News: Consolidator Report
If you want your shop to have a long (and profitable) life, it needs to periodically see a shop doc.
Today in the medical profession, the trend is to be more preventative rather than reactive. Why? Because it costs billions of dollars less to prevent illnesses rather than to treat them.
The preventative approach in medicine often includes proper diet, exercise and timely checkups. Proper diet means the correct balance of vitamins, minerals and calories, while reducing the bad fats and garbage we have a tendency to consume. The exercise keeps our bodies operating as they should for as long as our genetics keep us going. Then, checkups are performed to periodically evaluate how the first two are doing. During these checkups, tests are run to make sure physical health is continuing in a positive direction.
But this preventative approach isn’t just for our physical health. If you want your shop to be as healthy and profitable as possible, you also need to take a preventative approach by performing periodic business health checks. Why? To improve your sales offering. Do you provide what your market wants? Do you have a sales attitude that people in your market want? Are you easy to do business with? This can mean location, appearance and attitude.
And then there’s the technical aspect. Are your techs qualified, trained and committed to do it right the first time? Is your equipment up-to-date and maintained? Do you use efficient processes to stay competitive? Is there communication throughout your organization so everyone knows what to do and is committed to doing it? And these are but a small sampling of preventative measures you can take.
I should note here that a health check is very difficult for you, as the owner, to perform yourself. A business owner is too close to the business problems to often see the real problem. For this reason, I’m going to focus on some of the symptoms a sick shop will feel and experience – hopefully prompting you to get help before it’s too late.
Illnesses that Sneak Up on Your Shop
Many potential illnesses can befall every business – all requiring the attention of the owners, managers and business product/service providers. Everyone involved must make sure the business is healthy in each of their responsibility roles. The list of potential sicknesses needing attention is also much larger than most business owners believe or realize.
The easy operational ones in our industry are the parts, metal, paint and detailing departments. Most collision shop owners understand the importance of these areas, plus the ones that are related, such as mechanical and structural.
However, many other areas – if not attended to consistently – can put a shop that “fixes cars great” right out of business – just like a broken back or a heart attack. And these are the areas that many small-business owners overlook or downplay until it’s too late.
Poor sales, negotiating skills, estimating practices and paperwork documentation can cause cholesterol build up, increasing your shop’s chances of a fatal heart attack. This can be a slow process where profits and cash flow decline slowly but steadily or the trigger for an immediate heart attack due to the removal from work provider programs representing a large percentage of your total sales.
Poor sales practices are some of the easiest to identify but often difficult to cure. There’s a stubborn virus called the “I’m not in sales” affliction that affects front-desk personnel, estimators and even some owners. Yet without the sale, there’s no need for anyone’s job. We’ve provided improvements in this critical area so sales increase and paperwork flows better. Improvements begin with implementing a process of how the customer will be greeted (telephone and in person) and handed off to an estimator, how the follow-up throughout the process should be handled and how to deliver the vehicle to the customer.
Also, poor accounting, marketing, compliance, capital investment, training practices and a host of others can cause what appears to be a “healthy” business that knows how to fix cars better than anyone else in the market to contract a minor cold (leading to pneumonia) or an inoperable brain tumor leading to certain death in a short time.
But it doesn’t have to happen this way – if you practice preventative medicine and properly diagnose the ailments.
For a small-shop owner, the number of areas they’re responsible for is often too overwhelming to handle. This is why there are imaginary, but real in the eyes of the business owner (patient), imposed boundaries for business management, change and growth. Those levels, which do vary somewhat, often take place for annual sales dollar levels around 1.2 million, 2.1 million, 3.5 million and 5 million.
In the first two boundary levels, the shop owner is often trying to wear so many hats that he either limits himself and tries to stop the growth while micro-managing everything, or he lets the business get out of control and ignores the symptoms.
This is where diet and exercise can help. In our case, education and training can better prepare the business owner to prevent the illness in the first place. Establishing management levels and giving them the authority to operate are critical for the health of the business.
Business owners often try to wear all the hats themselves, believing this is what being in business for themselves is all about. But it’s not. Hiring the right people to do areas of the business you can’t possibly do yourself is the first step in curing this specific illness.
Often shop owners at these beginning levels also can’t relinquish enough control to allow others to perform their jobs. They also often hire poor management-level personnel – so as not to feel threatened or inadequate. They also often hire people who don’t have the correct skills to perform the job tasks required. For example, many times the daughter, wife or other relative is hired to do accounting but knows nothing about accounting. Or the son is in customer service and doesn’t wish to do what’s necessary to provide proper customer service. Or a friend is hired to do parts but doesn’t have the detail-oriented skills to properly manage parts.
I’ve also seen personnel who aren’t empowered to make any decisions. Everyone has to wait until “the boss” comes in. Often the people in these positions are like “beaten” puppies – they won’t make a decision because in the past, every time they did, they got reprimanded or embarrassed by the owner.
How many shop owners seek out financial, management, human resource and communication training programs on a regular basis? How many in our industry look for a business coach or support to expand their business and review their health?
Not very many.
Yet there are many types of shop docs out there, just as there are a full range of medical doctors – specialists who range from good, OK and to various levels of bad. The illness symptoms that are exhibited by each shop can easily be misdiagnosed by doctors who aren’t versed in the scope of the illnesses and viruses that cause them.
It’s easy to tell someone he’s sick, but how to cure it is a different level of medicine. When you have a fever, it’s often an indication of an infection. To take an aspirin may lower the fever but doesn’t battle the infection – it only addresses the symptom and not the cause. It’s important to do what’s referred to as a “root cause” analysis so the medicine doesn’t only affect the symptom.
