Greenwood on Management: Are You Guilty of Not Walking the Talk?

Shop operators from coast to coast are learning the value of developing solid, trustworthy, business relationships and how it can drive additional net profit to their business.

With that statement alone you were probably thinking about 1 of 2 basic relationships that must be in place to succeed today. The first one that pops up in everyone’s mind is the “client” vs “customer” relationship. There is no doubt about it; client relationships are the number one priority in business today. Without a proper client relationship, the shop does not operate on service and quality which earns all the service business available on the vehicle; instead, the shop is constantly on the prowl looking for more activity to keep the technicians busy so it ends up going to market based on low prices with a necessity to drive more volume (need more customers) through the bays.

The second thought that usually follows when it comes to proper business relationships, is the relationships that are in place with the “staff’. Without solid staff relationships which creates a “career’ orientated shop resulting in staff longevity, and having everyone in the shop on the same page striving for a high standard of excellence in delivery of all services to the client, you end up with a “job” orientated shop with staff turnover, poor productivity, and the wrong “attitude” throughout the building.

Those two points are critical, however, the relationship I am referring to in my statement is truly the toughest one to develop that is out there. Many shops “talk”about this relationship and how “pretty good” it is, or it’s “not too bad”. You rarely hear “fantastic”, or “the very best”, or “we are fortunate to have this person on our team”. The relationship I am referring to is the one with your chosen supplier. I witness and hear a lot of good things about service providers and their suppliers but rarely do I witness, or hear one, that is a complete business relationship. Yet, I see complete client relationships in place, and complete staff relationships in place, but rarely a complete supplier relationship in place. Failing to make this connection is costing the average shop a lot of net profit per year.

Too many operators and managers come from a background of “don’t trust anyone” or “don’t ever put all your eggs in one basket” mind-set. What kind of mind-set is that today when it comes to running this type of business? That is 70’s, 80’s even early 90’s thinking. Consider those statements are a walking contradiction. Those shop owners/managers expect their clients to “trust” them and give them “all” their repair and service business that is required for that vehicle, and don’t want their clients to go anywhere else for vehicle service. Isn’t that like your client having all his/her eggs in one basket?

“It’s not the same thing,” you say. Oh isn’t it?

There are some fantastic suppliers out there who are astute business people. They have learned about, and understand a service shop’s needs today; they understand the “value” they must bring to the table; they are in this business for the long haul, and they have made the re-investment into their business that is required to serve their clientele better. Yet, it is from many of these jobbers’ clients that I hear “the talk” about all the positive things that jobber is doing, and wouldn’t it be great if we could clone that company all over the country?

I then ask these shops “do you support this supplier and give them all your business to support their positive initiatives?” “Sure, they get most of it” is what I hear. “Why not all? I ask. “Well you know, I like to keep doors open, and keep them honest” and “I wouldn’t want them to take me for granted.”

With all do respect, what kind of a relationship is that? It appears to me, that it is a relationship from two sides of the mouth, of take what you want off the “menu” and leave him/her out to dry on the rest.

Many of you who are reading this article know exactly what I am talking about. You are guilty of “Not Walking the Talk”.

Do the math. For example: Your total aftermarket parts purchases were $12,000 last month. If a solid business relationship is in place, at least 85% to 90% of those purchases go to your main supplier. They are “first call” always. That would mean a minimum of $10,200 was purchased from that supplier for the month, and your purchases with that supplier are consistently in that percentage range.

If it wasn’t, I ask “why not?”

Was it a “fill rate” problem from the supplier? If so, sit down and address it head on with the supplier as to what they should be carrying so they can serve you better. Was it a delivery problem from the supplier? If so, sit down and address it head on with the supplier. If there is a problem of any nature, the message is, sit down and address it head on with the supplier. Don’t disguise your business relationship with smoke and mirrors, because you know, you wouldn’t want that from anyone you are trying to do quality business with.

Good business people appreciate the time their clients take to point out weaknesses in their business methods or system, and appreciate positive suggestions as to how he/she could do better to earn more of your business that is available to them. You would be helping the best suppliers to get even better, and that is what excellent business relationships are all about today, in every business. Open, sincere, two-way discussion on how can we work together to do it better?

