Monday, May 31, 2010

When you're drowning, you don't say "I would be pleased if someone would have the foresight to notice me drowning and come and help me", you scream!

A quote from the late John Lennon actually nailed the Aftermarket.

Why is our independent shop sector of the Aftermarket not willing to reach out and ask for help? Why is our sector not willing to accept the hard message advice required, understand it and embrace it to really fix the problem? Why is our sector always looking for the quick fix and instant gratification? Why does our sector not understand business "investment" and the "time" factor to realize a proper return?

The independent sector of the Automotive Aftermarket must embrace reality and embrace it quickly, however, reality can leave a lot to the imagination.

We are drowning in our own lack of business literacy and savvy. Now before you scream back at me as being uncaring, insensitive, arrogant, or not having a clue what I am talking about, I submit to you, and answer this in total honesty, "Does the Independent sector of the Aftermarket industry have a culture of many inferiority complexes rolled into one?"

Consider that most shop owners have worked hard to strive to be a great technician. They have paid the total price to be on top of their profession but they did so without achieving a business education. They then have the opportunity to own their own business but they are embarrassed that they don't even understand the difference between mark-up and gross profit; shop potential means nothing to them and effective door rate is a foreign terminology. They think a Balance Sheet is for bankers and accountants. They think all the real answers lie only in their bank account balance.

The question is who did they turn to for the answers on how the business should be operated to create not only a professional personal income but a good net income to the business so it could grow and prosper? The local Jobber they got to know? The WD and their seasonal "programs"? A Manufacturing Rep?

Sorry, but they were not in the position to provide them with the right guidance or solutions they were seeking. They knew nothing about the intricate workings of a shop business.

This is not meant to be a commodity bash, it is a blunt reality check. It is not meant to insult any level, it is intended to bring abrupt awareness to our Aftermarket issues.

Consider that the Aftermarket sector is made up of 4 divisions namely a Manufacturer, a Warehouse Distributor, A Jobber and then the Service Shop level. 3/4 of the sector is in the commodity business. They make and sell parts. They need volume and a lot of cash to make their business work. They must be "busy" to make their business succeed. We need more sales, more volume, is their constant rant.

So what question do they ask when they enter your shop? Listen carefully, do your hear...."Are you busy?". WOW totally out of touch. You don't want to be busy as a shop owner, you want to be steady. They are in the commodity business BUT as a shop owner, you are in the knowledge business. You have to diagnose the vehicle problem thoroughly, explain it fully to an uninformed consumer and do that in a way to establish trust. The objective is to build a long-term relationship with the chosen clientele you want to do business with. If you are too busy you don't have the time do that.

You have to slow down and concentrate on billed hours per invoice and total shop efficiency which actually measures the effectiveness of your shop "team" working together. The solutions the industry have given to you are not focused on creating net income, they are focused on creating more activity which could be perceived as self serving. They talk to shop owners about getting more car count through the door, average sales per invoice and to be price competitive in order to keep busy. Ever noticed that you can actually sell a lot more year over year because you are busy but you are still broke! What is wrong with that equation? Patronization from the industry of how important you are as a client because of your great parts purchase volume does not pay the bills but it does feed an ego.

The vast majority of shop owners in North America need help. It is long past due that every level of the Aftermarket must learn how a service shop is to work to create net income. This would allow for the growth and tremendous opportunities ahead for the Aftermarket. The service shops are the front line troops of our industry not the bottom of the sector. We have to take the industry standard triangle and reverse it.

Think about this fact; in my 35 year career, I know of only 2 top level commodity Executives (we are talking about one who was in charge of North America for his commodity company and another one who owns a Western Canadian parts distribution business that serves three Western Canadian Provinces) that have actually sat through a complete shop business management class themselves for 3 days. Most company Executives send their staff. These Execs. did the math with the other shop owners that were attending with them. They discussed, they challenged and they interacted. They learned how a shop is measured and what needs to be done to ensure the proper NET income and return on investment is realized and how it is obtained. Their eyes were opened. They were stunned. They now saw opportunity for their own companies and its clientele. These Executives got it.

Unfortunately, one was shipped off overseas when he wanted to make "waves" (big changes) after attending this class for the company he was overseeing. His boss (or Board) did not understand. These 2 top Executives got it.......the others in our industry just don't understand or do not have the desire to understand. They are too busy. They are too close to retirement. Unfortunately it is becoming that black and white now.

So now EVERYONE at every level of the Aftermarket sector is under net income siege. I wonder why?

This is not a commodity bash article. It is a reality check that we have to learn and understand each level and what it takes to work together to ensure the Aftermarket grows and succeeds.

So for the vast majority of shop owners, it is the time to make life changing decisions. Are you going to seek out the right Business Management course that will address your specific questions? Insist on a money back guarantee so you know you are not wasting your money. Would you ask your Jobber Owner to go with you if he/she has never attended before so the two of you can learn how to work better together? Would he or she attend with you? If so, congratulations you have a winner. If not, listen carefully to their excuse. I think you will see what I am talking about.

As a modern shop owner, are you ready to accept full discussion on all business issues, listen to advice and guidance? Are you prepared for the CHANGE that we talk about but admitting it has not being embraced? Will you finally believe in yourself enough to invest in yourself and your business and stop thinking that everything is a cost to you?

"Life is what happens while you are busy making other plans."

I think it is time to make other plans so our sector can really move forward and enjoy a life instead of being strapped day in and day out to the business. No one wants to buy themselves a job.

If not, what is your solution? And oh........in your solution, prove the math with your plan to ensure NET income is created after a professional income is paid to you and you are not just creating activity to keep "busy".

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