This is often the case when financial data is used as the only source for the business health diagnosis. This type of analysis only considers the symptoms showing up in financial figures (figures that usually haven’t been validated for accuracy or normalization). It’s always best to verify what’s actually happening in the shop that’s causing financial illness symptoms. This type of analysis compares to the forms you fill out at the doctor’s office and the nurse taking your temperature, heart rate and blood pressure – all before the doctor does the actual health check.
Then, simply by asking the owner where the pain is will begin to direct a doctor to finding a cure for the immediate pain as well as for the real problem. It’s like a person bleeding from an artery entering the emergency room. If he states he has a bad headache, the doctor needs to stop the (life threatening) bleeding before administrating the Tylenol.
So how do you, as the shop owner, go about finding the “right” shop doc?
The first step is to contact your paint company’s value-added program. Even though this is a first step and what’s normally offered is only a beginning treatment, it’s a start.
Then you need to find someone who you feel comfortable with and has the industry experience to provide the needed support for your challenges. Interview them and ask how they’ll structure the relationship.
Is the direction that the consultant (doctor) is proposing the same direction you want to go?
Weed through the “sales” to identify to what degree their involvement will be. Too often, doctors out there want to provide just aspirins to problems that really should require surgery.
The Real Cure
Analyzing your business’ health properly takes a balanced approach. Without it, the analysis won’t provide real solutions for your specific shop’s business problems. Many of the basic illnesses are as rampant as the common cold but are unique in that they morph into countless variations. And patients want “miracle cures” to resolve all their tough issues in one easy dose.
Unfortunately, there are no magic solutions to keep any business healthy – just like there are no perfect pills for weight loss and a host of other inflictions. The cure takes a regimen of treatment based on the true causes of the problems.
The problems often resemble an onion – as each layer is peeled away, a new layer is exposed. This is uncomfortable to many (and many may become impatient), but the commitment to the cure provides the best approach to nursing your shop back to health.
A vital part of the cure is often getting the owner and senior management to believe in the solutions (cure). Dr. E. Goldratt authored a book a number of years ago titled, “The Goal.” The book’s main characters were management personnel of a manufacturing plant, as part of a larger corporation. The concepts of the book outlined an innovative system of process improvements called, “The Theory of Constraints.” (These concepts have revolutionized the manufacturing industry and have made their way into our industry as well. My next industrialization article will address many of these ideas.)
I’m paraphrasing here, but basically, even when the doctor knows the cure, the patient must want to be cured and commit to what it takes to become healthy again. Goldratt also provided a method to introduce his cure to his patients and described the process as “The Six Layers of Resistance.”
The 6 Layers of Resistance (as Paraphrased by Me)
Implementing anything new in a human system unavoidably involves overcoming the resistance to change. Theory of Constraints (TOC) and its Thinking Processes are ideally suited to the challenge. In fact, a process for how to induce people to change is a foundational part of TOC. The 6 Layers of Resistance, also known as the “6 Steps to Buy-In,” encompass that process.
We doctors (consultants) see this on a daily basis when working with clients, but it’s equally important for you, as the shop owner, to understand what to expect from the doctor and what you’ll feel during the process if you really want to change your organization.
Layer 1: “You don’t understand our problems.” As the shop owner, you must have faith that the doctor does know the problems you’re facing. Otherwise, you’ve selected the wrong doctor.
And if you’re going to implement any solution that involves your staff, they, too, must believe in what you (and the doctor) are proposing and must believe that you both understand their challenges.
Once this area has been dealt with, you’ll then likely say something like this to your doctor: “OK, you do understand our problems, but …”
Once you succeed here, you’ll likely say to your doctor, “OK, you understand our problem and we agree on the direction of the solution, but …”
Once your doctor has provided you with supporting evidence for the level of results, you’ll then likely say something like …
And if the solution is going to have some negative side effects, everyone needs to take them seriously and the doctor needs to use this information to, if possible, design an even better solution.
However, this may also very well mean that the person you’ve had in charge of a specific area of your business is the wrong person and, hence, is going to have to go. This is also true if the problem in the metal shop is a specific metal man, etc.
Once these issues have been dealt with, you might find yourself saying …
In fact, once the systems are in place, oftentimes it will be you, as the owner, who first finds himself “not needed.” This can be a very good thing to some owners, but for others, it’s the main reason they don’t work toward improving their systems. They need that feeling they’re needed – that they’re the central figure of their business.
After shop owners overcome this layer of challenges, however, many still don’t move forward with the changes. Why?
To quote a famous phrase: “We have nothing to fear but fear itself.”
You must reexamine at the reasons your business isn’t performing the way it should and weigh the outcomes for making the necessary changes. Even though this logical approach rarely overcomes our fears, it can provide us with some justification for moving forward.
Is Your Shop Sick?
There are health checks, education, training, coaching and other support services to keep your shop in tip-top (or in this case, top-shop) shape. You just have to take the time to look.
We’ve worked with shops worldwide on sales, production, marketing and financial business illnesses. All aren’t life threatening if you catch them early enough. And with regular check-ups, exercise and a good diet of education and training, the business can continue to grow strong – and more profitable.
You see, the challenges of our business today are no longer if we can repair a vehicle properly (even though there are many who still can’t do that). The challenge is to understand how to keep the business healthy.
Contributing Editor Tony Passwater is president of AEII, an international consulting, training and system-development organization specializing in the collision repair industry. He’s been in the industry since 1972; has been a collision repair facility owner, vocational educator and I-CAR International Instructor; and has taught seminars and worked with clients across North America, South America, Australia, Malaysia, Korea and China. He can be contacted at (317) 290-0611 or at [email protected] Visit his Web site at www.aeii.net for more information.