As a business owner, are you capitalizing on a growing market? Are you considering an automotive care business expansion? There are a number of ways to grow your business. Growth can mean purchasing the building you are currently leasing, purchasing an additional business, undergoing a new construction project or implementing leasehold improvements or renovations. We’re here to walk you through what you need to know when it comes time to expand your business.
Expansion options and considerations
There are different approaches for securing automotive care business expansion financing. Consider the following:
- Lease vs. own: Most shop owners must eventually confront the issue of whether to purchase or lease their buildings. There are many factors to consider when making this important decision. For new owners who are uncertain of future space needs and are looking to ensure maximum cash flow as they grow their businesses, leasing may be a wise option. New or seasoned owners with strong financial profiles, however, might have a clearer picture of future growth and could be more equipped to take advantage of the tax benefits of commercial real estate ownership. A commercial real estate purchase can provide a solid foundation for growth. Remember, your monthly mortgage payment will often be less than your monthly rent payment.
- Relocation: Oftentimes, the location you initially choose for your business does not work further down the line. For example, it may not provide the space you need over time, or it might not be in the place you desire most. Relocating can remedy these growing pains. Moving to a new location can also provide an opportunity for growing your client base. For example, an ideal location will be visible from sidewalks and roadways to generate more brand awareness and easy access for new customers. Because of these reasons, relocation can help you meet your goals of automotive care business expansion.
- Open a second location: If your first location has proven successful, expanding to a second location under the same brand might be a good option to broaden your visibility, customer base and workforce. With an established business plan, strong customer base and successful employees, the upfront risk is often lower than it is when first breaking into the market. It is important to understand, however, that opening a new location is no simple feat (as you undoubtedly know from opening your first business). You’ll need to ensure your first location is a well-oiled machine, allowing you to focus your efforts on your new shop.
- New construction project: To determine how much debt the business can reasonably support, the lender will evaluate whether the cash flow of the business is sufficient to cover the monthly payments associated with financing the new construction project. In addition to cash flow, other business factors the lender may examine include:
- Revenue trends
- If revenues are maxed out due to limited space
- If upgrades are needed to keep up with competition
- What new services you will be able to offer
- Personal credit (Note that having early conversations with your lender can set you up for more successful access to financing)
- Acquisition: Purchasing an existing location is another way to grow, and this approach may have less risk associated with it than opening a second location. Be sure to weigh transition risks carefully. When it comes to the business you are considering buying, think about the following: How is the business performing? What is the existing customer base? Are they loyal? How will your cash flow be affected?
- Conversions: Converting an independent shop into a franchised brand location is also an option when it comes time to think about your automotive care business expansion. Typically, independent shops can be remodeled in a short amount of time as a result of the design of the existing structure. When purchasing an existing business, visibility and accessibility are crucial. When you consider a conversion, ask yourself, “Would I build a ground-up facility at this location?” Oftentimes, an existing building has an easier time successfully getting through the zoning process. Moreover, a community tends to be more lenient with conversions because the building already exists, and because there is less construction required. Converting can also bring down the overall costs of a facility structure because HVAC systems or other equipment may already exist on the site. All of these factors can influence the success of your business.
Live Oak Bank expansion financing
Let Live Oak Bank be your financial partner as you consider making steps to expand your business. We specialize in automotive care business loans with a team dedicated to the space. We are cash flow lenders and fully understand how to value your assets. We also include the working capital needed to establish a strong business in your community. Some of the benefits of partnering with Live Oak include:
- Flexible down payment options
- Up to 25-year terms with real estate
- Competitive rates
- No prepayment penalties for loans under 15 years
- Loan amounts up to $7.5 million
Let us develop a custom loan package to meet your business needs. Contact Ford Williams at 910.398.3419 or Mark Cyrus at 702.600.4870 to get started.