5 reasons why some shops fail

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It doesn’t take much for a shop to fail. Those that do generally share the same five qualities or mistakes that bring their downfall.

Shop coach and chief executive officer of the Institute for Automotive Business Excellence Cecil Bullard shared those reasons in a recent webinar.

At the top of the list was a lack of understanding about the real costs of doing business. They don’t price themselves accordingly. “And we have a lot of businesses where the owners and/or the salespeople are emotionally invested in the cost. And they do emotional discounts; they don’t hold margin,” he said during Best Advice for Running a Successful Auto Repair Business, hosted by AutoLeap.

A second reason is that shop owners don’t set goals. Once they understand that they need to set up a financial model for the business, they can look at how many technicians they have and their labour rate to figure out how much money they should be making. Doing so gives the shop owner focus and a goal to reach every day, week, month and year.

“And I think that’s not only positive because it brings more money into your business, but I think it’s positive for your employees because they know when they win. And we create those wins for them,” Bullard said.

Another trouble area for shops is figuring out exactly the type of clients they want. Some believe they need to work with anyone and everyone possible.

“A lot of shops are working with the wrong client because they haven’t focused their marketing, their branding, on the kind of clients that will help them be successful,” Bullard explained.

A fourth mistake is staff inefficiencies and lack of production. This isn’t meant to say that techs or service advisors are lazy — they’re inefficient or unproductive because of processes that exist in the shop.

“It’s usually the fault of the business. And it goes back to kind of that management: If you’re constantly looking at your business and saying, ‘Well, we should do this, and we’re not we’re not doing [this], we’re not on target for that — why is that happening?’ It often points back to processes that are inefficient.”

Finally, fear can kill the business. And that can range from fear that customers will leave if prices go up, staff leaving if they’re held to account or making changes that might not seem right in the current business climate.

“I’m really afraid in a way of what’s going to happen if I make the changes that I think I might need to make or that a consultant is asking me to make,” is a typical response from a scared shop owner.