Auto Service World
News   December 4, 2019   by Bob Greenwood

Greenwood’s Garage: Gearing up for change

The coming realities of business are going to require some new strategies.



By Bob Greenwood


We’ve seen a lot of changes in the aftermarket in recent years, and there’s more coming. I am not alone in predicting that the next three years will bring great disruption. Yet to my surprise – and disappointment – I hear very few shop owners talking about the coming reality or getting prepared for it.

Are you keeping up with changes in the industry? Does your team clearly understand the new aftermarket realities and the opportunities (and potential dangers) they bring?

If you want to surf the wave that’s coming and not get swamped by it, there’s a new bottom line that you have to start working toward. You have to have a culture of continuous learning in your shop. That must be a priority of everyone in your company, at all levels of the business.


If you want to
 surf the wave that’s coming
 and not get swamped by it,
 there’s a new bottom line
 that you have to
 start working toward.


Vehicle security and safety will be a top priority for carmakers as we move through the ADAS phase and into full-blown automated driving. Consequently, there’s going to be a lot more software in vehicles. Your technicians are going to have to understand this new software and the various operating platforms they function on.

Scan tools will soon require encryption keys and authorization verification. This means the cost of tools will increase dramatically. If you don’t have the right tools, you’ll be essentially “locked out” of vehicle repair, and this will make shops that are not in the game even less profitable.

Software coding will soon be part of the job. The amount software in modern vehicles is measured in the millions of lines… and that’ expected to grow exponentially to the hundreds of millions of lines by 2022. Already advanced driver assistance system features include crash avoidance technology, lane departure warnings, blind-spot detection, lane-keeping, lane-centering, collision intervention, automatic emergency braking, and dynamic brake support. This all takes tremendous computing power. Now is the time to take an “inventory” of each your employee’s knowledge base. You have to determine what type of training is required to enable them to work on tomorrow’s vehicles.

Attitude will be key!

If anyone on the shop team does not have the desire to be the very best they can be or does not want to continue to learn, they must be replaced. Their intentions are shown by their behaviour and their attitude. If you don’t get rid of the worst people on your team, they will drive out the best.

Here’s what every auto repair shop owner in Canada should prioritize:

Plan to train.

Lay out a specific training schedule for the next 12 months for each employee. Find out when and where the courses are being put on, and then register them. Don’t leave this to the last minute. You have to make plans for the shop on the days that you’re short-staffed. It is estimated a competent technician will require a minimum of 100 hours of training per year just to keep up with advancing technology. This will require a new budget line: Training and Development. Your culture of learning culture requires a dollar commitment. Remember, this is not a “step” but a “journey.”

Measure well.

Make sure you’re tracking the key numbers and ratios that monitor the health of your company. Modern business analysis will reveal where net profit opportunities are hiding. Just as your technicians need continual upgrading, management requires six to eight days of full-time training per year to understand new business trends, measurement, and techniques. You’re going to need the tools to measure the business properly daily, weekly, and monthly.

Set multiple labour rates.

Diagnostics capability will continue to play a very important role in your business. In order to offer your clients the services they need without losing money, you will need a minimum of three labour rates. At the very least, you’ll need a Maintenance, Diagnostic, and Re-flash rate. Measuring these types of billed hours individually will play a key role in management decisions to maintain the shop’s growth and internal culture development.

The opportunities to create a strong bottom line in the shop are incredible and very exciting.

We have proven there’s a minimum of $150,000 net profit per year being missed by the average five-bay shop from the current business coming through the door. That amounts to about $30,000 per bay. Larger shops might be missing even more. Every shop owner or manager should be asking themselves where that missing money is and how they can go after it.

That should be at the forefront of their minds.

Shop owners who embrace the new realities and set up their businesses to grow are going to enjoy an exceptional career!

Review your business game plan. Are you ready to embrace the dramatic and exciting change that has started? Or are you going to do the same old things expecting different results?

 

Bob Greenwood is an Accredited Master Automotive Manager (AMAM) who offers personal business coaching and ongoing management training for aftermarket shops, focusing on building net income. He can be reached at 1-800-267-5497 or greenwood@aaec.ca.

 


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