Not all investments are good ones.
Probably the worst thing to do is to open up a new store based solely off of the building or location, says Scott Schaefer, vice president of Schaefer Auto Body Centers.
Just because something is visually appealing does not mean it will be successful.
“The whole startup process, if you don’t have sales coming in the door, it can be really tough,” Schaefer says. “Our approach—whether it’s an acquisition or a startup—is to make certain there’s an existing customer base and that there’s high demand.”
Determining what shop qualifies as an ideal investment is a large majority of what Schaefer does on a day-to-day basis. Since 1985, the family-owned and operated Missouri-based Schaefer Autobody Centers has grown to 11 shops. Those opportunities came in a variety of different forms—from vacant dealership shops to existing body shops. Had Schaefer not known how to be on the lookout for quality investments, he may have missed out on some of these opportunities.
Schaefer shares a few key tips that’s he’s picked up along the way for finding a new location.
Seek Out Sources
When looking for a new business venture, focus on specific resources that can help lead the way. For Schaefer, one of the first contacts is those in the insurance industry.
“Before we start looking at a market, we’re talking to the insurance company about where they have a need,” he says. “It’s typical for them to not have a shop in a certain market.”
Insurance companies have helped Schaefer discover what specific areas could use additional help as well as how his shop is able to assist.
“As long as insurance companies say there’s a strong demand, we feel confident enough to go in and start up,” he says.
Along with seeking out insurance companies, check in with available resources such as research programs available at local libraries or community information gathered. Schaefer’s paint company has the ability to generate market reports which can reveal specific information such as household median, car count and average annual income.
“Triple check that you’re going to get sales for that new location,” he says. “You might have one or two insurance companies [on board], but you don’t want to have all the eggs in one basket.”
Consider All Options
When looking into a new building, focus on key elements it has that could bring customers through the door. For example, instead of getting hung up on the fact that you need to find an existing shop, a vacant furniture store be an ideal location and have all of the space you’re looking for. It all depends on what’s most important to you in your next location. For Schaefer, one of the best situations was the acquisition of a former dealership body shop.
“They have good equipment, good square footage and an established customer base,” he says.
Utilize Your Network
Make sure to reach out to your network. There are pools of resources that can be pulled from: those from I-CAR trainings, golf charity events, or even connections made through training sessions at a conference.
If a land is worthwhile or a business deal is on the horizon, more than likely those discussions will take place with those who also have an inside look on the industry. Networking at these events can give you a headstart with these opportunities.
“It’s one of those things where developing those relationships over the years and just creating that trust [is important],” he says. “If somebody’s interested and they feel like they can talk and trust you—that’s always the most critical thing.”
Create Meaningful Relationships
Establishing relationships with both customers and shop owners could potentially open up the door to business ventures in the future. Recently, Schaefer was contacted by a dealership-owned body shop who Schaefer Autobody Centers had worked with in the past.
“It was just a situation where the owner decided he was ready to sell the business and liked doing business with us already,” Schaefer says. “Really, the best possible thing is either [through] the insurance company [where] a market is underserved, or where dealerships let us know of that opportunity.”
