Opening a second store is special because you’re doubling. It's the only time you'll ever do it because you'll never go from five to 10 stores overnight. For a lot of people that's hard—and scary.
When you go from two to three stores, you go into your first zone defense-type situation. You can visit one or two shops—one in the morning and one in the afternoon—no big deal, but with more than two, you still can, but can't make the same impact. It's not going to be thorough.
That being the case, I see owners make the mistake of hiring a district manager too soon at two or three stores when instead they should be their own district manager. Do not bring on a district manager before your fourth store. Only at that point would it be a game-changer.
Counting the Cost
Many shop owners get into the habit of overpaying general managers because a district manager isn't as good and before you know it, they're giving away hundreds of thousands a year to employees that aren't performing. They could have saved that money because there's a right and wrong time to add overhead.
I've noticed when owners go multilocation, it's like Christmas. They get shopping happy and start spending money and hiring like crazy. They lose the lean principles they had, and think, “I'm paying this guy six grand a month, and I can afford it.” But six grand a month is not his actual cost. After vacations and benefits, he's more like $8,000 to $8,500. If you do this two or three more times, suddenly you've got $17,000 to $25,000 a month going out the door, which is money you could have been saving.
Proper Expansion
You don’t build by robbing the goose that's laid the golden egg. When you have store one and you open store two, store two must be 100% new employees. Do not take anyone from store one. Do not touch it. There's too much risk. Then when you go from store two to store three, then you could take one technician to store three and one office person so can you mimic the culture. And you may think, “Well, Aaron, how come I can do it then, but I couldn't take anybody when I had one store?” The risk was too great. Fifty percent of your company could have taken down the other 50%. When you wait, it's only 33% against 66%, the odds are much lower. And don't take your best tech or your best service advisor out of store one or store two. Always take the second best—the ones who are up and coming.
Be Intentional at Every Step
Since the first store is proven, it’s money you can count on. But be methodical; don't just run out and hire a bunch of staff and go to take off to hang out at the lake house. That's not how this works. In fact, it'll blow up in your face. When you're ready to open the fourth, bring on that district manager and mentor them. Use the profit of the fourth store to pay that person’s salary since you're still getting a profit on the other three stores. Do this and you won’t see a downturn in income and, when you open store five, you make even more money.
Be Patient and Persevere
Do your best to hold out at three stores for as long as you can, maybe even a couple of years. Use this time to stash several hundred thousand dollars a year to get a nice reserve to avoid using a line of credit and keep yourself safe. I know it sounds cool to open more shops and hire more people, but it is a recipe for disaster, and you can lose your company very quickly if you don’t play it smart.
