Working to maintain adequate business performance today while endeavoring to grow to keep up with rising costs can be a business owner's toughest struggle. The greatest challenge in achieving both goals can be in deciding which areas of business need special attention for the moment and how to give that attention adequately.
The performance of any business largely relies on maintaining balance in a combination of 4 key components: skillful staff, adequate work environment and equipment, efficient resources in vendors and effective financial management. Having any one of these four out of alignment is tampering with the potential our business has to meet expectations.
Although financial management was listed last, it was the first on the list in opening the doors of your business and mine, too. Some may argue that skillful staff (beginning with their own expertise) was the original key, but, money was the resource that funded the tools to attain that expertise. Vision always precedes financial investment and financial investment always precedes expertise. Basically, we haven't experienced too many adventures in our past that didn't somehow, at some point, involve money.
Something I share with colleagues and students regularly, having learned it years ago in considering my customers and the goals I had for them and me, ''Without money, nothing happens and without customer satisfaction, nothing happens for very long.'' Attaining both is so crucial to the success of any business that I continue to emphasize the importance of both priorities - we must have money and we must have customers.
Several times each year, in a variety of locations, I present a training course that keys to analyzing the profit structure of the independent repair shop. Shop owners are given individual attention during the course as we work through the financial structure of their business. It gives each an opportunity to define their expectations for their business and explore its potential based on the current performance of key components. Plugging certain information about the shop's performance into formulas that help owners calculate their alignment within its present structure will reveal any that need special attention to improve. Of course, step two is the other half of our ultimate goal for this course for these shops, deciding the strategies for achieving that improvement. For each shop owner there, the areas needing attention will different.
One common misconception always confirmed at the start of this course is the belief shared by the majority attending that 'shop rate equals true flat rate'. As owners plug real information into key formulas, the greatest percentage of them continue to be enlightened by the difference in what they've believed the business performance has been and what it truly is. That's usually the bad news. The good news comes when they see how do-able the needed changes are for them to make a difference in how their business responds to their efforts.
If your business continues to fall short of profiting enough to meet the demands of expense, you may want to take the time needed to make these same simple calculations about it. I have the worksheets available to assist you by calling my office.
Do you need to revisit your business structure and explore the areas that appear to be burdening its profitability? To help you decide, consider the following statements and mark each True or False.
T F I accomplished all that I set out to last year.
T F My business performed the way I needed it to these past 12 months.
T F The business provided all that was needed to each shop member.
T F I did not struggle to pay the bills again.
T F I did not lose good employees to others willing to provide benefits that I could not.
T F I did not lose money on misdiagnosis from lack of updated equipment and training.
T F The climb to pull ahead does not seem to be constantly uphill no matter what changes I make.
T F I was not forced to put needed savings and investments on hold another year.
As you ponder solutions to the challenge of your business performing to your expectations, remind yourself of this fact: just as life's experiences help define the things that we cannot count on, they also educate us about the things that we can. Unfortunately, many of the things that we learn we can count on are truths that simply confirm that some challenges will always be exactly that! For those truths, we must learn to accept them as such and work to convert a seemingly negative impact on our business to one that is positive, instead. For instance, several truths that experience teaches us is how we can depend on the vehicles we service becoming more complex but customers not understanding that complexity; how costs will always increase year after year to produce the same work; how finding and retaining good employees will always consume a fair amount of our energy and always for the sake of our customers and business goals; how the level of stress in owning a business may fluctuate bad to not-so-bad but will never go away completely (and the list goes on!).
This seems like the appropriate spot to pose the most important question: Are you fully prepared to consider every change that you learn your business needs to see or would you rather try to stay comfortable with the idea of skipping some of the changes needed to see if that will do? Remember, we talked about this in the beginning, how it's up to you, and here's the defining question.
To some, the word, CHANGE, congers up an ugly picture but, for the auto repair industry, the reality is this: the one thing that has remained constant is change and so must we. If fact, this industry changes at a rate so rapid that we hardly have time to catch up! There's not time enough to be paralyzed with the idea of 'wish I could make more money at this, I know I’m worth it. I’m dedicated, compassionate, and really want everyone to win, me included'. We have only enough time to understand how imperative it is to have good, working knowledge of our business and its operating costs and acting on that knowledge.
Today, equally as important as the technical side of business is the educated understanding of the money side, too. No guessing or assuming or conveniently hovering just above or below your competitor's price, hoping to make enough money to pay your own bills. When it comes to meeting needs fully, the basis for our increase must always begin with an accurate minimum and you may be surprised at what you need every month just to keep the doors open.
I recommend that you calculate your shop rate at least 4 times a year or any time you make a major purchase. Calculating correctly can be tedious but never really difficult, and always be honest and accurate with your numbers or risk not making the money you need and deserve! Again, I will be glad to help you with the formula for determining true Flat Rate. Please call to schedule a phone consultation.
Full details about ESI’s Professional Business Development training and support programs can be visited at www.esiseminars.com, dedicated to teaching specific strategies that assist professionals and their workstaff in achieving maximum business growth. Renowned instructors and industry consultants, Maylan Newton, Ray Kunz and Ray Warner, are available to bring courses to anywhere in the nation