Shop owners and Managers must adjust their business processes to address today's vehicle service realities.
Consider the higher quality of fluids and synthetics that are now being used today in all vehicles.
Consider vehicle manufacturers are now recommending 10,000, 20,000 even 30,000 kilometers between oil changes.
This means that there will be many cases where the shop sees the customer/client twice or maybe only once a year as we move forward depending on their annual driving distance and habits.
This raises a concern for 2 key vehicle issues, namely, safety and reliability.
If you have not done so, it is time to start discussions and to educate every customer/client the importance of having a thorough semi-annual vehicle inspection. The semi-annual date should be booked before the client leaves, with the shop following up within a week of the date to ensure it is still convenient for the client. If not, re-schedule.
Too many shops are not taking charge of their client base and managing their vehicle service properly. They rely on the client to remember to come back.
The fact is the consumer is too busy and has enough to look after in their own lives. The last thing most consumers think about is vehicle maintenance, in fact, vehicle maintenance has been neglected since the start of the recession. It is similar to the thought, if I'm feeling OK, there is no need to call my doctor for a check-up. The same now has happened with vehicles. They are built over all with a higher quality, so they just don't breakdown or require the frequency of service the way they used to 10 to 20 years ago. If it's running, everything is fine, why should I contact the garage for service?
As a Professional Service Provider you must understand what type of customer/client you are dealing with and what are their personal parameters in regards to servicing their vehicle? We must take the responsibility to do our best to ensure they are never compromising safety or are inconvenienced.
This opens the debate as to whether we should have mandatory annual vehicle inspections across the country and who is legally authorized to take an unsafe vehicle off the road? I am totally supportive of that concept of legislation. It is a safety issue. Some of the vehicles driving on the road today are outright dangerous. The annual date for an inspection to be completed could be on the individuals birthday; not everyone all at once by a given month as that would create chaos in a shop. This concept is urgent, however, it is for another blog as we move forward in this industry.
Review your front counter processes and your back end inspection procedures and reporting processes. Are you up to date with today's realities and your Professional responsibilities?
Thursday, June 3, 2010
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".
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".
Saturday, May 29, 2010
Perhaps It Is Time To Step Back And Take A Deep Breath
Let's face it, there has been a lot of stress this year so far, but, let's think this through. Are you caught up in your business as like the "Y" generation and expect instant gratification or do you truly realize the realistic time frame to get things done. This is not a cop out. The fact is staff must come "up to grade" faster than ever before, that is the "Professionalism" of our sector, but that relates to effective training on a given topic. What I am referring to is, does Management truly understand "Investment" into the business. The fact is every shop owner and every Jobber has been "taught by the industry" to think that a dollar spent is an "expense" and watch your "expenses" every day. This creates a powerful but potentially negative mind-set. No one throughout the industry has the image or reputation to be known for discussing "Investment" into the business and how it works and how do you measure it. Now think about this, it creates a huge dilemma. If a dollar spent is an expense, how do you see any dollar spent as an investment?
Instant gratification is not realistic, however the internet has taught the current generation to expect it. You see it in every child today that is under 20 years old. Has that mentality affected how you think about your business? If it has you could be heading for serious trouble.
The facts are these: To change a business culture and invoke the right processes and disciplines with this fast pace and intricacy connected and technological world will take you 2 to 3 years to fix or implement!! I'm sorry this is the reality check you need to hear. I did not say you would like a warm fuzzy message. In the Aftermarket we must "LEARN" to deal with reality and the longer you have been in this business, the harder it is, and on the other hand the shorter time you have been exposed to the full industry the more frustrated you are feeling about how things evolve.
Let's all take a deep breath and refocus. For the "older crowd" in the Wholesale side of the industry, it is time to understand "investment". We must make a large amount of investment dollars because consider how rapidly the Aftermarket sector has "evolved" in the past 5 years compared to the last 20 that you have been involved with. Make the investment and it will serve you well IF your plan is focused on the future success of your clientele.
To the retail side, it is time to catch up to the modern world BUT you must have a comprehensive plan to do so. That been said I am confident in saying 80% of the Aftermarket shops do not have a plan. This puts the Aftermarket sector in a very vulnerable position. Now what?
