COLLECTIVE WISDOM: What were you thinking?

In his regular COLLECTIVE WISDOM column, business consultant, Alan Beech, tackles the tough questions readers have about shop management.

This answer goes out to Ed who wonders why his dream of entrepreneurial success has turned into a nightmare of endless toil.

Hello Ed

It sounds like you’re experiencing the all-too-common reaction that most new business owners go through. You’ve come to the realization that instead of securing a life of leisure and independence, you’ve just bought yourself a new job with extremely high stakes.

Let’s take a look at your motivations for starting a business. What were you thinking when you decided to become a business owner? Were you tired of being told what to do? Did you think it was unfair that someone else was reaping the rewards of your hard work? Did you want the freedom you believed would come with owning your own business?

Maybe you saw what your previous employer was charging and assumed that you also could be raking in cash if you owned a business of your own. Or perhaps you made the unfortunate assumption that many new business owners make: that since you understood how to fix cars, you also understood the business of fixing cars.

This assumption, according to Michael Gerber author of The E Myth, arises out of “Entrepreneurial Seizure,” an aspiration that leaves individuals stricken with the dream of owning their own businesses.

It sounds like reality has begun to set in for you. Instead of having more independence doing a job you once loved, you’re over-burdened. Not only are you doing all the work you used to do, but you have a hundred new duties related to owning a business.

The transition you’re going through is not an easy one. And the pressure that you’re feeling, with your entire livelihood hanging on your success as an owner, can create an atmosphere of anxiety and tension in the shop.

Because you’re performing every role in the shop, your employees have come to rely on you for all the answers and are therefore nowhere near as self-reliant as they need to be. You’re inadvertently creating an incompetent staff.

Your technicians move slower than they usually would because they’re always asking for assistance. Your front staff is less effective because they’re getting minimal guidance.

I’d even guess that you’re receiving customer complaints left, right and center. If not, it’s only a matter of time before you begin to hear from your customers that things are starting to slip through the cracks.

It’s time for you to slow down and focus on your business. It’s essential that you come to the realization that it’s impossible for a single man or woman to do all the work in a busy shop. You will burn out and your business will fail. If that sounds harsh, good. It’s meant to.

As I mentioned earlier, this is not an easy transition to make. As a technician, you worked with your hands and finished every job you started. As an aspiring entrepreneur, you turned your dream of owning a business into a reality. Now it’s time for you to put on a new hat and be the full-time manager who will protect and nourish your entrepreneurial vision.

The manager is the pragmatic and systematic force behind any successful business that ensures the organized and successful running of day-to-day operations. It’s time for you to leave your wrenches behind, put on a white shirt, and focus on the business.

Your new place in the business is primarily in the front office. This will give you a chance to interact with customers and to hear their comments and complaints first hand. The complaints are especially valuable as opportunities for improvement and growth. Don’t be discouraged when you hear them. They are like mini status reports that collectively give you a good idea of how the company is performing.

In addition to tackling the everyday stuff that is the bulk of your job, it is essential that you not lose sight of your overall business objectives. I recommend that you get away from all the distractions at least one day a month and do nothing but look at the big picture. You need to work on your business, not just in your business.

For example, I know of one shop owner who spent a full day crunching the numbers related to one important service offered at his shop: oil changes. He looked at how many they were doing in a typical day, how long they took, what the costs were, and how they were priced. Even calculating their impact on ancillary sales and additional work, he could see that he his price point was off by about 5%. Not only that, but his cost on oil had recently gone up. Without a price increase, the shop would be losing significant money on every oil change it sold. So he told his manager to bump the price up immediately. Later that day, he called to find out how the new price had gone over with customers. The manager reported that they’d been so busy that day that he never had found the time to make the change. Effectively the shop had been busy all day selling oil changes well below cost.

It is all too common to hear about shop owners who do not have a thorough understanding of their cost-structures. They believe that by pulling the wrench faster and by bringing more cars into the bays, they can make more money. The reality is that most are digging themselves into deeper and deeper holes.

Every shop owner needs to monitor the company’s key performance indicators (KPIs). They need to have a good handle on things like parts and labor margins, average repair order, average labor per repair order, parts-to-labor ratio, and (most importantly) bottom line profit. You have to be aware of how your shop is performing on a daily, monthly, and annual basis.

If you’re unaware of whether or not your business is increasing or decreasing how will you ever be able to make productive changes?

Document everything that goes on in the business, and then continually look at the data to find important patterns and warning signs. Many shop owners find themselves facing the same problems over and over again – each time creating a new solution they think will work. Reading the data on your business will save you a lot of time and effort, and will be more effective in helping you stay on course in the long run.

Finally, the most important step that I encourage all new business owners to consider is to hire a coach or join a group. A coach is an invaluable resource to guide you in making necessary changes and hold you accountable in implementing them. Joining a group with other small business owners will give you fresh insights and develop your skills as a leader.

Owning and running a successful business is not easy and requires a very particular and disciplined set of skills. If you dedicate yourself to making these necessary changes and using the resources available, I’m confident you’ll be able to realize your dreams for the business.

Alan Beech is a management consultant and the owner of Beech Motorworks in Hamilton, Ont. You can reach Alan at alan@beechconsulting.ca