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This is the Automotive Repair podcast network.
It's your weekly Blitz with Chris keeping you in the game.
Hey, everybody. Good morning.
If someone walked into your shop today, not a customer, not a vendor,
an investor, and they said, I want to buy your business, show me what you've got.
Could you hand them a prospectus?
Could you show them clean financials, clear structure, defined roles,
systems that run without you, KPIs that tell a story, a management team that isn't
you, or would you say, uh, give me six months from the very first minute
you lay hands on a business, it should be designed to sell.
Even if you don't plan on selling it for 20 years, it should be designed to sell
even if you never sell it.
And so that's what we're getting into today.
Most shop owners own a job.
Let's just call it what it is.
You don't own a business.
You own a job with overhead.
And I say that coming from a place of love, right?
Like if you approve every estimate, if you solve every problem, if you hold
every relationship, if you know every password, if you make every decision,
you don't have a business.
You have a dependency and dependency kills valuation.
When a buyer looks at your shop, they're asking one question.
What happens if Chris leaves tomorrow?
If the answer is it collapses, you don't have any enterprise value.
I want you to think about it and I want you to design for exit from day one.
When you start or acquire a shop, you should immediately think, how do I
make this transferable?
Okay.
And what does that mean?
Transferable businesses are documented.
They're predictable.
They're repeatable.
They're profitable and they're not owner dependent.
From day one, you should be building an organization chart.
Even if you're filling multiple seats, SOPs, defined KPIs, clear compensation structures,
vendor agreements in the company name, clean accounting, not tax game accounting.
Okay.
And there is a big difference.
And yes, clean financials.
You should be able to hand somebody three years of PNLs.
I recently had somebody reach out to me and said, Hey, Chris, I don't
love my business anymore.
I need to get rid of it.
First question I asked them is like, okay, let's do an evaluation.
Send me your income statement for the last three years.
And they're like, we haven't even filed taxes in the past five years.
And basically what they have is shoeboxes full of receipts that they're
waiting for somebody to sift through.
And so now this person, because of lack of passion, wanted to sell the business
and has no business to sell.
So you have to not play the tax game.
And you have to have a business that is structured to sell.
All right.
Again, three years of PNLs.
I would say if I'm evaluating a business, I want to see three years of PNLs.
And I want to see three years of business summaries to match.
That way I can get car counts, labor amounts, and all of those things.
Balance sheets.
What was your EBITDA?
What is your adjusted owner ad backs?
Like these are all the things that you personally take out of the business
that if you weren't there, would no longer be there.
Like your cell phone, your other stuff, all of those things that you take.
I just talked about it, but again, car count trends, average
per order trends, technician productivity numbers, parts and labor gross profit.
And if you can't, that's not an accounting issue.
This is a design issue.
I know a lot of you run Mitchell.
What it is, Mitchell was great 25 years ago.
Today, the reporting is terrible.
There are a lot of other old legacy shop systems out there
that are just not designed to do what you need it to do.
So if that's not the case, then you have to make Excel spreadsheets
and those things and if you don't have time to run your business,
I don't know how you're going to have time to make Excel spreadsheets.
Again, these are all design issues.
You have to design your business to sell.
You know, why does this matter even if we never sell?
The shops that are easiest to sell usually don't need to because they're built right.
Designing to sell forces you to build the systems, to develop leaders,
to track metrics, to remove the chaos and to think strategically.
It forces you to stop reacting.
And here's the kicker, a business designed to sell is less stressful.
It's more scalable.
It has better culture, has better accountability, more accountability,
has any accountability and you become the architect of the business
and not the firefighter for the business.
Real quick break, if you're building a business that someday could be sold,
car count cannot be accidental.
Predictable demand increases valuation.
Our friends over at Shop Marketing Pros help shops create
consistent visibility, branding and lead flow.
Buyers love predictable traffic.
They love strong branding.
They love marketing systems that don't depend on the owner
posting randomly on Facebook at midnight.
If you want a business that looks investable, start with your market present.
Go check them out at shopmarketingpros.com forward slash Chris and tell them I sent you.
Now let's get back to building something real.
Next, I want you to have a prospectus mindset.
And so let's talk about the prospectus real quick.
