Independent Service Shops are Profitable When Profitably Managed

It is all too common in this industry to hear about how bad things are. Sit in on enough trade events and industry meetings, and all the doom-and-gloom predictions have the effect of making even the most optimistic very pessimistic about the long-term health of independent service providers.

So it was a pleasant revelation to hear at the recent AIA Aftermarket Forum in Toronto someone stand up and say this industry is healthier and more dynamic than many are giving it credit. David Meunier of TACT Inc. was passionate in telling the attendees that being an independent service provider is a great business to be in, and the potential revenues available to a successful shop owner are equal to that of any other kind of successful independent business in Canada. Meunier added he would recommend to anyone looking to start or run their own business to seriously think about opening an independent service shop, as there was nearly $400,000 in revenue available to the owner.

So why are some independent shops not realizing this potential? What came out at the AIA forum is that too many owners are not focusing enough on properly managing the shop’s resources, persons and time effectively; and often miss out on potentially lucrative maintenance and repair work because the shop’s technicians are not trained to look for such opportunities. Too many shops go down the unprofitable route of trying to compete on price, pushing the $30 dollar oil change or free tune-up, in hopes of staying in business; and quickly discovering this only leads to going out of business in the long-run.

The lack of management training for both managers and the staff means a shop often lacks the proper means of communicating with clients and then effectively taking what the customer’s concerns are back to the technicians; and the technicians often are not able to talk to the customer, except in such a way that either makes the person feel ignorant, or not being able to clearly explain why a repair or replacement of a part needs to be done. At the same time, technicians, shop owners and mangers are often missing out on the training that can help them identify underperformed maintenance or repair opportunities and thereby the extra revenues available.

Furthermore, many shops are still not investing enough in proven shop management technologies in order to understand their clients, or how to use that information to become more profitable.

J.D. Power and Associates, in their last customer satisfaction survey on the auto service industry bears this out. The study’s authors found the best shops are the ones that take steps to use management methods and technologies to understand who a shop’s customers are and to better communicate with them. Better communications through effective shop management translates into more satisfied customers, more loyal customers and finally into greater profits.