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.

AIA PROVES THEIR R2R INTENT

AIA Canada must be congratulated for remaining focused on the important criteria an Independent shop requires in the R2R agreement in order to move their business forward, rather than giving into so-called ridicule by a naive industry sector.

AIA Canada has always stated that any agreement (legislated or voluntary) must provide full access to engine calibration in the definition of Data Stream Information. The voluntary agreement agreed to by other parties did not clearly state this that gave the agreement teeth. Without this complete access every Independent shop would not legally be able to flash a vehicle computer. The shop would then lose consumer confidence and become a "lessor standard" within the automotive industry. This would create tremendous consumer inconvenience as well as jeopardize the future of the Independent sector.

AIA went back to the vehicle manufacturers with their lawyers in hand. A clear definition has now been worked out and agreed to.

AIA stated: "This willingness to provide important clarifications on the intent of the agreement signifies to us that the car companies are demonstrating good faith and a real desire to have an agreement that is clearly articulated and defined before it comes into effect in May 2010. Furthermore, a degree of commitment by the vehicle manufacturers, who have provided personal letters signed by their CEO's to the Minister, affords us with both confidence in their sincerity and an avenue to apply consequence for any none compliance. That is why we are now prepared to become a party to the agreement. Our participation in this agreement as a signing party will secure our involvement in the task forces and sub-committee working groups that will be established to ensure that the agreement is effectively implemented across the full spectrum of our industry."

Thank you AIA Canada for your Professionalism!!

And most of all, thank you to all the people volunteering their time to AIA for their unwavering dedication to our Aftermarket in Canada.

RIGHT TO REPAIR VOLUNTARY AGREEMENT HAS SO MANY FLAWS

Follow the link to the actual voluntary agreement and please read the detail.

I am not a lawyer by any means but as a laymen reads this...........This is not right.

Our sector must move forward on an EQUAL playing field.

Consider the following FEW..... FACTS:

Section I Definitions

Definition "Data Stream Information" - "does not include engine calibration related information"......excuse me.....This is what right to repair was all about!! In the USA "Title 40 Clean Air Act" covers access to calibration.

Definition "Motor Vehicle" - "designed for transporting persons or property on public roads" ..........continuing on "is sold only to commercial fleets" ......continuing on "or offered solely and exclusively for lease"........then it is not deemed as a motor vehicle for purposes of CASIS.........this is critical in definition as many shops deal in fleets........

"Service Information" ..........an whole escape section!!! (in my opinion)

"Service Information Source"......"as determined by the OEM in its sole discretion" provides an absolute out.

Section II CASIS

B (1) - "provided that Service Information, Tool information or OEM Tools need not be in the same medium as for Authorized dealers, nor the OEM itself, provided it is by reasonably equivalent means". Talk to your USA counterparts and discuss HOW the various OEM websites have been configured and what TIME it takes to find any information. All websites must have the same configuration and navigation capabilities OR you will be on a website for a "long time" just to navigate as to where the information is.

B (3) and where is CASIS information request time defined?

C (2) and how long will this take? With no target date what is the intensity to get it done?

Section III

1(c) HUGE........notice the words "is not entitled to claim or represent themselves as “Factory trained or as knowledgeable or as capable as Authorized dealers or Authorized dealers staff or make any similar claims that depict or suggest that the Service Provider has been officially qualified, certified or recognized by the OEM to perform the repair or service of the OEM motor vehicles except with the express written of the OEM"...........excuse me........are we opening ourselves to being "inferior" in the knowledge department which will lead to disclaiming and removing "we are licensed to work on" Truly...who thought of and..... OK'd this?

1(d) another HUGE......"Service information, training information, indirect information, Tool information and/or OEM Tools are provided without any warranty or guarantee"..........now think about that........what are we prepared to pay for........could this be a possible out to "misinform" the aftermarket so "They" will be perceived as the only alternative. I respectfully submit that today ALL aftermarket companies give a money back guarantee on "information" it supplies to its customer/client/data base.........what is wrong with this picture?

Section IV "C"

2....... 5 or 10 business days is a credibility "killer" with the consumer.....I'm sorry but this is a joke in today's "Information" world......this does not cut it!!

7......totally unacceptable......think of a shop dealing one on one with a client....

Section "D"

1 (b) "Solely determined by each individual OEM".......the consequences are huge for dissatisfaction in front of the independent client explaining "WHY" something can not be done.

Section III "D"

2 (g) read it for yourself.........really?? How do you explain to the client "we are incapable of providing you an answer to your problem?"

These are but a few of the immediate issues before us........they are NOT all inclusive.

It is time for our sector o get behind a NATIONAL issue represented by a NATIONAL BODY representing EVERY level of the Aftermarket. Don't stand on the sidelines.............get involved!!

SOME AFTERMARKET BRANDS WILL LOSE SALES
AND CREDIBILITY AGAIN THIS FALL

It appears another cycle has started again.

