What I look for in developing new sites | 318

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Download my FREE 8-Figure Playbook

This playbook walks through the exact process I used to build from $0 in 2016 to $50M+/year today across multiple franchise brands

Grab it here: https://brianbeers.kit.com/b79cf77012

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Transcript

0:00

Welcome back to the Business with Beers podcast, your source for daily podcasts Monday through Friday, sharing my insights on growing a business to over eight figures. And today I want to talk about something that's been on my mind recently, which is growth. And specifically doing what I'm going to call development deals, where we go out and we find a site and we develop it or we turn it into a Midas automotive brand, which is which is the company that I operate. So there are lots of different ways to grow on the spectrum, right? From acquiring existing franchises and just rolling them up to all the way to the other end of the spectrum is like a ground up build, you know, which I've never done, but other other guys are having success with that. And so over the years, we've done a lot of acquisitions of existing MITA shops. We've done conversions of national brands into our brand, right? Tenant, like they leave, they vacate in a shop, we convert that shop into us. We are in negotiation with multiple people that are independent uh uh businesses, independent uh auto repair franch uh brands, not franchises, not national brands, but you're like, you know, Bob's automotive repair or whatever, Dave's tire and this, and converting them into ours. We have a number of those in the pipeline. I'm gonna talk about more of those on another episode. But today I want to talk about something that I've been uh really diving into, which is these development deals to convert. Now, uh here's how I started it. It's we we want to continue to grow in our footprint, right? So we have 36 stores today. We stretch from the Philadelphia airport up to the almost the Poconos and up to northern New Jersey. But all along the way, there's lots of these little cities that are really good that don't have potential acquisitions there. And so we we like the approach of filling in the map, coloring the lines, make it darker, right? And what it does is it allows us to enter these new markets that maybe don't have any other national competitors. They might not have any like stores at all, like tire stores or people that do conversions, like maybe all the shops that are there are these like small little uh you know, two, three bay shops, like that it's like hard-to-do volume. And so there's this idea that if we can go into a market that we think would do really well based on you know all of our stuff and find a site and then convert that into an automotive repair shop in a cost efficient manner, like it it it opens a whole new world to us. And so this is what I'm like excited about is this this this ability that we've and we've never done this before. Like every one of my stores had been an existing shop that we rebrand and you know we renovate it and stuff, but like there's already lifts, there's already doors, there's already electric, all that, all this stuff, right? What we're talking about is uh, and I'm gonna give you an example today, uh, talking about a deal that I'm I I literally went and looked on Tuesday, which was in Philadelphia. So uh, but to back up a second, I found how I found the deal was I've been working with a really great broker here in the Philadelphia market uh whose specialty is this. They represent tenants uh like like me, they represent Starbucks and Sheron Williams and a bunch of other big names, big retail names, and they go out and they find sites that they can convert into these um, you know, whatever, whatever tenant they're representing. And so they're really good at knowing like what are the traits of the tenant that the tenant's looking for. So for me, they know that like, all right, we need bait, we need like we need a hundred feet long to be able to punch in bays to pull cars in and out, we need parking, we need signage, we need to be in a retail area, we need zoning to be right, right? There's like there's all these factors that make automotive really hard. And I don't want to get into like this is not an automotive podcast by any means, but there are a bunch of things that make it hard. And so the the more clear that you can get on a buy box to determine if a property would work or not, just the easier it's gonna be to be able to find properties and then have a quick filter so you don't waste a bunch of time and then get to the finish line and you realize this thing's not gonna work. So this is one of the one of the things I'd recommend right now to you. If you if you work, if you're in a franchise, you should be able to work with the franchise order to develop this. They should already have this. But even that, like we've kind of developed our own flavor of that that that we use. So for us, uh, this is our buy box. Number one, it's the location within our footprint. Like, if I can find a a site that's within the footprint that we already operate, that's gonna be way more exciting to me than it's like an hour and a half away, okay? Unless, unless we think that that location that is a seed point to open up more. Because we like having our stores in clusters. It's much easier to manage, to have synergies with employees, with customers, with vendors, with marketing, uh, with all these different things, right? So we want clusters of stores. And