Monday, March 25, 2013

I'm Sure I'm Making Money, So Where Is It? By Mike Lee Management Success!

Mike Lee
Co-founder
Management Success!
One of the major problems facing shop owners is the fact that they spend everything they make. Even when the business is expanding and they are doing fairly well, they seem to have problems accumulating money.

One of the least understood areas of the business has to do with MONEY! Very few people know how to accumulate money and live within their means.

This is amazing, since one of the major benefits of going into business is to make more money. Yet a great many shop owners had more money to spend when they didn't own anything and worked for someone else.

Most of the money-related problems in the business come from not understanding how to handle and control money, both in the shop and at home.

No Matter How Much I Make, It Never Seems to Be Enough!

Over the years, I've observed an interesting phenomenon where the business grows and yet the owner is unable to take more money out of it. Eventually the owner quits expanding the business, because even though it has doubled its gross sales, the shop is making less and less money!
 

It is not unusual for businesses to be grossing over a million dollars a year in sales and not have enough to pay the bills!

The solution is to learn the correct way to accumulate money despite the bills and all the reasons why it can't or shouldn't be done. Otherwise, the business will spend every dime and have nothing left over.
My Accountant Says We Owe Lots of Taxes, So Where's the Cash?!

Most shop owners were trained as technicians, not as business people. So when it comes to understanding the financial statements given to them by their accountants, they haven't a clue. Unfortunately, a good many accountants don't either. There are tremendous confusions regarding balance sheets and profit and loss statements.

An example of this is a shop in the Midwest owned by two partners who were told by their banker that they were doing really well and should borrow the money to expand. After they borrowed $198,000 and then found that they weren't making any money, the banker wanted them to sell off their personal stuff (houses, etc.) to pay the note down.

After becoming a Management Success! client, they paid off $40,000 of the debt in 8 months, except now the banker says they're not showing any profit and should go buy inventory so that "the financial statement will look good."

He advised them to go back to the way they were doing it two years before. If they had followed this advice they would be out of business and have no homes!

Their accountant gave them similar information and said they were "not doing it right." (Oh! By the way...they have a new banker and new accountant!)

What shop owners don't understand about financial statements can result in them following bad advice and potentially going out of business. The solution here is to get trained on how to read and understand financial statements!

Sales Are Going Up, But Expenses Are Going Up Faster!

It is very common for shop owners to see their sales increase dramatically as a result of learning to do some marketing and advertising. However, in the course of expanding, their costs can go up just as fast. What is happening here is the owner tends to concentrate on the shop rather than the money.

Part of the process of changing from being a technician or service writer to an executive who runs the business is the realization that an executive must put his attention on THE MONEY! Often, the owner of the shop doesn't know exactly where the business is at in terms of financial matters, and doesn't have the ability to get key data necessary to make good business decisions.

Most owners are shooting from the hip when it comes to the financial numbers. Too often, they leave this area for others to handle. As a result, they are never sure what is really happening, because in the owner's mind, it ain't his job!

NEWS FLASH!!! One of the primary jobs of a business executive is to control the money!

We Make Just About What We Need!

Another common problem is shops that are doing "okay" but never seem to get the full potential out of their business. Often this is because when the business starts to do well, the owner tends to relax.

A common trait among business owners who are at the top of their game is that they don't relax. The key to really getting the most money out of the business is to keep the pressure on and do the right thing at the right time. I also recommend that you never let employees, service writers, or the production department know exactly how well you're doing, or they'll relax too.

The Secret to Getting the Most Money Out of the Business

The real secret to getting the most money out of the business starts with the shop owner and his ability to control the money! The difference in getting 20% out of the business vs. 35% is in the office, and in controlling the checkbook.

A shop owner should know where the business stands at all times, and be able to know everything about the money coming in and where it goes. The successful executive is at least a week ahead in planning, fully understands the purpose and the use of financial statements, and is able to guide the accountant instead of being totally confused by him or her.

Ultimately, the shop owner is responsible for making sure the company is solvent, making LOTS of money and putting LOTS of it away for emergencies, and having a plan to get everything paid off.

Take control of your business; learn what you need to know to guide the business into a strong financial position and personal prosperity, it is your job, but Hey, it's ONLY money ... YOURS!!

MANAGEMENT SUCCESS! Advanced Financial Control Course

Help! Help! I Work At A Madhouse! By Mike Lee Management Success!

Mike Lee
Co-founder
Management Success!
When I used to do on-site consulting, one of the first things that stuck out in a real busy shop was how insane everyone was. The first time I saw this was in a very busy shop in Maryland. They had two Service Writers and they both needed space-age phone talker helmets. They had cars and customers all over the place and the phone was ringing off the hook. The owner was so busy helping out that he just waved to me because he just didn't have time to talk.

I watched them for a while and concluded that the two Service Writers had to be crazy to work under that much stress and the owner definitely shouldn't have been involved in the process.

