What can instantly kill a shop’s sale

If a shop owner considers themselves integral to the daily operation of their business, they will have a tough time finding a buyer, warned an industry advisor.

Hunt Demarest, accountant and business valuator with accounting firm Paar Melis, couldn’t stress this point enough while speaking at a recent conference.

“If you have a day-to-day job in the business — you are a service advisor, you are a technician — there is going to be a group of people looking to buy a shop that will no longer be interested in your shop,” he said during the session Transitioning Your Business at the Midwest Auto Care Alliance’s Vision Hi-Tech Training & Expo in Kansas City. “Period, end of story.”

Those looking to buy a shop are looking for an investment. They want a turnkey operation. Otherwise, from their point of view, they’re not buying a business. They’re buying a job.

If the shop’s owner is working the front desk, has built a relationship for decades with customers and has decided to retire and sell, that could greatly alter the dynamic of the shop with that person gone. The success of the shop may be heavily tied to the shop owner being in the shop all the time.

After they leave, buyers will wonder if the shops will maintain the same level of excellence.

“So when you leave and you retire, I have to hire someone else or try and find someone on this, is this [level of success] going to be anything similar?” Demarest said, posing as a prospective buyer in this scenario. “You have 30 years of trust. You are probably the most trustworthy person here because these people have been dealing with you coming back here — am I going to have the same value of trust when you leave? Probably not.”

That’s why the owner removing himself from the day-to-day — and even the business entirely — is so important, he added. By not being there, the owner has put the business in a position to be sold. But that doesn’t mean they have to.

“If you get your business to a state where it’s profitable enough and you’re building this business to sell, it doesn’t mean that you have to sell,” Demarest pointed out. The magic dream is … get your kids to run it, make them make all your profit, and you can just ride off into the sunset and live in Florida or whatever.”

If the kids aren’t an option, apply that thought process to a general manager, he added.

“If you can work yourself out of the business … then you can truly be in a position where someone comes to you” looking to buy rather than you searching for someone, Demarest said. “You can say, ‘Hey, everything’s for sale for the right price.’”

Image credit: Depositphotos.com

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