Planning for your shop’s success in the future

Planning for your shop’s success in the future

Understanding succession planning before you need it is critical. This series is presented by Standard.

Picture this: you’re driving down the open road, the wind in your hair, the sun shining, and the scenery breathtaking. But eventually, you start feeling the need to refuel, rest, or grab a bite to eat. It’s time to start looking for an exit.

Plan carefully and you’ll find what you need waiting for you at the end of the exit ramp. Wait too long or just hope for the best, and, well…you might find yourself in a bit of an emergency.

Similarly, when it comes to your career as the owner of an automotive repair facility, planning for succession is akin to preparing for that next stage of your journey. Whether retirement is on the horizon or still decades away, the time to start strategizing your exit is now.

The importance of early planning

In a recent survey, it was found that nearly 80% of small business owners intend to sell their businesses to fund their retirement. However, shockingly, less than a third have a concrete plan in place. This discrepancy highlights a critical issue: the lack of foresight in succession planning among business owners. Many may believe that retirement is too far off to warrant consideration, but the truth is, the earlier you start planning, the better prepared you’ll be.

“Those numbers don’t work well, when only one-third are planning,” says Vic Tarasik, The Shop Owner Coach. “And, frankly, I think that number is overestimated.

When you’re young and spry, you may think, “I’m never going to retire. Why should I even worry about it?” At that point in your life, you’re not looking at what’s at the end of the road – you’re looking at what’ ahead of you. And that’s great. Your career may have just started – you’re looking to get through that week to get through that month to make that next several paychecks. So, when is it time to start thinking about succession planning?

Succession planning isn’t just about retirement; it’s about ensuring the longevity and prosperity of your business while securing your financial future. From day one of opening your shop, you should begin laying the groundwork for succession. This proactive approach allows you to shape the future of your business and mitigate any potential emergencies that may arise along the way.

“It might sound a little too early, but the day you open your shop, that’s when you should start planning,” Tarasik says. “I know it sounds counterintuitive but think about it: we know when we start our workday and we think we know when we’re going to leave. We know when lunch is, but there may be a lot of changes each day ahead of us. Consider at the years ahead of you. If you start planning 10, 15, 20, maybe even 40 years down the road, you can set a pretty darn good plan in place.”

What is succession planning? Why is it important to think about what makes it crucial for small businesses and especially for auto shops?

Understanding succession planning

At its core, succession planning is about planning for success. It involves breaking down your future goals into manageable steps and preparing your business for a smooth transition when the time comes. Much like repairing a car, a robust succession plan requires careful attention to detail and a methodical approach.

“You think about the term itself, succession plan, you’re planning for success, you are taking control of your future, and the way you take control of it is to break it down into simple, small steps,” says Tarasik. “Honestly, it’s just like repairing a car. For shop owners who came up in the technician ranks, they know how to take a car apart. They know how to put it back together. They understand that process. A strong succession plan has several good components in place when how much you’re going to need that way down the road, and then you just begin to enact it in place.”

For shop owners, succession planning entails identifying potential successors within or outside your organization, grooming them for leadership roles, and ensuring the continuity of your business beyond your tenure.

Identifying potential successors

Finding the right successor is crucial for the continued success of your business. You don’t necessarily know who’s going to be that next owner of the business or the next perfect person for your shop.

The next leader of your business could be a family member, it could be a non-family member. “I know a lot of shop owners who have family members, sons or daughters, who don’t necessarily want to take the shop over. The owner wants it to continue, but they recognize that their kids aren’t that interested in it, so they’ve got to find the next generation because they certainly have been doing good, they don’t want the operation to struggle when they leave. I know a number of shop owners who have ended up coming in as the guy sweeping the floor who just gradually grew into the business and eventually purchased the business,” Tarasik says.

Identification of a successor starts with an eagerness, say experts. Do they understand the business? Do they want to be an owner? 

“It doesn’t matter whether YOU want them to have the business or not, but do THEY want to be the owner?” Tarasik asks “If they do, then the next step is to invest in them.”

This investment takes the form of training, says Tarasik, including management, finances and marketing training, because as you’re investing in their skills, they’re going to become more eager to take the business over. 

“Finding the right person who fits your culture is huge because your community has come to rely on you, and you’ve got to find someone who has a similar belief set that you do,” Tarasik says. “They’re out there in almost all cases. Part of that requires you to get outside your four walls, get to know the people who are in your industry, maybe at another shop, who you potentially bring in. It doesn’t always have to be a family member, and in many cases it won’t be.”

Succession planning isn’t a one-size-fits-all process. It may involve gradually transitioning ownership to a family member, selling the business to a trusted employee, or even seeking an external buyer who aligns with your business ethos.

Components of a robust succession plan

A solid succession plan encompasses various elements, including:

Financial planning: Determine your financial needs post-retirement and assess the value of your business accordingly. Ensure you have sound financial statements and consider consulting with financial experts to secure your financial future.

Training and development: Invest in the training and development of potential successors, equipping them with the necessary skills to lead the business effectively. Attend industry conferences and workshops together to foster collaboration and knowledge-sharing.

Transition strategy: Plan the transition process well in advance, allowing sufficient time for the successor to acclimate to their new role. Avoid lingering in the business post-retirement, as it may hinder the successor’s autonomy and growth.

Continuity planning: Consider the long-term viability of your business beyond your tenure. Explore options such as retaining ownership of the property while selling the business, ensuring a steady stream of income post-retirement.

Succession planning is a critical aspect of business ownership, especially in the automotive repair industry where continuity is essential for customer trust and satisfaction. Whether you’re just starting out or nearing retirement, it’s never too early or too late to begin planning for the future.

By taking a proactive approach to succession planning, you not only secure your financial future but also ensure the continued success of your business for generations to come. Start today, and pave the way for a smooth transition into the next phase of your journey.

What kind of training is out there for shop owners who are looking to start grooming their team?

Immediately, be sure to pay attention to this series, “It’s Time – A Guide to Succession Planning,” presented by Standard Motor Products. Including more than just this print article, you’ll be able to find a comprehensive print, video and webinar training program, created for today’s (and tomorrow’s) shop owners.

In addition, find out more by looking at leading automotive training conferences. “The biggies all have strong management tracks,” explains Tarasik. “There’s always honest discussion planning at these conferences, so I would encourage a shop owner who has identified a potential succesor to not just send somebody to these conferences, but to help select what classes to take. In fact, don’t just send your successor to the classes, but attend them with them, because you’re there to partner with the person. Truthfully, the more successful they are with getting it, the more successful it will be enacting your succession plan.

Over the course of the “It’s Time” series on succession planning, we’ll be getting into many different aspects of determining the next phase of your business success. 

Whether you’re young, whether you’re advanced in your career or early on in the career, it’s never too late to start. It’s also never too early, and the chances for success improve when you start today rather than wait until tomorrow.

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