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Tuesday, 31 October 2000 17:00

Run your shop as if you were going to sell it

Written by Tom Franklin

 
"Begin with the end in mind."
        -- Stephen R. Covey

The chapter with this title from Stephen Covey's excellent book, "The 7 Habits of Highly Effective People", begins with a request for the reader to consider his or her own funeral and to imagine what mourners will say during their eulogy.

The idea, of course, is to get you to look ahead at your departure date, and to consider what you would like to accomplish between now and then -- and what you would like to be remembered for. We're not speaking about your physical demise, but rather what your plan might be to exit from your business when you're either tired of operating it or just ready to turn the reins over to someone else.

Valuing with the end in mind

Now you might be asking, "What does this have to do with marketing my business?" The answer is "everything!" When you contemplate exiting from your business, usually this means bequeathing it to a son or daughter or selling it to someone not related to you.

Most business owners, when it comes time to sell their business, have in mind a price that reflects all of the sweat and pain they put into getting it started. They expect all of that plus a price that compensates them for the many years of sacrifice and investment they have made to gradually bring it to the point where it is now. Little wonder that few business sellers can find a buyer who will value it to that degree and see it the way they do. To get the price they have in mind, it will generally be necessary to greatly increase the perceived value,
and to effectively demonstrate that the business does indeed possess the productive potential required to justify that substantial selling price!

Marketing with the end in mind

Over the years I have bought and sold several houses. When I came close to the time I was ready to sell, I put an enormous amount of time and money into improving the house so I would get top dollar for the property. Your real exit date may be ten, fifteen, twenty, or more years down the road, but suppose you began to operate your shop now with that end in mind? Every prospective customer who comes into your place is -- in effect -- "buying" your business. They are either "sold" on the appearance, quality, service, value, and overall experience or they're not. If not, they may leave in search of a shop whose qualities they can "buy." Suppose you started now to make the improvements you would make to impress a prospective buyer of your entire business? Can you imagine a more powerful marketing move?

A buyer's viewpoint

You may think that someone considering the purchase of your shop will go to far greater lengths to learn about you and your business than any prospective collision repair customer, but you may be wrong. If a major insurance company, government agency, corporation or public service organization is considering your shop as a provider of long-term, major services, they may give you as much scrutiny as a prospective buyer.

Generally buyers do legal searches to check for liens, litigation, tax problems or other legal difficulties. They may also do a personal background check on you and key employees. If the prospective buyer isn't familiar with your industry, he or she will surely investigate your relative status in the industry as well as the long term viability of the entire industry. They may interview your key employees and vendors, not to mention your banker, broker, insurance provider, and possibly even a couple of competitors.

Would a major prospective corporate or institutional customer check you and your shop out to this degree? You shouldn't be surprised if they do. If you were about to turn a large portion of your business over to a sub-contractor, wouldn't you do the same thorough check? Perhaps part of your "exit preparation" should include complete disclosure documents that could also be used when soliciting a complex referral relationship such as a DRP.

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Up-front reassurance

If you're fixing up old junkers for "poor folk," you may not have to concern yourself with posting your credentials. But if you're going after high-end business, working on cars that now cost two or three times what most of us paid for a house twenty years ago, you would be wise to post and publicize everything possible to announce your qualifications, trustworthiness, track record and even solvency. Letters of recommendation from previous customers provide the track record, but for high-end clients it couldn't hurt to also post letters of recommendation from your lawyer, your accountant and possibly even your banker.

Most successful shop owners understand the need for a clean reception area. But how do you assure prospective customers that behind your clean waiting area, with its spotlessly attired customer service people, there are equally capable techs, with the best equipment, ready to produce the highest quality of repair?

To find out, a prospective buyer of your business would surely interview your personnel. To communicate the same reassurance to collision repair customers, I've seen some shops that posted photos of their key workers with I-CAR qualifications, years of experience, and other credentials beneath the photos.

Other shops have painted a protected pathway through their shop to walk key customers along a guided tour. Those shops with more of a "high tech" orientation use their websites to portray a virtual shop tour for both individual customers and also prospective insurance and commercial referral sources.

"Selling" your shop with a tour

At one time or another, you may have considered buying a second shop, buying into an existing business, or perhaps getting into some other kind of business altogether. Imagine that you are about to buy into an existing business. What are the things you look for first? Wouldn't you be most concerned about the quality of the capital equipment since that is a key factor in determining price?

Take a look at your painting, straightening, measuring and computer equipment. What value would be placed on these items the way they look right now? What could you do to increase the "perceived value" of these items? If you were ever in the military, you would recall the emphasis in the motor pool on continually cleaning up the vehicles and the surrounding area. How much time would it take every day, or every week, to keep your equipment presentable enough to show it to a potential buyer?

Some shop owners have subscribed to the services of See Progress, Inc., (www.seeprogress.com) to create and maintain a website that includes a tour of the shop plus a daily visual update on the progress of vehicles in the shop. When I discussed this idea with shop owners, several voiced the concern that, "I wouldn't want customers to see the condition of my shop every day." In fact, keeping a shop "tour ready" at all times, and on-line for all to see, is an excellent way to create an ongoing marketing discipline.

Begin with the end in mind

During the past ten years, I have witnessed numerous shops being bought and sold. I have seen one shop bought and sold four times. Several other shops changed hands two or three times.

Many of those who ventured into the body shop business by buying an existing shop quickly lost their investment. But the ones who survived understood the need to make major improvements in the appearance of the shop, its equipment and its personnel. They proceeded as though they were buying a fixer-upper house, intending to make improvements and put it back on the market to sell and turn a quick profit. They had "begun with the end in mind."

Those that were most successful went beyond making superficial improvements. They knew the importance of launching a powerful, initial marketing effort. Old customers were contacted with mailings and faxes. Commercial customers were wined and dined to maintain an ongoing business relationship. Local newspapers were contacted with announcements of the new ownership.

These were the actions of an enthusiastic new owner, energized by the thrill of creating something new. But these should be the actions of a every shop owner. It's never too early to begin with the end in mind.

Tom Franklin has been a sales and marketing representative and consultant for forty years. He is the author of the book, "Business Battlefield Marketing for Body Shops," and other collections of marketing articles. He can be reached for questions or comments by fax at (323) 465-2228 or by E-Mail: tbfranklin@aol.com.

 

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