Building a Shop That’s Actually Worth Something: How to Create Real Business Value Before You Exit

Most shop owners do not start out thinking like investors. They start because they want control, they want to make a living, or they believe they can do the job better than the place they came from. That is normal. It is also the reason many owners wake up decades later with a hard truth in front of them. They worked their fingers to the bone, served customers well, and still do not have enough value in the business to retire comfortably.

In this article, we dig into the uncomfortable part of the automotive industry that many people avoid. What is your shop worth, really, and what makes it valuable to anyone besides you?

Cecil Bullard's perspective comes from 43 years in the industry, plus years of evaluating businesses in real disputes, including court testimony where the numbers had to hold up under scrutiny.

Michael Herzberg-Smith comes from a Fortune 500 consulting background and now focuses heavily on mergers, acquisitions, and investor expectations inside the automotive service space.

Together, they frame the same message from two angles. If you do not build value intentionally, there is a good chance you will not get it at the end.

The heartbreak story that explains the problem

Michael shared a story from a top-performing group of shop owners. One of them bought a business from his dad. It was a third-generation legacy. They wanted to do right by their father and to pay him as much as possible.

They ran through proper valuation from an investor perspective. The result shocked everyone: The business was only worth $13,000.

“Forty years… in the business it was worth $13,000 on paper from an investor perspective.”

The number is not the point. The point is what it represents. A shop can have a great name in town and still have almost no transferable value if it does not produce real profit, if the owner is the business, or if the operations are not built to survive a handoff.

Cecil connects that story to something personal. His father worked in the trade his whole life, started his own shop, and worked relentlessly. He loved the work, but the financial outcome was not what it should have been. That reality drives Cecil’s urgency with shop owners now.

Most businesses are cash machines, not assets

Michael shared a statistic that should make every owner sit up. Private equity looks at privately held businesses across all industries and asks a specific question: would this company be a good investment for someone to buy?

The answer is brutal.

“Eighty to eighty-five percent of privately held businesses… do not have enough significant value in them for an investor to even buy them.”

In other words, most owners run their business for income today, but they never build a sellable asset for tomorrow. They pull money out in ways that feel smart in the moment and quietly destroy value on the back end.

Cecil gave a clear example: Owners who run personal expenses through the company to save taxes might “save” $10,000 to $12,000 in a year, but reduce net profit by $50,000. If your business sells for a multiple of profits, that one habit can cost you $150,000 or more at exit. That is not a strategy, that is trading dollars for pennies.

Profit is not optional, and guilt about profit is a trap

A major theme in this transcript is that none of the “soft” value factors matter if the business is not profitable.

“If you’re not profitable… none of the other crap matters. It has no value.”

A shop that nets 4 percent is usually not sellable in a meaningful way. A shop that consistently nets 15 percent, 18 percent, or 20 percent is a different conversation entirely. Not because those numbers sound nice, but because banks lend on profit, buyers pay for profit, and investors judge everything through profit.

Michael added a mindset reframe for owners who feel guilty charging enough to be profitable. He compares it to how customers buy services in other areas of life. When your HVAC goes out, you do not ask the contractor to remove their profit margin. You want quality, warranty, and confidence that you will not be dealing with the problem again soon.

Then he makes the competitive point that matters.

“There’s only one low price player in every market… it’s a race to destruction.”

Cecil followed it with the shop-owner version of the same truth.

“No matter how cheap you can be, someone can be cheaper than you. You can’t win that game.”

If you build your shop around being the cheapest, you are competing in a category where the winner is usually the person with the least overhead, the least compliance, and the least to lose. That is not the position you want if you are building a business meant to support a family and eventually fund a retirement.

You are a private equity investor, whether you admit it or not

One of the most important mindset shifts is the idea that every shop owner is an investor. You invested time, money, and risk into an asset. You are building equity, or you are not.

Cecil says it plainly. “You are an investor whether you like it or not.”

Michael pushes it even further. He wants owners to stop describing themselves as “just owner-operators” and start thinking, “I’m a private equity investor who happens to invest in auto service companies.”

