Management must be willing to change with the market to be successful

There is no doubt about the confusion in our economy. The high technology sector is under siege on its up-and-down market capitalization value; the various automobile manufacturers are trying to redefine growth strategies to deal with various emission regulations, market and globalization realities; the fishing and forestry industry is quite distraught; and the oil and gas sector has to rethink their strategies with shortages and “all over the place” global economics. Things have changed in four to six months and, in some cases, four to six weeks. It seems there is no more constant in the world we once knew.

These are the facts of today's life, yet I see too many independent shop owners and managers burying their head in the sand and not changing their business style to the times we are in, and it is dramatically affecting their bottom line. Some of it, I'm sure, has to do with technicians in our industry believing it is fine to do it the way they’ve always done, which can create a stagnation mindset within the shop. Too many people see change as "for other people, not me." This attitude can put, and hold, management in a rut. We must agree, the only constant now is change. Now we must deal with it. We must be prepared to reinvent our business every three years now and that reality demands good management skills to be in place on a daily basis moving forward.

Management must take charge of the business. That's your function within the business. Your decisions affect everyone who is working with you. That is a huge weight on your shoulders and it must be taken seriously.

Clearly explain to all employees where the business must go over the next three years in terms of why and how. Lay out your vision in written form so they can read, see and understand where the future lies. Explain to them the difference between a customer and a client. You want to build a client-strategic business where you get all your work by building a strong, trusting relationships. Clearly tell the staff that they are an important and key part in getting the shop to the next level, and if they are not interested in moving forward, this is not the shop for them. This may sound harsh to you with such a shortage of competent technicians in our industry, but if you have a team member who does not want to grasp reality, challenge themselves and move forward to be the very best they can be, where does that leave your future and the balance of the team’s future?

One issue that we must agree to is that we must pay our people better if we are going to get the best available workers, otherwise, from an employee’s perspective, what is the incentive to challenge oneself? To achieve this, you must manage your business to increase bottom-line profitability. This includes changing your mindset on what to measure in the business. Watching sales is just measuring activity. Sales can increase, but that is absolutely no guarantee that net profit increases. It will take more net income to be available to reinvest in the team’s financial standard of living.
 

Now we must watch billed hours, which is productivity. Measuring and increasing productivity on an individual basis must become a culture within the shop that everyone clearly understands. Invest and train your staff thoroughly! If they are in the shop for 8 hours a day, find out clearly why they are not billing out 8 hours a day. Is it an internal process problem affecting the efficiency of the operation or is more individual training required?

Measure the average hours produced per R/O. Strive to average 2.5 billed hours per R/O for basic consumer vehicles. Strive for 4 to 6 billed hours for one-ton vehicles such as cube vans and if you do any heavy-duty vehicles the objective is 8 to 10 billed hours per R/O. Look at your vehicle mix and determine what you should be averaging in billed hours per R/O if you have a blend of vehicles. Measure your total labor hours billed for each month for true comparison purposes. Measure your parts percentage sales mix between aftermarket and dealer domestic and dealer foreign name plates. This measurement can help define your client base and the talent and ongoing training required to do the job right the first time. Charge out maintenance work at 85 percent of your total cost per billed hour, and charge out diagnostic at 125 percent of your total cost per billed hour. Now you are truly looking at shop efficiencies to be market competitive with your labor rates.

Review your detailed system as to how the vehicle is inspected when it enters the shop. Are you completing at least one comprehensive inspection per year for your basic clients and two per year for commercial clients? It’s all about having a complete file on each vehicle for safety, reliability and efficiency so you can counsel the client effectively based on their realities.

Put your report into print for the client. Discuss with them how to obtain the best return on their investment with their vehicle, based on their driving habits. Print the upcoming maintenance schedules for the client and schedule accordingly. Develop trust through educating, then deliver true value to your clients.

Finally, acknowledge the truth: business is so hard when I have to, and yet so easy when I want to.