It’s Your Business
- Author: Terry Greenhut, Management Editor
Are you a goal setter? Do you make to-do lists and check items off as they are completed? Do you know where you want to go and how you are going to get there? What was your sales volume last year? What do you think it should be this year? What will you have to do to get it there? How much more profit will a higher volume net? Will you have to increase staff, equipment or size of facility to get there?
Those are all valid and interesting questions – the kind you probably should have asked yourself about six months ago. But it’s not too late to make a plan workable for this year. You just need to start today. And you might as well, because the best day to start anything is always today. I get a kick out of the procrastinators who say, “Yeah, I’m going to start doing that.”
I always ask, “When do you think would be a good time to start?”
They usually answer, “Soon.”
I then suggest, “How about today?”
Lots of people have very good intentions that get them absolutely nowhere because they either never initiate a plan or don’t see it through.
Do you ever get tired of letting life happen to you? If so, you’re the only one who can do anything about it. You can’t sit back and hope that the phone will ring more this year than last if you haven’t done anything that would make it ring more. And when it does ring, how capable are you at talking the customer into the shop? Have you gotten any better at it? Have you learned any new techniques? So what is going to change if you don’t?
That’s enough questions. Let’s look at some answers. First, you have to want change. Many people say they do, but if change takes them out of their comfortable operating zone, they can’t handle it, so they unknowingly do things to keep the status quo. If you really want to change you first have to get past the fear. Gee, what would happen if the shop did really well? Would your lifestyle have to change? To what? Would that be good or bad?
Let’s say you got past the fear and decided it might be OK to make more money, maybe live in a better house in a nicer neighborhood. How much more would that take? How much would you have to take home to make the dreams come true?
Let’s say you needed $50,000 more a year to get what you want. If your business is operating anywhere above break-even, almost 50 cents of every dollar you subsequently take in goes to the bottom line, because once you hit breakeven all your fixed expenses like rent, insurance, utilities etc. are paid. Then the only money going out that varies with how busy the shop is will be the cost of parts, labor, and additional advertising or promotion to bring more customers. Your numbers may vary slightly, but if you wanted an additional $50,000 in profit you would need to do an additional $100,000 or thereabout in sales. So now you have your first goal: $100,000 more in gross sales. The question is, “How do you get there?”
What does $100,000 in sales represent? How many more transmissions would you have to build each year to reach that goal? If you average $1,500 a transmission, wholesale and retail, you would have to do about 66 more rebuilts to achieve the goal. Dividing 66 by 52 equals about 1.25 more units each week. That brings up more questions.
Can your facility handle an extra 1.25 units a week? Can your builder produce them? Can your R&R guy install them? Can you or your manager take care of more customers and order more parts while still handling everything else, or are more people required?
What is your telephone retention rate? That’s an important number to know. If you know how many of the potential customers who call actually come in, need a major repair and have the car fixed, you then will know how many more potential customers you need to have calling to get your additional 66 units a year.
Let’s say your retention rate is only 50%, meaning you are able to get only half of the callers to show up in your driveway. Of those who do show up, statistically only about half require a major. The rest need minor services or repairs. Assuming for the moment that all of your business is retail, for 66 additional overhauls you would need 132 more customers or 264 more callers. Those may sound like big numbers but they’re not. You need only about five more callers a week – fewer if you want to work on your telephone skills to increase the retention rate to 75%-85%, where it should be. But I wouldn’t want anyone to work that hard, so you can just spend more on advertising to make the phone ring five more times a week. If you can somehow get your average major up to around $2,000, you would need only four more calls a week.
Once you’ve identified what you want, you have to figure out how to get it. What kind of additional advertising or promotion would you need to get those extra four or five calls? Assuming that what you already do yields the calls you get now, the obvious choice is to do something different. Since the extent of the advertising in most shops is to have an ad in the yellow pages, maybe it’s time to realize that most people who look for a shop in the phone book do so because they have already heard a name in a referral or some other form of advertising and now are trying to track it down to find a phone number. In other words, the yellow pages isn’t where the search starts; it’s closer to where it ends. You need to concentrate on forms of media and promotion that will bring customers to your ad in the book.
Radio, cable TV, newspaper ads, Pennysaver, your Web site, networking in the community, belonging to and attending the meetings of the chamber of commerce, the Elks, the Lions, the Rotary clubs etc. are all methods of becoming known in the community. Joining a breakfast club of local business people who meet once a week to exchange ideas and sales leads also can be a big help. Volunteering to drive the local ambulance or at the fire house or being the cook at the pancake breakfast can make you look like a good guy. Any charitable act that people can see makes them want to seek you out when they have trouble.
What’s that you say? You don’t like people? You just want to stay in the shop and build transmissions? That’s OK. Anything you don’t want to do, hire someone to do it for you. If you don’t like shaking hands and kissing babies, hire an outside salesperson, someone who does enjoy it and will project a good image of the shop in spite of you.
Remembering that all you need is 1.25 more units a week to make the extra money you want, you can easily pick that up with three or four good fleet accounts and some garage referrals. OK, so it might be 1.5 extra units if you have to hire a really good outside salesperson or someone additional to do what the owner won’t (remember that your outside salesperson’s initial salary came out before you hit break-even).
That’s just one example of setting and achieving goals. It always works the same way. First, you have to decide what you want over some length of time. Then, you need to break it into bite-sized pieces so it doesn’t seem so hard to attain. Next, you have to identify the necessary resources to achieve the goal. You then need a plan of action: What will you actually do to achieve the goal? When will you do these things, and in what order?
To keep yourself interested, every time you reach a small plateau on your way to the big goal, reward yourself. If you get the extra 1.25 cars this week, buy yourself a cigar (if that’s what you like). Want something specific, like a boat or a new truck? Put a picture of it on the bathroom mirror so that every morning you have to look at it and say to yourself, “Yep, that’s what I’m going to work for today.”