Shop owners MUST start thinking about the next 3 to 7 years. It is irrelevant how tight your Cash flow is today. That will be sorted out in "time" if you have a plan AND the resources focused on making it happen. Anything else or other "quick Fix" is a pipe dream. Time for a reality check. If you are not prepared to make the required investment to deal with and understand today's realities, then perhaps it truly is time for you to get out of business. This sector of the automotive industry is the most exciting but most challenging to be embraced. If you are not up for it, them may I facetiously say maybe it's time you go into the funeral home business.
Instant gratification is not realistic, however the internet has taught the current generation to expect it. You see it in every child today that is under 20 years old. Has that mentality affected how you think about your business? If it has you could be heading for serious trouble.
The facts are these: To change a business culture and invoke the right processes and disciplines with this fast pace and intricacy connected and technological world will take you 2 to 3 years to fix or implement!! I'm sorry this is the reality check you need to hear. I did not say you would like a warm fuzzy message. In the Aftermarket we must "LEARN" to deal with reality and the longer you have been in this business, the harder it is, and on the other hand the shorter time you have been exposed to the full industry the more frustrated you are feeling about how things evolve.
Let's all take a deep breath and refocus. For the "older crowd" in the Wholesale side of the industry, it is time to understand "investment". We must make a large amount of investment dollars because consider how rapidly the Aftermarket sector has "evolved" in the past 5 years compared to the last 20 that you have been involved with. Make the investment and it will serve you well IF your plan is focused on the future success of your clientele.
To the retail side, it is time to catch up to the modern world BUT you must have a comprehensive plan to do so. That been said I am confident in saying 80% of the Aftermarket shops do not have a plan. This puts the Aftermarket sector in a very vulnerable position. Now what?
Shop owners MUST start thinking about the next 3 to 7 years. It is irrelevant how tight your Cash flow is today. That will be sorted out in "time" if you have a plan AND the resources focused on making it happen. Anything else or other "quick Fix" is a pipe dream. Time for a reality check. If you are not prepared to make the required investment to deal with and understand today's realities, then perhaps it truly is time for you to get out of business. This sector of the automotive industry is the most exciting but most challenging to be embraced. If you are not up for it, them may I facetiously say maybe it's time you go into the funeral home business.
Monday, April 12, 2010
ONE MORE TIME - IS IT TIME FOR A NEW VOLUNTARY AFTERMARKET SYSTEM IN CANADA?
The traditional methods of operating a business within the Independent sector of the automotive aftermarket industry in Canada has been very simple. A person or licensed technician has the opportunity of having his/her own shop, raises the required cash and opens up for business. A person or Jobber sales representative has the opportunity to own a parts store, raises the required cash, and the doors are open for business. This is the capitalist system working at its best as one decides to take the personal risk to build a better future.
I submit that it is time to raise the question: "Is this the right method of conducting business that helps ensure the growth and success of the Independent sector of the automotive aftermarket industry in Canada?"
Consider the following variety of facts within the Canadian aftermarket industry:
1. The majority of Independent shop owners in Canada never obtained a formal business education before moving on to "pay his/her dues" to obtain his/her Automotive Service Technician license.
2. The average Jobber store owner is trying to figure out their own business and determine how to move forward when shop owners seemingly only want to squeeze parts margin out of the Jobber but Jobber business costs continue to rise.
3. The North American name plate vehicle count is dropping as Foreign name plates surge from coast to coast.
4. In the perception of Independent shop owners, aftermarket parts manufacturers have not produced appropriate quality foreign name plate parts that perform fit/form and function.
5. Dealerships are retaining their customer base away from the aftermarket segment and aftermarket shops end up supporting dealerships with aftermarket dollars by purchasing parts from them to obtain OE quality.
6. Pricing strategies of the aftermarket parts manufacturers are against other aftermarket parts manufacturers and not against dealer OE parts themselves which creates huge pricing fluctuations between OE dealer and aftermarket parts. This issue kills shop/jobber relationships and sends a tremendous amount of aftermarket money into the OE arena.
7. Independent Jobbers do not really understand the Service Providers service business and how to grow it. Independent Service Providers do not really understand the Jobbers commodity business and how to grow it yet both need each other more than ever before for their own survival.
