Don’t let these 5 common problems be a downfall in your shop

As a consultant and trainer, I get an inside look at many businesses. Many are doing well and are just trying to take it “to the next level.” Others are struggling and trying to turn things around. Still others are floundering but don’t realize – or respond to – what’s not working.

Across all these types of organizations, here are what I see as the five most common problems that plague small businesses.

1. A failure to focus on cash flow. I’ve read that 82 percent of small business failures are based on cash-flow issues, and I don’t think the collision repair industry is any different. Vendors want to be paid, payroll has to be met, tax deadlines are real. You can’t do these things if the money isn’t flowing into your business.

The good news is that cash flow in this industry is largely tied with something else most shops pay attention to: cycle time. Reducing cycle time improves how quickly your business turns a repair into cash. I often see that one of the most immediate ways a shop can improve cycle is by working toward starting work on every vehicle within hours – not days – of its arrival. Check out my earlier ABRN columns on better scheduling for tips on that.

The other critical key to cash-flow is looking at your receivables daily. A good collision repair business should operate with receivables that are less than 2 percent of total monthly sales. Stay on this daily. Make the calls. Find out where the money is. Don’t let that sit.

2. Management is not managing. Too often in shops it appears everyone is working in a silo. “My A-tech is on that job,” an owner will say. “He knows what to do.”

Well, does he really? That’s probably a big assumption given today’s increasingly complex vehicles. I would challenge the belief that you can presume things are being done correctly without management oversight, without walking the shop, checking in-process work, looking for what could go wrong before it goes wrong.

In today’s industry, I see part of management’s role as slowing things down to make sure the shop goes faster. That means, for example, making sure the research has been done and a repair plan is in place before someone just starts ripping into a car.

3. A poorly-communicated purpose. A team can’t align itself with core business values if those values and goals haven’t been defined by the owner and management, or haven’t been adequately communicated. In the best shops I’ve seen, everyone knows they are there to fix the cars right the first time, to the highest quality possible. If a technician tells me he’s not going to do what I know is a needed procedure because it’s not on the work order, I know that shop hasn’t defined and communicated the over-arching goal and purpose of the company.

4. A lack of well-defined processes. If you or your team are forever putting out fires, that’s a sign you don’t have needed processes in place. That wears everyone – technicians and management – out. They're scrambling every day in a chaotic environment, in which few of the processes within the company are handled in a consistent, predictable way. Even customers will see evidence of the friction and frustration within your organization, and that will be reflected in inconsistent customer satisfaction.

At the end of the day, process is the engine that’s needed for a small business to succeed. It can take time to build. But I believe it will be increasingly impossible to repair the complex vehicles and technologies we will see without well-practiced processes.

5. Failure to recruit the needed talent. This is a small business killer. Too often I see shops only starting to recruit when they find themselves with a job opening. They end up just hiring whoever shows up, rather than the real talent they need.

Always be in recruiting mode. Interview people all the time. You never know when you’re going to lose someone. Develop a pool of potential talent. They may or may not be available when you contact them weeks or months later when you have an opening, but you won’t be desperately starting from square one.

The good news is that working to address any one of these five problems can help you resolve the others as well. The shops I see that are process-oriented, for example, with a well-defined and communicated purpose, that listen and learn from their well-managed team, and that stay on top of cash-flow, also tend to more easily attract and retain the talent they need.