ROWING TOGETHER - WE'RE ALL IN THE SAME BOAT

Let's work together to get to safer shores.


By now most shop owners and jobbers must have recognized that the business environment has changed dramatically. In this economic crisis, it's time to put aside petty differences and learn to work together for our mutual benefit.

More now than ever, a shop requires a competent jobber who knows how an auto service facility must be operated and measured in order to ensure that it is profitable. At the same time, a jobber needs to sell parts in sufficient volume, and with timely payment, to shops who understand how to move their businesses forward.

Each has a clear responsibility to ensure the success of their own operation.

Jobbers:

Jobbers must slow down and recognize who their shop clients are, and how to enhance those businesses.

Defining a shop client is pretty straight forward these days. A client is one who calls them first whenever they need parts. A client is one that pays their account in full each month. A client is one with whose owner and staff the jobber has a positive business relationship. A client is one whose owner understand the reciprocal nature of their relationship, and the importance of working together in these trying times

Jobbers must ask their clients "How can I help you in your business?" In most cases the first answer should be "Get me the right part fast." This means the jobber has to stock properly to ensure the inventory is on hand for the shop.

Jobbers must stop dealing with shop owners whose first and only question is, "Can I get a cheaper price?" It's time to recognize those shops are most likely under severe financial stress. Those shop owners don't get it. Those owners believe the important money is made through better parts pricing, not through shop productivity. Those owners don't know the important numbers in the business nor how they're measured, nor what they mean to the bottom line.

Jobbers must adjust their internal business processes to address the unique challenges of today's economic reality. They need to keep these cash-strapped shops on a very tight leash. When monthly bills are not paid, they need to move instantly from monthly billing to weekly billing. This is the new reality. Cash is king. If weekly payment is missed, then instant COD status must be implemented. The jobber needs the cash to survive as margins are becoming tighter each year and operating expenses rising. One shop going down can wipe out the profitability of a jobber for months or even a year. No jobber can survive with losses month over month. Jobbers are not banks. It also must be recognized that "no sale is worth making if it cannot be collected." Too many jobbers are focused on sales for the sake of making a sale, rather than using good business common sense.

Jobbers must also work with shops to seek out the right technical and business training required. Training must be paid in full by the shops. Subsidizing training courses on behalf of a shop in order to earn their parts business just doesn't cut it these days. It's the same as marketing your business on price. You attract only price-conscience people. Training courses take time and effort to put together. That should be recognized as the jobber's contribution to the relationship. The shop owner must recognize training represents an investment in the business. And they needn't be worried about getting poor value for their money. The best courses will always come with a money-back guarantee by the instructor.

Jobbers must aggressively move to reformat their businesses, addressing the above issues with shop owners in order to get through 2010.

Shop Owners:

It's critical that a shop culture is developed that creates a "team environment" operating on behalf of the shop's clients. The new economic reality is made clear when people in your market area are being laid off. Cash dries up and uncertainty settles into the marketplace. But the vehicles are still moving out there - though perhaps racking up fewer kilometers. Every employee must take their responsibility seriously and pull their weight. Shop management must communicate clearly to all staff, address the concerns that are out there, and explain how the shop will move forward in challenging times. If the staff are left in the dark, don't expect cooperation.

Shops don't "sell" to the customer any more. The shop is "hired" by the customer for advice and counsel on how to keep the vehicle reliable and safe. This is the professional level the better shops have now moved to. Given this new fact, the average sales per invoice may turn out to be lower this year than over the past two years. This is not necessarily a bad thing. This gives the shop the opportunity to secure the trust, confidence, and loyalty of their customers. It does, however, involve an adjustment in front-counter processes and measurements.

Above all, shops must be measured properly these days in order to track the changing environment and react appropriately. Some key metrics that must be monitored closely include:

- Total gross profit dollars required each day to break even
- Average billed hours per invoice
- Average billed hours per month compared to previous year
- Total site efficiency measured against total shop potential
- Balance sheet measurement
- Net income per invoice (per transaction).

These must be clearly measured daily, weekly, and monthly to ensure the business is still healthy and is successfully adjusting to the current economic reality. This is management's responsibility to establish these procedures.

Work with your jobber to ensure a win-win strategy is put into place. Progressive shops know very well the stress and bottom-line damage that can be done when a good jobber is lost because they were dealing with incompetent shops.

It's time to sit down with your first-call supplier and communicate your concerns about the next 12 months, and your ideas on how the relationship can be improved. What are you looking for from your jobber? Don't focus on price. Focus on the value your jobber can deliver. Obviously you want a fair price from your supplier, but enhanced value will add thousands of dollars to your bottom line in the course of a year. This relationship will reduce shop stress, which in turn allows the shop to focus on the customers coming through the door and turning them into loyal profitable clients.

No doubt 2009 through to spring 2010 will be additional time of transition for many shops and jobbers. It will continue to be a huge year for change. It will be a year where shop owners and jobbers will redefine how they go to market and what value they can add to the equation. The old thinking that a shop owner or jobber can discount themselves back into prosperity does not work. Do the math.

Opportunity is staring at us right now. The sharpest business owners will recognize this and reap the rewards.

I firmly believe the aftermarket is finally coming into a more professional way of conducting itself. We can thank this changing economic climate for waking us all up.

The Holiday Season is Upon Us

The Holiday Season is the time when I like to reflect upon the past year and review the business and personal accomplishments that were achieved. In this reflection, the most important prerequisite is to remember, and think of, the people involved that help make those accomplishments come to fruition.

Your participation with AAEC over the past year, through being a subscriber to our website, utilizing our business coaching services, supporting us by participating in our semi-annual marketplace statistics, updating yourself through our Business Development Courses, or just verbally applauding our company's Aftermarket industry vision, deserves a very sincere "Thank You".

It is people like you within our industry that gives our company the drive, the energy, the motivation, the desire to continue to do our part. I believe deeply that we all aspire to make the Independent sector a place where one can enjoy a professional, profitable business, an above average lifestyle, coupled with a career where you can look back and be proud of the contribution you made to your part of the world.

I want to pass on my heartfelt "Best Wishes" to you and your Family for the Holiday Season.

Please take the precious time we all set aside and truly enjoy the Holidays in the way that means most to you. May 2010 be a Healthy, Prosperous and Special year for you in which your personal goals are fulfilled.