Getting Ready to Sell Your Midas Business
There’s a reason that Stephen Covey’s The 7 Habits of Highly Effective People has been a best seller since 1989: his advice is timeless and universally applicable. Habit number 2 states, “Begin With the End in Mind.” It’s about having a plan. If you own an auto repair shop, it’s never too soon to think about and plan for your exit strategy. In fact, we recommend owners start making changes in their business three years before they’re ready to put it on the market.
That’s because buyers and lenders will want to examine three years’ worth of financial statements and performance data when they’re deciding whether to purchase a business. The changes you make now will pay off when they look at how profitable and well-run your business is a few years from now. Here are some things you’ll need to do to get ready to sell your business.
Make sure your books are clean and well-organized. If your accounting has been less than meticulous, or you struggle with staying organized, this is a good time to get everything back on track. Buyers will want to be able to see and understand all your expenses, and you’ll need to respond to their inquiries quickly and with solid documentation to back up your numbers. Getting organized now means you’ll have much less stress when you’re going through the diligence process with a buyer while still trying to run your business.
Hire or promote your trusted number two. A buyer is buying more than your equipment and brand name; they’re buying your talent as well. They prefer a company that doesn’t require the owner to be turning wrenches 8 hours a day or making every small decision. If you don’t have an assistant manager who you’re confident can run the business when you’re not there, you’ll need to hire or train one. Creating a structured management team will help your business thrive in the short run and make it more valuable to a buyer in the long run. Make sure you have a strong training program and policy manual so a new owner will be confident that the staff is reliable and efficient. If your wages don’t meet local market standards, this is the time to review them and make changes there, as well. This helps the buyer understand the true cost of labor in the business and prevents him from having to increase salaries immediately after he takes over. Your workforce will also be more stable and more loyal, which is critical to the shop’s success and marketability.
Tighten up your operations as much as possible. Eliminate waste wherever you can: wasted time, wasted materials, unnecessary inventory, and procedures and systems that don’t work for you anymore but that you’ve never taken the time to fix. Time is money, especially in a repair business, and the more efficient your staff is, the more profitable the business will be (that will help pay for the raises you might be planning.) You might also need to overhaul your facility; invest some overtime in cleaning, painting, or repairing the shop so it looks more appealing to customers and to potential employees. Add touches that create a clean and inviting waiting room; make sure the employee break room is well maintained. You’ll find that your workers do a better job for your customers when they take pride in where they work.
Check your online reputation and make changes if it’s less than stellar. You may not be paying attention to your Google reviews, but your customers and potential buyers certainly are. If your customers complain about poor service, costly or unnecessary repair suggestions, or don’t seem to trust the staff, you have time to take these issues on and fix them. You can follow up with satisfied customers to ask for reviews and follow up with dissatisfied customers to make things right.
You should also check in on where your shop appears in a Google search. Your franchisor should provide support for marketing and online presence, but if your strong brand isn’t showing up on the first page of Google results, your customers may not be able to find you. Online presence and customer reviews will also factor in the value of your business when it’s time to list it on the market.
If we can help you understand the current value of your business – click here to get a complimentary and confidential opinion of value.
