Planning Your Business Exit

Planning for Your Exit: A Guide for Independent Garage Owners

Introduction

As an independent garage owner, you’ve probably spent years building up your business, creating a loyal customer base, and troubleshooting all kinds of challenges along the way. But what about planning your exit? Whether it’s a few years away or something you’re just starting to think about, setting up a solid exit strategy now can make a huge difference. In fact, aiming for a 1-3 year (or even longer) runway before you plan to leave gives you options, flexibility, and the chance to get the most value out of your business.

Deciding to sell and move to a different stage in life needs to be planned. The business needs to be playing its ‘A’ game financially, as well as operating independently of you.

A business that can run itself is a business that’s more sellable. So, even if you don’t have a fixed exit date yet, now might be the perfect time to make some changes that will enable a smoother exit when the time comes.

These are all things I didn’t know and I learnt some the hard way. That’s why I want to share these initial tips with you.

1. Why Self-Sufficiency is the Key to a Strong Sale

Imagine you’re a buyer looking at two garages. One is heavily dependent on its owner; the other runs on its own. Which one seems more attractive? It’s the one that’s self-sufficient. If your garage can operate independently of you, it opens up the market to a wider range of buyers, including those without industry experience. I have to say that I am a fan of owners having industry experience, but at the point of sale you will want as many prospective buyers as possible.

Consider where you’re currently involved in day-to-day operations and start building a team or implementing systems to manage these areas. This could mean training staff to handle customer interactions or if you are the go-to diagnostic guru, start to enable other team members to be that person. The goal is for potential buyers to see that the garage will continue to run smoothly—even if you’re no longer there. This does have another benefit of course. In the meantime, you can enjoy hassle free holidays!

2. Exploring Your Exit Options

When it comes to exiting a business, there are a few common paths to consider. Each one has its own unique set of benefits and challenges, and the right choice depends on your personal goals and business setup.

Selling to Another Business or Interested Party

The first option many owners consider is selling outright to another business or interested party. Maybe it’s a local chain looking to expand, or perhaps an individual with an entrepreneurial spirit. Keep in mind that some buyers might be interested in your customer list, skilled team, and reputation, while others are after a steady income stream they can build on.

It’s also worth noting that some buyers might not have the technical expertise you do, which means they’ll likely value a setup that’s less hands-on. The more your business operates smoothly without you, the broader your pool of potential buyers.

Winding Down and Closing

If selling doesn’t feel right or there’s no one suitable to take over, winding down and closing the business could be an option. This involves selling off assets, paying down any outstanding debts, and then closing up. While this approach may feel bittersweet, it’s a straightforward path if you don’t have a successor in mind. The downside, of course, is that your customer base and goodwill built over the years won’t carry forward.

Passing the Business to Family or Key Employees

For some, the goal is to keep the business in the family or pass it on to a key employee who’s earned their stripes over the years. This transition takes time—so it’s good to start planning early. Your successor will need not only technical skills but also a solid understanding of business management to keep things running. If a family or employee transition is your chosen route, begin early conversations, training, and mentorship well in advance.

3. Finding the Right Buyer: Key Questions to Consider

A critical part of any business sale is finding the right buyer. Here are some questions that can help guide this process:

• Does the Buyer Need to Be Technical? It depends on the buyer’s plans. If they intend to work on the floor, they’ll need hands-on skills. However, if they’re more of a hands-off investor, their focus will be on management skills. Knowing this ahead of time can help you position your business to appeal to the right buyer.

• Do you Own the Premises? If you own the building, you’ll need to decide whether you’re selling it with the business or offering a lease to the buyer. Both options have their own advantages. Selling the property could increase the sale price significantly, while leasing it offers you a continued income stream. If you’re leasing the premises yourself, think about how you can make a leasehold business attractive—whether by securing a long-term lease or ensuring flexibility for the buyer.

4. Navigating the Valuation Process

One thing that can catch owners off guard is how varied valuations can be. If you speak to a few sales agents or business valuers, don’t be surprised if they each come back with different numbers. Valuations are influenced by factors like profitability, the strength of your customer base, condition of assets, market trends and length of lease.

If you’re serious about selling, it’s wise to get an expert opinion and to understand that some buyers may place different weights on parts of the business. For example, a buyer looking for a long-term investment might prioritise a reliable income stream, while a more hands-on buyer may value equipment and facilities more heavily.

5. Structuring the Sale: Financing and Flexibility

Buyers today have a range of financing options, and the way you structure your sale can influence who might be interested. Here are some options to be aware of:

• Traditional Bank Loans: This is common but might limit your buyer pool to those with strong credit histories or previous business ownership experience.

• Vendor Finance: With vendor finance, you essentially “loan” part of the purchase price to the buyer, letting them pay over time. This was the biggest surprise to me in the sale process. The agents don't tell you, but they expect you to be open to the idea, almost as if it's the norm. Well it isn't but is getting increasingly common.

This can make your business more accessible to buyers who might not qualify for a bank loan right away. It’s a good option if you want to attract a larger group of interested buyers, but make sure to assess risks carefully and involve a professional to set terms. If not done right you could end up back at the helm of a failed business.

Flexible terms or instalment payments might increase the price you can ask, while cash-only sales might mean a lower price. It’s a balancing act—know what works best for your goals.

6. Creating a Timeline for Exit Preparation

A structured approach makes the exit process easier and more predictable. Here’s a general timeline to get you started:

• 1-3 Years Before Exit: Start preparing the business to run without you by delegating responsibilities and streamlining processes. Update records and create training manuals to make transitions smoother.

• 12-18 Months Before Exit: Begin discussions with valuers and start identifying potential buyers. This is also a good time to address any leasehold considerations if applicable.

• 6-12 Months Before Exit: Finalise the valuation, update financials, and start working with legal professionals to structure the sale, whether it involves a lease transfer or property sale. This stage is where buyer financing discussions and final business adjustments come in.

Conclusion

Planning an exit isn’t something that happens overnight—it takes thoughtful preparation and a proactive approach. By getting a head start, you’re setting yourself and your business up for the best outcome, with a legacy you can be proud of. Whether you plan to sell, pass it down, or wind things up, a well-organised exit strategy is the key to making sure your years of hard work pay off and your customers are well taken care of.

If you would like help with exit planning, then please get in touch. You can book a free initial consultation here.