8. The term "Profit" throughout every level of the aftermarket segment is treated as a "dirty" word as everyone is in a race to the bottom in their pricing strategies. "How low can I go and how fast can I get there?"
9. The industry thinks in terms of "Cost" and not "Profit". It is an embedded state of mind of this and past generations!
10. Warehouse Distributors and Manufacturers continue to spend millions of dollars each year on "toys/trinkets and trash" trying to lure shops to purchase their parts.
11. Manufacturers, WD's, and Jobbers are seemingly consumed with parts volume at any price in order to meet monthly and quarterly sales quotas.
12. The industries focus and support processes are focused on the "bottom-feeder/cockroach type" shops and not the "best business practices" shops; i.e. - Jobbers carry too many shop receivables that are 60/90/120 days old because these shops do not know how to run a business profitably in order to pay all bills on time when due. The Jobber, therefore, does not have the cash necessary to grow his/her store and cannot bring value to their best practices shops. WD's focus on "programs" to "buy volume" from the average Jobber and marketplace shop, which is traditionally, the weakest shops in the industry. The WD's then go back and beat up the manufacturer on price to support these "programs". Manufacturers don't listen to the best business practice shops as to their needs and future requirements and, like the WD's, have focused on toys/trinkets and trash to try to capture their business rather than fit/form and function at the right price. These, flavor of the day concepts, do not produce long term profitable results, yet no executive will ever challenge this method of doing "short-term" business in our industry, as most are near their retirement age and do not want to upset their "comfort zone".
13. The Independent shop as part of the industry lacks proper recognition from the consumer, as the Independent is "diverse" because the best of the Independents are also associated with the worst of the Independents.
14. Vehicle quality and service intervals have changed, therefore, shop processes must change. No one in the commodity business is talking about this. More bays with more equipment with a larger, relationship/education focused, client base is now becoming the necessary standard requirement "today" to secure and sustain "tomorrows" business and consumer needs. "Learn to grow the business or go home."
15. Television commercials are encouraging the layperson consumer to read the instructions on the box and change their own brake pads on their vehicle. This is a safety issue.
16. There is a tremendous need for a change in "Corporate Culture" at every level of the aftermarket industry.
17. There is a tremendous need for a change in "Communication Practices" at every level of the aftermarket industry.
Currently, in essence, the aftermarket operates with "no real accountability for their actions".
One might respond to the above statement with "this is the free enterprise system and if they are wrong they will lose money or go broke, leave it alone."
Well then, considering that response, now consider these facts:
1. We have now become and will continue to be a "knowledge based" industry as vehicle technology continues to develop.
2. Technology development means the requirement for highly skilled technicians for proper vehicle diagnosis and to secure the right safety related "prognosis". It is truly a safety issue.
3. Capital costs as well as on-going business and technical training time required for this industry are very high so it is very important to implement and obtain the right price from the consumer to support the structure required.
4. Technology development means more parts proliferation for Jobbers.
5. The consumer is more educated today, but very uninformed as to the proper vehicle maintenance processes required to maximize their vehicle's life. The Dealerships are using unethical "tactics" on the consumer to retain the aftermarket client with them.
6. Independent Shop owners and Jobbers must earn each others trust and learn to work closer together for each respective business to succeed.
7. Business "communication" must be greatly improved between each and at every level of our industry.
8. To be "Professional" in today's economy means meeting, and sustaining an "Industry Standard".
If the aftermarket sector of the industry acknowledges the above-mentioned facts and wants to achieve the right level of prosperity, then perhaps it is time for a dramatic change in focus. A change in focus that will allow the next generation to have a better chance to enjoy the elusive words, "professional prosperity".
Consider, if you will, the "system" used by Accountants, Engineers, Lawyers and even Liquor Control Boards.
These organizations "sanction" people and companies who voluntarily want to deal in that profession at that professional level. It is the law. The organizations are recognised by the Federal and Provincial Governments.
To become a Chartered Accountant he/she must obtain a certain education level, then pay his/her annual dues to their "Society" by which they are "sanctioned" to operate with outlined standards.
The same applies to Engineers and Lawyers.
To sell liquor, the Provincial LCB's across Canada "License" the premise to sell alcohol under certain conditions and "standards".