So imagine if you had to hand somebody a clean 10 page overview
of your business tomorrow, what would be in it?
Mission and vision, organizational structure, market position, services offered,
competitive advantage, revenue model, KPIs, growth plan, exit strategy,
risk analysis, could you produce all that?
If not, then that's your homework because writing that document forces
clarity and clarity creates value.
When we're talking about exiting a business, most shops talk about
Ibada or what your net profit is at the bottom.
But imagine if you could take that number and multiply it times two or three
because you're profitable business.
And what if you could take that number and then multiply that times three or four
or five because your business runs without me?
So how do we make it run without you?
This is a little bit where ego gets involved.
All of us built our shops on hustle, but scalable businesses are built on systems.
All right.
And this is also when we're coaching, when we take somebody from being
the technician, service advisor, owner, and then add in more people,
like more technicians, a service advisor.
And then the first person that comes in and complains to the owner, then the
owner's like, Oh my God, it can't run without me.
It can run without you.
Just had a little hiccup in the system.
All right.
I want you to think about these questions and answer them.
Could your service manager run a full week without you?
Can payroll be processed without you?
Could a major parts vendor call somebody else other than you?
Could your KPIs be explained by somebody else?
If the answer is no, that's not a weakness.
And I'm telling you we have shops and I'm in the process of doing this in the shop.
So I don't have it all buttoned up.
Somebody could walk into my shop right now and be like, Hey, are you ready to sell?
I'm like, man, I'm still in the build out phase.
I'm not really in the cell phase, but I need to finish buttoning this up for my
business as well.
Coming from you hat in hand saying, Hey, nobody's perfect, but you need to be
working on these things.
Okay.
The answer is no right now.
And that's a weakness.
It's a weakness in my company and I'm doing it.
Guess what?
That's why we're talking about this episode.
So it's just unfinished design.
All right.
And here's the truth.
A business that runs without you is not a threat to your importance.
It's proof of your leadership.
Buyers don't buy revenue.
They buy predictability.
They buy margin consistency.
They buy leadership teams.
They buy processes.
They buy reduced risk.
And when you design to sell, you're going to eliminate single points of failure.
You're going to create documentation.
You're going to improve financial reporting.
You're going to standardize operations and you're going to train future leaders.
And guess what?
Even if you never sell, you can step back, expand, open a second location, launch
another venture, take a vacation without panic.
This is how multi-location owners think.
I want you to think about this.
How should you be thinking?
What should you be doing to prepare your business to sell, even if you don't?
So here's what I want you to do this week.
I want you to build or update your organization chart.
I want to identify where you are the bottleneck.
You need to start documenting one SOP per week.
You got to clean up your financial reporting.
And I want you to write a rough five-page prospectus outline.
Use AI if it sparks something in your brand to get you going.
And I want you to clarify your three-year growth vision.
Okay.
I'm going to give you this question.
If I had to sell in 12 months, what would need to change?
And I want you to start there.
Remember, any change is good change as long as you're moving towards your goal.
Some owners don't design to sell because they're afraid of the answer.
If you designed your business to sell, you'd realize your margins aren't strong enough,
your systems aren't tight enough, your team isn't deep enough, and you're too
central to everything.
I don't mean that to be discouraging.
I mean that to be a point of opportunity for you.
You may never sell your shop, but one day you will exit.
We're all going to exit the grand plan at one point, whether it's retirement,
health, opportunity, burnout, acquisition, succession.
You will leave without a doubt.
The only question is, will you leave chaos or will you leave value?
Build it to sell, even if you never do.
Thanks for tuning into episode 248 of the Weekly Blitz.
If this challenged you, I want you to share it with another shop owner who needs to
hear it. Big shout out to our friends of the Aftermarket Radio Network.
Proud to be part of a network that pushes the industry forward.
I need you to keep building, keep structuring, keep thinking bigger than today.
And remember, if your business can't survive without you, you don't own a business
yet. See you next week.
You've been listening to the Weekly Blitz with Chris Cotton on the Automotive
Repair Podcast Network.
Download our exclusive podcast app at automotiverepairpodcastnetwork.com
because the best conversations in the industry start here.
Want expert advice on running your shop?
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