Succession: Building Up to the Endgame
by Alana Quartuccio
One thing every shop owner will have to do – eventually – is exit their business. Long term planning goes very far in seeing to it that a successful outcome is achieved when the time comes.
Hard work may indeed pay off, but putting in long days and nights to make sure cars are being fixed correctly and customers are served well isn’t the secret to successful exit planning.
Yes, building a strong business reputation for quality work and excellent customer service is absolutely essential to the future, but exit planning itself involves making strategic moves along the way to ensure a prosperous endgame.
Building up to the time of succession comes down to working on the business, not in the business.
In fact, industry leaders believe exit planning should really start on day one.
“As Mike Anderson (Collision Advice) always says, exit planning should begin as soon as one opens their doors,” advises Matt DiFrancesco (High Lift Financial). “The earlier one starts the better, to build a business that can be transferable. When one gets down to less than five years out, it doesn’t give one a lot of time to build value in the business.”
One can’t put a puzzle together without knowing what the picture looks like on the box, says DiFrancesco. Planning has to begin with determining what lifestyle one seeks to have once they transition away from their business.
DiFrancesco has encountered those unfortunate shop owners looking for a quick escape due to burnout. Without investing time to build value into the business, those owners are unlikely to walk away with much – no matter how much of their blood, sweat and tears they may have put in over the years.
“I’ve seen cases where the owner wants out, they don’t have anyone in the family interested in taking over and their employees have made the judgement call that they can’t do it,” he says. “The owner just wants to sell. We start the process by looking at their personal assets and the value of their business if they were to sell to a third party, but many times in these situations we’ll find a value gap. They don’t have enough to generate the income to live the life they want. So, they either sell for less or they get stuck having to continue to work in the business, delaying the exit another five, seven or 10 years, depending on how big that gap is, in order to build value.”
DiFrancesco has seen this type of situation many times. “The reality is that these shop owners are not able to live the life they want if they exit at that point because they won’t get value from the business and they did not save enough to be able to make up that gap.”
Many shop owners don’t realize how dependent the business is on them, which can severely affect the value of the business.
“One of the biggest drivers of value lies in how dependent the business is on the owner,” DiFrancesco explains. “The more dependent the shop is on the owner, the less value they are going to have so it’s really about building a business that can function without the owner having to be there. That’s really the starting point.”
There are many things shop owners need to consider when thinking about stepping away. Some of those things involve making sure systems and procedures are in place but it also comes down to taking a look at who may be in place to step to the plate.
“A lot of times it’s about the whos not the hows. Do you have the right people to carry out the tasks you need to accomplish? Or will you use technology like AI, which can be a great tool. In some cases, AI can take the place of having to hire certain people for certain tasks. Do you have proper SOPs in place? All these things help build value in the business.”
Diversifying one’s business is another strategic way to build value. “It spreads your risk. It’s like how with your 401k, you don’t want all your eggs in one basket, having one stock to ride out that’s supposed to take you to the moon. It’s the same with your shop. When things are flat like right now, having additional revenues like mechanical repair, calibrations, glass repair can create more value in the business and increase cash flow too to help you fund the things you need to fund to make the shop less dependent on yourself.”
The more time a shop puts into working on the business and planning for the future the better leverage they will have in the long run.
DiFrancesco suggests identifying someone in the shop who can take ownership of tasks done by the owner. “Automatically, we look to the low hanging fruit first to start transitioning things off of the owner’s plate. That will immediately start to reduce the dependency of the shop on the owner.”
Not only do these things make the business more attractive to a potential third-party buyer should a shop choose to sell one day, but it also helps put the shop owner in a better financial position to help them prepare for post-shop life.
“Shop owners who have diversified income or have another revenue source through rent from real estate don’t have to maximize the value of the shop. In those cases, the shop owner can achieve the lifestyle they want. In these cases, prep work was done in advance to diversify income sources and make the business less dependent on the owner. We also helped them increase their personal assets. We put retirement plans in place. Have them. Instead of keeping all the funds retained in the business, which typically they don’t end up using, have them funnel it through some type of 401k profit sharing plan so they keep those assets so they have personal wealth and diversified income sources that will guarantee a successful exit down the road to live the life they want.”
DiFrancesco has observed many shop owners discover other benefits from building their businesses up in order to become less dependent on them. “I find most owners love the business but get tired of the BS, fighting with insurance companies trying to get paid. When they discover that they can create a world where their shop isn’t as dependent on them and they can still achieve cash flow, they realize they can stay in because they don’t have to come in more than 20 hours or 10 hours a week.”
He suggests another important aspect of the whole process. “Figure out who you want to be when you grow up,” DiFrancesco advises. He’s encountered more than one shop owner who was ecstatic at the beginning and happy with the sale, but years later found themselves questioning what their purpose was. “Everyone needs to have purpose in life.”
DiFrancesco believes what may be most important of all is taking what he calls “renewal time.”
“We do need time to work in the business and then we need to schedule the time to work on the business to do the larger level planning to create that vision for what we want our life and our business to look like. But then we need renewal time to just get away from it all. That’s when the real breakthroughs happen. When traveling to the beach or a resort, we may get out of our environment but as entrepreneurs, our subconscious minds are always working and this is where you get the great ideas. I always keep a notebook with me to jot stuff down. It’s learning to schedule not only the strategic time but the renewal time because that is when we have the big breakthroughs.”
Want more? Check out the November 2026 issue of AASP-MN News!