There is an age-old question for tire dealers to consider: Do I buy or lease? That question extends down from the building itself to the equipment inside. But it’s the building itself that costs the most all around.

Tire dealers need room. But should they buy or lease a structure? Sometimes a situation dictates what will happen, but other times a dealer can choose. Of course, each side of the lease/buy argument has its pros and cons.

These are decisions that shouldn’t be made lightly, and you should even consider the advice of a business consultant before doing anything.

Decisions on buying a building vs. paying rent need to be based on solid business factors, not necessarily what you think is a good idea.

Here are some advantages to owning the building your business is housed in:

• Your mortgage will always be cheaper than any lease price and won’t increase as quickly. And you will also have an easier time expanding when you own the structure.
• If real estate prices rise, you’ll be able to capitalize should you decide to sell the building. That doesn’t happen when you rent.
• Owning the structure might help your psyche. It sounds strange but pride of ownership is a tangible feeling. It lets you know you’ve arrived.
• There are certain tax advantages – depreciation, deductions for mortgage payments and repairs – that can help you in the long run.

However, there are some drawbacks, like hidden costs such as up-front capital for a down payment. You’re now solely responsible for building costs, repairs, utilities, all of which will take time away from your business. Your mortgage payments could reduce available cash for expansion and you’ll have to pay property taxes.

Sometimes owning your own building can mean owning a building that also has other businesses in it. Many businesses find that the revenue from leases paid by other businesses in the building can offset the cost of their mortgage. In essence, you end up paying very little for your space and in trade you only have to take care of maintenance and repairs.

When you go to buy a building, consult a professional with experience in business real estate. You may be able to sell tires better than anyone else, but you could miss the little things when it comes to purchasing a building. Things like quality of neighborhoods, traffic patterns, future value of land, and hidden structural problems.

Up and Running
Opening a second location is a big task for a dealer. The money, the work, the stress of whether or not it will succeed. It can be very taxing. And dealers can get themselves into trouble very quickly, especially financially.

Before you go plunking down loads of money thinking a second location is just going to take off and flourish, here are some of the major expenses you should consider:

• The building space itself. A good case can be made for spending whatever is required to get premium space. After all, walk-in traffic can be big business. It’s all about location. Space in a strip mall can be great, but leases could run high. Remember that with a new location, instant visibility can be the key to success or failure. If you feel that your current location is successful without being in the best location and you think you can make that work someplace else, that’s all right too. It would be cheaper in the short run, but you’ll have to work harder to drive traffic into the store.
• You’ll have to manage what tools and equipment your new location really needs. Just because your first location has certain kinds of tools and equipment doesn’t mean the second store needs them, as well. Audit your real needs carefully, and consider new tools and equipment you may need. The market served by your new store should dictate what equipment you’ll need.
• Salaries to train and employ more people. Your current employees aren’t going to work in two locations at once. You’ll probably have to add significantly to your workforce to open a new location. But, it’s a necessary expense and training takes time if you want to get it right. You’ll just have to grin and bear it when it comes to spending money on new employees.
• Marketing materials to advertise the new location. You need to let customers know you’re out there. Your regular advertising methods will work after the store has been open for a while. But at first, you’ll need to break out all the bells and whistles. Flags and banners probably wouldn’t be too far out of line, either.
  Marketing will probably be the biggest thing you’ll need to accomplish when opening a new location. You can have all the best tools, the best people, but customers have to know where you are. There are a few tips to that can help you get the biggest bang for your buck.
• Don’t create the highest quality four-color brochure advertising your new location right off the bat. This can be prohibitively expensive, both in the price of printing and cost of designing. Instead, consider choosing more modest and less expensive one- or two-color brochures and flyers.
• When advertising on TV or radio, don’t spread yourself too thin. Target your exposure to one TV channel and one radio station to start with. You’ll be able to expand as business picks up.

Marketing is a necessary expense for most new businesses, and must be carefully considered when putting together initial budgets. There are ways to market at very low cost, it may just take a while for you to find what works within your budget. For the most part, however, your marketing budget will be a significant part of your opening operating expenses.

Aesthetically Pleasing

Take some time and put thought into pleasing your customers with the appearance of your store. It sounds trite, but customers can be very picky and peculiar when it comes to choosing one tire dealer over another.

Customers judge everything in mysterious ways, so you’re not going to be able to please everyone. But if you can win over a few new customers simply with your decor, what happens when they realize you provide excellent service, as well?

We’re not talking about completely restyling your place. Maybe a newer and better selection of magazines, comfortable chairs for your customers who have to wait, a television and a place to entertain small children. Even a different color of paint on the walls. While service bays will get dirty, the same doesn’t hold true for display and waiting areas. A clean waiting room and bathroom will get noticed, especially by those hard-to-win-over female customers.

Here are some tips to consider if you’re thinking of changing the look of your business:

• Accept the fact that a change may be in order. Try to recall the last time you did anything different to your decor. If you can’t remember, chances are your business has become a little too stale and the time has come to shake things up.
• Visit your business like a customer would. Experience it from start to finish. Notice the look, how it makes you feel and what you could do to make it more inviting. Ask yourself if you would spend your hard-earned money in your shop.
• Ask a friend whose judgement you trust to shop in your dealership. Have them go through the place with a critical eye. Make them tell you what they like and don’t like, and if they felt comfortable. Their opinion will be less biased and more to the point than yours.
• Go right to the source. Ask customers what they think of your shop. After all, they are spending money with you. Put in suggestion boxes, ask them personally, but do not be defensive with them. Their opinion is important and the reason any changes should be considered.
• Ask your employees what they think. They’re there just as much as you are. Have them be creative and generate a lot of different ideas. Not all of them have to be implemented, but maybe a few can be pieced together to create a look all of you can be proud of.

Chairman of the Board Is the Customer

Input can be vital to a business. You need to know what your customers are thinking and why they think that way. Sure, outside consulting firms exist, but they’re expensive and don’t spend a lot of time in your shop. So why not go straight to the horse’s mouth?

Many small businesses opt to go with customer advisory boards. These acts much like a focus groups, and rather than hearing complaints, you get constructive criticism from your most important asset: your customers.

Customer advisory boards help a business by offering feedback from the people who provide your income, offering insight into why customers think the way they do, and it gives your customers a feeling that they matter.

To establish a customer advisory board, invite six to nine of your best customers – the ones you know by name – to an informal meeting with an independent moderator, maybe a friend or outside consultant. The meetings can be open to any discussion. Suggestions can be made, new ideas can be discussed. But make it clear that the board will not be making decisions for your business. The board doesn’t have to meet all the time – maybe three or four times a year. And you might want to find a way to compensate the members for spending their time.

A lot of good can come from learning what your customers really think – and how they think. A customer advisory board will require some time to construct, but in the end, the effort will pay off.