I submit it is time for the Independent sector of the automotive aftermarket to form its own "Society" that "sanctions" Independent shops and Independent Jobbers who voluntarily agree to operate their business to a higher standard. It is an issue of protecting consumer safety and obtaining/sustaining best business practices. This society must be approved and recognized by the Federal and Provincial Governments (so it has teeth). The owner who wishes to join this society must meet pre-set, established criteria. Business conduct and standard rules are set. Sustainable, on going, communication processes are put in place. Annual dues must be paid to the "Society". Accountability is now in place and it is "policed" internally as are the other "Professional Societies". When this is achieved, the focus will be on best business practices throughout the industry rather than accepting the current status quo focus of weak, unprofessional practices. WD's and manufacturers would adjust their businesses to meet the requirements of their customer, namely, the new shop owner and the new Jobber. Communication lines are clear. The aftermarket would have an incredible future. This "system" becomes the "industry standard" not just a "shop standard". The mind-set is elevated and conduct is changed. The consumer sees the difference from a sanctioned business to a non-sanctioned business as is recognised from a Chartered Accountant to a Bookkeeper. Aftermarket profitability changes for the better.
If your comment is "impossible", or sounds like a "pipe-dream", I submit that it is perhaps you who is not willing change to be accountable to his or her peers to improve the standards and image of our sector of the industry. You use the phrase "I am only accountable to my customers, my clients". I submit to you, that attitude is correct for running one business, but not running an entire industry of this complexity and magnitude.
The challenge would be great however the end result would make the task worthwhile. All issues must be brought to the table from each level of the industry and fully discussed by appointed representatives. All levels clearly agree to work together to form the structure.
Consider most of the infrastructure to such a mission is already in place through our National and Provincial Associations. Fine-tuning would have to take place, but a lot could be accomplished in five years when the "will" is there to make things happen.
Where are all the Association Executives and their Board members across the country who have the desire, focus and dedication required to move our aftermarket sector to a much higher and more accountable level which in turn would build the foundation structure for the next generation?
A new structure for a true Profession requires a new attitude approach and new thinking from an aftermarket industry entrenched in "tradition" created from a break down and repair world; a world that we must finally admit is now over in the current and next generation of vehicles.
I submit that it is time to raise the question: "Is this the right method of conducting business that helps ensure the growth and success of the Independent sector of the automotive aftermarket industry in Canada?"
Consider the following variety of facts within the Canadian aftermarket industry:
1. The majority of Independent shop owners in Canada never obtained a formal business education before moving on to "pay his/her dues" to obtain his/her Automotive Service Technician license.
2. The average Jobber store owner is trying to figure out their own business and determine how to move forward when shop owners seemingly only want to squeeze parts margin out of the Jobber but Jobber business costs continue to rise.
3. The North American name plate vehicle count is dropping as Foreign name plates surge from coast to coast.
4. In the perception of Independent shop owners, aftermarket parts manufacturers have not produced appropriate quality foreign name plate parts that perform fit/form and function.
5. Dealerships are retaining their customer base away from the aftermarket segment and aftermarket shops end up supporting dealerships with aftermarket dollars by purchasing parts from them to obtain OE quality.
6. Pricing strategies of the aftermarket parts manufacturers are against other aftermarket parts manufacturers and not against dealer OE parts themselves which creates huge pricing fluctuations between OE dealer and aftermarket parts. This issue kills shop/jobber relationships and sends a tremendous amount of aftermarket money into the OE arena.
7. Independent Jobbers do not really understand the Service Providers service business and how to grow it. Independent Service Providers do not really understand the Jobbers commodity business and how to grow it yet both need each other more than ever before for their own survival.
8. The term "Profit" throughout every level of the aftermarket segment is treated as a "dirty" word as everyone is in a race to the bottom in their pricing strategies. "How low can I go and how fast can I get there?"
9. The industry thinks in terms of "Cost" and not "Profit". It is an embedded state of mind of this and past generations!
10. Warehouse Distributors and Manufacturers continue to spend millions of dollars each year on "toys/trinkets and trash" trying to lure shops to purchase their parts.
11. Manufacturers, WD's, and Jobbers are seemingly consumed with parts volume at any price in order to meet monthly and quarterly sales quotas.
