Become a Profit Master
I’d like to share one of my guilty pleasures with you.
I rarely watch TV, but when I do, I love watching episodes of The Profit. If you aren’t familiar with the show’s concept here’s a quick overview: Marcus Lemonis, aka The Profit, surveys a struggling business (at their request) and decides whether he can help turn things around and ultimately invest in the company.
My question for you is, if The Profit dug into the details of your business, do you think he would be interested in investing in your company? There’s an awful lot of value in getting yourself in the position to answer that question with a confident “yes.”
While the types of businesses featured on the show vary greatly, there are very few unique problems. The most common problem these struggling businesses face is not knowing their numbers. And, for the record, knowing how much money is in your bank account today doesn’t qualify as knowing your numbers.
I recently watched an episode that featured an Italian restaurant in New Jersey, my home state. I think there's a lot of wisdom we can gain from this episode and apply it to our industry. If a restaurant is struggling, most people would assume the food isn’t very good. However, this restaurant has excellent food. While it's very important to have a good product in our industry, this restaurant proves that it’s not the only thing needed for success. When The Profit asked to see their numbers, they brought out a notebook with handwritten details for daily sales.
The last time I saw data on how many shops in our industry used accounting software, it was around 10 percent. If you fall into the 90 percent that don’t own an accounting package, I strongly recommend joining the minority group. Accurate numbers will help you make almost every important decision regarding your business.
One of the exercises The Profit had the restaurant owner do, was to get the exact cost, to the penny, for each meal on the menu. When he went through that exercise, he found out that some menu items were priced to the customer at less than the amount it cost to make it. It would be an extremely valuable exercise to go through ten repair orders and figure out the exact cost on each one. In the restaurant example, they figured out how much it cost for a teaspoon of olive oil. I would recommend going to the same level and getting the cost for all the materials you used on each repair. I’m not talking about expenses here, just costs. Anything associated with labor, parts, materials, and sublet. You should be making 40 percent profit on whatever you sold the job for. If you don’t know how to figure that out, there are many people in the industry who would be happy to help you for free, your paint supplier being one of the obvious choices.
Another one of the exercises The Profit made the restaurant owner do was walk around the perimeter of the building and parking lot. What he found was trash, weeds, and a worn-down looking place. We have the good fortune of working in an industry with a low consumer confidence level. Most people don’t have a good feeling when they think of auto body. That makes our job easy. With low expectations, it’s quite easy to impress. I encourage you to walk around your building and put on the customers’ glasses for a second. How does the place look compared to other professional office buildings you know? Do you do anything to make your place look attractive? If a stranger pulled into your lot, would they get the feeling you care about your property? If you don’t care about your own property, why would they think you will care about their vehicle?
The third thing I loved about this episode, was the story behind the restaurant. The owner was a father-and-son duo who lost their mother/wife on September 11 in the World Trade Center attacks. The money that was used to start the business was from the settlement they received. Most of the people working in the restaurant didn’t know their story. When the owners shared their story with their staff, it immediately changed the morale. The employees went from working a job to realizing they were helping someone honor the memory of their loved one who was lost in tragedy. The owners embraced their story and started sharing with their customers, which gave the entire community a reason to patronize the restaurant.
I love hearing the back stories of why people got into this industry. Most of them are unique and interesting. However, those stories are rarely shared with anyone involved in the business. Years ago, I attended the Disney Institute, where I learned how Disney ran their operations. One of their most important objectives is the be storytellers. When people hear a story of who they are dealing with, they find it much easier to relate to them and form a bond. I encourage you to think about your story and what makes you unique. Once you do that, share it with everyone.
There are some simple steps to succeeding in any business, including collision repair. Know your numbers, set your business apart with curb appeal, and share your unique story.