Loading summary
Transcript1 lines
- [00:00]
A
Welcome back to the Business with Beers podcast, your source for daily podcasts Monday through Friday, sharing my insights on growing a business to over eight figures. And today I want to talk about something that's been on my mind recently, which is growth, specifically doing what I'm going to call development deals, where we go out and we find a site and we develop it or we turn it into a Midus Automotive brand, which is the company that I operate. So there are lots of different ways to grow on the spectrum, right? From acquiring existing franchises and just rolling them up to all the way at the other end of the spectrum is like a ground up build, which I've never done, but other guys are having success with that. And so over the years, we've done a lot of acquisitions of existing Mitre shops. We've done conversions of national brands into our brand right tenant. Like they leave, they vacate in a shop, we convert that shop into us. We are in negotiation with multiple people that are independent businesses, independent auto repair brands, not franchises, not national brands. But you're like, you know, Bob's Automotive Repair or whatever, Dave's Tire and this and converting them into, to ours. We have a number of those in the pipeline. I'm going to talk about more of those on another episode. But today I want to talk about something that I've been really diving into, which is these development deals to convert. Now here's how I started it. We want to continue to grow in our footprint, right? So we have 36 stores today. We stretch from the Philadelphia airport up to almost the Poconos and up to northern New Jersey. But all along the way there's lots of these little cities that are really good that, that don't have potential acquisitions there. And so we like the approach of filling in the map color in the lines, make it darker, right? And what it does is it allows us to enter these new markets that maybe don't have any other national competitors. They might not have any like stores at all, like tire stores or people that do conversions, like maybe all the shops that are there or these like small little, you know, two three bay shops. Like it's like hard to do volume. And so there's this idea that if we can go into a market that we think would do really well based on, you know, all of our stuff and find a site and then convert that into an automotive repair shop in a cost efficient manner like it, it opens a whole new world to us. And so this is what I'm like excited about, is this, this, this, this ability that we've. And we've never done this before. Like, every one of my stores had been an existing shop that we rebrand and, you know, we renovate it and stuff. But, like, there's already lifts, there's already doors, there's already electric. All that. All this stuff. Right? What we're talking about is, and I'm going to give you an example today, talking about a deal that I literally went and looked on Tuesday, which was in Philadelphia. So. But to back up a second, I found. How I found the deal was I've been working with a really great broker here in the Philadelphia market whose specialty is this. They represent tenants like me. They represent Starbucks and Sherwin Williams and a bunch of other big names, big retail names. And they go out and they find sites that they can convert into these, whatever tenant they're representing. So they're really good at knowing what are the traits of the tenant that the tenant's looking for. So for me, they know that, like, all right, we need 100ft long to be able to punch in bays to pull cars in and out. We need parking, we need signage, we need to be in a retail area. We need zoning to be right. Right. There's, like, there's all these factors that make automotive really hard. And I don't want to get into, like, it's not an automotive podcast by any means, but there are a bunch of things that make it hard. And so the. The more clear that you can get on a buy box to determine if a property would work or not, just the easier it's going to be to be able to find properties and then have a quick filter so you don't waste a bunch of time and then get to the finish line and you realize this thing's not going to work. So this is one of the things I'd recommend right now to you. If you work, if you're in a franchise, you should be able to work with the franchise order to develop this. They should already have this. But even that, like, we've kind of developed our own flavor of that that we use. So for us, this is our buy box number one. It's the location within our footprint. Like, if I can find a site that's within the footprint that we already operate, that's going to be way more exciting to me than it's like an hour and a half away. Okay. Unless. Unless we think that that location that is a seed point to open up more because we like having our stores and clusters. It's much easier to manage to have Synergies with employees, with customers, with vendors, with marketing, with all these different things, right? So we want clusters of stores. And so I'm okay extending it a little bit if it was like 45 minutes or a half hour out, but it extends it a little bit, totally fine. It's the hour and a half that there's no synergies created that become more