12. The industries focus and support processes are focused on the "bottom-feeder/cockroach type" shops and not the "best business practices" shops; i.e. - Jobbers carry too many shop receivables that are 60/90/120 days old because these shops do not know how to run a business profitably in order to pay all bills on time when due. The Jobber, therefore, does not have the cash necessary to grow his/her store and cannot bring value to their best practices shops. WD's focus on "programs" to "buy volume" from the average Jobber and marketplace shop, which is traditionally, the weakest shops in the industry. The WD's then go back and beat up the manufacturer on price to support these "programs". Manufacturers don't listen to the best business practice shops as to their needs and future requirements and, like the WD's, have focused on toys/trinkets and trash to try to capture their business rather than fit/form and function at the right price. These, flavor of the day concepts, do not produce long term profitable results, yet no executive will ever challenge this method of doing "short-term" business in our industry, as most are near their retirement age and do not want to upset their "comfort zone".
13. The Independent shop as part of the industry lacks proper recognition from the consumer, as the Independent is "diverse" because the best of the Independents are also associated with the worst of the Independents.
14. Vehicle quality and service intervals have changed, therefore, shop processes must change. No one in the commodity business is talking about this. More bays with more equipment with a larger, relationship/education focused, client base is now becoming the necessary standard requirement "today" to secure and sustain "tomorrows" business and consumer needs. "Learn to grow the business or go home."
15. Television commercials are encouraging the layperson consumer to read the instructions on the box and change their own brake pads on their vehicle. This is a safety issue.
16. There is a tremendous need for a change in "Corporate Culture" at every level of the aftermarket industry.
17. There is a tremendous need for a change in "Communication Practices" at every level of the aftermarket industry.
Currently, in essence, the aftermarket operates with "no real accountability for their actions".
One might respond to the above statement with "this is the free enterprise system and if they are wrong they will lose money or go broke, leave it alone."
Well then, considering that response, now consider these facts:
1. We have now become and will continue to be a "knowledge based" industry as vehicle technology continues to develop.
2. Technology development means the requirement for highly skilled technicians for proper vehicle diagnosis and to secure the right safety related "prognosis". It is truly a safety issue.
3. Capital costs as well as on-going business and technical training time required for this industry are very high so it is very important to implement and obtain the right price from the consumer to support the structure required.
4. Technology development means more parts proliferation for Jobbers.
5. The consumer is more educated today, but very uninformed as to the proper vehicle maintenance processes required to maximize their vehicle's life. The Dealerships are using unethical "tactics" on the consumer to retain the aftermarket client with them.
6. Independent Shop owners and Jobbers must earn each others trust and learn to work closer together for each respective business to succeed.
7. Business "communication" must be greatly improved between each and at every level of our industry.
8. To be "Professional" in today's economy means meeting, and sustaining an "Industry Standard".
If the aftermarket sector of the industry acknowledges the above-mentioned facts and wants to achieve the right level of prosperity, then perhaps it is time for a dramatic change in focus. A change in focus that will allow the next generation to have a better chance to enjoy the elusive words, "professional prosperity".
Consider, if you will, the "system" used by Accountants, Engineers, Lawyers and even Liquor Control Boards.
These organizations "sanction" people and companies who voluntarily want to deal in that profession at that professional level. It is the law. The organizations are recognised by the Federal and Provincial Governments.
To become a Chartered Accountant he/she must obtain a certain education level, then pay his/her annual dues to their "Society" by which they are "sanctioned" to operate with outlined standards.
The same applies to Engineers and Lawyers.
To sell liquor, the Provincial LCB's across Canada "License" the premise to sell alcohol under certain conditions and "standards".
I submit it is time for the Independent sector of the automotive aftermarket to form its own "Society" that "sanctions" Independent shops and Independent Jobbers who voluntarily agree to operate their business to a higher standard. It is an issue of protecting consumer safety and obtaining/sustaining best business practices. This society must be approved and recognized by the Federal and Provincial Governments (so it has teeth). The owner who wishes to join this society must meet pre-set, established criteria. Business conduct and standard rules are set. Sustainable, on going, communication processes are put in place. Annual dues must be paid to the "Society". Accountability is now in place and it is "policed" internally as are the other "Professional Societies". When this is achieved, the focus will be on best business practices throughout the industry rather than accepting the current status quo focus of weak, unprofessional practices. WD's and manufacturers would adjust their businesses to meet the requirements of their customer, namely, the new shop owner and the new Jobber. Communication lines are clear. The aftermarket would have an incredible future. This "system" becomes the "industry standard" not just a "shop standard". The mind-set is elevated and conduct is changed. The consumer sees the difference from a sanctioned business to a non-sanctioned business as is recognised from a Chartered Accountant to a Bookkeeper. Aftermarket profitability changes for the better.
