Snr VP Business Dev
In the past, it was enough to have good mechanical skills, some common sense, and a dose of good luck to be successful in the auto repair business. But there have been a lot of changes since that time. The increase in extended warranties, environmental demands, government regulations, more competition, less qualified help, and an economical environment that has changed significantly since 9/11 all have contributed to making it tougher to make a profit.
Is Business Growth Tied to Management Knowledge and Skill?
Looking at the growth of thousands of shops, there is a definite pattern which is directly tied to the owner’s business skill and knowledge. Oftentimes, the growth and success of the business can be tied to the owner’s background and experience.
Small to Mid Size Shops
In most small shops, those that have been in business for longer than five years and are doing somewhere from $5,000 to $25,000 in sales a month, the owners have come from the technical side of the business. Their time is primarily spent fixing cars.
Other shop owners have pushed their monthly sales up into the $25,000 to $45,000 range. In those shops, the owner tends to be the service writer and oversees the rest of the business. The technicians fix most of the cars. In a small percentage of shops, the owner hires a service writer, while continuing to work on cars him- or herself. Sometimes, owners bring in their spouse to help out and eventually handle customers.
What all the shops in this range have in common is that their business grew to a certain level of monthly sales and then ran into a barrier that seemed to stop the business from growing and expanding.
- Having problems finding good help
- Not enough customers
- Working too many hours
- Not making enough money
- Owner overwhelmed
- Owner has to handle every problem and check on everything or else it doesn’t get done right
The barriers become unsolvable. Owners try everything they can think of to solve the problems. By talking to other shops that are having the same problems, they get agreement that the problems are unsolvable. When you talk to shops that have been in business for five to 30 years and are still struggling with the above problems, you find that most of the owners have given up and believe there is no solution to the problem.
- Close the shop down
- Sell the shop or turn the shop over to a family member
- Hope that it will get better
- Keep on doing the same thing until they retire or die
These owners have resigned themselves to the “fact” that there is nothing that can be done about these problems. They get to the point where they will not listen to anyone that indicates that there might be a solution to their problem.
Bigger Mid-Size and Large Operations
The number of shop owners who have taken their business to the next level is much smaller. This group of shops is doing somewhere between $50,000 and $90,000 in monthly sales. They will occasionally help the service writer, or help out in the back, but normally they are not working in the operation on a day-to-day basis. These shops have run into barriers, too.
- Getting someone to manage the shop who has the same care factor as the owner
- Getting someone to manage the shop the way 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 successfully themselves, but are unable to get the job successfully turned over to someone else.
There is another group of owners who have pushed their operations above $90,000 to over $200,000 in sales a month. They can come and go as they please. Most do not 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 managing or running the shop to someone else.
They will tell you that they are doing fine and have no real problems. When you talk about taking the shop to the next level, they begin to tell you they are not really interested in doing that. Eventually, they will tell you about the barriers that they have run into and why they have decided not to expand.
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, it was because, for some reason, they lost the 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 have one shop, then start opening multiple locations. They too eventually run into problems. They expand to the level just beyond the ability that their organization and their people can effectively control.
So, you have the person who is successful up to five stores, but when they tried to expand past that point, everything starts to break down. In fact, in most large multiple location operations, there seems to be certain constant points where they run into problems.
They are not involved with the operation; they are doing something else. They hire a general manager to run the operation and, as they grow bigger, they hire district managers to run four to six stores.
During the growth pattern, they are making money like it’s going out of style. It is a wild time. They just start opening stores and putting people in place. But eventually, the organization gets into trouble.
If the owner starts visiting the shops and inspecting each operation, what is found is policy violations. Standard policy and procedures are not being followed. 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 and getting it implemented is one of the missing basics. Another is the right organizational structure, and 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 being able to duplicate that model in a second shop; then in a third, fourth, and so on. Then, you figure out how to organize the sixth through the tenth shop. Most owners expand too quickly and take their operation beyond their ability to control it.
The Real Solution
At every one of those levels, there are common barriers that must be handled in order to expand. The owner’s inability to handle that problem is solely based on his lack of knowledge on how to handle that problem. The more you grow, the more management knowledge and skills you need. It is the key.
At Management Success! we have helped shop owners solve each of these problems. Isn’t it time that you quit being frustrated and hoping it 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?
We invite you to go online and take the free Shop Business Analysis. This analysis will point out all the things you are doing right and shed light on those areas that are holding you back. Do it today!