The best suppliers out there are really trying hard, but if service shops are only going to “talk the talk” and not “walk the talk” with their full monthly aftermarket volume, paid in full each month, then within 3 to 5 years, we will probably lose them. They are independent entrepreneurs like you. They need volume because they are in the commodity business. They need full payment each month because they don’t have a labour component, therefore their margins are substantially smaller than yours to cover all their costs to execute this high level of quality service to their clients. One can only invest so much in terms of dollars, and time, into their business, and when there is no return on the investment for the effort made, one comes to the conclusion that it is time to move on. After all, they have an entrepreneur mind-set.

This is not a bleeding heart article on behalf of jobbers. This is a reality check to bring to the surface what the best jobbers in this industry deserve. They understand, and they want to do it right. It is time to throw your full support behind them, with your loyalty and chequebook.

Others reading this article are wondering where I am coming from. “He must be dreaming in Technicolor”, “it doesn’t exist” “what is this guy smoking?”

When you are wondering where I am coming from, you know you do not have a professional relationship in place with your supplier. You have 2 to 4 calls you must make to various suppliers to shop for parts to “get the best price”. That is all you think about because that is how you run your own business….price, price, and price. You are afraid to “trust” someone else to work “with” you. You feel confident they would take advantage of you.

I am confident you have not done the math. This mind-set is costing you money. Seek out an A-1 supplier and watch how much your business stress can come down, and how your overall business gross profit will increase because you now can focus on improving your shop’s service and quality execution to your client base, instead of spending all the time worrying about hard goods gross profit. Let’s wake up and realize you will not win on price for every single part purchased from this one supplier, but, over the course of a year, your business will win big time, proven by the increased bottom line called Net Profit. Are you operating your business for the short-term gain, or the long-term need? It has been proven time and time again, survey after survey that an exceptional Jobber relationship pays. Review the statistics, and article, in the April 2002 issue of SSGM.

If there isn’t an A-1 supplier i
n your market area yet, pick out the very best one available, sit down with him/her and have a one on one talk with them. Tell them, show them, that they must get better at what they do, and the benefits that come to them once they do. Support them as they go through the transition period of being an “old style” jobber to a new “focussed style” jobber. If they quit progressing to the level that they are capable of going to, bring it to their attention, re-point out the benefits of moving to a new level of doing business, and continue to support them. The change process is a 1 to 2 year time frame for a jobber, so be realistic in your expectations. If they quit again, it is time to seek out another and change suppliers. There is no hope for this one. He/she is not an entrepreneur, they are just sales people operating a jobber store with know business vision, and their days are numbered.

There is tremendous opportunity for every level of the aftermarket industry, but it takes a different level of thinking and business execution to reap the net income rewards. Consider that it is motivation that gets any businessperson started, however, it is habit that keeps you going. Your habits with your chosen supplier is what will keep him or her going, and give you the opportunity to excel on the bottom line of your business. Don’t be a shop who “talks the talk”, but one who truly “walks the talk”. Your business will be a better one for it.

Robert (Bob) Greenwood is President and CEO of E. K. Williams & Co. (Ontario) Ltd. and Automotive Aftermarket E-Learning Centre Ltd. Bob has over 27 years of Business Management experience within the automotive industry, counseling individual shops in Ontario. E. K. Williams & Co. (Ontario) Ltd. offices specialize in the independent sector of the automotive industry, preparing analytical operating statements for Management purposes, personal and corporate tax return completion, Business Management consultation and Business Management and Employee Development Courses. Visit E. K. Williams & Co. on the Internet at www.ekw.ca and sign up for their FREE monthly management letter sent to you by E-mail. Automotive Aftermarket E-Learning Centre Ltd. is a company devoted to developing Automotive Shop Business Management skills through the E-Learning environment over the inter-net. Students learn at their own speed, and at a time, and place, that best suits their needs; available 7 days a week 24 hours a day. Visit Automotive Aftermarket E-Learning Centre Ltd. on the Internet at www.aaec.ca Bob can be reached at (613) 836-5130, 1-800-267-5497, FAX (613) 836-4637 or by E-mail; greenwood@ekw.ca or greenwood@aaec.ca