How to Build Value for Your Diesel Repair Shop
If you're like many small business owners, you have no set exit plan for your business. For some of you, this may be because you haven't even thought of retiring yet, and for others, you just haven't found the right plan to fit your business.
But wherever you are in your business journey, it's never too early to plan for the future of your business and your role in it. This plan helps set the tone for how you grow your business and what your role in it will be.
Do you want to keep the business in your family? Sell it to one of your current employees? Sell it to another business? Or maybe you want to retain ownership to gain passive income in your retirement?
All of these require you to have a lean, profitable business that can continue to run even if you're not the one overseeing the day-to-day operations.
Want to know more about setting up systems to help your diesel engine repair shop run when you're not present? Check out Keep Your Repair Shop from Holding You Captive!
Maybe you're unsure how to move your business in that direction. What does it really mean to have a turn-key business? How can you build value for your business to not only make it attractive to potential buyers but to get you the maximum amount of profit?
This series will take you through some of the best ways to build value for your business so that when it comes time for you to leave, you're getting the most out of it.
Need to order diesel engine parts? Call our ASE Certified Techs today!
Where Do You Start When Building Value in Your Diesel Repair Shop?
It can seem daunting to try and estimate the value of your business and make a plan to get the most profit when you decide to leave. But we're here to help! In this series, we'll go over:
How Your Shop's Financial Performance Affects Value
Potential buyers want to make sure that they're making a good investment when they purchase a business. As such, they look not only at how you're business is currently performing, but how it has performed in the past, as well as its potential for future growth.
This means it's essential that you have accurate records of your financials to prove how well your shop performs. The better the records, combined with the profit your shop brings in, makes your business look less of a risky investment, and therefore more attractive to potential buyers.
What Metrics Impact the Value of Your Business
We've talked about KPIs (Key Performance Indicators) before. Understanding them is crucial to the health of your repair shop. But there are some that play a large role in how your business is valued. Make sure you understand what those are and how improving them can boost this valuation.
Check out 10 Metrics Proven to Boost Repair Shop Profitability for more KPIs to monitor to build profit.
How Future Growth Projections for Your Diesel Repair Shop Impact the Current Value
When someone is looking to buy a business, they aren't just looking for profits in the short termthey want something that will continue to make them money well into the future. In this way, what your diesel repair shop will be making in the future has an impact on its current value.
This is important even if you're not planning to sell your shop, but want to retain ownership as a passive income stream. You want to make sure that it will be making enough money in the future to support you in your retirement. Otherwise, you'll need to make some changes.
What Your Revenue Says about the Health of Your Repair Shop
Do you have recurring revenue? How reliable is it? Can you plan on a certain amount of income month to month? This plays into the overall value of your business, as potential buyer look to make sure they're purchasing a reliable business that won't lose them money.
What it Means if Your Business is Dependent on one Person or Client
It can be dangerous for your business to rely too heavily on one entity for success. What happens if you lose that client's business? Or that employee who is the only one who knows the different systems of your shop leaves? Or your only parts supplier goes out of business? In any of these cases, you have a serious problem.
But not only will this leave you in the lurch, it can also affect the overall value of your business!
Does Your Diesel Repair Shop Stand Out from Your Competitors?
What makes your diesel repair shop different from the others around? This can help bring a steady string of customers to your shop and assure future revenue. Try to find what is both unique to your shop and beneficial to your customers and use it to your advantage.
How Your Customers' Opinions Affect the Value of Your Business
Are your customers satisfied? If yes, they are more likely to become repeat customers, or refer you to people they know, and therefore provide you with a steady income stream. The more satisfied customers you have, the better off your business is.
And just as satisfied customers can help your business, angry customers can hurt you. So be sure to keep the customer experience in mind each time someone comes to your repair shop.
Can Your Business Run Without You?
We get it, you're the owner of your repair shop and you have a hand in everything that goes on. But while that may seem like a good thing, it can actually be holding your business back. If you're like a lot of owners, you're spending too much time working in your business rather than on it.
Building a business that can run without you monitoring every detail not only makes it more attractive to potential buyers, but it allows you to focus even more fully on the future for your business. This, in turn, only adds more value you to your business.
Throughout this series, we'll touch on each of these points more fully, to give you the full picture of how you can build value for your diesel repair shop. That way, when it comes time for you to leave your business, for whatever reason, you can be assured you're going to get the maximum profit.
Planning for your eventual retirement? Be sure to read Will Your Repair Shop be Here in 5 Years? to see if you're prepared!
Looking for other ways to grow your shop? Our Repair Shop Value Program can help save you time and money!