SLOW TIMES MEANS PAY ATTENTION TO SHOP PROCESSES

Have you ever noticed that when the shop is slow, management has a tendency to panic? Welcome to the break down and repair business. The fact is it has been extremely slow from coast to coast. Over the past 4 weeks I have traveled from the Atlantic region to the shores of the Pacific and regions in between, talking with many people from all levels of the industry. Business is definitely different.

A main contributor to the slow business is that too many shops rely on the break down and repair business model from the past 40 years. They are running an installer based business model from yesterday's era versus a comprehensive service provider based business model required today. The previous generation's business model is broken. The math does not work any more.

This is why the preventative maintenance business model must be adopted and embraced.

Vehicles are still moving out there so they must be properly maintained.

Preventative maintenance is currently being neglected by the consumer. You can thank the high consumer debt load coupled with the fact vehicles are also built better. They just don't break down the way they use to. Another factor is the shops through out the industry have failed to educate the client/consumer about budgeting for their vehicle to ensure safety and reliability.

During this slow period of time it would be wise to start building and refining the shop's internal process and procedures by going through your data base and research the last time the customer/client was in for preventative maintenance service? Start by reviewing all flush services required. As you know complete fluid maintenance is critical to reliable vehicle performance today. From there locate what other specific items were declined in previous visits by the client that must be brought to the table again. Review manufacturer recommended required servicing based on client mileage utilizing industry resources such as Mitchell, Alldata and Identifix.

It is the shop's Professional responsibility to ensure the client's vehicle is safe and reliable. This is what you are hired for. This is why clients trust you. It is time to review their file completely and then contact them. Work with the client. This on-going process must be instilled as a culture in the shop's daily and weekly procedures. Become proactive rather than reactive.

Take charge of the business. Review all internal vehicle inspection procedures and processes with the staff including the items above coupled with thorough time clock recording which is required to ensure proper billing at the front counter. Bring the staff together as a team; a team that understands its responsibilities to serve each and every client to the very best of our ability. We must never let a client down. Let the staff see and hear you counselling the client and lead them by example.

It is easy for an owner/manager to sit back and complain about the world while they try to slash expenses, then they focus on parts cost by shopping jobbers all over town for a better price to save $5 or $10 on a part, rather than concentrate on their core business which is shop productivity. They then think they can discount themselves back into prosperity by now putting on price specials trying to keep the bays busy. Do the math. Math doesn't lie. These discounting, out of control shops from yesteryear, are trying to make 2 + 2 add to 7.

The shops that have now gone back to the old style of business with the oil change loss leader method will not only do more damage to their own business but also to the reputation of the automotive aftermarket industry. Everyone knows these shops try to sell up and do anything to find work to keep the staff busy. This shop's culture is always all about them and not the end client/consumer. Client/consumer trust is not in place and never will be with this method. These shops just don't get it. They always end up buying themselves a job and a terribly poor one at that, as management is chained to the business 6 days a week.

The real issue in these modern times is taking control of the business by understanding the math and managing the client's vehicle and their relationships the shop has in place. From there the shop executes its responsibilities of trust on behalf of the client. Client's are not thinking about vehicle service because they are too busy in their own lives and besides, to them, the vehicle seems to be running just fine, however, you know that if it is not maintained properly a potential costly and time consuming inconvenience for the client could occur. Educate the client/consumer by counselling not selling. The average client/consumer is not stupid but they are uninformed.

Consider all the options...........you are in the relationship business. You are the Professional. Take your responsibilities seriously.

WE HAVE THE KNOWLEDGE TO MANAGE, DO WE HAVE THE GUTS TO MANAGE?

Many shop owners have invested the time to learn how to manage their shop in today's new realities. This is excellent and they must be applauded for that commitment made to their business. Now they return to the real world of the aftermarket after the course with great intentions and are faced with the incredible day to day distracting noise within the industry.

The changes required to the shop are substantial and will take, on average, 2 to 3 years to fully implement, but the biggest impediment to making the change will always be Management's self discipline to get it done.