Later, I noticed that time after time, I would go into a busy shop and would see everyone was running around like crazy. Occasionally, I would hear heated discussions or very upset people muttering to themselves. It was very obvious that nobody knew how to organize the place and they were killing themselves and not being very efficient at anything. The biggest problem was that they weren't even aware of how much money it was costing them to do things this way.

The Owner Promised Me It Would Be Done Today!
Nothing drives a Service Writer crazier than to find out from the customer that the owner had promised the customer that his car would be done today and not told the Service Writer.

Did the Part For the Buick Come In Yet?
Don't you just love it when you are busy trying to sell a job to a customer and a technician wants to interrupt you to handle some problem?

Is My Car Going To Be Done Today? I have seen Service Writers actually throw phones against the wall because one of their customers calls every five minutes to see if their car is going to be ready.

When Is My Car Going To Be Done? You Told Me the Same Thing Yesterday!
This is another version of the customer who calls constantly wanting updates on his vehicle. It is amazing how much time is wasted answering the phone and then checking on the status of the customer's cars.

Did You Get the Authorization To Work On the Ford Truck?
How many times a day does someone in your organization ask the Service Writer or you questions about the status of a car or when is a part going to arrive?

There Is No Change. It Is Still Doing the Same Thing It Was BEFORE You Worked on It.
Just Ducky! Just Marvelous! This is just what the Service Writer wanted to hear at the end of a super busy and crazy day. Sometimes, they want to kill the technician who did the work on the car.

I Thought You Ordered It.
This is another lovely piece of news to a Service Writer trying to handle a customer on the phone about when his car will be done. It turns out the part the car needed was never ordered and of course, it will take a week from today to get it. You're thinking, "Do I have to do everything myself?"

I Am Sorry, We Are All Booked Up! I Can Get To It In About a Week!
When I hear owners and Service Writers saying that to customers, I go NUTS! I want to grab the owner and the Service Writer and explain to them how much money they are costing themselves by not having the shop and the front organized.

I remember visiting a shop where the Service Writer told me that he was in overwhelm and it was a madhouse and he didn't know how he was going to get it all done. I looked at the parking lot and the bays and asked "Is this all of it?" He indicated that it was. I told him that it didn't look that busy and that he probably would be over the hump by 2:30, if he did it right.
He handed me the clipboard and said, "You do it then!" I took the clipboard and got all the data on every job and where it stood and when it was promised and who had what. By about 2:00 o'clock it was pretty much a piece of cake from there and he indicated he could handle it. After closing, I sat down with him and showed him how I did it.

Some Basics

If you ever want to watch a really organized operation, be on an aircraft carrier doing flight operations during wartime. It is an amazing thing to watch. They have lots of people doing dangerous activities at a breakneck speed and have occasional unplanned disasters happen, but they handle it all with incredible speed and efficiency. The key is they are trained. They are organized. They have procedures. They all know how to do their jobs.

Of course, if you don't want to join the Navy to learn how to speed up your organization and handle a lot more cars with half of the effort and stress, you and your Service Writer should come to our three-day Controlling The Front Workshop.

At the workshop you will learn how to handle the basics of organizing and controlling the front part of your operation. You will learn how to handle more work in less time and under less stress. You will gain new insight on how to turn your front operation into a lean, mean, money-making machine. It's only money! Yours!

MANAGEMENT SUCCESS! Training and Consulting

I am Too Busy to do the Controlling the Front Workshop By Mike Lee Management Success!

Mike Lee
Co-founder
Management Success!
There are 3 ways to increase the bottom line in a shop.

1. Increase your prices.
2. Cut your expenses.
3. Increase the volume of work being done by the shop.

One of the fastest ways to make money, when a shop tends to be very busy, is to organize the front of the operation so it can handle more work effectively.

Boom and Bust!
Without organization and training, one of the things that can happen to a really busy shop is the Boom or Bust phenomenon.
This is especially true with clients who have entered a period where the shop is really busy. Just like a race car, a shop will peak out at a certain level of efficiency. When they go beyond that level of work that they can handle effectively, a lot of negative things start to happen.
The Service Writer starts to become overwhelmed. He starts to make little mistakes and then sometimes bigger mistakes due to the lack of control and organization. When this happens, the shop starts to become less efficient.

He then starts to spread his overwhelm to the production people. Technicians start making silly and costly mistakes. Things are forgotten. The small mistakes creates comebacks and this adds to the confusion and the overwhelm and spreads back to the already overwhelmed Service Writer.

How to Lose Customers

When a Service Writer gets into overwhelm and things start to get chaotic, most Service Writers will begin to stop the flow of business. They begin to not push to get customers into the shop as soon as possible. They start pushing work away. They tell the customer that they are super busy and can't handle it for a couple of days or next week or occasionally for a week or two.

When this happens, they don't realize that they are killing their future and losing good customers. The difference between being super busy and slow is not that much on a per day basis. It only takes about 2 or 3 more cars a day to make a shop super busy. So it doesn't take much of pushing work into the future to start to slow a shop down.

The other missing piece on this is when you put a good customer off for 3 or 4 days or a week. Occasionally, they will decide to take it somewhere else to get it fixed because your shop is too busy. Sometimes, those customers will like the new shop better and you have lost a good customer and you don't even know it.

