I have had this call more times in the last three months than ever before in the past. Many shop owners are pondering questions like what is going to happen to their businesses if we have another COVID-19 spike, what happens when the government stops providing free cash to people. Business owners are questioning whether or not they want to stay on the roller coaster and if they’re ready for a life change. I certainly don’t have the answers, but I do know how to weigh my risks and rewards. We’ve all had these questions in the last few months (if you haven’t, then we need to take your temperature) and now is the time to make a clear plan for our futures.
As a company, we have changed our long-term and short-term goals. In the last few years, we have grown slowly, primarily through opening new locations, building new locations and a few acquisitions. We did not have plans for rapid growth. The availability of real estate, costs of construction and overall opportunities just didn’t make sense at the time. We have now switched into a strong acquisition mode. We found that we have the ability and cash to weather a few years of economic instability and drastic cash flow changes in locations/regions to come out positive for a long-term strategy. However, many landlords and shop owners are not looking at this same positioning or structure. So, the question then comes: Should I buy, sell or hunker down and stay still? That’s a loaded question. However, some of these are easy answers:
If you are not 100 percent certain that you have the available funds to weather another round of a pandemic or economic crisis without being rescued by banks, loans or funding, then get out now. Don’t wait for another wave to hit, have a dramatic downturn, close your doors (or have poor sales) and then say, “I need to sell.” It is too late to get any value!
If your sales last year showed a profit or at least decent sales before COVID 19, then it is easy to make that exception and base the price off those previous numbers.
If your sales or profits were not where you wanted them to be last year but you still have good assets, a good location, a good customer base then you still have some value on your hands. Position the sale now when things are on an upswing do not wait for the downswing.
If you were planning to retire soon, then look at your options while you can. It never hurts to look at what you could do today while the opportunity is there and when you are in the driver’s seat. Don’t wait for a recession, pandemic or economic crisis to hit that could make you have a mandatory sit and wait for a number of years.
If you are now looking to change your lifestyle or you are just burnt out and cannot take another big crisis, get out now. This is not going to get easier; hours are not going to get shorter and vacations of fun away from the business are probably not sitting in the near future for any of us. That is just the truth. To make it in this environment or another crisis means we must be 100 percent engaged 100 percent of the time.
If you have the funds to withstand some economic swings and you are not planning to retire anytime soon and you still love the business, then keep at it. The future of automotive repair will continue to be great. Even better, if you have the funds to expand in your market, then look for the opportunities around you while there are opportunities coming to market with real estate and acquisitions.
On the real estate front, it really again depends on your short-term and long-term goals. If you are going to sell your business and you own the real estate, then you may want to look at selling them both for a number of reasons
If you get a tenant that may not be able to pay your rent rate in the near future, then you may want to sell all of it now so that you can invest your future in other areas. Also, you can put more of the sale in the real estate part of the transaction for tax savings.
If you get a tenant that may have future operational issues or credit that is not strong, then a future real estate buyer may see this as a negative. This could affect the price you obtain on your real estate.
If you have a strong buyer with no credit issues that is willing to pay you a premium lease amount to build up your future resale value of the property and you are willing to hold the property for another 5 – 10 years, then you may want to consider holding the property.
Overall, no matter what you choose, now is the time to seriously consider your options and future. Do not wait a month or two to see what will happen. The time to act is now! Take control of your own future and goals. No one can make the decision for you but there are many people that can help you talk this out. Just ask!
