Our entire nation faces some difficult challenges. The economy has hit a low point the likes of which most of us have never seen. Domestic car manufacturers are just barely holding on, as are other industries. Factory shutdowns and employee layoffs are on the news daily. Fears grow that the unemployment rate will reach double digits. History has shown that our economy will come back, but when and how is the big question.
Looking into 2009, many business owners have hope for a good year but no clear strategy in place to shape their future. Many owners, especially those in a service industry, seem to be so stuck on focusing on day-to-day operations that they believe they don't have time to plan ahead for next month, let alone for the next year – or longer. This position is tenable only if both the economy and sales are strong.
So what are the steps that shops can take as they examine their future in a tough economy? For one, they might want to look into consolidation.
For the last 10 years there has been an upswing in business consolidations in many industries. As the economy continues to struggle, the rate of consolidations certainly will increase. For businesses with cash (or at the least the ability to get cash), there are great opportunities available at bargain basement prices. Deals are forming daily involving large corporations such as General Motors and Chrysler, Northwest and Delta Airlines, etc.
Our industry also is continuing to undergo consolidation as it becomes more challenging for single shop owners to work on their business and upgrade their skills. Surviving is no longer merely about fixing cars. Shops must possess management, financial and marketing skills and resources to compete. But this does not mean that the only survivors in 2009 will be the consolidators or multi-shop operations. The shops that will make it through what promises to be a difficult year are those that can change.
Our industry has a number of successful shop consolidations with organizations prepared to grow in this market and economy. Single and multiple shop owners are taking advantage of the conditions. Franchises and networks too are growing. These shops provide their members tools, training and services for growth and direction. As an industry consultant, during the past 12 months, I have worked with more shop owners than ever to regain their market share and improve their business performance.
The collision repair industry landscape will continue to evolve even as claim counts decline, shortages of skilled techs continue to be an issue, vehicle technology changes and insurance companies continue to move from relationship-based to performance-based programs. Your preparations for 2009 and beyond needs to focus on getting your organization to become a "lean, mean business machine."
There are several strategies to accomplish this. They all begin by focusing on yourself and then your operation. These are the two most significant business factors you have the greatest control over. Can you look at yourself in the mirror and honestly commit to truly changing your priorities so you can take the steps that will allow you to survive and flourish in 2009 and beyond? Can you look at your organization objectively? If not, get help if you want to stay in business (or plan to get out).
Next, turn your focus on your operation and doing business better. You will have to embrace lean and mean tactics and get back to the basics that helped you in the past. You must look at your operation under a powerful microscope to: determine your place and value in your marketplace for the services you provide; see it from the customer's perspective and learn how to exceed their needs; reduce wastes within and between processes and systems you have or will need to create, and assess your technical and equipment levels for the new technologies being introduced.
Of course, you'll need to do all this while dealing with the new Environmental Protection Agency/Occupational Safety and Health Administration rules, human resource laws and other increased costs of business. These are all basic requirements for small business owners for any industry, not just ours.
In America, we have the greatest opportunity of any nation to be true entrepreneurs and masters of our destiny. We also have very high failure rates due to factors such as a lack of business skills (not technical skills). It is critical you improve your business skills in 2009 and beyond, or you will be in a position almost no one can survive: essentially "taking a knife to a gun fight." Make 2009 the year that you turn your business around by rethinking it from the ground up. Good luck.
Please send comments, questions and potential discussion topics you would like to see addressed in future columns to [email protected]. For additional information you can also visit www.aeii.net.
