Are you Prepared to Compete?
Put Yourself in a Position to Succeed
Too many auto shops have been driven out of business by merely hoping that adverse market conditions that have slowed their business down will reverse themselves. A shop must be well-prepared in order to survive and prosper in tough times.
Shop owners often inform us that their business is slow due to economic or demographic changes in their marketplace, beyond their control. They also mention their belief that today’s vehicles no longer require the same amount of maintenance and repair their predecessors did, further contributing to a lack of business.
These shop owners often find comfort in hoping their business will return to normal once these marketplace changes reverse themselves. It is this “hope” that continues to drive more auto service/repair business owners out of business daily!
We respond to these shop owners with a few pointed questions. For example:
- By what percentage of total annual sales is your business off?
- How many competitive service/repair shops, including franchises, new-car dealers, and other independent shops, are located in or close to your market area?
- What is your best “guestimate” of the annual gross sales of each of these shops when business is good?
- Do you believe their business has declined in a similar proportion to yours?
Once we have obtained the answers to the above questions, we ask them to perform a simple but effective exercise:
For example, if their annual sales revenue normally is $900,000 and now it’s $675,000, their business is off by 25%. If there are a total of 15 competitive shops (including this one) in the market area that normally do the same average volume of sales ($900,000), the amount of available annual business in their market area would be $13.5 million. If we reduced these annual sales by the same 25%, the remaining available business volume is $9.75 million. Of course, these numbers are examples only, and would vary according to individual market areas.
After defining the size of the market, we then tell the shop owner that the reason their business is “slow” is that their shop is unprepared and perhaps unequipped to compete for the lion’s share of the existing business volume available in his area. Sure, there are some exceptions, where there may be only a couple of other shops in town, and a small number of vehicles needing service. However, for the majority of shops in the industry, there really is ample business available. Shop owners just need to learn how to compete for it.
Shop Owner Preparation
Based on the number of enrollments in our course offerings, we know that a very small percentage of shop owners seek out and attend business management training. Of those that do, very few follow through and implement what they’ve learned. In addition, we’ve found their investment in their staff as a percentage of sales dollars has been minimal. The result is that the majority of independent shops are untrained and unprepared to compete for business in today’s marketplace. This provides the franchises and dealerships with a competitive advantage by default.
The good news is that shop owners can not only survive, but prosper, because there are many customers to be satisfied, plenty of talented staff available, and much money to be made!
Let’s look at some elements of automotive service that can be improved by shop owners in an effort to prepare to compete. We begin with staffing. Without well-trained and competent staff, today’s shop owner is doomed.
The biggest fear of today’s professional technicians is to have technology pass them by and render them obsolete when it comes to servicing and repairing the newest vehicles. Our industry has come a long way in generating great technical instructors and technician training opportunities. The majority of the industry has responded well by continuously making the investments in its technical workforce.
Forward-thinking shop owners have also invested in business management training, and those who have fully implemented what they’ve learned have been able to afford the best technicians and compensate them for their investment in tools and equipment, and for their knowledge and expertise. Those who have not made these investments need to do so in order to compete.
We witness on a daily basis shops that employ well-intentioned people as service advisors, but who, in many instances, are nowhere near being qualified for the position.
Service advisors are pivotal people who are almost solely responsible for every gross sales and gross profit dollar earned by the company. Yet in most instances, they receive no formal sales, business, or customer relations training. Without such training, they’re left to do the best they can, which in most instances, is not enough.
If you’d like to witness this lack of training, call 10 to 15 competing shops, including dealers and franchises, posing as a customer requiring routine information and service, and see how it’s handled. We perform this exercise during some of our courses to demonstrate how just a little improvement will provide a service advisor with a huge competitive advantage.
An important question for shop owners is: Why would you spend large sums of money in marketing efforts geared toward increasing business, only to have the customers that do come in mishandled by an inexperienced and untrained service advisor?
Not only is the service advisor required to have the best sales and people-handling skills, they are also required to:
- Have a complete understanding of efficient workflow processes
- Be very adept at the management of the labor inventory
- Have acquired efficient vendors to supply quality parts and materials in a timely manner
- Possess the skills necessary to prepare and quote estimates
- Manage the shop equipment and space
To be able to compete in today’s marketplace, a shop owner needs to be prepared to hire, train, and provide ongoing training to build up a service advisor who is capable of performing these tasks.
Join us next time as we dive deeper into why your shop may not be performing at the same level as your competition. In the meantime, if you would like further training, enroll in Guerrilla Shop Management, which begins September 10th. Call 800-755-0988 or click here to enroll.