That is not a gimmick it's a mental model. If you build and run your shop like an investor, you make different decisions. You care about transferable systems, leadership depth, customer quality, and consistency of profits, not just “getting through this month.”

The four types of “capital” that create real shop value

Here is a short list of what investors actually pay more for. Not slogans, not “we care,” not a fancy logo. Investors pay for durable business value that survives the exit of the owner.

He describes four categories.

Human capital: Do you have rock stars, leaders, and a team that can run the business without you?

Social capital: Is your culture strong, and is your market reputation meaningfully better than average?

Customer capital: Do you have premium, loyal clients who come back, spend well, and refer others?

Structural capital: Have you institutionalized everything through systems and processes so the business continues without your hands on it?

Cecil reinforces that this is not theoretical. He has seen shops with good reputations close their doors because they were not profitable enough to be purchased, and no bank would lend on them. Reputation without performance is fragile and unsustainable.

Michael also adds an important clarification that many owners miss. Brand is your external company personality and culture is your internal company personality. If they do not match, you are creating a business people will not trust for long. Consistency is what builds the kind of reputation that attracts both great employees and great customers.

The “answer man” owner is a value killer

Many owners become the emergency technician, the fallback service advisor, the head diagnostician, the bookkeeper, and the final decision-maker in every situation. It feels important, and it feels validating.

Michael explains why it happens. Being the answer person gives you a dopamine hit. People need you, you fix it, you feel useful. The problem is that this same dynamic traps you inside the business and reduces value to a buyer.

An investor will ask a painful question: “How much do you work on the business versus in the business?”

Every role the owner plays becomes a role the buyer has to replace. The more “essential” you are, the less your business is worth.

Cecil provides a real example: A large client had an owner who was the head diagnostician. He got cancer and had to step away. The shop suddenly faced a crisis because the diagnostic capability was concentrated in one person. That is not just a continuity risk, that is a valuation risk as well.

Both of them make the same point in different words. Building human capital is not optional. It is how you stop being the ceiling on your own business.

Private equity is not the enemy, but it will change the industry

Early private equity attempts in automotive often failed because buyers targeted poorly run shops and assumed they could “fix” operations after purchase. Many could not, because they did not understand how to build the foundation: people, culture, systems, and real shop execution.

Now that investors have learned, they are hunting differently. They want profitable businesses with strong teams, clear processes, and durable value. They will pay more for those companies.

Cecil says he gets multiple inquiries every week from investors looking to buy, or looking for help identifying shops worth buying.

Michael frames it as a multi-decade wave that will reshape the industry, and he argues that owners owe it to themselves to understand the options, then decide intelligently. Selling to private equity is one path and selling to a key employee or family member is another. Closing the doors and liquidating assets is the path nobody wants, but many owners drift into it because they waited too long.

Exit planning is not something you do at the end

It does not matter if you are 25, 35, 65, or 70, you need an out strategy. Michael adds that exit strategy works backward where you start with the life you want after the sale, the money required to support that life, what the business must deliver to get you there, and then you build a plan to close the gap from where you are today.

They also remind owners that building value does not require building a seven-shop platform. You can create a highly valuable single-location shop. The requirement is not scaling to multiple shops.

The requirement is performance, leadership depth, strong customers, and a business that can operate without the owner being the main engine.

And for owners who are skeptical, Cecil makes a final practical point. There is a lot of free education available. Use it. Learn. Stop waiting for the last minute to discover what you

could have built the entire time.

The takeaway

If you want a shop that is worth real money at exit, you have to treat it like an asset, not just a paycheck. That means you build profitability without guilt. You build teams that can perform without you. You create a culture and brand that match. You attract premium customers who stay. You install systems that make excellence repeatable.

Do those things and you gain options. You can sell to a key employee. You can sell to family. You can sell to a strategic buyer. You can sell to private equity. You can also choose not to sell yet, because you are no longer trapped.

Do not wait until the end to find out what you should have done earlier. Start thinking like an investor now, because you already are one.