It’s Your Business
- Subject: Making good business decisions
- Essential Reading: Shop Owner, Center Manager
- Author: Terry Greenhut, Transmission Digest Business Editor
Business, as life itself, always seems to come down to the choices we make. I’ve found that we are usually presented with two options at a time, rarely more. It’s a matter of picking the best road to go down in almost any instance.
These generally aren’t blind choices. We usually get to make them on the basis of experiences that we or others have had. That’s why possessing a good memory and keeping abreast of what’s going on in the industry and the economy helps a lot. Knowing the mistakes we’ve made in the past, we hope, will help us to avoid making the same ones in the future.
This is where the old-timers should have an edge. They’ve been there and done that several times before. They’ve made hard choices that have worked or not over the years, so we would hope they’ve learned enough from them to make better choices in the future. Younger entrepreneurs would do well to study what the elders had done to see whether they can avoid similar pitfalls and mimic successful actions.
It isn’t always easy to get veteran shop owners to talk about their mistakes and shortcomings, but I can tell you that from those I’ve spoken with who would rather remain anonymous, they’ve all chosen the wrong road from time to time. Some fully recovered and put themselves back into a strong position; others continue to struggle or have failed and chosen new professions or retirement.
Here are some of the key choices that have been determining factors in the success or failure of these businesses.
1) Good choice: The decision to think and act like an owner as opposed to a technician who just happens to own the place. Since the transmission- and auto-repair businesses have always been grassroots types of operations not well suited to corporate America, owners came up through the ranks. They started out as mechanics or installers, then – in the case of transmission shops – went on to become rebuilders, afterward managers and eventually owners. Some took over and started to run the family business, and others bought another existing business or started one from scratch.
Even if they had been well schooled – which they usually weren’t, having learned what they could by watching their previous bosses – the choices they made along the way were not always ruled by what they knew or thought to be right but by their individual backgrounds and often their emotions. In other words, technicians tend to think like technicians no matter that they now own the business.
They think about making the job work, about getting the car out quickly and about getting the parts as cheaply as possible because they lack the sales skills to get a profitable price for their work.
2) Good choice: The decision to learn to run the business on the basis of profitability. Still, amazing enough in this day of computerized everything, when I ask the question of a new client, “What does it cost you to do that job?” I rarely get an answer. I can sometimes get a guesstimate but not a definitive answer. That means the owner has not made the decision to know his or her cost of doing business – without which, of course, they can’t possibly know the right amount to charge – and that, as we all know, generally leads to undercharging for fear of losing the job to the guy down the street who doesn’t know either.
3) Good choice: The decision to continually market and advertise the business, which takes an ongoing commitment to wisely spend what’s necessary to keep its good name in front of the public. Today that involves the Internet with websites and social media along with constant monitoring to make sure no one is posting bad reviews and, if so, employing methods to counteract the problem, but it still means hitting the streets to drum up new wholesale business while maintaining those all-important relationships with established accounts. Far too many automotive businesses fail because they slack off on the marketing over time either because of the owner’s delusion that the shop’s been there so long that everyone must know about it or because of lack of funds or the owner’s disinterest in keeping the site and social media up to date and employing a regular outside salesperson.
4) Good choice: The decision to place the customer above all else and treat each one as though they are your only one; to go the extra mile and to make “Yes” the only answer to every customer desire except for a lower price.
5) Good choice: The decision to buy only top-quality parts and replace questionable ones to avoid expensive and unnecessary comebacks, increase productivity, and create happier customers and employees.
6) Bad choice: The decision not to make a decision about getting rid of non-productive or difficult employees. It’s always easy to hire and hard to fire employees if you have a conscience and compassion, but that’s not what a successful business owner does; so making the decision not to put up with that nonsense even when the employee has an abundance of talent is the difference between the owner controlling the business or the employees running the show.
7) Bad choice: The decision to try to save money by either not honoring warranties, stalling off comeback customers or not extending courtesy when the car is just over the warranty period. I recently witnessed a shop lose its biggest account by not giving priority to taking care of its comebacks. Understand that a customer who has already paid for something has the right to expect that it live up to reasonable expectations. If not then that customer, and rightfully so, believes he or she should receive priority over a new customer who hasn’t yet paid. Shops that are not doing well have a greater tendency to put comebacks on the back burner because they so desperately need the revenue the new jobs bring in – short-term thinking at its finest.
8) Good choice: Hire the best diagnostician you can find, and if you can’t find one farm out to a local expert anything you can’t easily figure out. The time wasted trying to find the cause of an electrical problem could be far better spent making money on something else, even if you have to pay out pretty good money for the diagnosis. Sometimes it just makes better sense to let the expert down the street invest the thousands of dollars it takes every year to upgrade to the latest diagnostic equipment and go through the learning curve to use it than wasting hours, if not days, trying to work out problems that you aren’t equipped to handle.
9) Good choice: Not to be a “know-it-all” and believe that you don’t need help. Everyone does from time to time. Joining iATN, ATSG, ATRA, ALLDATA, Mitchell 1 or any other tech service that might be able to help you shorten the time it takes to solve a problem is worth far more then you’ll ever invest. Attend tech seminars whenever they’re available, but don’t neglect the management side. Read books and trade magazines, listen to recordings and attend live seminars to get you fired up and to remind you of the successful actions you’ve taken in the past along with new ideas for sales and marketing.
10) Good choice: Be certain you’re right before proceeding. Many of us, including me, started our own transmission- or auto-repair businesses at a time when we had no right to do so. We didn’t know enough or have enough money to sustain ourselves, but we were lucky. We did it at a time when a big mistake cost a $15 transmission core. There were no tough electrical problems to deal with, and units and parts were so readily interchangeable we could make almost anything right in no time. Today it’s quite different. If you don’t really know exactly what you’re doing you’ll suffer big-time for making those mistakes.
11) Last good choice: Always take the high road. When presented with the choice always ask yourself, “What’s the right thing, the honorable thing, to do?” because that generally brings the profitable thing, either immediately or in the long run.
Terry Greenhut, Business Editor. Visit www.TerryGreenhut.com.