Some say the proverbial dark clouds are forming on the horizon, heading this way fast. Consolidation within the industry, manufacturers selling direct and/or online, shrinking profit margins, rising employment costs, a shift toward digital, competition from big box stores and car dealers – I could go on. The combined perfect storm of pressure upon the existing small business model for independent tire shops is forcing an evolution within the marketplace.
All of this begs the question: Is it even possible for an independent tire dealer to remain “independent” and thrive in this environment? And more importantly, how can you position your business to best compete and prosper?
Last month we honored Lex Brodie’s Tire, Brake & Service Co. as our Tire Review Top Shop Winner. The Hawaiian-based business is literally an island unto itself, building its business without the support of warehouses, dealer groups and marketing partnerships. They focus their resources, prioritize and make it happen – from their service philosophy (turning away or referring out work that isn’t in their sweet spot much like a medical doctor would) to marketing within their communities and online – the team remains open to its own evolution to best manage the changes within the marketplace.
But many shops may not be willing to (or have the resources to) commit to the shift necessary to manage the trends within their own organization – especially when there are other options open to them, such as joining a franchise, dealer marketing network, co-op or other form of partnership. For some it makes sense to take an easier path, to hunker down during the storm, seeking protection in the strength of a larger network. Sure it sounds great, but is it worth the price? And is it worth trading off some of your independence?
I recently spent some time with the good team at Big O Tires, part of TBC. The franchise group currently has 387 franchisee-owned locations in 20 states as it continues to grow its North American footprint. For about the price of what it costs for an experienced full-time marketing staffer, you get yourself a bevy of resources to help grow your location, from digital marketing and SEO to coupons and in-store promotions. They also provide updated product pricing and promotions on your/their website, continuing education, regional dealer groups, buying power, recognition within the marketplace and more.
But all of this comes at a price. Taking your family name (or existing business name) off the side of the building and replacing it with a Big O Tires sign can be gut wrenching for some. And it’s never easy to release control, having to accept the practices and policies made by people in a corporate office somewhere. Even though you “own” it, the internal struggle remains between pure independence vs. strength in numbers.
Even so, auto service franchises including tire stores are an attractive option to people just getting started in the business, taking years off the learning curve, and for investors looking to diversify by owning a stable, profitable business model. Even as some shop owners struggle with the perceived negative market pressures, outsiders coming into the business see opportunities – especially as consumers are keeping their vehicles longer, requiring tire replacement as well as ongoing vehicle maintenance and service. Compared to other industries, it’s not a bad place to be. Shops run by numbers people with limited in-bay experience can be very successful, which makes a turn-key business model even more appealing.
If you’re considering buying in (or selling out, depending on who you talk to), some questions to ask yourself:
Are the brand requirements and expectations in line with the way you prefer to operate?
Will you miss having your historic business name on the sign?
Will your business be able to stand out in your area or do you become one of many who are part of the same program (like when someone searches “tire stores” on Yelp or on their mobile phone)?
Do the benefits of consistent marketing, time-tested processes, buying power and support services outweigh giving up control of certain aspects of your operations?
Are you comfortable with a shift from “independent” to “independently owned”?
Of course, in addition to franchises there are other partner models that could make sense, depending on your business needs and goals.
This takes me back to my initial question: Can you survive without being part of a collective, without the support of outside affiliation?
My answer is Yes. But regardless of the path you choose – to go it alone or to join a franchise, partnership, network, etc. – all require you to make an increased investment, focus and commitment to your operation’s success. After all, you should do more than survive the storm – the real goal should be to have the winds of change propel your business toward real prosperity and sunny skies ahead.