Normally, within about 2 to 3 weeks, things have slowed down. The shop doesn't realize that it is partly responsible for creating this problem. They are not aware of what is happening, so they continue to let things slide until the shop is dead slow. At that point, the owner now is screaming for more business.

So the shop starts another cycle of boom or bust.

Too Busy or Too Slow!

At Management Success! we have watched this happen repeatedly to our clients. One of our Service Advisors will call a shop about doing the Controlling The Front Workshop and the owner of the shop will say "Man, we are swamped and can't do it now. Call me in a month."

The Service Advisor will call again in about a month and the owner of the shop will say, "It has quieted down and I want to think about it. Call me in another month." The Service Advisor calls in another month and the owner says that they have no business and they want our help with marketing, because they need customers.

Organizing the Front Office Improves the Bottom Line

The owner of the shop doesn't realize that one of the fastest ways to improve the bottom line is by organizing the front part of the operation. When the owner and the Service Writer are trained on the basics of controlling the front operation, it means big numbers on the bottom line.

Example: Shop A: The owner and the Service Writer are not trained and the shop tends to max out at about $10,000 a week in volume. After doing the Controlling the Front Workshop, Shop A can easily handle $15,000 week and seem slow. Also, Shop A will not tend to have this constant pattern of boom or bust.

Time to Change!

So are you tired of this boom or bust pattern? Are you tired of chasing the business? Are you tired of going through periods of craziness followed by periods of boredom? If you get into a condition where the shop is so busy that you can't handle it, that shop needs to have both the owner and the Service Writer do the Controlling the Front Workshop. But it is only money, yours!

MANAGEMENT SUCCESS! Controlling the Front Workshop

Monday, March 18, 2013

How Much PROFIT are You Leaving On the Front Counter? By Bob Spitz Management Success!

Bob Spitz
VP Production
Management Success!
I was talking with a distressed shop owner the other day, who was worried sick about his car count.   He told me all the money he had spent recently on marketing efforts, trying to resolve the problem.  “I’ve got mailers going out, my website is new, I don’t know what else I could be doing!” he lamented. 

After asking him some basic questions regarding his marketing and advertising efforts, I asked him the following:  “Do you track how many calls or walk-ins you get per week?”  This made him pause, so I continued.  “When someone calls your shop or comes in asking about your services, that is called a reach.   What happens with that reach can mean the difference between eating well and starving.  Marketing materials get the phone to ring, get customers and potential customers to visit your website or to stop by the shop.  Once that person reaches it is up to sales to close the deal.  These are two distinctly different areas of a business and they must be watched and kept track of carefully. 

“Who is answering the phone in your shop and do they like sales or do they think of sales as a necessary evil?”  That got his attention, because he did not know.   “Can you help me with this?” he asked.  I offered to set up some “mystery shoppers” to call and come in to his business to test the waters.  I would get back with him once I had the results.

I set up a team to do a series of mystery shopper phone calls and had a friend of mine drop by the shop and pose as a potential customer.  The end result was very revealing.  This is what we found:

  • The phone was not answered promptly and sometimes went to voice mail.
  • One three different occasions when the phone was answered the person answering did not announce who they were and sounded rushed and impatient.
  • When asked for a price on a repair we were put on hold and waited longer than a customer would normally wait.  When the person came back on they quoted a price and then were not asked to set an appointment to bring the car in for an inspection.  The person on the phone seemed bored with the whole process.
  • On one occasion when calling to ask for a price on a repair we were immediately given a discount.
  • We were left on hold and forgotten about.
  • On one call we were asked to bring the car in, and when we politely declined the person on the phone called our caller a jerk as he hung up.
  • The on-site mystery shopper stood at the front counter and was not acknowledged by anyone in the shop until he begged for help from someone walking by the front desk.
We then surveyed the people working on the front and found neither of the two had any professional training in the area of sales, and one of them did not like selling or having to deal with customers!

I went over the findings with the shop owner. He was shocked and a bit embarrassed.  I told him to stop beating himself up, this wasn’t uncommon.   Often a shop owner can be the last to know the true condition of the front once he stops actively running the day-to-day operation of the business.

Then I told him this key concept.  “A shop can have a great advertising campaign, a very good looking, professional website and it will be all for naught and waste a ton of money if the shop has the wrong or untrained people on the front counter.  THE PEOPLE ON THE FRONT WILL EITHER MAKE OR BREAK A BUSINESS!

We went over a list of attributes that his front people needed to be successful and checked to see how they stacked up.

Attributes of a Good Front Person

  • They have to like people
  • They have to enjoy the game of sales
  • They have to be highly skilled at communication
  • They have to know how to sell and close the deal
  • They have to really care about the customers and the shop
  • They have to enjoy responsibility
  • The have to be organized
  • They need to have good computer skills
Measuring his front people against this list, we came up with a solid plan to get his ship righted and went to work. We started monitoring his reaches and sales on a weekly basis, and started getting his guys grooved in on the “Good Attributes” and got them really selling!

