All shops are not created equal

Aug. 16, 2017
Why can one business charge $110 per hour and the shop is constantly full, and a shop within two blocks charges $75 per hour and is struggling to find work?

The independent shops in our industry too often believe that they are the same caliber of business as the maintenance/repair facility down the street.

Nothing could be further from the truth.

Why can one business charge $110 per hour and the shop is constantly full, and a shop within two blocks charges $75 per hour and is struggling to find work?

One would think that the potential for business with the higher-priced, busy shop must be different than the potential for business with the lower-priced shop. That assumption is wrong.

All shops within a market trading area have the same potential, which is dictated by the population base of the given marketplace. As the population increases, the potential for business increases. As the population decreases, the potential for business decreases.

What is distinctly different from each shop in the marketplace is their capability to maximize their potential. Every shop has different capabilities, and by measuring the capability, it becomes clearer why some shops are steady and more profitable than others.

There are six items we consider in examining a shop — the six questions of capability. Every problem in a shop falls within one of these six categories; therefore, it allows one to focus on resolving the problem once it is clearly defined.

The first question is Attitude. What is the attitude of the shop owner/manager and the staff? Ever notice when you walk into a shop you seemingly can “feel” the attitude of the premise? Is the attitude positive or is it negative? A negative shop will never reach its potential in business. The owner/manager is usually complaining about cheap customers, business not being how it used to be, not being able to make the kind of money he once did, or how you can’t keep good staff anymore as they always want more and don’t want to work for it. When the owner/manager is in this frame of mind, I can guarantee you the staff will have a negative feeling about the entire business. The owner/manager has no vision for the business, no plan for the future, he just complains and points the finger at someone, or something else, for all his woes.

The second question is Personnel.  What is the quantity and quality of the people working within the shop?

Every November the shop is extremely busy, so busy in fact we could use double the staff.  However we don’t have that quantity on board, therefore we rush the cars in and out to ensure all clients are looked after. The rushed process however, ensures that we don’t maximize our potential for business because we didn’t have the time to properly inspect the vehicles as we were too busy and management didn’t have the right quantity of people to ensure a full vehicle inspection could take place to maximize sales and service to each and every client.

Also, the shop must look at the quality of the staff to maximize its potential. An apprentice technician usually is not qualified to do high-end diagnostic work, yet if that is all the shop has on staff, then the potential for diagnostic labor is lost. Does the shop hire and train the right quality of staff to serve the client base it is selling to? What is the talent depth of the shop? Without the right quality of people, potential business is lost, comebacks are usually high, and client perception of the shop is low.

The third question is Inventory. Is the shop carrying the right inventory to serve the current client base? Does the shop inconvenience clients by making them wait for parts to arrive because they didn’t carry the obvious inventory they should have to serve the client? Is the inventory management system tight enough to ensure the right inventory turns are being met each year, and that the proper quantity of stock is re-ordered on time? A poor inventory management system can create inefficiency within a shop and create lost potential sales for the business.

The fourth question is Equipment. Is the shop properly equipped to meet the demands in automotive maintenance/repairs of its current clientele? If the shop does not have the right equipment, then in time the reputation of the shop goes down as word travels among clients that the shop is not competent enough to handle my vehicle. This shop can’t fix the vehicle the right way the first time. Once again, without the right equipment, technicians are forced to be inefficient with their work and usually management is blaming the technician for low productivity vs. management in competencies by not ensuring the shop was equipped right in the first place to do the work called for.

The fifth question is Facility. Does the facility look professional, is it attractive to come to, is it set up to properly accommodate the clientele it is selling to? Take the time to do this simple exercise. Stand across the street for ten minutes and look at your facility and honestly answer this question: I am new in town; I am looking for a competent automotive maintenance/repair outlet. What would make me WANT to turn into my location and check it out? Is your facility set up the way your clients want it, or the way you want it? Pay attention to your clients’ views. It is the client who pays you, it is the client who must be pleased. Give them a facility that they are comfortable with.

The sixth question is the Finance. Without the proper financing in place, you cannot create a professional facility, purchase or lease the right equipment required, stock the correct inventory at the right levels or hire and train the most capable personnel in your trading area.

Out of the six questions, the most important one is your Attitude, which affects all the other questions being examined. Without the correct attitude in place, you can’t get started at solving any problem in your shop, including how you set your labor rates.

The next time you are looking around and see one shop steady and the next one not, review the six questions of capability, and I am confident you will find the answer your looking for.

About the Author

Bob Greenwood

Robert (Bob) Greenwood, AMAM (Accredited Master Automotive Manager) was the President and C.E.O. of Automotive Aftermarket E-Learning Centre Ltd. (AAEC). AAEC is a company focused on providing Business Management Resources and Development for the Independent Sector of the aftermarket industry utilizing the Internet environment. AAEC content and technology is recognized as part of the curriculum of the Fixed Operations Diploma and the Aftermarket Degree courses taken at the Automotive Business School of Canada in Georgian College located in Barrie, Ontario, Canada. This school is the leader and only college in Canada that offers an automotive business education. AAEC is also recognized by the Automotive Management Institute (AMI), located in Colleyville, Texas USA, allowing 80 credits for successful completion of the AAEC E-Learning portion of the site towards the 120 credits required to obtain the reputable Accredited Automotive Manager (AAM) designation. The Automotive Management Institute’s Accredited Automotive Manager designation is the first business management accreditation exclusively for the automotive service professional. To date, AMI various programs have attracted more than 212,000 enrolments throughout North America. 

Greenwood died on Sept. 9 in Surrey, British Columbia, Canada, from a heart attack. He was a regular contributor to Motor Age magazine and will be greatly missed. See some of his recent work here:

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