Self discipline is everything in moving a business forward today. Self discipline is only controlled by one person and is no one else's responsibility. Self discipline will be the key measurement in the end when evaluation takes place as to why the business succeeded or why the business failed.

It takes a lot of guts to remain disciplined to see things through as the owner/manager now must re-enter business territory that they have purposely tried to avoid in the past. Two examples include:

1. Owner/managers are not comfortable with confronting a long-term staff member to see if they can change to get them on board to create a TEAM concept within the shop. No one likes staff confrontation but in some cases it must be done as you need the right people and the right attitude on the bus.

2. Owner/managers find it difficult to insert the new day to day measurement disciplines required today as they now must work closer with the bookkeeper, knowing they are not an expert or even comfortable discussing accounting formats but they must learn to do so in order for the business to move forward.

The owner/manager is facing many personal internal fears when making changes to the business, but the changes must be made IF the bottom-line opportunities are going to be realized.

In the end it is clearly acknowledged that running a professional automotive service shop today is the most complex business in the retail world. If it was easy, everyone would embrace it. Knowledge, pure guts and incredible self-discipline are required to "get it done".

Are you one of the select few entrepreneurs who will be enjoying an incredible and rewarding business career moving forward into the next 5 to 7 years of the aftermarket or will you end up being a historical footnote in our industry?

Look in the mirror. Talk the truth to yourself. You now have the knowledge and all the resources at your disposal to succeed. Use them. Believe in yourself. Push yourself each and every day. Be proud of who you are and what you and your business stand for in delivering integrity, service and quality to your business clients and your community.

You CAN do it!!

7 STEPS TO YOUR NEW BUSINESS MODEL IN 2010

There are steps that a shop owner can start to take to transition the business into the modern day format that is required to be successful for this new decade.

Consider each point as it applies to your operation.

1. THINK ABOUT THE SHOP'S HISTORY: Never embark on a new plan without first understanding where the shop came from. Discuss the shop's history with your team and talk about why change is required and how each individual will benefit from the change desired.

2. DO SOME MATH: Study the basic numbers of the business and project how the numbers would change in the business when the new transition is in place. Math does not lie and when the employees income improves and the shop's bottom-line is positively impacted, then effort to make the transition makes sense.

3. SEEK OUT THE SHOP'S VULNERABILITY: With any transition in business there is always one or two weak links in the chain. Review the shop's weakest points and how they would have to be changed in order to support and make the transition work.

4. ARE THE RIGHT PEOPLE ON THE BUS?: In any business having staff with the right attitude is everything. A negative staff member creates conflict, business stress, and always slows any new desired process down. I would rather have a staff member with an incredible positive attitude and little experience over a highly qualified individual who knows it all. Do an inventory of the shop's staff. Can this shop operate as a team or is it too individualistic? Today's business requires a team.

5. DON'T SELL, COUNSEL: Work on changing the mind-set throughout the shop that we are Professionals being hired by our client to advise them based on the clients parameters. This is the Professional way of doing business today. When the client is properly and Professionally served, the sales will look after themselves. Review all internal vehicle inspection and reporting processes to ensure the client is being properly and fully informed.

6. MEASURE THE RIGHT CRITERIA: Transition the business effectively by monitoring and measuring 2 basic items on a weekly basis, namely, the average billed hours per invoice (minimum 2.0 to 2.5 hours per invoice for basic consumer vehicle maintenance) and total shop efficiency (minimum 75% with a desired goal of 80%). Report and discuss these numbers to the staff as they point out exactly the effectiveness the shop is having, as a team, with each client.

7. PATIENCE WITH DISCIPLINE: If change was easy, the entire industry would be embracing it. The fact is transitioning the business to a new culture requires Management patience coupled with discipline to execute. It is so easy to make up an excuse to stop trying or quit.

I believe 2010 will be an exceptionally positive year for the Independent sector of the Aftermarket. There is a lot of pent up demand for vehicle preventative maintenance that was turned down or neglected during 2009. The shop's that have transitioned their business to professionally serve their clients are in the right position to reap incredible rewards.

Are you enjoying a career or have you bought yourself a job?

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!!