The turn-around for this shop was not something that happened overnight, but is also did not take forever either, and the results where nothing short of miraculous.

I called the shop the other day and was greeted promptly and professionally by a cheerful individual who was a joy to speak with.  The results of a follow-up round of mystery shopping showed a 180 degree turn in the front, and the statistics prove it.   Sales were up 26% and the owner is breathing a lot easier these days!

MANAGEMENT SUCCESS! Training and Consulting

Organization By Lisa Shomo Management Success!

When I walked into Steve McNamara’s general repair shop in Huntington Beach, CA, I got a sense of order and organization. It is clean, the staff knows what they are doing, no one is frantically searching for parts or paperwork, the manager is clearly in charge and has control of both the front and the back. The staff is very happy and eager to get their job’s done. Steve (pictured right) can leave his shop every night knowing they’ve done a good day’s work. He can return home unburdened with the problems that often happen in an unorganized shop.

Having a bad day at the shop can lead to a miserable night on the home front. Situations such as a problem customer, bad debts, or financial losses can end up bringing everybody in your life outside of work down a few notches.

If a husband and wife work together in the business, they’re likely taking their arguments to the dinner table, sharing the stress with the rest of the family or hashing it out in front of the customers.

Or are you a shop owner who gets home late in the evening, doesn’t get to sit in the bleachers for his kid’s game, or is just plain tired all the time?

Perhaps your thoughts are constantly back at the shop—thinking about all the things that you left undone, or need to do when you open up the next morning.

There is relief for the stressed-out, tired, overworked shop owner—organization.

Organization for your shop means owning a shop that is well-run and profitable. A shop that is completely organized will continue to stay organized the next day, and the day after that. Worry will never follow you home from the shop. Your family and home life stay happy; your shop stays organized and profitable.

Getting organized can require some motivation. Here’s an example. Years ago, you asked that special person out on a date. And they said yes! Before the date, you washed the car, pressed your favorite shirt or bought a new one, found out what food they liked and made reservations at the best restaurant and left early enough to pick them up on time. You planned it out and organized enough of the details so the night would go perfectly.

In your shop, suppose you have an investor or important financial source coming in for a visit. You might get your shop super clean and tidy with everything put away in its place. You would also ensure your staff looks presentable with new uniform shirts and everyone has their best foot forward.

Organized businesses are valuable and worth more money. It’s true in lots of little ways. A crisp operation inspires trust and respect. Customers always notice when a shop is running efficiently. When everything is designed to flow smoothly, work becomes easier, things get done quicker and you have more free time. This can spill over into your home life. Money spills over too! Having a truckload of cash doesn’t necessarily make a happy home, but it can sure help. A well-managed, tightly organized shop makes a lot more money than one that is not. You can bank on that.

MANAGEMENT SUCCESS! Auto Shop Analysis

What Does it Really Take to Make a Shop Profitable? - by Robert Spitz, Management Success!

Bob Spitz
VP Production
Management Success!
Ten years ago an independent repair shop owner could make a pretty good profit. Today, for many, it’s much tougher. Why? Did the industry really change that much in ten years?

Yes it has.

Many things about running a shop have changed, making it more difficult to make a profit. So, ten years later there are shop owners working impossible hours and literally going broke doing so.

But there are some shops that do make big money—even in the face of these huge industry changes. How is that possible, you ask?

Small to Mid-Size Shops

In most small shops that are doing up to $25K in sales a month, the owners have come from the technical side of the business.  Their time is primarily spent fixing cars.

Other small to mid-size shops have pushed their monthly sales to around $45K.  The owner is usually also the service writer and oversees the rest of the business.  Their technicians fix most of the cars. Sometimes, owners bring in their wives or girlfriends to help.

What these shops have in common is that their business grew to a certain level of monthly sales and then ran into a barrier that stopped the business from growing.

Common Barriers for Small to Mid-Size Shops
  • Problems finding good help.
  • Not enough customers.
  • Working too many hours.
  • Not making enough money.
  • Owner being overwhelmed.  (“My shop is so unorganized!”)
  • Owner has to check on everything or else nothing gets done right.
The barriers become unsolvable.  Owners try everything they can think of to come up with a solution.  When you talk to shops that have been in business for 5 to 30 years and are still struggling with the above problems, you find that most of the owners have given up.

Unfortunately, they often decide to close or sell the shop, turn the shop over to a family member, just hope it will get better or simply keep on doing the same thing until they retire or die. They get to the point where they won’t believe anyone that tells them there might be a solution to their problem.

Bigger Mid-Size & Large Operations

The number of shop owners who have taken their business to the next level is much smaller.  These are shops doing between $50K - $90K in monthly sales.  They will occasionally help the service writer or help in the back, but normally they are not working in the operation on a day to day basis.  But these shops run into barriers, too.

Common Barriers for Bigger Mid-Size & Large Shops
  • Getting someone to manage with the same care factor as the owner.
  • Getting someone to manage the way that the owner wants it to be done.
  • Running into problems when a key person, either the manager or a good technician, is lost.
Here you have owners who can run the shop themselves, but are unable to get the job fully turned over to someone else.

