Since 1931, A.B. Hadley has been a part of Ogden, Utah’s story. For three generations, the auto repair shop has been serving the community and going above and beyond to help those who walked through the door. The team would help people in the parking lot, sometimes free of charge, and take any business that walked through the door. All of that was great for the community, but not so great for A.B. Hadley’s bottom line.
With 4.9 stars on Google and a building steeped with history, it was a hit with the Ogden community. However, with an ARO of $111 and a revenue of $30,000 per month, the shop was losing money fast. Tom Lambert, who owns Shadetree Automotive, bought the location in 2020. He kept the name of the business but made some major changes to bring the shop up to his standards. Here’s a look at how he did that and what advice he’d give to shop owners looking to take on another location.
Backstory:
Like many in the industry, Lambert started in his father’s shop, sweeping the floors. In 1998, his father’s shop grew to where he could no longer keep up with its demands, so he told his son that he could either go to school to learn how to manage it or he would have to shut it down. Lambert went to business classes at night and started managing the shop a month out of high school. In 2014, Lambert met business coach and founder of The Institute, Cecil Bullard. Bullard helped Lambert turn the business around, and Lambert purchased Shadetree Automotive from his father in 2016.
Problem:
When Lambert took over his father’s shop, he knew that he would eventually buy another location, but he wasn’t actively looking. However, in 2020, an opportunity presented itself that seemed meant to be. A historic auto repair shop in the area went up for sale, and the shop just happened to be where Lambert’s father had his very first mechanic job, giving him a personal connection to the location.
The shop had a great reputation, but it was lacking business savvy. Lambert saw an opportunity. He kept the name and staff in place but took over as owner.
When Lambert took over the shop, they were down to one service advisor in a 10-bay shop. A.B. Hadley was seeing 10 cars per day and would take any work that would come through the door.
“It was chaos,” Lambert says of the state he took over the shop. “They didn’t have any processes in place; it was a free-for-all.”
Lambert saw the potential and got to work right away.
Solution:
The first obstacle to overcome? Aesthetics.
When Lambert took over the shop, it was dirty and cluttered. Lambert started on a Thursday and spent that entire weekend cleaning—15 hours per day—with his wife in order to declutter the showroom before they opened the doors on Monday. Lambert says he filled at least three 50-foot dumpsters with all of the stuff that needed to be thrown away.
Once the shop began to look workable, Lambert got right to work bringing his processes over. When he took over, there weren’t any, and Lambert is a big believer in processes being a key to success. That being said, starting from nothing was going to be overwhelming, so he introduced one new process at a time. The first big one? Teaching customers to schedule with the shop and to leave their vehicles rather than waiting. After that, it was about properly inspecting vehicles. After each process was mastered, a new one was introduced until the shop was up to Lambert’s standards. That whole process took about six months. During this time, Lambert hired new staff and worked in the vacant positions until they were filled. Lambert was able to work full-time in this location because he had good processes and strong leaders in place in his Shadetree Automotive location.
Aftermath:
Within a year of Lambert taking over, the shop was profitable. He believes a big part of that was doing a lot of the legwork himself. His processes have helped turn the shop around to do $300,000 per month vs. $30,000 and have raised the ARO from $111 to $1,300. Although Lambert changed the way the business was run, he retained 85% of the shop’s clients, and the ones that he lost are the clients that he didn’t want.
Takeaway:
Lambert currently has three locations: his original Shadetree; A.B. Hadley; and a second Shadetree Automotive, a shop he purchased that didn’t have a stellar reputation, so he changed its name. He has done it in different ways, and he plans to grow to at least 10 locations, and knowing what he knows now, he would never do it how he did back in 2020. Why? It takes a long time to get everything up and running just to your standards, and then even longer after that to get sales up and proper staffing.
For future acquisitions, he plans on buying a business that is well-led with processes in place so all he has to do is make a few tweaks. That being said, he’s now in a position to purchase one of these shops now whereas the other shops he bought because of the price point when he didn’t have as great of a cash-flow as he does now.
“Our strategy moving forward will be buying the best-run shop in town,” Lambert says.
For a one or two-shop owner who’s considering taking on another location, Lambert has some words of wisdom.
“If you don’t have your main location optimized, you don’t have a chance. It doubles the chaos. If you don’t have the bandwidth to do it properly with one, you can’t do it with two.”
Are You Ready for Another Location?
Five red flags that now is not the right time for you to take on another shop
Taking on another location is a huge step—and it’s not for everyone. Many shop owners are perfectly content with one location and others dream of an auto repair empire. If you’re on the fence about whether or not you should take the leap, Cecil Bullard, founder and chairman of the board for The Institute, has some red flags to share that could indicate that now is not the right time.
Red Flag No. 1: You Have Only One Shop
Now, this is not a deal breaker. You have to start somewhere. However, a shop owner who’s taken on another location knows what they’re in for and is much better equipped to take on more shops.
Red Flag No. 2: The Property Isn’t Ideal
Don’t make a purchase just because of the price. From the purchasing options to the physical location of the shop, these are non-negotiables. If you can’t secure the property, Bullard says, it has no value to you. If you can’t buy it or get a long-term lease of sorts, there is nothing to stop the owner from selling the location out from under you, leaving you with nothing. You also need to make sure that there’s good traffic in the area, or your business simply won’t get any customers.
Red Flag No. 3: The Previous Owner Isn’t Forthcoming with Key Documents
You need to be able to get reasonable financial data, Bullard says. It doesn’t have to be perfect by any means, but it is not too much to ask for three years' worth of P&L and cash flow statements. If they’re not forthcoming with this, it could be because there is an even more dire financial situation than they let on or are even aware of, or worse, some shady stuff may be going on behind the scenes.
Red Flag No. 4: The Business Didn’t Have Your Business Model
Bullard says if all of the marketing is discount offerings, he wouldn’t advise buying that shop. He says any shop that has a value and relationship model will end up having to chase away two-thirds of the customers from the shop. In other words, make sure that the business you are buying fits the model you currently run.
Red Flag No. 5: You’re Constantly Putting Out Fires
Can your business run without you? If not, Bullard says you’re not ready–plain and simple. You need a solid management team in your other locations that will allow you to really step away from that location because the new location is going to need all of your attention until you have it up to your standards. You need to be able to step away and have your other location run seamlessly without you, or now is just not the time.
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