While there are many factors that affect business valuations, here are 3 fatal errors that kill auto repair shop values. Of course learning about these 3 factors is of no value unless something can be done to fix it. Fortunately, even if you’ve already made these or other mistakes that negatively impact your shop’s value, unless you’re listing your auto shop for sale within the next few months, it’s not too late to do something about it. Let’s take a look at these 3 fatal errors and what you can do about them if you’ve already committed them.
Fatal error number 1
Choosing a business name that limits the marketability and therefore the value of the repair shop. William Shakespeare posed the question, “What’s in a name?” To paraphrase, he went on to ask if a rose would smell just a sweet regardless of the name. While this might be true of roses, it’s simply not the case when it comes to business names. In particular, it’s not the case when naming a business that is as relationship driven as the relationship people have with the trusted auto repair shop.
In the early years and subsequent thriving years of the business, many shop owners proudly attach their names to the business and fly it on their signs with pride as an emblem of honor. Many make a big deal out of the fact by saying things like, owned and operated by the “Smith” family for (blank) years. We stand behind our work with our name. The quality goes into the job before our name goes on it. These are all nice platitudes, and they go a long way toward building relationships, but what happens when the owner leaves the business? The relationship between the business, its location, the building or employees may not be as strong as the relationship customers have with the owner.
Here are some questions to consider in determining how much your clientele depends on a personal relationship with you.
- Do most people ask to speak with you or are they just as comfortable speaking with whoever answers the phone or greets them when they come in?
- Do customers accept the recommendations from your service advisor(s), or do they try to go around them to speak to you before they’ll approve the repairs?
- When there is a misunderstanding or customer upset, do you have to step in to resolve the situation?
If this sounds like your shop, and if you’re planning to sell or retire in the near future, it could be time to put some distance between you and the customers. Also, even if your name isn’t on the sign, if your customers rely exclusively on your personal involvement in every auto repair, your management style may need to change to a more hands off approach.
So, what can you do if 20 plus years ago you proudly put your name on your shop, Jack Johnson’s Expert Auto Repair, and now you want to sell it and retire to your well-deserved life of leisure? Unless the new owner, by some coincidence, shares your name, he’s not going to want to pay much for the name equity. And if he changes it to Jim Wilson’s Expert Auto Repair, he might just as well be starting over in terms of the value of the name.
Here’s the good news. You can turn this otherwise negative situation into a value builder. You’ve built a good reputation and strong relationship with your customers, and most of them call you out of habit. However, unlike when you started your business 20 years ago, today, most new customers will find you by doing an internet search on their smart phone and clicking “call”.
With this fact in mind, through the miracle of the internet, you can capture customers and prospective customers by using multiple key words and even various domain names that all link to your website. Also, most people who do searches for local businesses will include location key words like city names or zip codes to localize the search results.
With all that said, it’s as simple as changing your name and not changing your name at the same time. What on earth does that mean? With the right internet strategy, you can phase into the new name or keep the old name alive to add name equity for the new owner. Here are some examples of additional domain names for Jack Johnson’s Expert Auto Repair.
- Jack’s Expert Auto Repair
- Johnson’s Expert Auto Repair
- Expert Auto Repair in (Insert City or Geographic Area)
- Expert Auto Repair in (Insert local zip codes)
- Auto Repair near (Insert Geographic Descriptors and/or zip codes)
- Best Auto Repair Shop in (Insert city and zip codes)
Now, once they’re on your website, you can choose a strategy for announcing the transition into the new ownership. You can be as transparent as you wish or take as long as you wish to complete the process. Consider adding a topical blog to your auto repair shop’s website. The key is to be creative and keep it positive. Talk about all the good things the new owners bring to the party. Couch the transition in words and phrases that convey the benefits that customers will receive by continuing to deal you’re your legacy business. The new owners may even choose to keep your name attached to the business by historical reference in order to tap into the equity that it has with your customer base.
Fatal error number 2
This fatal error is naming your auto repair shop after a specific location. Let’s say you named it, “Oak Street Auto Repair”. This can become problematic for a number of reasons. Here’s a list of just a few reasons a specific location could be a bad idea for the name for your business… some are obvious.You move to a larger location on Main Street;
- The traffic flow moves away from Oak Street;
- The Oak Street neighborhood changes;
- A shopping mall developer buys out Oak Street businesses;
- You decide to open additional shops and need to be identified by more than a specific location;
- The town’s growth moves away from Oak Street; and so on.
The solution to this fatal error is the same as with fatal error number 1. Tap into the power of the internet and manage the process with a dynamic website and a blog strategy that touts the customer benefits associated with the move to the new location. Maintain a virtual presence at the original location while promoting the new location.
Fatal error number 3
Failing to tap into the power of the internet for business computing purposes. To get top dollar for your auto repair shop, it’s essential that you can sell it with a cutting edge business management software system that doesn’t just do estimates and write repair orders, but also maintains accurate customer data, vehicle history, sales and financial records and reliable business reports.
It needs to incorporate the latest innovations in terms of efficiency and mobility. The days of operating your auto repair shop from behind the counter while tethered to a hardwired CPU and keyboard are long gone. Today, if your shop management system isn’t completely mobile friendly, utilizing smart phones, tablets and operating in the cloud, you’re missing the boat.
Not so many years ago, proactive strategies like those discussed above weren’t even possible and name equity was a huge factor in determining the value of auto repair shops and any business, for that matter. In fact, in the past, everyone scrambled for business names that started with the letter “A” to jump ahead of the competition in the yellow pages listings. Today, even older folks never open the yellow pages, and the younger generations don’t even know what the term “yellow pages” means.
The internet has changed the face of marketing and Profitboost has changed the world of computing… dictating how shop owners can get more out of their auto repair shop software than ever before. Profitboost is the leader in cloud based computing for auto repair shops. By utilizing the cloud, Profitboost’s clients enjoy seamless integration with innovative, web based marketing companies like Kukui and Demand Force. These companies also tap into the power of the internet to deliver results that weren’t even thought possible less than a decade ago.
These are just 3 fatal errors that kill auto repair shop values. Please post a comment below if you’d like to add your thoughts.