If your comment is "impossible", or sounds like a "pipe-dream", I submit that it is perhaps you who is not willing change to be accountable to his or her peers to improve the standards and image of our sector of the industry. You use the phrase "I am only accountable to my customers, my clients". I submit to you, that attitude is correct for running one business, but not running an entire industry of this complexity and magnitude.
The challenge would be great however the end result would make the task worthwhile. All issues must be brought to the table from each level of the industry and fully discussed by appointed representatives. All levels clearly agree to work together to form the structure.
Consider most of the infrastructure to such a mission is already in place through our National and Provincial Associations. Fine-tuning would have to take place, but a lot could be accomplished in five years when the "will" is there to make things happen.
Where are all the Association Executives and their Board members across the country who have the desire, focus and dedication required to move our aftermarket sector to a much higher and more accountable level which in turn would build the foundation structure for the next generation?
A new structure for a true Profession requires a new attitude approach and new thinking from an aftermarket industry entrenched in "tradition" created from a break down and repair world; a world that we must finally admit is now over in the current and next generation of vehicles.
Saturday, March 27, 2010
Want Better Shop Management Skills - Learn to Play Golf
Only the golfers who own/manage an automotive business will really appreciate this particular BLOG and the message it truly sends.
I just came back from my annual 10 day golf outing at Pinehurst/Southern Pines North Carolina. I love that region and the overall State itself but most of all I love their golf courses. The people throughout the region are warm and beautiful and the golf courses are challenging and visually spectacular. As for my personal golf rounds this year?...let's just say my friends, once again, had an incredible amount of patience with me and my attitude towards my own golf play ..........but....the weather was great!!
Playing a round Golf is so very similar to running an automotive shop business today.
Golf is an interesting and very disciplined sport as is owning and managing an Independent automotive maintenance and repair business. You truly have to learn the right self-disciplines that must become habits in order to succeed.
Consider the similarities:
Golf tells it like it is no matter how good you may look in appearance. Many golfers look like pros in appearance with the bag, the clubs, the clothing and the shoes, but read the score card to tell you the truth. Similarly many shops may appear to look good on the outside but take a look at their true net-income after tax and ensure a professional management wage and market place rent have been factored in.
Golf is very humbling. The true golf score measurement brings you back down to earth. When you are given strokes through the handicap system it only covers up your real score. Your handicap is the smoke and mirrors show of the sport. Similarly, it is irrelevant how much your ego is telling you how great you think you are with your shop business, if you are not achieving a 35% ROI over all in the business, you are "shot down" by the real world who really know your "handicap(s)". When shop management only measures its business in total sales and sales per invoice and does not include average billed hours per invoice coupled with total shop site efficiency, their lack of net income is like having a handicap. It is not telling you the truth....you think you are running a great business....BUT...you really are not the top player you may perceive.............yet!!!!
You need to get a new skill-set together and practice them if you have the discipline to do so.
Golf has no sympathy for lack of mental discipline and physical sloppiness. You end up with a boogie,double boogie or worse on more holes than desired. Excuses are always so plentiful in golf but also very cheap. When running a shop, average billed hours per invoice starts to tell the truth about what processes and methods you really adhere to. Does your shop achieve an average 2.5 billed hours per invoice for basic consumer vehicle maintenance? If not what is wrong with your business "processes"? In golf, a consistent correct swing and "format" is critical to a great shot and your overall score. In business the right and consistent internal processes (format) to achieve the desired and sustained results takes discipline and practice.
There is no doubt about it.......Golf separates the men from the boys. In business key measurements separates the true entrepreneurs from the "wannabees"
A great golf score is so very much like running a highly profitable shop business today because the self disciplines to achieve the desired results are very identical. Without a lot of self discipline backed up with on-going practice and an attitude to continuously learn in order to improve, one finds it extremely difficult to achieve the ultimate desired results.
