The Long and Winding Road to Profitability | November 2019
Running a profitable shop isn’t as easy as opening the doors and tracking the right KPIs. How you navigate slowdowns dictates the future as much as anything else.
Speed Zones. Safety Areas. Construction, construction, construction.
No matter where you drive, the state has a different name for the same result: deceleration and slowdowns. Frustrating but inevitable, there’s often no way to avoid them to reach your destination.
It’s not any different in business, but the consequences of a slowdown—for any reason—are a little more dire. You can plan for vacations, family leave and opportunities such as staff training and industry events that bring you out of the shop, but what do you do when factors outside your control affect your monthly net profit? What do you do when the tachometer of your business starts mirroring the one in the dashboard when approaching a slowdown, and the gears of your business don’t churn quite as quickly?
Pedal to the Metal
“That’s the time to attack,” says Chris Cotton, former shop owner and current founder of AutoFix, an automotive coaching service that helps repair shops and tire companies “move the needle” forward.
Cotton says that many shops believe cutting back is the right solution when factors dictate a slowdown, but that’s the opposite of what you should do.
“Shops cut back on marketing and sometimes cut back on hours, and that’s not the time to do it,” Cotton says.
“You have to be forward-thinking and moving ahead and attacking instead of sitting back on your heels. Be in attack mode instead of pulling back the reins.”
In Oklahoma, Cotton owned Community Auto Repair for more than eight years before discovering that coaching was more interesting work for him. Now, instead of fixing cars, he helps shop owners fix their businesses, moving the needle toward increased profitability. During his tenure as an owner/manager, Cotton made the same mistakes against which he now advises.
“I got sucked into that trap too,” he says, “and I didn’t have as much free cash as I thought or needed; instead of advertising to bring in more, I pulled everything in, and it cost me in the long run.”
“That’s not a mistake you can make in business very often.”
Like many shop owners, though, Cotton had a business mentor in the industry who was able to help him learn from his mistakes (and if you don’t have one, get one). Cotton’s mentor helped show him that big companies move slow by necessity, and that small companies are neither burdened by that overhead nor have the luxury of waiting for the next quarter to turn things around (See sidebar “How to Create a Marketing Calendar”).
“If you’ve been in business for more than a few years, you should know when lean times are coming,” he says.
“You need to get your marketing calendar in place in the summertime; if you’re worried about car count in November in November, you’re already too late. Use November to plan for January, February and March.”
Embrace Local Businesses
and Community Events
In Waukee, Iowa, one of the ways Willard Garage engages the community is through social media. Facebook has been a favored avenue to reach potential customers.
To make it fun, owners Brian and Peggy Willard invite people to “like” and comment on Facebook when they have gift certificates or tickets to give away. During the Iowa State Fair in August, they gave away four admission tickets. During Mother’s Day they gave away a $50 gift card to their local-owned coffeeshop, and for Father’s Day gave away a $50 gift card to Waukee Hardware. When the new movie theater opened, they gave away two movie tickets.
Building positive relationships is important to Willard Garage. Along with social media, they enjoy following up with each customer after their repairs or services are complete. Brian and Peggy believe it’s important to thank clients for choosing and trusting Willard Garage for their vehicle care.
Every Day a Data Point
“In 2014, I was struggling,” says Gregg Cheshire, owner of Cheshire Automotive (Merriam, Kansas).
“Then I started looking at my business on a weekly basis instead of waiting until the end of the month, and that changed everything. When things are trending down, I can put my finger on it before hitting bottom.”
Cheshire remembers thinking the formula to profitability was easy (“You fix cars, and people give you money,” he says.) But success isn’t built on a simple exchange of legal American tender; sometimes it takes a little American spit ‘n’ vinegar.
“If you’re not keeping track of your daily and weekly, you have nothing to go by. You might know it’s a little slow, but you don’t see the data,” Cheshire says.
Cheshire immediately takes to the phone when the numbers dip. He calls customers with open tickets or if he has suggestions for maintenance; sometimes all it takes is a change of seasons to get them into the shop (See sidebar “Short-term Plans for Long-term Profitability”).
“When you make a phone call and can address them on a first-name basis and know about their vehicle, it changes the equation,” he says. “You’re not talking about their car; you’re talking about their family. It made me look at it in a whole different way. I was only two weeks in when I started seeing results.”
Cheshire also depends on his marketing calendar, despite “going into the 21st century kicking and screaming,” he says, with a laugh (the motto of Cheshire Automotive is “Old Fashioned Service, New Technology”).
“I have an email list with my clients and that’s the biggest way to connect. We also do postcards, and on Facebook, I try to stay positive and lighthearted,” he says.
As Cotton and Lake say, find the approach that works for you.
How to Create a Marketing Calendar
According to Laura Lake, author of Consumer Behavior for Dummies and former writer for Small Business, a marketing calendar “assists you in launching your marketing vehicles...using a structured and thought-out manner so that nothing is forgotten.”*
The marketing calendar should:
Address your needs. Look ahead to the next quarters and identify seasonal opportunities that align with your products and services. This will help provide a base for your marketing messages in line with your brand.
Be specific. Spell out promotions and events. Include the known cost and update afterward to assess how successful the promotion was. This will help you plan future promotions and hone your marketing know-how.
Be consistent. Be sure to vary and document the means in which you market, whether it’s through social media campaigns, radio spots, events, mailers or email campaigns. Spread them out in a reasonable manner according to your needs to avoid a marketing “feast or famine” effect.
*”How to Create and Use a Marketing Calendar Effectively, thebalancesmb.com, July 31, 2019
Short-term Plans for Long-term Profitability
There are many ways to work on your business every day that will affect its long-term viability. At your next staff meeting, ask what the service team or management is doing today to push the business forward. If your team needs ideas, here are a few simple strategies to attack, attack, attack.
Implement a Social Media Plan.
Social media isn’t as simple as creating a Facebook or Instagram account, snapping a few photos and clicking “share.” Do a little reading, see what appeals to you from other business accounts, and create a simple social media calendar. Remind your customers why you offer the best service with the savviest technicians and work with the friendliest staff.
Take a Shop Walk.
How well do you know your shop? Can you see it through your technicians’ eyes? Take a stroll two or three times a day a few times each week (or every day) if you aren’t usually in the bays or front office and try to see your shop for the first time, every time. Is it clean enough? Can your technicians move quickly and easily? Are you utilizing the space in the best way possible? A small winter construction project is a great way to re-brand for spring.and to let your staff know you’re always striving to make their jobs easier.
Make a Checklist.
It’s remarkable how something as little as a checklist can change your business. Is your front office dirty? Make a checklist. Do your technicians always know where to find the right tool? Add it to the checklist. Can you leave work on Friday, arrive on Monday and know the status of every repair immediately? Checklist. Adhering to a checklist yields proactive habits to increase efficiency and revenue, which will make everyone happy.