so uh I'm okay extending it a little bit. If it was like 45 minutes or a half hour out, uh, but it extends it a little bit, totally fine. It's the hour and a half that like there's no synergies created that become more difficult. So that's the first thing I'm gonna look at is the location within our footprint. And the the the better the site there, the more excited I'm I'm gonna be about and willingness to overpay, quote unquote, because I know those synergies are gonna more than make up for whatever that premium is. Then we're gonna look at like the building size, right? It's got to be certain criteria. For us, it's 4,000 square feet. It's like our you know, median or whatever. Bread and butter. Like we'll go up to maybe six, seven, like we'll go down to maybe 25 if we really had to. Um, but for the most part, four, right? We're gonna look at the layout. Like, does it make sense? We're gonna look at parking. Like, if you're in a retail business, you have customers coming going, you have to have parking. Otherwise, like people are gonna get frustrated if they if they can't you know park on site. They're just like not gonna do it, right? They're gonna go somewhere else. I think co-tenants are pretty important. Who are your co-tenants if if you're in a strip center or you've got people right on either side of you? Uh, are you in an area that like if they're gonna shop here, they're gonna shop there. So in our business, like we want to be in retail areas, we want to be buy fast food, we want to be like, oh, like, oh yeah, like I have a noise that's convenient. I'll just swing by there, and then I'll just like walk next door and go to like Popeye's or whatever and get lunch. Like, perfect, right? I joke about not having uh coffee under shops to save money, and like there's there's some stores we're literally next to a Dungadon's, we're literally next to a Starbucks, and um, yeah, makes it makes it great for for us and every everyone, right? Uh you're gonna look at like traffic counts, you're gonna have like how many cars are going by. Like, if you're in a retail business, you need people to like see it. Like you, we can't be in an industrial area, we can't be uh on a on a side street, like we have to be on a major road uh because that's just the type of business we're in. We do look at income, right? So, so income of people that live there, but it is a little bit less of a factor for us because you know, everyone, no matter how much money you make, if you own a car, you have to pay to get it fixed. And to be honest, like some of our best performing locations are in like middle to lower income areas. And so I'm actually like, we're actually okay leaning slightly towards lower income than to say how we want to be in like the richest, richest possible neighborhoods. Um, because you know, it there's just like they just traditionally don't do as well uh as compared to it. So and then competition. So competition's an interesting one. A lot of people think that like, you know, oh, if a competitor's there, I'm not gonna like do much, or oh, the like the pie's only so big. But these pies are way, way bigger than what we think they are. Like they're massive, massive industries that that most of us are gonna be in. And so uh I wouldn't worry as much about the competition uh as long as you know that you're better than them, right? Or that you have a unique market that you're gonna serve that that they're not gonna touch. So we have very clear buy box on what we're looking for now. And it's taken some time to do it and to develop it, but now, man, we can cycle through sites. Like I can literally pick up my phone, someone can send me an address. Within 30 seconds, I could tell you initially is this good or not, based on location, the layout, the size, the cotenants, um, you know, roughly the road, roughly the income. Like there's these things that like immediately I can know. So the better clarity I have than my brokers have, that they can go and hunt me deals because all these brokers are gonna work on contingency. You don't pay them until you get a deal done. So they're the ones who honestly take all the risk in working with you to then not get paid if you don't move forward. And at the end of the day, like the best brokers are only gonna work with people who do deals. So if you're not doing any deals, you know, they're gonna stop working with you. And so you want to make sure you you don't waste their time because plenty of other people do. And so work to try to find a relationship in your market of people who will uh do that for you, and it is you're it's gonna pay dividends. So, um, all right. Brokers, deal box. Uh, so the guys brought me a site in Philadelphia uh last week, two weeks ago, something like that. We got it, we get we toured it this week, and I'm not gonna give too much away because it's still like I haven't I don't have it locked down yet. Once I have it locked down, I'm I'm I'm gonna happy to share more. I have a we we already shot some some video there. Hopefully it's gonna be awesome. So yeah, this is like the criteria that I think through. Okay. So we we found a site, it's a fantastic location in in Philadelphia. It is in a market that has no uh competitors within uh no competitors within at least a mile, which in the fitted city of Philadelphia is like pretty good. The competitors that are outside the mile aren't that good. Uh they're small mom and pop or a couple bays, not national. I have a store that's about over five and a half miles away. There's some other major competitors, another five miles. So, like, man, we're