Hey if it was easy, everyone would have a great golf score..........hey if it was easy every shop owner today would run a financially successful enterprise.........
Revisit your score card. Do the math. Are you measuring your business with a handicap system or are you a "scratch" entrepreneur?
I just came back from my annual 10 day golf outing at Pinehurst/Southern Pines North Carolina. I love that region and the overall State itself but most of all I love their golf courses. The people throughout the region are warm and beautiful and the golf courses are challenging and visually spectacular. As for my personal golf rounds this year?...let's just say my friends, once again, had an incredible amount of patience with me and my attitude towards my own golf play ..........but....the weather was great!!
Playing a round Golf is so very similar to running an automotive shop business today.
Golf is an interesting and very disciplined sport as is owning and managing an Independent automotive maintenance and repair business. You truly have to learn the right self-disciplines that must become habits in order to succeed.
Consider the similarities:
Golf tells it like it is no matter how good you may look in appearance. Many golfers look like pros in appearance with the bag, the clubs, the clothing and the shoes, but read the score card to tell you the truth. Similarly many shops may appear to look good on the outside but take a look at their true net-income after tax and ensure a professional management wage and market place rent have been factored in.
Golf is very humbling. The true golf score measurement brings you back down to earth. When you are given strokes through the handicap system it only covers up your real score. Your handicap is the smoke and mirrors show of the sport. Similarly, it is irrelevant how much your ego is telling you how great you think you are with your shop business, if you are not achieving a 35% ROI over all in the business, you are "shot down" by the real world who really know your "handicap(s)". When shop management only measures its business in total sales and sales per invoice and does not include average billed hours per invoice coupled with total shop site efficiency, their lack of net income is like having a handicap. It is not telling you the truth....you think you are running a great business....BUT...you really are not the top player you may perceive.............yet!!!!
You need to get a new skill-set together and practice them if you have the discipline to do so.
Golf has no sympathy for lack of mental discipline and physical sloppiness. You end up with a boogie,double boogie or worse on more holes than desired. Excuses are always so plentiful in golf but also very cheap. When running a shop, average billed hours per invoice starts to tell the truth about what processes and methods you really adhere to. Does your shop achieve an average 2.5 billed hours per invoice for basic consumer vehicle maintenance? If not what is wrong with your business "processes"? In golf, a consistent correct swing and "format" is critical to a great shot and your overall score. In business the right and consistent internal processes (format) to achieve the desired and sustained results takes discipline and practice.
There is no doubt about it.......Golf separates the men from the boys. In business key measurements separates the true entrepreneurs from the "wannabees"
A great golf score is so very much like running a highly profitable shop business today because the self disciplines to achieve the desired results are very identical. Without a lot of self discipline backed up with on-going practice and an attitude to continuously learn in order to improve, one finds it extremely difficult to achieve the ultimate desired results.
Hey if it was easy, everyone would have a great golf score..........hey if it was easy every shop owner today would run a financially successful enterprise.........
Revisit your score card. Do the math. Are you measuring your business with a handicap system or are you a "scratch" entrepreneur?
Saturday, March 13, 2010
OE Website Access Must Be Planned
On May 1st 2010 all Independent shops in Canada are suppose to have open access to the OEM websites which was agreed to through a voluntary agreement.
This simply means that information such as vehicle calibration codes and the ability to re-flash and reset the vehicle computers coupled with diagnostic information is suppose to be available to the Aftermarket for a reasonable fee.
Some words of caution on this key leap forward for the Independent sector that I received from respected competent technicians:
1. Ensure you have hard wire to the various laptop computers available throughout the bays and preferably located at the technicians tool box. Wireless is not recommended when it comes to downloading a re-flash issue. Hard wire & high speed is important as certain downloads, such as a BMW re-flash which could take up to 8 hours to complete, and the last thing one needs is an interruption due to a poor connection. A hick-up with a download could destroy a vehicle computer.........if you are not familiar with the variables in downloading information, get ready to write the cheque!!