There is another group of owners who have pushed their operations above $90K to over $200K in sales a month.  They can come and go as they please.  Most don’t open their shops in the morning.  They have a service writer or manager who runs the day-to-day operation. Here the owner has successfully turned over the job of running the shop to someone else.

They will tell you that they have no real problems and they are not really interested in taking their shop to the next level.  Eventually, they will start to tell you about the barriers that they have run into and why they have decided not to expand further.

Expanded to the Next Level Then Fell Back

Some owners in this group got the business to the next level then something happened to pull them back down.  Sometimes they lost a good manager or a key technician. Other times, they started to get alarming reports from their good customers along with a drop in business.  When they investigated they found the manager was creating problems and decided to go back to running the shop themselves.

Multiple Shop Locations

Finally, there are shop owners who open multiple locations.  They also eventually have problems.  They expand to a level just beyond the ability of the staff to effectively control and run the business.

The owners are not involved with the operation, they’re doing something else.  They hire a general manager to run shop operations.

During the growth they can make money like mad. They start just opening stores and putting people in place very fast.  But eventually the organization starts to have trouble.  The owner gets frustrated because he tells the management what to do and while some changes are made, most of it doesn’t get done.

Common Barriers for Multiple Shop Locations
  • Expansion happens too quickly to put real systems in place.
  • Owner can not get management to run the locations the way he wants them to be run.
  • Owner can not implement changes in the way things are run.
  • Training staff doesn’t always help.
If he starts going into his shops and inspecting, he will likely find all kinds of things that he has strict policy against.  They are not doing it his way and he can’t seem to be able to implement the changes he wants.  He has all kinds of training programs, some of which help while others don’t.  The operation starts to flounder.

The Real Problem

There are three things that you need in order to be a really successful multi-location operation.  Having a system for production and getting it implemented is one of the missing basics.  Another is the right organizational structure. The last is the ability to find and train the right people to do the job.

The trick is having a successful model in one shop, then be able to duplicate that model in multiple locations. Most owners expand too quickly to control the operation.

The Real Solution

At every one of these levels, there are common barriers that must be handled in order to expand and be more profitable.  The owner’s inability to handle a problem is solely based on his lack of knowledge of how to handle that problem.  The more you grow, the more management knowledge and skills you need.  It is the key. Otherwise, growth stops and profits plummet.

At Management Success! we have helped shop owners to solve each of these problems.  Isn’t it time that you quit being frustrated or just hoping things will get better?  Isn’t it time that you learned how to solve the problem that is preventing you from taking your business to the next level? Isn’t it time you started making the profits your shop should really be making? It is. Now is the time.

MANAGEMENT SUCCESS! "How to Increase Your Profits" Seminar Description

Thursday, March 7, 2013

Getting Your Business Organized, by Robert Spitz, Management Success!

Robert Spitz
Snr VP Business Dev
Management Success!

“I'm too busy to get organized!”

I'm sure it was originally said in jest, but that's exactly what goes on in too many small businesses. The owner / manager is extremely good at what he or she does, but the idea of stopping long enough to organize the business seems impossible.

The result is management gets overwhelmed trying to get the machine (the business) to produce anything profitably. Too many times the real problem is the person responsible for running the business doesn't know how to organize. Here are some tips on how to tackle this problem.

Let's first look at what organization means: Organization is the action of lining things up in a logical sequence to get something done, and done efficiently; in other words, getting it done in the most economical manner without wasted time or motion. Management means controlling some activity so that activity can operate smoothly and productively.

Management's job is to ensure the products of the company are being produced profitably. When we look at this explanation, it's easy to see why management can have a very difficult time. It's hard to manage an area and get things done when organization is lacking!


Never Organize for Organization's Sake

When embarking on the task of getting organized, it's important first to look at what it is you're trying to produce or accomplish. What's your goal? It's easy to get lost in the woods if the destination isn't clearly defined and known. So the first step is to name what you want to accomplish. A complete understanding of what products the business produces or could produce is the starting point for any organization project.


Make a List

Start off with a list of, say, 10 things you'd like to improve about the business. Now narrow the list down to 3 items… and then pick one. Hopefully it will be the one that, if done now, will quickly improve the overall performance of the business.


Name What You Really Want

Name what it is you really want. If you don't completely name what it is you what to accomplish, you can end up with weird, unworkable solutions.


Example: Doing It Wrong

Situation: Production is being slowed down waiting for replacement parts. 
Improvement Wanted: Speed up the production line. 
Solution: Keep a large inventory of parts on hand. 
Problem with this Solution: Ties up my money in inventory; drives up assets; drives up taxes. Parts are hard to control and start walking out of the shop; lost revenue. 
Solution to Inventory Problem: Hire a parts person. 
Problem with this Solution: Increases inventory and payroll.

See how nutty this can get? What went wrong? What's really needed isn't named completely.

