Running a Shop Leadership Operations

Michael Ryan

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 If it sometimes feels like you need a rocket scientist to help you figure out how to successfully run your shop, don’t worry: Michael Ryan used to be one. Ryan started his career as an engineering officer for a Boston company that designed and launched scientific rockets.

After more than 15 years in corporate leadership in the U.S., Europe and the Middle East, and another 10 years successfully launching and running his own Minneapolis-based company, Ryan serves as the director of the Twin Cities Small Business Development Center (SBDC).

The SBDC, a national organization with independent branches across the country, is funded in part by the Small Business Administration (SBA) and works through local colleges to provide business owners—and would-be business owners—with consulting and training services.

All businesses, regardless of industry, suffer from similar mistakes, Ryan says, and he spoke with FenderBender about ways collision repair shop operators can make the most of their businesses.

 

Are there certain struggles that you see business owners have over and over?

Pretty common for us, across all industries, is that a lot of business owners don’t understand what their financial numbers are telling them, or they don’t keep track of the numbers very well. By that I mean that, as long as they can pay their bills, they feel like they’re doing OK. But they still don’t know how to look at their books and know if they’re making money or what they need to do to manage their businesses a little better.

“When you’re still working in the business, you can’t do both—you can’t be a good manager and a good worker.”
—Michael Ryan, director, Twin Cities Small Business Development Center

In those cases, we’ll help them go through their books and try to straighten things out so that if they just look at their numbers, they’ll know where things are going well and where things aren’t going well.

That’s really the most common problem we see.

 

Are there any financial numbers you try to focus on with business owners, specifically shop operators?

There are three main areas that people have trouble with when it comes to managing cash.

The first is collections; keeping track of who owes them money. A lot of times with repair shops, you’re paid right away with the transaction, but there can be cases where you are waiting on payments.

For instance, a shop might offer a credit program that allows some customers a certain amount of time to pay for a repair. Or parts might have been purchased weeks before a repair is completed—that affects cash flow.

I’m working with a body shop right now, and they have real trouble, because a lot of their payments come from insurance companies. You have to be able to stay on top of who owes you money, when it’ll be collected and how you’re going to collect it.

So, managing your accounts receivable—tracking it, staying on top of it and who owes you money—is the first critical part of this.

Then, the next thing is focusing on your accounts payable—what you owe your vendors.

Finally, you have to keep a handle on what inventory you have.

Those are the three things that drive the most cash problems with any business, and with repair shops, too. Lack of cash is a problem that really sneaks up on people, because it looks like they’re profitable, but they have no money.

 

What’s an easy solution for shop owners?

Make sure you have a good bookkeeper. Most shops can’t afford their own bookkeeper on staff, but you don’t need them on staff.

For the majority of small businesses, four hours a week is sufficient, if it’s a good bookkeeper, to be able to do all your numbers. Then, it’s all about understanding those numbers, and that will solve most of the problems in these businesses, in terms of business management problems.

 

What are some of the basic necessities for running a shop?

The first is trying to balance workflow going through your shop. You have to be able to balance the work between the techs and the front desk, so that you don’t have a lot of wasted labor. It’s something that’s come up with some clients, where you see some really big jobs coming through. It makes you have a couple people really busy with these big things, but then you have other guys doing spotty things.

The key is spending more time managing your business. Most of the businesses we work with are people who start out as a skilled worker, like a technician in a repair shop, and they need to take a step back and look at the workflow, look at the operations of the business, and put people in place to do the work.

It’s sort of related to the other issue we see, and that’s that most of these small businesses tend to be family businesses. And a lot of the time, people are put in positions that aren’t really the optimal positions for them. You might have the wife or the daughter doing the books, because there’s a family relationship, but they have no business doing that. It’s not a fit, but that’s how a lot of these businesses are run.

Everything is about stepping back and managing the business as an actual professional manager, instead of as being part of a family or being one of the technicians. When you’re still working in the business, you can’t do both well—you can’t be a good manager and a good worker.

 

What does the Small Business Development Center offer to small businesses like repair shops?

First of all, we assist business owners, and we are free. There is no fee required for our services. We are funded by the university we operate out of, and by the SBA. We’re not selling anything.

We work with business owners, really, in three main areas. One is finance and accounting. We see so many problems with people managing the financial end of their business. So we help them with what we call financial literacy. We help them understand what the numbers mean. Also on the financial side, we will help them raise capital.  Many, if not most, of our business clients need loans to expand or to start. So, we help them access capital. We work with all the lenders in town, and we understand what they look for and what they require to make a loan to a business.

Another third of what we do, we broadly call marketing—and that’s helping people grow their businesses. Whether it’s that social media piece, or looking at the competition and positioning you to be more competitive, the big challenge for everyone is that business has been soft in almost every industry. The demand has been low in a lot of businesses. So, one of our big focuses is on helping people find growth in their businesses.

The third piece is what we call operations. The people we work with tend to be very good technically at what they do, but they’re not experienced at managing a business. So, we act as a sounding board and sit with the owners: Does it make sense to do this? Should we look at more of this? Or do less of that? Then there’s the scheduling aspects, and other items that are just us sitting down and figuring out how their business can be better.

We do have some training and classes, but by far what we do most is the one-on-one consulting with the business owner. It’ll either be someone like myself, or we have a whole bunch of professional consultants that we retain in our center that have different expertise. We have marketers and operations people and finance people. And depending on what that business owner needs, we match them up with the right person. Usually, we’re pretty good at making sure they have the best fit. Sometimes it’s not the best fit, and we’ll have to change it up.

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