When you own an auto repair shop, you might wear a lot of hats, causing you to take things day by day. You may have some long-term goals, but how do you expect your owner journey to end one day?
Many repair shop owners decide that they’re ready to retire with only a month’s notice – and they still think they’ll find a good buyer and sell their shop for top-dollar as-is. Let’s manage those expectations by talking about the benefits of an exit strategy like succession planning.
At CSI Accounting & Payroll, we’ve provided monthly accounting and unlimited advice to repair shop owners for nearly 60 years. In fact, your industry was our specialty when we first got started. That means we’ve talked to hundreds of repair shop owners about exit strategies, answering questions like:
- Why should I choose an exit strategy like succession planning?
- When should I start an exit strategy?
- How do I do succession planning? Who can help me?
Why Choose Succession Planning?
Succession planning is all about running at peak profitability in a way that benefits your shop – not just cutting corners to give potential buyers the illusion of profitability.
It’s a great exit strategy because it can maximize your profits and ensure your repair shop lives on without you.
How? You can structure your purchase agreement to base the purchase amount on future revenues. If you’ve done proper succession planning, then it’s a win-win-win situation for you, your buyer, and your loyal customer base because of a smooth ownership transition and continued relationships.
Are you thinking that succession planning isn’t the right exit strategy for you? Reflect on your long-term business and personal goals, then check out some other exit strategy goals here!
When to Start an Exit Strategy
As I mentioned in the introduction, many repair shop owners don’t plan enough for their retirement. When you wear too many hats (as many repair shop owners do), you eventually hit a hard stop due to burnout.
When you implement an exit strategy like succession planning, how long do you need to do it before you’re ready to pass on your shop?
Some say that it’s never too soon, but we’ve found a sweet spot at around three years in advance, and a little bit of planning can be done as soon as a few months in advance. Selling your business at the wrong time makes our list of the top four mistakes we see when small business owners sell.
How to Do Succession Planning
So, you’ve decided to move forward with succession planning? Then you’ll need to start building your team. Select an annual tax preparer or a monthly accountant, then an attorney, and – optionally – a business broker as well.
These different people on your team can help you at various steps along the way, including:
- Making a game plan to get your repair shop in tip-top shape. Here’s how monthly accountants help save you money and increase your value. You'll only need an accountant to start.
- Establishing your timeline. Remember, three years is the sweet spot! After that, you can add an attorney (and potentially a business broker) to your team.
- Performing a business valuation.
- Finding a buyer.
- Writing up a purchase agreement. Don’t forget the important details! Consider the price, length of agreement, payment or financing, and stock sale versus asset sale.
- Handling any tax implications.
- Continuing a relationship with your buyer for long-term success.
It sounds like a lot, but the process isn’t too hard with a great team in place! That’s why you should choose your accountant, attorney, and business broker wisely.
Handle Your Succession Planning With Experts!
Now that you know about the benefits of succession planning, that you should start it around three years in advance, and how to do it with the help of professionals, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your repair shop, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about what it’s like to work with us by clicking the image below:
