Take Urgent Action
With the economy in disarray, I’ve seen many shops struggling just to survive. Amidst the slowdown, shop owners wait, anxiously hoping the numbers will soon rebound. What surprises me is how so many shop owners seem to lack a sense of urgency about taking action when their numbers start to head south. Staffing levels are often maintained as though the times were “business as usual.” Even when shop owners do decide to lay off personnel and to cut as many expenses as possible, there is still little evidence of what I believe is a necessary, broader sense of urgency—to save the business.
In a period of rapid revenue decline, the condition is comparable to being in a building that’s on fire: Everyone must stop what they’re doing, grab a bucket, and help extinguish the flames. Obviously, customers must still be cared for and jobs must be completed appropriately, but acting as though it’s “business as usual” can have deadly consequences.
THE STAGES OF DECLINE
An old joke has a shopkeeper saying, “I lose a little on every sale, but I make it up in volume.” Actually, by the time a shop is operating in the red, it has reached a treacherous point among three stages of decline. Here’s what those stages look like:
Stage One: The first stage of a decline is signaled by a serious drop in sales, though not enough to run a shop into the red.
Stage Two: The second stage is indicated by operating in the red (there are the beginnings of those financial flames!).
Stage Three: As you might’ve guessed, in stage three, you’re out of business.
The drop from the second stage to the third can happen faster than a struck match can ignite spilled gasoline. In fact, the owner of a shop in decline may imagine he’s still in stage two when the business is effectively doomed. He just doesn’t realize it yet.
There is rarely a “bail-out” for the independent small business. Once a shop has fallen deeply into arrears, the probability of recovery is slim.
This is why it’s vitally important to recognize just how far your numbers have declined in troubled times. In that first stage, you’re operating just below your typical, average conditions, and corrections can be made by cutting back on a few expenses, perhaps shortening hours for a few employees, boosting advertising and promotion to bring in more business, and generally tightening the operation.
Simply recognizing the need to make a few changes and keeping a close watch on how revenue and profits respond can bring the shop back to being solidly in the black.
A failure to recognize that initial decline, and to take steps to reverse it, typically results in a drop into a stage two decline. Once you’re operating in the red, the need for immediate action is far more serious.
When the situation approaches stage three—a serious possibility of losing the business—you are in the midst of a fiscal emergency: Fire!
So what does “grabbing a bucket of water” look like in this case?
• You and your employees must use your time to the utmost.
• Eliminate most casual conversation.
• Use lean procedures to make the most of each vehicle’s repair time.
• Use the office personnel’s idle moments to bring in more business and to maximize the business that is still coming to the shop.
• Call and send cards to prior customers.
• Make phone calls, send e-mails, write letters and visit dealerships, agents, claims offices, referral sources and fleet managers.
In a crisis, everyone sells until enough business is coming in to move your company out of the red.
URGENCY IS NOT FEAR
A sense of urgency need not be a sense of panic. Remaining calm during an emergency enables people to keep their wits about them, whereas projecting fear will instantly be sensed by customers. And customers sensing an attitude of panic may worry that the shop can’t be trusted to do a good job repairing their vehicles. A reassurance of confidence from you, and certainty that the urgent actions being taken will bring the shop back into the black, will keep personnel calm. And that will translate to a confidence that customers can sense.
Tom Franklin, author of Strategies for Greater Body Shop Growth, has been a sales and marketing consultant for more than 40 years.