What's more, as you can see by this example, it isn't enough just to name the problem; you also have to name what you want, to come up with a solution that makes sense. By naming the thing you really want now, you can start walking backward from that point to come up with the actions needed to organize the area.


Example: Doing It Right

Let's go back and look at the original problem.

Situation: Production is being slowed down waiting for replacement parts. 
Improvement Wanted: Speed up the production line.

Now Name What You Really Want: The right parts at the right time, without increasing inventory or payroll.

What does it take to get the right parts at the right time without increasing inventory or payroll? What do you need to do to accomplish this goal? Now let's work out a solution.


Walking Backward

Now with this one area of the business, look at what steps are needed to be done to get this area into the condition you imagine. Make a list of the actions that have to be taken. Look it over carefully and ask yourself, “If I take these steps, will I get what I want?” Make sure that each action makes sense and that there aren't any needless or redundant steps.

Possible Solution: Look over appointment book the night before for all vehicles that are scheduled to come in, and preorder the parts that will most likely be needed. Now work out the rest of the steps needed.


Getting Others to Understand and Use New Systems

A great tool for management to use when organizing an area is a flow chart. A flow chart allows you to put down on paper what you're visualizing. Flow charts allow you to see where there might be a flaw or a bug in your thinking.

Once again start with what you want and start working it out from there. Once you have it worked out on paper, you can easily show it to others to gain agreement that your plan will not only help the shop, but will also make their lives easier.

Go through any new procedure with the people who'll be involved. Do dry runs and drill it until the new procedure is smooth and everyone's questions are answered. You can come up with great new organizational plans and systems, but if you can't get the people that need to use them engaged and in agreement, your efforts will go to waste. But when you take the time to do it right and train people on any new system, life is good! Good luck in your efforts and here's to a more organized business!

Learn how to better organize your business by attending the Management Success "How to Increase Your Profits" Seminar.

MANAGEMENT SUCCESS! "How to Increase Your Profits" Seminar

Should Your Technicians Be Selling Service? by Robert Spitz, Management Success!

Robert Spitz
Sr VP Production
Management Success!
In this industry, there are two schools of thought on this matter. I have heard arguments on both sides that are both good and bad at the same time. Let us take a look at this and come up with a consensus. First, we need to clarify a technician's job.


What Is a Technician's Job?

Defining what is wanted from a particular position in a company helps simplify what functions must be done to get the product or end result of that position. With a technician, it is fairly straight forward:

A technician must correctly diagnose, repair, and recommend any future needed repairs and services so that the vehicle does not have any immediate problems.

From this, we can draw up a list of actions that must be done to achieve the desired product or result. So where does sales fit into this picture?

Most shops are started by technicians who have more ability and drive than the other technicians in town. They have a desire to be their own boss and to have their own successful business. To survive, they quickly learn that they have to have some sales skills. Mixed with their technical skills, this can become a powerful combination. If they fail to learn even the most basic sales and management skills, their growth will stall, and so will their dreams. They eventually figure out they cannot do both jobs of selling and fixing cars. There are just not enough hours in the day.

In order to grow, technicians or sales people need to be hired. Of course, this requires new management skills on how to recruit, hire, and put people on the job so they can now produce in a volume that allows the business to grow and the owner to make money.

A technician earns a living by diagnosing and repairing vehicles. All of a technician’s time must be focused on these two functions. When we pull technicians off vehicles to deal with customers, they are now mixing the functions of sales into their job and are no longer doing what needs to be done to achieve the purpose of the position. This cuts heavily into their production and creates comebacks. So, organizationally, this does not make much sense.


When Using Technicians for Sales Does Makes Sense

There are times when using a technician to help close a sale makes sense. Sometimes the customer is skeptical or just does not understand even though you have used sales aids in your presentation. Using technicians as a “technical tag” can be very powerful in this instance. Knowing which technician to use and when to use him or her is a sales skill that all service writers need to have. The technician needs to be trained on how to do this and must keep the answers short and to the point. The service writer guides the customer back to the vehicle and asks the technician to show the customer why he recommended a particular repair.

Learn this technique and use it on those tough sales, and you will close a lot more. Sales people have a purpose and a function, and technicians have theirs. Do not mix up these jobs, but learn to use the strengths of both to your and the customer's benefit.

MANAGEMENT SUCCESS! Online Shop Analysis for Shop Owners

For more information, call Management Success! at 818-546-5836 or visit ManagementSuccess.com. We are here to help!

It's The Economy! By Mike Lee Management Success!

Mike Lee
President
Management Success!

Ah! Over the years, we have heard this complaint on numerous occasions. Shop owners complaining about things getting tight and that there is not enough business and "I can't pay my bills, etc."

Let's go over some basics about business and handling the "tight economy." A shop goes through cycles or periods of where business is good followed by a period where business is bad. This has been going on since the beginning of time. So we can conclude that it is going to happen again. It appears we are in one of those times when things are a little tough.

Now, if you have been through this before, hopefully, you have learned some things. Some businesses survive and a lot don't. Why? Most of the time, the shops that survive know how to handle the tough economy!

