Should I Open a Second Auto Repair Shop?

Only once the first one is humming, and almost nobody asking the question is there yet.

Two sites can mean two lots of revenue. They rarely mean two lots of profit, and in twelve years of this I have advised a great many owners against it.

The thinking is reasonable on the surface. More sites, more profit, wages from two shops. Some owners run one mechanics workshop with a few team members and are perfectly happy. Others are a bit entrepreneurial and want the thing to grow into something bigger. There is nothing wrong with the ambition. It is the sequence that goes wrong.

What happened when I nearly did it

Back when I owned a workshop, we went a long way down the path of buying a second site as a going concern. Contracts exchanged. Then we discovered the seller had started reducing their own working hours, which meant the business being handed over was not the business we had agreed to buy.

We were able to back out, and I have been thankful ever since, because at that point I had exactly the mindset I am describing. Two sites, two lots of profit, two lots of wages.

Getting out of it gave me the chance to look past the part everybody pictures, which is the second shop opening and money starting to come in.

The first thing that breaks it

The second site will never get as much of you as the first one did.

You cannot be in two places. If you go to site two to get it off the ground, site one needs something standing in for you, which means management, and management is not you. Our whole job is building shops that run without the owner, but even then you are sitting in the background giving it some operational attention.

With two sites, that attention is halved. One of them is going to lose you.

The second thing, and it is the bigger one

If shop one is not firing at 110% across the board, shop two will not be either.

You set everything up for shop one. You will go and set everything up for shop two as well. You might be more experienced the second time around. But if you have fundamental problems with your margins, your upselling, your customer service or your cash flow, you will simply repeat them at the second address.

You will transfer your team issues, your cash flow issues, your retention issues and your customer service issues straight across. That is the part owners do not think about, and it is the one that does the damage.

Watch: the whole thing, including what to check before you go near a second lease, in under nine minutes.

Does buying into a group or a franchise change it?

Not as much as you would hope.

Buying a subsequent site through a franchise is common, and you are buying something closer to a business in a box: they tell you the branding, they tell you what the website looks like, and you would hope for a complete operations manual, although in Australia most franchises do not offer that as well as they could.

It still does not fix shop one. If the first is not producing the result you want, the second will not, and neither will the third. I can think of one multi-site franchise owner in Australia who is about 80% of the way there, and for a multi-site owner that is a genuinely good result. That should tell you something about how hard this is.

The test to run on shop one

Before you look at a lease, a listing or a franchise pack, answer these honestly about the shop you already have.

• Are the right systems actually set up, or are they in your head?
• Are your customers returning?
• Is the cash flow good, consistently, rather than in good months?
• Are you hitting the profit benchmarks?
• Are you already drawing a proper salary AND taking profit distributions from shop one?

That last one is the gate. If you are thinking shop two is what will finally pay you a salary, the thinking is upside down, and I would not advise going ahead.

Get shop one humming and ticking every benchmark before you even consider duplicating it somewhere else. An automotive workshop that works is a thing you can copy. One that does not is a thing you will copy anyway.

Questions owners ask

How do I know when shop one really is ready?

When it produces a repeatable income result and a repeatable profit result at benchmark, with you not holding it together day to day. Repeatable is the word doing the work. One good quarter is not it.

Isn't a second site how you build something to sell?

It can be, and plenty of good businesses have been built that way. The order still holds: a buyer is purchasing a system that works, and two sites running on guesswork are worth less than one that runs without you.

What if the opportunity is right in front of me now?

Then look at what is actually being sold, closely. In my case the seller had quietly cut their own hours, so the trading figures no longer described the business on offer. Opportunities that will not survive proper due diligence were never opportunities.

What about my own time, won't a second site buy me more freedom?

The opposite, almost always. If your personal downtime is already short, it evaporates. You now have twice the shops generating twice the worries and taking up twice the head space, which is the thing that stops you relaxing even when you are not there.

Could I put a manager in and stay out of both?

Only if shop one already runs without you. If it does, you have the system that makes a second site viable. If it does not, you are about to find out what your systems are really worth, at two addresses, at once.

The shift

It sounds great on the surface, owning two shops or more. Dig into what is actually happening in the first one instead.

Tonight, write down what shop one paid you last financial year: your salary, and your profit distributions, separately. If the second number is blank or embarrassing, that is your answer, and the work is in the shop you already own.

If the numbers have never quite made sense, start with Poor to Profit. It is free, and it is the grounding most owners were never given.

Want to see shops that got the first one humming? Our clients are named auto repair shop owners, and garage owners across five countries, on camera, telling you what changed.

More on this topic: all Performance articles.

Whenever you're ready, here's how we can help.

• Free. Shop Talk, a 30 day reset for auto repair shop owners, and our free resources.
• Under $50,000 a month? Auto Superstars Academy, $997 one off. Your service advisor is often where the first shop's margin goes.
• Over $50,000 a month? The Engine Room, where we get shop one to benchmark before anyone talks about shop two, with one on one coaching on demand from a business coach who is a current or former auto repair shop owner.