Go large or go home? Expanding your business

Andy Savva looks at the challenges businesses in the garage sector face when they look to expand

Published:  04 September, 2019

As most of you already know, I have previously owned and managed a wide variety of successful independent garages.   

Perhaps the most well-known example of these was my last one; Brunswick Garage. I was being always asked by those within the automotive aftermarket why I don’t consider franchising Brunswick Garage. I was also asked why I don’t consider opening other sites, thereby creating a chain. Many people would ask one or both of these questions. Indeed, these thoughts often crossed my mind as well.

It sounds good to expand the empire doesn’t it? Grow the brand, make a name, and of course hopefully get a better financial return to boot. However, despite the encouragement, and my own inclination towards promoting growth, there are serious considerations that need to be made before you take the leap. The paramount one for me is my own belief that this is one of the most difficult industries in which to create a franchise.

Blaze of glory
About five years ago a garage in Coventry opened in a blaze of glory. This was an independent garage that was going to be franchised, with the aim to have one of in all major towns and cities with five years. The originator of this idea was not from within the automotive industry, which is not a bad thing, but from the banking-finance world. I remember when the second site was opened, I was asked my opinion on this venture. I said then the same as I would now.  What I told them, very clearly, that it is practically impossible for such a venture to succeed. To date I I’ve been proved right, as it has closed down, although you might have already guessed that by the way I was talking about it in the past tense.
    
The reasons behind my opinion are very simple, and very clear. A garage is not like any other business, where you are purchasing a product such as a coffee or a shoe. A service is perhaps the most difficult sale to make. When a vehicle owner is buying a service or repair, that person is really purchasing a promise that will be fulfilled in the future. That requires trust, skill, competence, ability, technical knowledge, and much more.

Processes, procedures and interactions
There are too many processes, procedures and interactions between customers and staff members. This web of interactions means that you can’t franchise just like that. We are dealing with emotions and behaviours that can’t just be accounted for. What works in one area of England may not necessarily work in another. What works in England may not work at all in Scotland. What about Wales and Northern Ireland? Forget about it, and so on. There are so many variables and barriers to consider, customer and vehicle demographics, land and property costs differ up and down the country.

However, no matter what your goals are as a business owner, it’s important to review the pros and cons of growing your business in order to hone your vision and assess potential stumbling blocks before they arise. Owning a multi-unit business is hard work. Here, I have tried to highlight some of the key points to consider if you want to expand into multi-site independent garage operator.

Pros  

  • Economies of scales, when purchasing parts of equipment: You should be in a position to achieve better prices
  • Marketing activities can be combined – wider message at a lower cost – increasing brand awareness
  • Cross-utilise employees between locations depending on need
  • One manager could be spread over two or three sites
  • Possibility of sharing diagnostic equipment – depending what services you offer at different locations
  • More profit achieved with multiple sites
  • A successful multi-site can attract a larger corporate if exit strategy was the end objective
  • If family are involved could be easier to expand – families tend to form a grounded and loyal foundation. In built support system. It could bring long term stability and trust


Cons

  • Increased capital investment: Opening a garage;  it is not cheap
  • Location is critical – near transport links its it easy for customers to get to?
  • Finding suitable premises is becoming increasingly difficult
  • What works in one area may not work in another – important to research and understand the customer type and vehicle demographics in that specific location
  • Difficult to manage if you don’t have rigid processes and procedures in place that are clear to all staff members
  • Difficult to manage staffing levels and correct management structure with the right pay incentives
  • Poor customer service from one site can affect another site
  • Managing costs across several locations not easy – strict controls need implemented. Cost can spiral out of control if other sites are not successful
  • With attention divided among other locations, there could be an impact on customer service, a loss of the personal touch, and a greater distance between stakeholders and staff
  • Increasing difficult to attract competent, skilled staff – inherent with our industry
  • Family businesses create a lot of challenges too. Difficulties arise when it comes to succession planning, sibling relationships, promotion and leadership. This can result in dysfunctional behaviour affecting business decisions


Desires and ambitions
Whichever way you may decide to take your garage – there are pitfalls and benefits in all camps – single site, multi-site and franchise. Ultimately it will come down to the desires and ambitions that you set yourself.

www.thegarageinspector.com





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