They do the right actions which helps them through the difficult period. Such as:


Work Harder

Successful shops know when the economy gets tough, they have to work harder. What I really mean is they have to work smarter. Just working an extra 3 hours day will not solve the car count problem. It will not solve a shop that has gotten lazy and dropped out successful actions they were doing when they were small.

The most common of these successful actions is they used to be "hungry". When they first started in business, they were very aggressive. They did whatever it took to get business in the door. Many times, new shops will pass flyers out door-to-door or in malls promoting that they were a new business that was opening. They passed out business cards to everyone they knew.

But as soon as they got busy, they stopped these actions, even though they contributed to the shop getting busy. So part of the working harder is go back to being hungry and aggressive.


Promote!

They promote! This doesn't mean they spend a million dollars on advertising or promotion, but they do actively increase their efforts with their customers. They are able to effectively get results without having to spend lots of money doing it.

When things slow down, shops tend to stop promoting. This is not the right thing to do.

I love people who spend lots of money to learn how to create tricky, expensive promotional campaigns. When in reality, the key to promotion is word of mouth. So instead of spending tons of money on promotion, you can increase your car count by having a plan to spend more time with your existing customers.

Personal contact with your existing customer costs you additional time, but is more effective than any promotional piece ever created. Explaining the bill and what you are doing and why is very effective promotion. There is no promotional piece that will replace having a high care factor and good communication skills in dealing with your customers.


Fix The Cars!

The other day I got an e-mail about a problem a potential customer was having. He was complaining about bad checks, business slowing down and then proceeded to give a full picture of all the promotional actions that he was doing. He was spending a ton of money and he indicated that 50% of his business was new customers. He asked a ton of questions that did not make any sense.

I asked a couple quick questions like what his average repair order was and what was his cost of parts and labor. It was very obvious that he had other problems than promotion problems. The number one problem was the quality of work going out the door.

When 50% of your weekly business is new customers, wow!! Something is definitely wrong in the quality of work. A growing and expanding shop is built on repeat business and word of mouth. The part of the industry that has heavy repeat business needs to have about 90% of their business be from existing customers or you are starting to have problems.

If you are in the part of the business that doesn't operate on repeat business, then word of mouth is everything to you. Every time you finish a car, you put a referral out in the world. This referral is either good or bad and generally it is up to you to make it a good referral.

First Rule of Promotion: Fix the Car

Second Rule of Promotion: Treat the customer fairly with a high care factor.

I know of shops that do no promotion or are not even listed in the yellow pages, but they do terrific business, because of the way they fix the cars and handle their customers. They have a good number of new customers coming to their shop because of referrals from their existing customers.


A New Level of Expense

In good times, shops tend to get very lax on the control of the money. They start buying things and expanding without looking at the long term effects of this. They take on heavy debt and commitments due to the fact that they are making lots of money and it appears to be no problem.

But when the economy slows down, they begin to get into real trouble because their monthly overhead is now out of sight. While smaller and the overhead was low, they could handle a drop in business and survive rough times.

I find that the most successful operations go back to the basics when business slows down. They work smarter. They get more aggressive on making sure that they are doing everything that they know helps create good customer referrals and repeat business. They tighten the financial belt, make sure that they don't spend money on things that don't work and do spend money on those that do!

I hope this helps.
Mike Lee

MANAGEMENT SUCCESS! Where is the Black Hole in your Shop? Test

Insurance Adjusters — Friend or Foe? by Robert Spitz, Management Success!

Robert Spitz
Snr VP of Business Dev
Management Success!

I was talking with a fairly new shop owner the other day on the state of his business and the challenges of starting a new business. During our conversation, the subject of adjusters came up.

This particular owner, like many others in the business, has a passion for art; he is a master painter and does beautiful work. Like many new operators, he has some collision guys, but he is still the one who does the painting. He has goals. He wants his shop to be the best collision shop in his market, and I have no doubt that with his drive, he might make it. The reason I say might is because he is currently stuck working in the back and trying to run the business, which includes writing his own estimates.

He is experiencing his first case of true stress, and it is starting to show itself in the way he handles people. He looks at an adjuster as the enemy who is there to drive him crazy and whittle down his profits to the point where he is not making any money.

I asked him if he provides a space for the adjuster to work while he is in the shop. His reply was instantaneous and filled with antagonism. "Why should I do that? He is not here to help me!" I knew immediately that he was looking at the adjuster as an adversary and not a potential ally.

I was not trying to find fault with him. He is a well-trained and experienced painter with a lot of knowledge and talent in that area. His problem is he is not trained in the fine art of handling people, which, as an owner, is more important than his skills as a painter. As a result he is trying to handle the wrong problem in his business. Killing adjusters will not improve his bottom line!

I got him to calm down and take a look at what an adjuster does and how the adjuster creates a balance between the insurance company and the shop that has the customer's interests as the priority. I got him to also look at the fact that he needs the adjuster's help in accomplishing his goals, and yelling at them and being belligerent is probably not the best way to win someone over.