difficult. So that's the first thing I'm going to look at is the location within our footprint. And the better the site there, the more excited I'm going to be about and willingness to overpay, quote, unquote, because I know those synergies are going to more than make up for whatever that premium is. Then we're looking at like the building size, right? It's got to be certain criteria for us. It's 4,000 square feet. It's like our median or whatever. Bread and butter. Like, we'll go up to maybe 6, 7. Like, we'll go down to maybe 25 if we really had to. But for the most part, four. Right. We're going to look at the layout. Like, does it make sense? We're going to look at parking. Like, if you're in a retail business, you have customers coming, going. You have to have parking. Otherwise, like, people are going to get frustrated if they can't park on site. They're just like not going to do it. Right. They're going to go somewhere else. I think co tenants are pretty important. Who are your co tenants? If you're in a strip center or you've got people right on either side of you, are you in an area that if they're gonna shop here, they're gonna shop there. So in our business, we wanna be in retail areas. We wanna buy fast food. We wanna be like, oh, yeah, I have a noise that's convenient. I'll just swing by there and then I'll just walk next door and go to Popeye's or whatever and get lunch. Perfect. I joke about not having coffee under shops to save money. And there's. There's some stores. We're literally next to a Dunkin Donuts. We're literally next to a Starbucks. And yeah, makes it great for us and everyone, right? You're looking at traffic counts. You're going to have how many cars are going by. If you're in a retail business, you need people see it. We can't be in an industrial area. We can't be on a side street. We have to be on a major road because that's just the Type of business we're in. We do look at income, so income of people that live there. But it is a little bit less of a factor for us because everyone, no matter how much money you make, if you own a car, you have to pay to get it fixed. And to be honest, like some of our best performing locations are in like middle to lower income areas. And so I'm actually like, we're actually okay leaning slightly towards lower income than to say how we want to be in like the richest, richest possible neighborhoods. Because you know, there's just like, they just traditionally don't do as well as compared to it. So and then competition. So competition's an interesting one. A lot of people think that like, oh, if a competitor's there, I'm not going to do much or oh, the pie is only so big. But these pies are way, way bigger than what we think they are. They're massive, massive industries that most of us are going to be in. And so I wouldn't worry as much about the competition as long as you know that you're better than them or that you have a unique market that you're going to serve that they're not going to touch. So we have very clear buy box on what we're looking for now. And it's taken some time to do it and to develop it. But now, man, we can cycle through sites like I can literally pick up my phone, someone could send me an address within 30 seconds. I could tell you initially is this good or not based on location, the layout, the size, the co tenants, you know, roughly the road, roughly the income. Like there's these things that like immediately I can know. So the better clarity I have the, that my brokers have that they can go and hunt me deals. Because all these brokers are going to work on contingency. You don't pay them until you get a deal done. So they're the ones who honestly take all the risk in working with you to then not get paid if you don't move forward. And at the end of the day, the best brokers are only going to work with people who do deals. So if you're not doing any deals, they're going to stop working with you. And so you want to make sure you, you don't waste their time because plenty of other people do. And so work to try to find a relationship in your market of people who will do that for you. And it's gonna pay dividends. So. All right, brokers deal box. So the guys brought me a site In Philadelphia last week, two weeks ago, something like that. We toured it this week. And I'm not gonna give too much away because it's still like, I don't have it locked down yet. Once I have it locked down, I'm gonna happy to share more. We already shot some video there. Hopefully it's gonna be awesome. So, yeah, this is, like, the criteria that I think through. Okay, so we found a site. It's a fantastic location in Philadelphia. It is in a market that has no competitors within. No competitors within at least a mile, which in the city of Philadelphia is, like, pretty good. The competitors that are outside the mile aren't that good. They're small, mom and pop, or a couple bays. Not national. I have a store that's about over five and a half miles away. There's some other major competitors, another five miles. So, like, man, we're talking great, great spot. So checkbox, right. Building size 50, 500 square feet, which is, you know, I talked about four for us. Good layout, though, is different, Right? So we love the thing of, like, pulling cars in and out. This one's not