talking great, great spot. Uh so so checkbox, right? Building size, 50, 5,500 square feet, which is, you know, I talked about four for us, good. Layout, though, is different, right? So we love the thing of like pulling cars in and out. This one's not like that. This one you'd have to pull in one door, diagonal lifts, pull out the back. So it is not traditional in that sense. Now, there are plenty of other shops that have this layout. This is not like totally new, it's just we don't have any currently. So that is honestly the biggest thing that we're concerned about is is this like layout gonna work in terms of just like the way we do things? And in a franchise, like your goal is as much copy paste, copy, paste, copy, paste. And so anything that new, you have to do it new or different, is you like you should definitely take some pause to make sure that it's worth it. All right. Traffic counts are pretty good. Like there's signage is a little iffy, parking's a little iffy, but it's a city, so like you just kind of have to deal with it. And so uh anyway, it it checks a lot of the boxes for us. The next steps on this one are gonna get out there with our lift company. We're to like lay out the lifts, see what it feels like, get a car in there, like actually do as much as we can. But uh, there's a lot of good things to like about it. So now on these deals, these development deals, the once you get through all that, all right, is the site gonna work? Um, does it meet all these criteria? Then it's gonna be this question of is it worth it? All right. And for for us, it's not necessarily a money question, as it is a time and time and effort where it's gonna take more work to get these stores up and going. Because you think about if I take over just like this industrial blank, you know, 5,000 square foot box, we are gonna have to build out a waiting room. We're gonna have to put plumbing in to like connect to the sewer drain uh that's like further in. We're gonna have to get the lift guys and like install six lifts and compressors and racking and and electrical work and like you know, there's there's probably I don't have the number yet, but my guess 200, $250,000, you know, worth of stuff. But like somebody has to, I'm gonna say GC it, but you know, GC it to be like, all right, we got to get these vendors in, we got to get this guy, we got this guy, we get these permits, and there's like lots of different moving parts. And it would probably take two months, maybe, to get the store open, maybe a month if we really busted our ass, but probably two months to get the store open. And so during that time, you think about the resources that it puts on the organization of who's gonna lead that process? What is that gonna distract them from? We also have to line up who are we gonna hire. We have to get them hired ahead of time and trained. So day one, we're ready to roll. We got to plan marketing. So it launches on day one. Like there's all these things that are gonna go in, and then you have some unknown factors just because like you're you're doing something different. And at the end of the day, it's gonna be is the time and the effort and the distraction that I'm gonna do on this thing worth the money that I think I can make? And so that becomes the magic question, right? Is like, how much money do you think this location can make? For us, I think it could be a pretty good location. I think it could be a, you know, uh make make us $150,000 to $200,000 a year, which is which is, you know, good, good number. And so, uh, and if it costs us $250 to get it, we're like, all right, could could we get all of our money back in with without taking on any debt in you know a year and some change, maybe maybe it's a year and a half, we're all of our money back, and then we have no debt and the thing makes money every single year. Like, sounds like a like a pretty good deal. Could could we get them all of our money back in a year and get this store to be you know one of one of our best? Like, that is really exciting, right? If you could say, hey, I could open up this store and within a year it could be one of my top five, like, yeah, we we would definitely do that. The concern, the fear is the opposite, which is like, what if I get this thing going and it barely pays the bills? So what if we've distracted us, we took a bunch of time, we invested 250,000, $300,000, whatever it is, maybe there's like overruns, and then the thing barely makes money or breaks even for a year, and we've like we're just like grinding away and we're like we signed a 10-year lease and we're trying to figure out like what we got to do, and maybe there's a reason nobody ever put a shop in this market, right? Uh and so so those are all the concerns, right? But that's the risk that you take as an entrepreneur, that's the risk that you that you take, franchise or not, or independent, doesn't matter. Like you take risk when you decide to open up and put it out there, and that's why you get the rewards if you win, is because you could lose, all right? And so uh I'm excited. I I believe the more that uh I look at these deals and we start doing them and we have some success, then like my worldview will change on this, and I will want to do more and more of these because like I get to start with a blank slate and make it exactly how I want it, potentially, versus you know, the janky buildings or whatever of like these old shops that we're we're also looking at. So uh more on that later. Uh, but this is all I got for today. So work on that buy box. I'll see you tomorrow. Cheers.