Tire Shop Expansion | Good Or Bad Idea?
Do you recommend expanding?
Expansion is a case-by-case situation. We had 10 or so years of success, before expanded. You know we were fortunate to expand in the 80s and we were the only Wholesaler for Hercules Tires in Oklahoma.
So our story of expansion doesn’t revolve solely around expanding a retail shop. Our wholesale business allowed for those expansions.
So when we finally made our final expansion of 7 stores, we were geared up to reach every mom and pop business in Oklahoma And Kansas (wholesale). Our strength in wholesaling and exclusivity, allowed for our expansions.
Where Are You Now (Retail/Wholesale)?
The industry was changing, national brands were developing routes to reach the thousands of mom & pop shops across the state that solely depended on Hercules for their tires. Eventually, we would sell our big wholesale component and it left us with 7 retail locations, now 5.
Like all businesses your business structure changes to meet demand. We were no longer wholesale, we were strictly retail. My, my what a puzzle to solve. We had this colossal business structure that met the demands of our mom and pop tire shops (wholesale), while meeting the demands of our tire repair & auto repair clients (retail).
It took us awhile to figure it out; we’re still figuring it out.
We loved wholesaling, we were good at it. Selling our wholesale business was inevitable as the internet changed, national brands expanded, and manufacturers changed. It’s hard not to think back of how much fun we had developing the wholesale Hercules Tire Industry in Oklahoma.
Back to retail expansion. That leg of our business that provided cushion enough to expand, no longer was our comfort blanket. We had to be good at retail. We had to think like a retail shop and that was different.
We were always good at retail, but when you go from two focuses to one focus, you learn quickly, you can be better.
This was the biggest struggle. Restructuring our business. Although we were extremely large & profitable, we were still like a mom & pop shop. Letting people go (downsizing) was never on our mind. These people become family and depend on you. So restructuring to match the change was very complex.
So Is Expansion Good or Bad?
Well, truthfully it can be both. Most expansions that we did, we didn’t actually go hunt for them. They came to us and we thought, we are successful, lets expand.
Expansion has been wonderful for our family. It has given us everything we’ve wanted as a result of smart, hard work. But to say it’s been a bed of roses would be a lie.
When it rains and you have one roof, it rains on one roof. When you have many roofs, it rains on many roofs.
In retail, unlike stocks, you need all your locations to be successful. You can’t approach retail as a hedge fund. You need profitability, or the organizational complexity can get out of balance. This is why training is essential, among other things.
What is Your advice For Someone Looking To Expand?
Invest money in training systems. If you can, dig deeper not wider. Although, the life we have lived may or may not have been possible with one store, as I look back, we could have always dug deeper down within the ground we had, before grabbing more ground.
Keeping employees in the same building is one thing you will lose with expansion.
When you don’t see employees everyday they lose your identity. The only way to keep them honest is to make them feel like family, pay them what they are worth & also keep them learning.
If you can create processes, videos, manuals, & shadowing for everything in your retail location you will eliminate a lot of headaches.
Yes you can have 16 cameras facing every direction. Yes you can retain a store manager for 10-15 years and keep 95% of the business consistency through that individual.
But it’s controlling those last 5% of the variables, those details, that can only be managed through training processes; there is no way to remove the headache of expansion but there are keys to ensure long term success.
“I am great at training others, I should expand!”
Training is the key.
A scaleable system for training.
Don’t think, I love training I will do all the training. It’s not true or possible at scale. You have to create a duplicate-able system that can achieve scale and can scale with your growth.
So your telling me not to expand? When you’ve got a supporting cast that can help with the work load. When you have processes that are documented. When you have enough cash flow to allow for mistakes, you’re ready to consult someone that has!
If your business isn’t turn-key to the point where it could be turned into a franchise, then it might be a little early for expansion.
Build a team, not a workforce
Only you know if you have the personality and support for expansion. There are many ways to skin a cat and there are many ways to a successful expansion program. But one thing is true, if you can’t lead a team, you will find it difficult. Scaling wouldn’t have been a thought in our minds, if we didn’t have the ability to lead and build a team.
Co-Owner of Hercules Tire Sales