Auto Shop Coaching Blog

Five Ways to Avoid the Ten-Year Dropout

According to Entrepreneur Magazine, only 50% of small businesses make it beyond the five-year mark. Lack of sufficient cash flow and market shifts are often the culprits. But did you know that the next big drop-off is at ten years?

At ten years, the failure rate jumps to 70% of small businesses, including independent auto repair shops. The problem is a shop owner may feel like they’ve “figured it out.” They’ve got a good team and a strong customer base, and they are making money.

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So why is ten years the timeframe when many auto repair shops fail? I have worked with hundreds of small business owners and see the same patterns. At the ten-year mark, or sometimes sooner:

  • The business has more expenses than it can handle. Often, the owner is paying personal bills out of the business at a rate the sales can’t support.
  • The business has excessive payroll expenses (too many family members working in the business or wages are too high for the revenue coming in).
  • The owner is exhausted from working open to close for so many years.
  • The owner put someone in charge that is not qualified to run the business.

Eventually, we hit critical mass and the business collapses in on itself.

Here are my top five tips to avoid the ten-year dropout:

1. Find Experts to Help

Did you have a marketing degree, accounting degree, management degree, etc. when you started your business? If the answer is no, reach out to an expert for help. You don’t have to be an expert at everything, but you do need to have a basic understanding of best practices so you can ask the right questions and find the right help.

2. Understand Your Books

Learn how to read your Profit & Loss Statement, Balance Sheet, and Statement of Cashflow so you know where your business stands financially before tax season. Review all the business expenses at least quarterly and compare them to the previous year to see if any dramatically changed. If you are paying personal bills out of the business, know what they are so you can decide what the right course of action is with your accountant.

3. Set Expectations for Everyone on Payroll

I often work with shop owners who have no job descriptions and no written expectations for their team. If you have people on your team that take advantage of you or act entitled, it is probably because you don’t set expectations and don’t hold them accountable. This is especially true in shops with several family members working there. By setting expectations you show your team what success looks like and can create a plan to achieve that success.

4. Create a Manager Success Track

Too many shop owners put someone in charge and don’t keep an eye on them – a poorly trained (or dishonest) manager can have you on the brink of bankruptcy in six months. If you want more freedom, properly train the person who will oversee the shop while you are away, and regularly review the key performance indicators and expenses with them. You’ll spot an issue quickly and fix it before any serious consequences.

5. Learn Leadership Skills

This is by far the #1 reason people leave you. You can’t be a dictator, but you can’t be a pushover either. Leadership and management skills help you get the most out of your team. Learning to be a better leader will reap rewards in all areas of your life.

Do you want to sell your auto repair shop someday? Or pass it on to the next generation? Then start planning for it now by putting in place the foundations of long-term success. At ATI, we help shop owners build that foundation. Get started with one of our shop owner events.


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Charlene is an Executive Coach at ATI, a Certified Profit First Professional, a former shop owner, and has been coaching since 2014. Charlene helps clients find the right solutions to their challenges and encourages them to make the changes that result in having the life they dreamed about when they got into business ownership.