2. Invest in high end laptops. Bargain priced low-end laptops are not the way to go for this job. Make sure they are stripped of all the software "stuff" that comes with them. You don't need interference with items to slow the process down when downloading information from an OEM website for a specific vehicle!!!! Forget the Excel, PowerPoint and all the other "software verbiage" that accompanies a laptop. Keep it simple with Windows 7 as the one feature to allow access to the internet.
3. Communicate, communicate, communicate!!! When one technician has an experience with an OEM website issue, it is imperative to stop the bay activity and take the time to call everyone over to witness and explain the experience. Everyone must see the issue live in order to learn/familiarize themselves with the various website set-ups and diagnostic issues. The old concept of "I am the only one who knows this site or issue" is wrong and will be detrimental to the shop in the long run. It must be a "team" effort and experience. Management and staff must understand the importance of this issue.
4. Be prepared for a new learning curve. Re-flashing is an important issue BUT it is not the only thing. Website information and where it is located must be learned throughout the shop and this will take a lot of time as every OEM website is different. The culture of the shop must be "exchange information when discovered, no exceptions". The internal shop strategy of everyone is an island does not hold water any more. Internal communication and everyone acting in a team format is the ONLY way that this will work internally.
5. If you are thinking you are going to get rich quick through this new information access with the ability to re-flash and calibrate vehicle computers.........you may be disappointed. Do the math. The investment will be incredible. There will be many stepping stones to be taken such as internal processes for capturing and documenting time will have to be thoroughly reviewed and mastered. This will require an investment of time and manpower to ensure we, as a sector, serve the end client/consumer competently and professionally.
The Independent Aftermarket sector is a unique division of the automotive industry. Take the time to do this right so your shop can serve the end client/consumer in the most professional manner. The shop culture must embrace the philosophy of "We will NOT let you down".
This simply means that information such as vehicle calibration codes and the ability to re-flash and reset the vehicle computers coupled with diagnostic information is suppose to be available to the Aftermarket for a reasonable fee.
Some words of caution on this key leap forward for the Independent sector that I received from respected competent technicians:
1. Ensure you have hard wire to the various laptop computers available throughout the bays and preferably located at the technicians tool box. Wireless is not recommended when it comes to downloading a re-flash issue. Hard wire & high speed is important as certain downloads, such as a BMW re-flash which could take up to 8 hours to complete, and the last thing one needs is an interruption due to a poor connection. A hick-up with a download could destroy a vehicle computer.........if you are not familiar with the variables in downloading information, get ready to write the cheque!!
2. Invest in high end laptops. Bargain priced low-end laptops are not the way to go for this job. Make sure they are stripped of all the software "stuff" that comes with them. You don't need interference with items to slow the process down when downloading information from an OEM website for a specific vehicle!!!! Forget the Excel, PowerPoint and all the other "software verbiage" that accompanies a laptop. Keep it simple with Windows 7 as the one feature to allow access to the internet.
3. Communicate, communicate, communicate!!! When one technician has an experience with an OEM website issue, it is imperative to stop the bay activity and take the time to call everyone over to witness and explain the experience. Everyone must see the issue live in order to learn/familiarize themselves with the various website set-ups and diagnostic issues. The old concept of "I am the only one who knows this site or issue" is wrong and will be detrimental to the shop in the long run. It must be a "team" effort and experience. Management and staff must understand the importance of this issue.
4. Be prepared for a new learning curve. Re-flashing is an important issue BUT it is not the only thing. Website information and where it is located must be learned throughout the shop and this will take a lot of time as every OEM website is different. The culture of the shop must be "exchange information when discovered, no exceptions". The internal shop strategy of everyone is an island does not hold water any more. Internal communication and everyone acting in a team format is the ONLY way that this will work internally.
5. If you are thinking you are going to get rich quick through this new information access with the ability to re-flash and calibrate vehicle computers.........you may be disappointed. Do the math. The investment will be incredible. There will be many stepping stones to be taken such as internal processes for capturing and documenting time will have to be thoroughly reviewed and mastered. This will require an investment of time and manpower to ensure we, as a sector, serve the end client/consumer competently and professionally.
The Independent Aftermarket sector is a unique division of the automotive industry. Take the time to do this right so your shop can serve the end client/consumer in the most professional manner. The shop culture must embrace the philosophy of "We will NOT let you down".
Thursday, February 25, 2010
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.
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.
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