Utilizing Unrecognized Resources

Sept. 1, 2010
Unused, underused and unrecognized resources can protect your financial performance.

This past week I visited a shop where the owner had put his people to work repainting work bays and frame machines, and refinishing the floors. The freshly painted blue-and-white color scheme was not only outstanding, but cleverly emphasized the promotional colors used by the shop’s paint provider and a major DRP. Rather than lay off more employees, as many of his competitors have, he put the staff to work upgrading his facility in anticipation of better times ahead.

I’ve also seen shops shrink. One closed the additional space he had across the street, and consolidated his entire operation into approximately half of his previous space. Now, more than ever, in order for a shop to survive, every resource has to be recognized and put to the best use possible. Space use is certainly one major resource priority. I always recall the legendary Don Long, who—long before his multimillion-dollar shop creation for Keyes Motors in Van Nuys, Calif.—coaxed $250,000 a month out of a 2,000-square-foot shop in the same vicinity.

Finding productive uses for idle resources might save the day. And those resources can always be returned to full-time collision repair activities when the economy improves.

Today, lean-process thinking has many shop owners re-evaluating their use of personnel, space and equipment. One shop manager actually completed a space inventory, assessing the square footage devoted to each production activity. That’s not a bad idea. If Don Long could accomplish such tremendous volume in such a limited space, it is almost certain many more shops could utilize space far more efficiently.

Put Your People to Work

Personnel may be another underutilized resource. I’ve written before about a shop owner in a local suburban area who, when business slowed down, went to the parking lot of a nearby college and wrote business-card-sized estimates on damaged BMWs and other high-end vehicles purchased by over-indulgent parents for their college-bound offspring. He said he always picked up a few jobs that way.

The marketing manager of one shop that has seen a significant slow-down, has decided to follow that example and train any idle employee to go out and write these tiny estimates. When employees have the choice between being laid off and going out and performing an unfamiliar marketing task, most are willing to see if they can bring in enough business to preserve their job.

Bank on Your Time

Time is one resource that can easily slip away before it is noticed. One of the strategies of the lean processes for the office is “handle it once.” When an invoice is received by one person, passed to another, then filed and eventually retrieved by someone else, it will have been handled four or five times. Working out a way for that invoice to get right to the person who ultimately handles it will save more time than one can even imagine.

Another loss of the time resource is putting off actions that would improve business “until I have more time.” This is like saying, “I can’t go on a diet until I lose some weight.” The business demands of the day somehow often take more time than expected, but a concerted effort to make the time to focus on money-making or money-saving improvements will more than pay for itself.

One great area of wasted resource is undervaluing the productive capacity of talented personnel. A button, belt and garment ornament sales business in my area had a saleswoman who sold so much product, her commission was often more than double the revenue the owner was taking home for himself each month. He couldn’t stand to see someone earn more than he did from the business, so he kept reducing her commission. Eventually she left and opened her own business, taking a large percentage of her customers with her. Not every shop owner is willing to pay commissions, but it’s essential to recognize a race horse when you have one.

See Profit Everywhere

Perhaps the ultimate resource rescue is a double use of space and personnel. One shop owner put excess space to use renting U-Haul trailers. His office manager handled both body shop and U-Haul customers. Another built up an accessory business. A shop in horse country began to do a fair amount of business painting horse trailers, and another started painting metal file cabinets for a local manufacturer. One would hope it wouldn’t be necessary to turn to dual-use tactics to survive an economic downturn, but finding productive uses for idle resources might save the day. And those resources can always be returned to full-time collision repair activities when the economy improves.

Now, while business may be slow at times, is an opportune moment to put those unused, underutilized and even unrecognized resources to work for you.

Tom Franklin, author of Strategies for Greater Body Shop Growth, has been a sales and marketing consultant for more than 40 years.

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