Never too Late to Fix It

It’s Your Business

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

No matter how much financial trouble a shop might be in, if there’s enough money available to keep the doors open it can be fixed. I know how depressing it can be when the bills pile up and there never seems to be enough work to cover all the expenses. You find yourself in a continual state of fear, wondering whether you’ll survive another month and questioning whether there is any way it can be fixed. Well, it can and must be, but not just temporarily; it needs to be fixed in a way that won’t have you in this same position repeatedly.

The simple answer, of course, is to adjust the amount of business you do to the expenses. When you are pretty far behind in paying your commitments it’s either because the business costs too much to operate or it doesn’t make enough sales – or shall we say enough profitable sales – to generate the proper revenue. More often than not it’s a combination of the two. Expenses have quietly grown over time and business has withered.

Addressing the cost factor first, you need to look at all your costs to determine which, if any, you can cut. The little ones won’t mean much to the bottom line so they may not be worth much time and effort, but the big ones will be.

1) Rent or a mortgage payment is a big one. Many landlords are making rent concessions to commercial tenants who are in trouble these days, especially long-term tenants who have previously been good payers. They would rather do that than risk having an empty building for several months, if not years. Banks and other lenders are showing more flexibility in extending mortgage terms to help the borrower manage the payments.

2) Insurance. Are you overloaded? Do you ever check your coverages and their costs, or do you take for granted that your agent or broker has set you up with the proper policies? Remember that they are salespeople who will sell you pretty much whatever you will buy and will hook you up with policies from companies that pay them the highest commissions while relieving them of the most work and responsibility.
Are they all that way? No, but human nature teaches us that many will be, so it’s buyer beware. Too many shop owners have told me that they can’t understand insurance-policy language so they’ve quit trying to read them. They miss the concept that insurance agents should be working for them and as such should be compelled to make their clients understand exactly for what they are being asked to pay.

3) Accounting costs should not be high in today’s computerized world unless shop owners are being lazy. Easily learnable and usable software packages such as Quick Books can allow small-business owners to be their own accountants and bookkeepers. Tax-filing software is updated regularly, and almost all tax forms are available online. You may want to have an accountant verify your work or advise you on the latest tax information, but you should not need to pay extravagant fees for the tedious part like making your journal entries; it’s too easy to do yourself.

4) Uniforms: Although I love to see everyone in uniform when I walk into a shop, I also know that the ongoing cost to rent and clean those uniforms is outrageous and not about to get any cheaper. Many owners now simply buy shirts for their employees and make them responsible for maintaining them. This often can save more than $600 a month, a substantial amount. If you do have a contract with a uniform company read it carefully. Make sure you know the expiration date and the procedure to get out of it at the end. Most of those contracts automatically renew. If you don’t notify them that you want out at the appropriate time they will keep you in with threats of lawsuits if you refuse to pay.

5) Non-productive payroll. In these tough times there should be no free rides. All employees should be measured on the basis of productivity. You can’t afford to carry your brother-in-law’s cousin anymore unless he produces enough work to pay for himself and make some money for the company. Each production employee should be able to give you 40 hours or more of billable time each week. If you had two technicians paid by set salary and giving you 20 hours each, as is too common, one or both would need to go and be replaced by someone more productive.
With regard to office help the question is, “Am I keeping people on because I don’t want to do the paperwork myself or do I really need them?” Employees hired to do what you can do are a luxury. They might be afforded when the shop is doing well but not when it’s hurting.

6) Stop the charge accounts. Go COD with as many of your suppliers as possible. When you have to pay every time you get something it makes you closely examine its cost, profitability and necessity and whether it’s being billed properly. If you owe suppliers money add something on to the payment whenever you receive a delivery so you can whittle the balance and get current. Make sure you have a good system to track returns and cores. You don’t want to pay for things you don’t use. Don’t over-order. Too much of anything sitting on a shelf leads to abuse.

Those are the big ones. Of course, there are other expenses to watch – heat and electricity, for example – but walking around turning off the occasional light switch won’t make much difference. What will is to generate new customers and get more business your existing ones. In fact, it’s the fastest way to make a long-term difference. So let’s see what we can do inexpensively to make that happen.

1) Make an attitude adjustment toward your customers. Understand that they are your entire business and that pleasing them, although possibly distasteful at times, is your No. 1 priority. Providing what they want and need will get you what you want and need.

2) The answer to everything is “YES.”

“Can you do this for me today?”

“Yes, I can” is the right answer, and then make it happen. Don’t chase away customers who have made the effort to come in by telling them you can’t help them today. Ask whether they can leave the car, whether they need a ride etc. but don’t chase them. You can’t take the chance that they won’t come back.

3) Want to generate a lot of repeat business? Make notifications by e-mail or postcards. It works great. All you need is to make sure your shop-management software is equipped and set up for it, then just check the notifications you want sent and at what intervals. Then once a week print the cards or send the e-mails.

4) Try putting little signs in strategic locations in front of the shop and/or in the office, such as “We sell tires – All brands available” or “State inspections performed here – Is your sticker about to expire?” You’ll be amazed at how many people will come in and say they stopped because they saw the sign.

5) Do a complete bumper-to-bumper inspection of every vehicle that comes into your shop for the first time, no matter what it originally came in for. Then sell every service or repair that’s necessary. Be a little more aggressive than your comfort zone will allow. When your survival is at stake you can’t take a laid-back sales approach. You have to really try for every sale. Never prejudge that the customer doesn’t have the money or won’t allow you to sell them what they need. Show complete confidence that what you are recommending is right and needs to be done now. They will tell you if they don’t have enough money to take care of everything now. Should that occur prioritize the list, sell them the most-critical repairs and services, then set their next appointment before they leave the shop; there’s nothing more important to keeping the work flowing.

6) If you don’t have a Web site, make one or have a professional do it. If you do have one make sure it functions well, that it quickly and easily shows what you do and why customers should choose you, that it can gather contact info, maybe even allow users to ask questions or make their own service appointments. Make sure your site comes up when you perform searches. If it doesn’t, hire a company that specializes in Web-site optimization to move you up in the search-engine standings.

7) Hit the streets. Visit existing and potential commercial accounts regularly. Make yourself and your business known in the community. Build a reputation for quality and a can-do philosophy.

One of the fastest and least-expensive ways to generate business is outside sales calls. It works, but you have to make a commitment to do it on a continuing basis. Sometimes it takes several visits before you get any work from a prospect. Remember that your goal is to climb out of whatever hole you’ve fallen into and then build a great, sustaining business. That does take some elbow grease but it can and must be done.