe Marconi]

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[ncautoshop]

The decision to expand, move, or open up another location is never easy. I found myself in the same position about 8 years ago. At the time I had a six bay shop with very little parking. There were times when you could not even enter my driveway. I had to make a move. Luckily, years back, I bought property adjacent to my shop and in 2008 constructed another 4 bay facility and a much larger parking lot. We finished the project in 2009.

 

The advise I can give is to run the numbers, know exactly what you will need to remain profitable, understand that you will need good people around, and build the systems and procedures that will allow the business to run without you having to hold everyone's hand each and every day.

 

If you read my early blogs, I outline the steps I took for the project.

 

http://www.autoshopowner.com/blog/2-joes-blog/

Thanks Joe,

We're the opposite. Tons of parking but only 1 lift that's somewhat unsafe and another low ceiling bay. About 60% of our work is outside and we've found ourselves spending more time moving cars than working on them. Another issue currently is the bays are not on the same level, making it more of a struggle at times. I'm meeting with the building owner today to determine some of the facts. I'll update when I know more. If I could invest the monthly rent on improvements here I'd rather do that.

 

ncautoshop, do you have an active living business plan? I made a move about 2.3 years ago and its something I would highly suggest to be done thoroughly before a move is made. I didn't and I have to figure things out as I go along. 

mspec, I must have clicked the post without knowing sorry for not replying sooner. Business plan - you mean the one in my head right? sure I know what my plan is!

Just kidding, we're working on one, never needed one when it was just me with no overhead but I need one now lol. It can be hard to find the time but it's slowly but surly coming together.

 

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[ncautoshop]

We're going to pass on this opportunity and consider staying where we are. With all expenses, new equipment and building modifications we easily would be looking at $8,500-9000 a month. I'd rather spend that on something that's ours! I did have an option to purchase at 1.5m but to be completely honest, financially I'm not prepared for that.

 

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[mspecperformance]

1.5 mil. yeah I wouldn't be either lol