An automotive aftermarket shop is not a bank so don’t play one to those who owe you money, urged a shop coach.
Collect faster, Bryan Stasch, vice president of product and content development at the Automotive Training Institute, told shop owners at a recent convention.
“Reduce your accounts receivable,” he said at this summer’s NAPA Expo 2022. “There is not a person in this room that can afford to play bank.”
He advised shop owners to put thought into how they approach this. “How long should you have open accounts and how who you open them to?” he observed as key questions. “Just be very, very careful. in a world with …. some serious unprecedented inflation” shop owners need to be careful.”
Another tip he had for shops during his presentation, Finding Money by Understanding your Financial Numbers was to think about how they’re going to increase sales with the new reality of driving. Many people are now working from home. They’re not putting the same wear and tear.
“So you really need to think about, what’s your new cheese?” he said. “What’s your new loss leader to get customers in? Because it’s not going to be the oil services as much anymore.”
He suggested finding ways to increase repair orders. Of course, do it ethically. But how many customers have ignored needed repair work for too long? If a customer wants to be able to drive their vehicle until the wheels fall off, you can prepare a plan to ensure that vehicle gets the service is needs to last that long. That will ensure continued business for years.
“How many of you really want to make a little bit more money? How many of you need to make more money?” Stasch asked
Another issue he raised was around pricing models.
“We are one of the few industries that I know of that we just price whatever [we feel like]. All the other industries, all the other businesses, they have a model their pricing strategy has their bottom line in mind,” Stasch said.
When you’re thinking about profit models, profit models need to align with pricing strategies. Shop owners need to think about their return on investment.