It’s Your Business
- Subject: Opening a second location
- Essential Reading: Shop Owner
- Author: Terry Greenhut, Transmission Digest Business Editor
As tough as it is to turn a profit from a transmission- and/or auto-repair business, you would figure that it is even more difficult in times of great economic hardship such as we now face. Therefore, most owners would be hard pressed to consider opening an additional location until the economy stabilizes and shows signs of growth. The problem is that for the economy to grow, owners of small and medium-size businesses have to take the risk of expansion.
We know that even in the best of times if you don’t have the proper management personnel, marketing, advertising and systems in place before you begin, succeeding in more than one location is an almost-impossible task. All that being carefully considered, one of my best friends, Steve “Big Daddy” Dudden, the owner of All American 4 Wheel Drive and Auto Repair in Littleton, Colo., decided to go ahead and make it happen right now, smack in the middle of this “smoke-and-mirrors” economy.
Big Daddy, as his closest friends call him, had contemplated opening a second location for several years, but the right opportunity never seemed to present itself until just now. There was always an issue with either the location he wanted being unavailable or too expensive, or with not having the proper personnel to make him feel comfortable that the new shop could sustain itself without his constant intervention. One thing he had learned early on from watching close relatives who were involved in a business with multiple locations under the same name was that if you weren’t there, and it couldn’t run as well without your making most of the day-to-day decisions, you had no business opening additional locations.
Your role in a multi-shop operation has to be to create a great business environment, ever growing the business by bringing in new accounts and working to retain present ones while training and coaching managers and overseeing operations to be sure all company policies are followed. That is, of course, after you have established those company policies in writing, on paper, where employees can see them, be trained on them and know exactly what is expected of them. Your job shouldn’t be to run around like a lunatic all day trying to put out one fire after another, hoping to keep from losing too much money when things keep going wrong. In other words, if you must be there to run one successfully, then you can’t run two.
The idea of a second location is to make twice as much as you did from the first one. Unfortunately, in too many instances it turns out to be an inverse proportion and the owner winds up making half as much as he did when he had only one shop to worry about. The original shop tends to feed money, and sometimes work, to the other to keep it alive, therefore decreasing or deleting its own profits.
In a single-shop operation, if the manager or service adviser isn’t the strongest he or she has the owner to back them up, but in a multi-shop setup each has to stand on their own, meaning they each have to be excellent at sales, employee and time management, and customer relations.
Why do I think Big Daddy will do well?
- 1) Because he runs an excellent business now that has made a flawless reputation for himself over many years of serving the community.
- 2) He has been planning this for so long that he has a garage full of brand-new equipment just waiting to be installed in the right location and isn’t going to go heavily into debt to make it happen.
- 3) He finally found that right location in a new garage-type building 20 miles south in Castle Rock, Colo. It houses two other unrelated automotive businesses, with a reasonable rent and an option to buy. It’s in an up-and-coming community with the right demographics. He’s naming it Advanced 4 Wheel Drive and Auto Repair, which I thought was a little odd since All American has already established such a good name, but Steve explained that he didn’t want any of his present customers patronizing the new location, as that would water down his original shop’s sales and make the new shop’s sales seem better than they might really be. He also figured that if there were a freak incident that hurt the reputation of one it wouldn’t place the other in jeopardy as has happened with so many other multi-shop operations under the same name.
- 4) He set up the new shop as a separate corporation with loans from the original company to fund it so as not to mix revenues. He also took on a partner, an automotive-aftermarket computer and financial wizard he has known almost forever, to set up and oversee the proper systems.
- 5) He hired a terrific local manager and technical personnel who not only understand the area and the industry but also have done business successfully with the customers he wants. Having an excellent reputation in this community, they will bring their own following. Steve had me come in to give a refresher course and impart to them his business philosophy, which very simply stated is: “Whatever the customer wants! Always say yes to them. Make them happy. Never argue over a comeback. Make it easy for them to buy, and never leave anybody stranded without a way to get home.”
- Just to prove that he is serious about not leaving anyone stranded, he personally answered a call from a customer at 7:30 p.m., 11/2 hours past closing time, in the middle of a blizzard a few weeks ago. The customer didn’t have a mechanical problem with the vehicle; he just couldn’t get out of the parking lot at work to go home. So out went Big Daddy in his GMC 4X4, picked up the customer and drove him home. I later asked whether this was a special or big, important customer.
- “No, not special” he said. “But they are all important, and if I treat him like he’s special one day he probably will be.”
- 6) Steve makes it a point to meet and get friendly with as many customers as possible. A good number of them have become his personal friends over the years. He goes camping, off-roading and scuba diving with them. That’s something most shop owners won’t do. They would rather keep their business and personal lives separate. He’s not afraid of messing up either relationship, because he strives to do the right thing in all situations.
- 7) His shop, office, waiting area and restrooms aren’t just clean; they’re super clean to a point where if you didn’t know you were in an automotive shop you’d never be able to guess it.
- 8) His business is self-contained, housing its own complete machine shop, so it rarely, if ever, farms work out, keeping full responsibility in one place.
- 9) He won’t condone less-than-perfect work, so when he asks how a certain job came out, somebody better tell him “perfect,” because good enough just isn’t, and that car will be back inside being rechecked immediately.
- 10) He has no fear of investing in marketing and advertising and allocates a much-larger portion of the budget to his Web site and Internet advertising these days, because his customer polls indicate that’s where many more of them are coming from.
- 11) He insists on a bumper-to-bumper inspection of every new customer’s vehicle and is adamant that his sales force make its best attempt to sell everything necessary on that initial visit. Anything that isn’t sold stays in the customer’s computer file and automatically comes up on the next service reminder.
- 12) Appointments for the customer’s next visit are always offered and, whenever possible, scheduled before the vehicle leaves the shop.
- 13) He has his staff religiously follow up with customers in the form of thank you notes, customer-satisfaction calls, service reminders and calls to book appointments.
- 14) His manager’s offer to pick up and deliver vehicles and provide customers with rides when necessary is commonplace and all part of the complete customer-satisfaction commitment.
- 15) His shop is the highest-priced in town (that shouldn’t be a surprise) with an average repair order hundreds of dollars higher than the industry standard because of the thorough inspections performed and the emphasis placed on selling everything customers need, but nothing that they don’t; so despite the pricing and the economy, the vast majority of the customers remain loyal, and if any don’t, he strives to find out why and sees what he can do to bring them back.
- 16) Steve realizes that a big part of promoting his new shop will be outside sales, so that initiative already has begun.
So why do I believe that despite all the possible obstacles Big Daddy will make the second shop work? Because he is a proven success, having all the proper attributes, and is now applying those along with the multi-shop management skills necessary. But there are a few other intangibles that must be mentioned because they are the driving force that will make this venture and almost everything else he does a success: his love of people and the business, and his will to win. All the best, Big Daddy!
Terry Greenhut, Transmission Digest Business Editor. Visit www.TerryGreenhut.com.