Over the past ten years it has been discussed many times however it seems the industry is determined to do it their way with the quick fix method. They then will blame the poor quarterly sales and profits on something else instead of squarely on Management.

I am talking about aftermarket parts pricing as well as part function.

There are Aftermarket Brands that continue to fail to take their time to do their homework as they are not pricing themselves against OE parts. When a shop is loyal to their chosen supplier as well as a manufacturing Brand, and makes that first and only call to their jobber to purchase an aftermarket part to then find out, after the fact (the hard way), that the OE part from the dealership retails for less than his aftermarket actual part cost, all trust and credibility is destroyed between the Brand and the shop owner. The Jobber is caught in the middle of this storm as they continue to lose sales to the OE arena.

Shop owners will now start taking additional time to check OE cost for key parts because they don't want their clients to be over charged and potentially lose the customer/client over the price of a part. Trustworthy client relationships are critical today and especially during challenging economic times. The better shop owners are always looking out for their client's best interest.

How could our industry fall off the wagon so easily?

Now we are also starting to hear, once again, that the Aftermarket part function is not up to standard. Why are Name Brands sourcing parts off-shore without monitoring quality in favor of perceived quick profits to then have the part fail time and time again?

The aftermarket must continue to have a strong dialogue in regards to these issues and manufacturers must insert the disciplines to ensure they excel with their Brand. Let's face it, cutting corners for the quick fix today is costing everyone money, time and credibility in the long run. During these different economic times, quality, fair pricing and top level service is so necessary to maintain the shop and consumer's confidence and trust.

Let's keep the dialogue open.

AUGUST IS AN IMPORTANT MONTH FOR RENEWAL

As easy as it is to remain in holiday mode during the month of August, business owners should use this month to review all business processes within their operation to make sure the shop is primed and ready for the Fall service season.

Consider completing the following reviews and discussions with all staff members:

Initial Facility Image
- Is the facility clean and organized outside and inside? Review your processes to ensure the facility remains this way even during hectic days.
- Does the facility send a perception to the consumer that we are a professional organization? Consider that you are a mini dealership but with the Independent touch.
- Is the facility appealing to women clientele? (ask for honest feedback)
- Does the client waiting area contain current educational material and is it visually appealing, including the smell of fresh air?
- Is wireless internet connection available in the shop?

Front Counter Procedures
- Is the process of how clients are professionally greeted and acknowledged in place with a friendly voice and smile behind the counter?
- Is the vehicle service history always being reviewed and discussed with the client?
- Do you manage the vehicle on behalf of the client based on the clients use and expectations of their vehicle?
- Are all manufacturer recommended servicing being reviewed and discussed with the client?
- Are future appointment time frames being booked before the client leaves?

Back Shop
- Are clear and precise communications in place between the front counter and the technician?
- Are written vehicle inspections being completed by the technician and reported to the front counter on every vehicle?
- Is all maintenance and diagnostic time being captured and documented properly?

Office
- Are average billed hours per invoice being calculated daily and weekly and reported to all staff?
- Are billed hour goals being set for the day and week for the front counter and with each technician?
- Is the total shop efficiency being calculated weekly, compared to objective and reported to all staff?

Review what up to date courses are required in terms of technical and business training. Search the marketplace as to where the courses are being held and register the shop. There is a good possibility out of town travel will be required. Plan now to ensure training opportunities are not missed. Remember you are in the knowledge business.

These are not all the issues to be addressed however theses few items play an important role to ensure the shops bottom-line profitability is moving forward. August can be a month of internal renewal for the shop, so use it wisely. Make sure your business processes are in place and working seamlessly. It will be time and effort well spent.

"I Should'a , I Could'a, I Would'a"

These 20/20 hindsight expressions have ruined many businesses.

Today's business operations must have a Management capability and style that is focused on a tested and a definitive path that creates business net income along with future growth and security.

I find that too many shop owners are not willing to admit that they really don't know the detailed required to resolving shop issues affecting business outcome. Their attitude, actions and approach to issues confirms that. Their own ego, and in many cases their own insecurities, get in the way. It is later that they realized they were in error, too embarrassed to ask in the first place and they repeat the 20/20 hindsight expressions.

Today's shop business is complex and very detailed. No one really does know it all and therefore it is important to have key business resources to draw upon for continuous input and advice. Today's modern and successful shop owners have the contacts to seek out the right solution for a given problem. It is impossible to be an island and be successful in this day and age.

As a shop owner, consider your depth of skill and resource relationships that you have nurtured and where you have the ability to draw upon at the right time. Keep these relationships strong and never take them for granted.

Consider developing a coaching and mentor relationship as well. I have found the businesses today that have this in place are always above average in their business performance in every category. There has to be merit to this process or it would not continue year over year.

20/20 hindsight is not the way to move forward. A continuous knowledge and support structure in place throughout your business followed with confident execution will bring you the results you are looking for.

If you are unclear about how to create this environment, I would be happy to take your call to discuss and clarify it for you......1-800-267-5497.