Independents must review and renew their business

Studies of the independent sector of the automotive aftermarket industry are confirming shops are losing the struggle to retain consumers’ on-going business, versus the growth in bay service business new car dealerships are experiencing. The main reason is due to a lack of business focus by the management of the independent shop. Too many owners and managers are too busy not making money instead of slowing down and preparing to meet the customer’s real needs and wants.

Consider that weak shops focus on cost to save money, whereas the most successful shops focus on value to make money. As well, new business standards are needed today to be successful, and most owners and shop managers have not addressed or put into place these standards.

So now is a very good time to review and renew your operations. Review each of these items within your own operations to ensure your business is heading in the right direction and is able to retain all of your customer/clients’ business. If you ignore these items, there is a real possibility that you have already, or soon will, lose your clients to the dealerships.

1. Renew the Business Format: The “same old, same old” does not work any more. Shops can not “bang them in and bang them out” to create large car count numbers. In fact, independent shops that concentrate mainly on volume to keep the technicians busy do not know that on average, 60 per cent of the work they do does not create net profit for their business. It only creates sales and gross profit. The shops do not know how to measure this and instead are working very hard to stand still; and in many cases actually moving backwards. Today, your business must be focused on each individual client and deliver value. Management’s number one job is to build relationships. Therefore, management must slow down at the front counter and take the proper time to meet, understand and council clients as to what the manufacturer recommends to ensure safe and reliable driving with their vehicle. Vehicle technology and maintenance education is more critical today than ever before.

2. Relearn the Business: Continuous technical and business training and development is required today. Operating an independent automotive maintenance and repair shop is the most complex retail business in this new millennium, requiring not only a great deal of capital, but also higher in-depth skills than ever before. Consider the technical developments incorporated into new vehicles. They require highly skilled technicians who embrace vehicle knowledge with a tremendous amount of personal pride. These technicians are highly skilled professionals. The depth of knowledge they must have and stay on top of is mind boggling, and it is management’s responsibility to ensure these professionals have all the right training and tools to execute their skills.

Management must also stay on top of all business issues, and there are many. It is a new world order today and this new order affects the very profitability and potential future viability of an independent shop. Management must learn and measure the business in a totally different format today.

Just measuring parts and labour sales, and following the shop’s bank account up and down doesn’t work. Management must stay on top of the business numbers to ensure they are measuring net profit on each invoice before the invoice is closed off.

3. Retool the Business: Management must ensure the business is profitable enough to have available funds for continuous investment in equipment. As an example, consider the basic equipment required to properly execute such all-vehicle fluid maintenance as a system flush, carbon clean, oil flush and transmission flush. Equipment and tool requirements are higher today than ever before. Without the right equipment, shop inefficiency settles in, affecting profitability and the relationship of the client with that shop, potentially driving the client right back to the dealership.

4. Recertify the Business: Management must establish standards of execution throughout the shop. Define your standards in print. Each staff member from the front counter, to the back office, to the back shop must completely understand and properly execute their job functions. Certification today is just not a piece of paper. Certification is also an attitude: “We will not let the client down. We care and will take the responsibility to make sure your vehicle maintenance and your experience within the walls of our shop exceeds your expectations.”

5. Re-Professionalize the Business: Management must establish on-going reviews with each staff member to make sure that person is keeping their skills up-to-date and understands their job in the operations; as well as continuously reviewing the systems and overall operations within the shop itself, to make sure it’s meeting clients’ needs.

To review and renew your shop is not just knowing what to do, but also being proactive. The challenge is not an easy one. However, it is possible to turn things around when all independent shops start to communicate with each other about the importance of raising the shop operation bar.

Robert (Bob) Greenwood is President & CEO of E. K. Williams & Co. (Ontario) Ltd. and Automotive Aftermarket E-Learning Centre Ltd. Bob has 29 years of industry-specific business management experience. He has developed shop business management courses for independent Service Providers recognized as being the most comprehensive courses of their kind available in Canada. Bob is the first Canadian Business Management Consultant and Trainer to be recognized for his industry contributions when he received the prestigious Northwood University Automotive Aftermarket Management Education Award in November 2003. E. K Williams & Co. (Ontario) Ltd. offices specialize in the independent sector of the automotive aftermarket industry preparing analytical operating statements for management purposes, personal and corporate tax returns and business management consultation. Visit them at www.ekw.ca and sign up for their free monthly management e-newsletter. Automotive Aftermarket E-Learning Centre Ltd. is a leading edge company devoted to developing comprehensive shop management skills through the e-learning environment. Visit www.aaec.ca and take the free overview. Bob can be reached at (613) 836-5130, 1-800-267-5497, FAX (613) 836-4637 and by E-Mail: greenwood@ekw.ca or greenwood@aaec.ca