Succession Plans for Your Auto Repair Shop
In a recent industry study conducted by BOLT ON TECHNOLOGY and PTEN Magazine, more than half of shop-owning respondents indicated that they plan to retire in the next ten years. While many shop owners will be moving into the next stage of their life, what could this mean for the future of their shops?
Planning For Your Shop's Future
Many shops become too wrapped up in their day-to-day and neglect planning for their future. But there comes a time, whether a shop owner is prepared or not, that they will not be able to continue running their business. Most shops today either have to close their doors or sell their property unless they have a succession plan in place.
Why Does Your shop Need a Succession Plan?
A 2018 survey delivered by Wilmington Trust revealed 58% of small business owners do not have a succession plan. These small businesses are put at risk, and often fail, when owners or key stakeholders retire, die or become incapable of continuing with the business. However, a good succession plan can help:
- easily transition both management and ownership
- reduce uncertainty for stakeholders, family members and employees
- provide for heirs financially
- maintain a comfortable lifestyle in retirement
- prepare the business to handle unexpected events
Whether retirement is quickly approaching or quite a ways off, planning for the future can give peace of mind and increase the longevity of the business shop owners worked hard to build.
TIPS FOR PLANNING A SUCCESSIoN PLAN
Creating a detailed succession plan won't just prepare a business for the future, but ensure the strength and stability of a business in its current state. The following tips will help set the motion in play:
- Determine how to exit the business: Will the shop be transferred to heirs, sold to business partners, key employees or an outside buyer, or acquired by a larger brand?
- Identify key leaders and successors: Can you identify a key, or "go-to", employee who can take on the owner's responsibilities in the event they are no longer able to? How are you nurturing that relationship?
- Document and automate processes: Technology and strong processes can help shops run efficiently in the owner or manager's absence. In addition, a well-oiled business is valued higher if the owner decides to sell because the function of the business does not rely on the owner.
- Understand the shop's value: Conduct a business valuation to understand how much the shop is worth. The valuation helps to develop a retirement strategy, properly value shares, and attract potential buyers or investors.
- Focus on the long term: Planning for the future is worth the initial time investment. Plan for the long term success of the shop, rather than the short term wins of the day.
As the auto repair industry ages, it's important to keep retirement plans and succession plans fresh. By focusing on the end game, auto repair shops will be better prepared for the unexpected. For more information on how to build processes that increase the efficiency and value of a shop, speak with one of our experts and see our software in action.