News: Consolidator Report
I recently opened up my own body shop and was slightly concerned after reading the statistic in your December 2012 cover article, “Opening a New Shop,” that revealed that only 33 out of 100 new businesses that open today will still be open in five years. How do I make sure I’m not one of the 67 that close?
I recently opened up my own body shop and got slightly concerned after reading the statistic in your December 2012 cover article, "Opening a New Shop," that revealed that only 33 out of 100 new businesses that open today will still be open in five years. It got me thinking about how I thought I had everything planned out, and sometimes things still don’t go the way you want. How do I make sure I’m not one of the 67 that close?
Asked by Timothy J. Hedrick, Downingtown Collision, Downingtown, Pa.
First, let me say thanks for reading my "Opening a New Shop" article.
The 67 percent failure number is for all small businesses in the U.S. and is from the Small Business Administration. Those numbers include every sort of business, from collision repair shops to florists and travel agencies. Sadly, if we look at the continued decline in the number of collision repair shops over the past 10 years, I think the number may actually be a bit low.
But since you’re already in the business, that number really doesn’t matter! Most of us don’t really plan for business when we open. That’s okay! Since you’re in it, take the important concepts from the article to make sure you become one of the 33 percent who make it.
If you’re new in the business ownership role, read "The E-Myth: Why Most Businesses Don’t Work and What To Do About It" by Michael Gerber. Team up with an accountant who can help you understand the numbers of your business and build "pro-forma" P&L’s and a "pro-forma cash-based cash flow statement."
Most paint companies have business development managers (BDMs) who may be able to help.
Yep, seems like a pain – and it is. But you’ll learn more from the experience of building those statements than you will from five years of hard knocks training. Just understand that building and running a business is more than fixing cars. I’m sure you’ll do well!