How do you know when you’re ready to expand? Whether you’re maxed out, or feel your company can grow in more ways with a second location, it’s important to put one thing into perspective when making the decision to morph: how your business will benefit.
Nick Sallas, owner of Sallas Auto Repair in Kansas City, Mo., and Overland Park, Kan., has morphed his business frequently since he first opened.
It was 1993 when Sallas rented a two-bay shop in Kansas City.
“I knew I was going to open up a shop at an early age,” he says.
Sallas stayed in the original location for five years and added three technicians. While the shop continued to grow, Sallas sought out ways to further maximize his team of eleven’s experience during their time for the company.
“For me, it made more sense to do two different locations,” Sallas says. “I had people that I knew could do more; I had nowhere else for them to go here, so I opened up that second location and allowed them to spread their wings and give more opportunities.”
In 2006, Sallas made the decision to open up another location. When nearby land opened up, Sallas jumped at the opportunity to own property and move the business.
“The second location gave me the opportunity [to invest in] the future for employees and for my family and I,” Sallas says. “We all put a lot of time in our business and when you go to retire, you have your savings and real estate.”
The Problem
In the shop’s 12th year in business, during early 2006, Sallas took a step back to look at operations, as well as reflect on what he was hearing from customers about the shop’s location. According to Sallas, at that time, the shop saw roughly 380 cars per month and the business was doing well.
However, the shop was unable to provide further opportunities for employees, as well as cover a wide customer reach.
“You’re at a job and you can only go so far, so you want to try to figure out ways for them to grow,” Sallas says.
Along with giving employees the opportunity to grow within the company and further bring more customers into the shop, Sallas thought about customers who made comments regarding the shop’s location. According to Sallas, customers began to ask about the likelihood of adding a store to Overland Park, a more suburban area of the city.
“The main location had a very good, steady group of customers,” Sallas says. “My first location was not in that great of a neighborhood, but it’s more of the destination where people would drive if they found a good repair shop.”
The Solution
While keeping his customers in mind during his search for the shop’s second location, Sallas began to research what the Overland Park area in Kansas had to offer. The first thing he did was drive out to Overland Park and look at different areas that could benefit his business.
After locating the area, Sallas started looking for a shop that the business could either acquire or purchase.
“There was already an existing shop that was [in the location I wanted],” Sallas says. “It was a little two-bay gas station that they had taken the pumps out.”
The next step was to check out the demographics for the location, he says, where he learned what the income was for that specific area. Following the demographics, Sallas spoke with the city to determine the traffic flow in front of the location.
“It ended up being about 30,000 cars that drove by per day, and that was with the highway being blocked off, so it really slowed down some of the car count on that street,” Sallas says.
Following his research, Sallas decided to speak with the owner who was in the location to discuss the potential takeover.
“I did a lease with the option to buy at the end of three years, and I negotiated the price of the purchase of the building when I went in for the lease [meeting] in the very beginning,” Sallas says.
In order to ensure that the location would work, Sallas focused on two important elements of making the shop a success: creating the right time and marketing to customers. According to Sallas, he thought about which staff members would thrive at the business as well as have a more convenient commute to work.
“I had a guy that lived in Overland Park and had been with me the longest at the point,” Sallas says.
He was the top candidate to lead the new facility. Sallas knew that a large store would be difficult to manage, so the opportunity to manage a second, smaller store seemed to be the right fit.
“We put him in [Overland Park] and it was perfect,” Sallas says.
In addition to the store’s new manager, Sallas moved an employee who came to the shop from a community college and had trained in different roles throughout the business.
Prior to opening the store, Sallas focused on direct mail to hone in new customers and inform them about the business. In the past, the shop had always done a monthly newsletter to the customer base, which had been successful, Sallas says.
“[The direct mail] ended up being a lot of referral business,” Sallas says. “Google and the internet wasn’t as strong [as it is] now.”
The Aftermath
While the shop was successful in the beginning, it saw an improvement with the Overland Park location after the rented area was purchased by Sallas in 2009. At the time, the rented location only had capacity for two bays, restricting the staff size to two employees.
“I think the first three years were the hardest because we were functioning out of two bays and [we were] only able to bring two employees on,” Sallas says. “It’s difficult to get anything done out of the two-bay store.”
Following the purchase of the location, the shop added an expansion onto the business which increased the shop’s space, resulting in an increase in car count. According to Sallas, the second location began to show success in its third year of business.
By 2009, the Overland Park location had a monthly car count of 140. Today, that number is 215–220 cars per month.
The decision to add another business has also brought in more opportunities for the shop, Sallas says. Not only has he implemented a cross-training process so staff members can move between both stores, but there’s now the option to send customers to the other store if the first shop is swamped.
“When you have technicians at one location that see different cars than the other, they can call the store [and inquire about questions],” Sallas says. “It’s more like a tech support line.”
Ultimately, the business has grown in various ways that were unlikely with just one building.
“We were doing a lot out of [the Kansas City] location and by opening up that second location, it purged some of those customers, moved them over there, and brought in more,” Sallas says. “Our count was about 3,400 customers per year, and now we’re servicing about a little over 7,000 people per year.”
The Takeaway
Adding in a second location is a learning process through and through. Although Sallas felt prepared for the move, he says it’s important to have a plan in place that lays out your procedures.
“Not every shop is going to be the same, so it’s even more important to have procedures in place and make sure it’s correct before you make the move,” Sallas says. “You should have procedures to follow and they should get the same service [at both locations].”