like that. This one, you'd have to pull in one door, and diagonal lifts pull out the back. So it is not traditional in that sense. Now, there are plenty of other shops that have this layout. This is not, like, totally new. It's just we don't have any currently. So that is honestly the biggest thing that we're concerned about is is this, like, layout going to work in terms of just, like, the way we do things? And in a franchise, like, your goal is as much copy paste, copy paste, copy paste. And so anything that new, you have to do it new or different is, like, you should definitely take some pause to make sure that it's worth it. Traffic counts are pretty good. Like, there's signage is a little iffy. Parking's a little iffy, but it's a city, so, like, you just kind of have to deal with it. And so anyway, it checks a lot of the boxes for us. The next steps on this one are going to get out there with our lift company. We're like, lay out the lift, see what it feels like, get a car in there. Like, actually do as much as we can, but there's a lot of good things to like about it. So now, on these deals, these development deals, once you get through all that, all right, is the site going to work? Does it meet all these criteria? Then it's going to be this question of, is it worth it? All right. And for us, it's not necessarily a money question, as it is a time and effort where it's going to take more work to get these stores up and going. Because you think about if I take over just like this industrial blanket, you know, 5,000 square foot box, we are going to have to build out a waiting room. We're going to have to put plumbing in to, like, connect to the sewer drain. That's, like, further in, we're going to have to get the lift guys and, like, install six lifts and compressors and racking and electrical work. And, like, you know, there's probably. I don't have the number yet, but my guess, 200, $250,000, you know, worth of stuff. But, like, somebody has to. I'm going to say GC it, but, you know, GC it to be like, all right, we got to get these vendors in. We got to get this guy. We got this guy. We got these permits, and there's, like, lots of different moving parts. And it would probably take two months maybe to get the store open. Maybe a month if we really busted our ass, but probably two months to get the store open. And so during that time, you think about the resources that it puts on the organization of who's going to lead that process. What is that going to distract them from? We also have to line up. Who are we going to hire? We have to get them hired ahead of time and trained. So day one, we're ready to roll. We gotta plan marketing. So it launches on day one. Like, there's all these things that are gonna go in, and then you have some unknown factors just because, like, you're. You're doing something different. And at the end of the day, it's gonna be. Is the time and the effort and the distraction that I'm gonna do on this thing worth the money that I think I can make? And so that becomes the magic question, right? It's like, how much money do you think this location can make for us? I think it could be a pretty good location. I think it could be a, you know, make. Make us 150 to $200,000 a year. Which is. Which is, you know, good. Good number. And so. And if it cost us 250 to get it, we're like, all right, could. Could we get all of our money back in without taking on any debt in, you know, a year and some change? May. Maybe it's a year and a half, we're all of our money back, and then we have no debt. And the thing makes money every single year. Like, sounds like a pretty good deal. Could, could we get them all of our money back in a year and get this store to be, you know, one of, one of our best? Like, that is really exciting, right? If you could say, hey, I could open up this store and within a year it could be one of my top five. Like, yeah, we would definitely do that. The concern, the fear is the opposite, which is like, what if I get this thing going and it barely pays the bills? So what if we've distracted us, we took a bunch of time, we invested 250,000, $300,000, whatever it is, maybe there's like overruns and then the thing barely makes money or breaks even for a year and we've like, we're just like grinding away and we're like, we signed a 10 year lease and we're trying to figure out, like, what we gotta do. And maybe there's a reason nobody ever put a shop in this market, right? And so those are all the concerns, right? But that's the risk that you take as an entrepreneur. That's the risk that you take. Franchise or not or independent, it doesn't matter. Like, you take risk when you decide to open up and put it out there. And that's why you get the rewards if you win is because you could lose. All right? And so I'm excited. I believe the more that I look at these deals and we start doing them and we have some success, then like, my worldview will change on this and I will want to do more and more of these because I get to start with a blank slate and make it exactly how I want it potentially versus, you know, the janky buildings or whatever of like these old shops that we're also looking at. So more on that later. But this is all I got for today, so work on that buy box. I'll see you tomorrow. Cheers.