Crash and Burn

It’s Your Business

Subject: Salvaging a declining business
Essential Reading: Shop Owner, Center Manager
Author: Terry Greenhut, Transmission Digest Business Editor

A few months ago I wrote an article about a transmission shop that was so poorly operated I didn’t know how it stayed in business. Well, guess what: It didn’t. I drove by yesterday, the signs were down and the place was locked up tighter than a drum. I was sad, but not the least bit surprised.

It always saddens me to see any business go under, because I think about the owner and how excited he or she must have been when they started the business and set the goals that they had for its future. Now here it is, not many years later, a smoldering shell of what it was supposed to be.

Was this inevitable? Did it have to happen? Could the owner have avoided this terrible fate? If the shop had been in a bad location, if there had been no business nearby to be had, if the rent had gone out of sight, if there had been a serious lack of trained technicians in the area, then I might agree that the closing was unavoidable, but none of that was the case here.

The shop was situated on a major thoroughfare with a high traffic count. There was plenty of business to be had, both residential and commercial. I found out that there was still 10 years to go on a reasonably priced lease. The shop had good technicians who screwed up only when the owner tried to make them skimp on the quality or quantity of the parts they needed to install. So, no, it didn’t have to happen.

This business, like many others that have been around for a significant time, could have been saved from the auctioneer’s block; it could have been revitalized with a little money thrown at it and a complete attitude adjustment on the part of the owner. Of course, if the owner was tired of being in the business, if he was so buried in debt that he never could see his way clear of it, if the IRS and the state were breathing down his neck, if he had indeed tried every possible means of promoting the business to no avail, then I could see why he would want to bail out. The question remains, if these conditions were manageable, could this business have been turned around? The answer is yes, but it would have involved a total recommitment from the owner with a whole lot of management and sales training and coaching for all the customer-oriented personnel.

I’m sure a sizeable investment would have been necessary to clean the place up, take care of back debt and set forth a marketing program that would bring good results. The money might have been procured as a loan or by taking on a partner, either silent or working. In fact, a partner with a lot of untarnished enthusiasm might have been just what the owner needed to build a fire under him.

Many times over the years I’ve seen locations go under or change hands. Sometimes, if it happens repeatedly and nobody has done any good in that spot, it will get a reputation as a loser. Then all of a sudden someone from outside the area, who doesn’t know the location’s history, shows up, falls in love with it and decides that this is where he can make his fortune. He invests in modern equipment, signage, a paint job, a couple of great technicians, advertising and an outside salesperson, some top-quality sales and management training and, in short order, turns the location from a jinx to a star.

A question I would like to have asked the owner of that failed shop is: If you were driving down the street and saw a shop that was closed or that the owner wanted to unload at a fire-sale price, and you could envision a great deal of potential in the location, would you go in and try to start up a business or salvage an existing one there? And if you were going to do that, how much time, money and effort would you put into making it work?

What makes the question a valid one is that anybody who embarks on a new business venture is going to invest a good amount of time and money. Even this owner, who hasn’t put anything into his existing business lately, would invest wholeheartedly in a new one should the opportunity come along. It’s just human nature. So why can’t he see that the same kind of investment in his own business could be exactly what it needs to start again producing wealth as it once did?

One of the major stumbling blocks to this reformation is the fact that the owner has watched his business decline over the years in that location. He forgets what he did to build it up when he first opened or took it over from someone else. He many times feels entitled to having a good, profitable business because of the early work invested and can’t understand why it’s all gone south today even though he has not made a true marketing or sales effort in many years.

As a shop owner for 25 years I can understand that feeling of entitlement. I would ask myself, “Why, after all these years, don’t we have a steadier flow of business without having to knock our brains out to get it?” The answer is that situations change continually. Companies that may have sent work are no longer there or have been taken over by people who don’t even know you exist. Retail customers move in and out of the area quickly. Sometimes an entire population of an area can replace itself within a few short years and these new people don’t know you from Adam. Alliances and allegiances can change, leaving you unaware of your customer’s move to a different service provider.

If your business is getting older and not performing the way it should, and you don’t want to see it go the way of the shop described in this article, here’s what you can and should do to turn it around.

1) Look at the business as an outsider. Say, “If I were starting from scratch and opening this shop today, what would I do to equip and promote it properly?”
2) How much of an investment would I be willing to make in a business that I already know how to do well, one in which many of the customers, employees and technologies are known to me, and one that I have, at one point, successfully built?
3) Reface the exterior and redo the office and waiting room. Give the place a clean, modern and inviting look and feel.
4) Set new goals for the business. Write them down. Place the list where you can see it every day so you always know what you are trying to accomplish, even if from time to time you get momentarily sidetracked by the daily challenges you face.
5) Retrain your service writer, manager or yourself, if you are the one writing service. Don’t take for granted that if someone has been doing it for a long time they are doing it well. Selling jobs properly is the weakest link in the management of most automotive businesses. The inability to talk customers into the shop when they respond to a referral or advertisement, to retain them if they show up in the driveway, to get the price it takes to be profitable and to set up for repeat business plagues countless shops and is the major cause of most failures.
6) Hire an outside salesperson to be out there regularly, at least a few days a week, promoting your business. If you think you are the one to do that job, do it! Make the commitment. Don’t dream up every excuse for not going out. You need new fleet and wholesale customers to replace the ones you naturally lose. You also need to keep as many as possible from leaving. That requires constant contact. You need to know when situations are changing and how you can keep up, what new opportunities are available to you and how to go about securing them. You can’t do any of that unless you constantly have someone in the street.
7) If you have quit advertising, start again. Remember that as much as you hate the yellow pages you have to be in it so people can find you. Even if they are referred, they will many times look for you in the book. If you aren’t there they think you’re out of business. You may not need to have the biggest ad, but you need to be there. The Internet is the “hot setup” today. More people look for what they need that way than by any other means. You need a Web site to tell your story. You may be able to set one up with your yellow-pages advertising to give it a lot more clout. Radio and TV are great for their long-term and cumulative effect, but they are expensive and usually don’t provide the instant result you might need. Print ads allow you to make offers that you can change at will and should provide more-immediate response.
8) Last, remember to advertise to your existing customer base. Send them service reminders and offer them coupons and specials the same way you would with strangers. They are more likely to respond and give you opportunities for additional sales than people who don’t yet know you.

If you want to survive and prosper, now is the time to recommit!