I agreed with him that not all adjusters are sweethearts. Some are a real problem. They can be difficult and unreasonable. Maybe they just got chewed out by the owner of the last shop they were in. Maybe they have a chip on their shoulder due to their own failures in business. It doesn't matter. You need this person to help you get what you need. Maybe just offering them a bottle of water and a place to sit down for a moment to talk about anything other than the business at hand would help. Not all of them are out to get you. In fact, if he would put down his sword and shield, he might find the majority of them are just trying to do a difficult job the best way they know how.

Dealing well with people is not only a skill, but it is an art form that has to be mastered by anyone trying to run a business. There are many things to know about business. Understanding personal relationships and knowing how to negotiate is among the top items on the list.

Understanding people and how to handle them well is a priority for those who have to deal with the public. Very few people are born with these skills. They have to be learned.

I asked him, "What if you had the same ability in dealing with adjusters that you have in dealing with cars? Where would you be?" He stopped dead in his tracks. I continued, "You are a gifted, talented painter who only knows how to do the job one way: the right way. Your upset with the adjuster is because you feel he is trying to get you to do the job in a lesser way, a way that will not satisfy you or the customer. You do not have the skill to get the adjuster to see it your way. This leaves you with the limited choices of short-cutting or accepting what is being offered, which reduces your profit. Neither one of these is acceptable, nor should it be. You are going to do it the right way, regardless.

"Two things need to happen here, and they need to happen quickly or you will burn out and never achieve your goals. The first is you have to learn how to recruit, hire, and train the right people so that you can back out of the paint booth and run your business. You are killing yourself trying to do both. What is currently happening is you get short-fused when you have to stop what you are doing to handle the insurance adjusters. You start the conversation with the adjuster with an already negative attitude.

"The second thing is you have got to learn how to deal with people and negotiate in order to get what you need to do the job right and put money in your pocket."

His shoulders sagged, and he said to me, "Where do we start?"

I am happy to report that this particular shop owner did not blow up his business and is now in a much better condition. He smiles easier and has a good business. He is well on the way to achieving his goals.

Collision shop owners are in the people-handling business. If you are not achieving your goals and you are feeling fed up and frustrated, give Management Success! a call. We can help.

MANAGEMENT SUCCESS! Sales Training for Estimators

Wednesday, March 6, 2013

What Would You Do If You Won the Lottery? by Robert Spitz, Management Success!

Robert Spitz
Snr VP Business Dev
Management Success!

What would you do if you won the lottery?

This is a fun question to contemplate and one that I like to ask as a consultant when working with small business owners. The answers open the door to how an owner is currently thinking about the business.

So, what would you do? If your immediate response is, "I would close this place down and be on the next plane to Hawaii!" well, that probably means you are not too thrilled with the business anymore and would be willing to do almost anything other than working in your business.

There can be many reasons for this, and believe me, you would not be the first small business owner to feel this way. But what are you telling yourself? What is going on?

Goals and purposes are the first place I dive into when I get this kind of response from an owner. What was your reason for starting the business in the first place, and where are you on your path to achieving that purpose or goal?

I received a call the other day that made me want to write this article. This particular fellow had been running a fairly successful business in the Chicago area for over 20 years, had enjoyed the freedom and challenges of owning his own business, but suddenly his pilot light was out. He wanted out.

He started the conversation by telling me he had enough and was thinking about closing up. When I asked him about this sudden change of heart, I found out he had recently been burned by a fleet account that went belly-up, leaving him holding a lot of worthless paper.

He was looking to me to give him my blessing about his decision, but that was not going to happen. I do not take it lightly when someone I have known a long time makes a decision that will alter and affect his life, as well as the lives of everyone who looked to him for leadership for so long.

Instead of taking the bait, I started to casually poke around with a series of questions:

  • What was his original reason or purpose for starting the business?
  • What has he enjoyed about having his business?
  • Except for this major hit, how was the business doing?
  • What would he do if he sold the business?
  • Did he feel like he had achieved his original goal of the business?

He had not given most of these questions much thought. He was stuck in the loss of all the money and what it had done to his year. After going through these questions, he started to change his views about the business. Giving up something that he spent so much of his life building was a little harder to confront than he first thought.

We looked at the consequences of his decision. What would happen to his employees? What about his loyal customer base? Would he really be happy working for someone else? These were important factors to consider.

When we were done, I told him to take a look at where he started and where he is now and to give me a call in a couple of days. I heard from him the next day, and he told me he was not ready to throw it all away over this one circumstance. He took a fresh look at his objectives and the reasons for having his own business. He likes being his own boss, calling the shots, and taking the risks. He has a good crew, which took him years to develop, and he did not want to break them up. Now that he was fired up again, I knew he would be okay because a business always reflects the owner's attitude and drive.

If you are having trouble mustering up the energy to drive to your business in the morning; if you are not sure about your business, bored with it and where you are going with it; or if you are anything less than enthusiastic, give Management Success! a call. We have the experience and the know-how to help.

MANAGEMENT SUCCESS! Executive Freedom and Power Workshop