Why COVID-19 could improve your business

May 27, 2020
Our response to COVID-19 will matter to our businesses, our employees and will shape the recovery in the months and years to come.

This article is being penned early in the U.S COVID-19 pandemic while under a shelter-in-place order. The length, scope and effects of COVID-19 are projections currently. My hope for all is that by the time this article prints, most of this pandemic will be behind us. As this pandemic runs its course, it is important to remain focused on positive outcomes.
 

Our response to COVID-19 will matter to our businesses, our employees and will shape the recovery in the months and years to come. Covid has temporarily disrupted and halted many nations economies. This has caused massive hardship for businesses, employees and families. To minimize the effects of these events which are beyond our control, we must remain focused on improving both during and after this pandemic. COVID-19 has provided businesses the opportunity to adapt, change and improve to create a better version of themselves. The rate at which the change needs to happen may be very uncomfortable, but with the right focus successful business owners will adapt rapidly to stay viable during these tough times. There are three key steps owners and managers can take to improve.
 

The first step is to know and understand the business’s overhead and break-even point. Without clearly understanding monthly, weekly and daily costs will make it nearly impossible to remain profitable in a tumultuous time. All costs need to be analyzed for necessity and size. Businesses will find that some expenses that were tolerable under normal business volumes are now unnecessary expenses in challenging times. Implementing spending controls will help to control the outgoing flow of cash and liabilities from the business. This can require realignment of job duties and new restrictions on who can make purchases of parts, supplies and equipment. Cash control and flow will be critical to continued viability. Once costs have been analyzed and the necessities have been separated from the niceties then break even can be calculated by taking total overhead costs and divided by total gross profit percentage.  This will provide the sales dollars required to reach break-even. This is important as COVID-19 has disrupted miles driven and consumers willingness to interact with people outside of their homes. Some MSOs have projected a 40 percent to 50 percent reduction in sales during the pandemic. The important point to realize is that as volume decreases, the amount of sales per job required to reach breakeven increases.
 

The second action is to refine and reinvent how shops interact with the consumer. Touchless services have emerged as the early adaptation to this situation. Sending digital authorizations and accepting online payments are two early examples of adjustments made to serve the consumer. COVID-19 will continue to provide shops the opportunity to change how and what they communicate to their customers. It is just as important to have digital documents as it is to have digital presence communicating your business’s status to the market. COVID-19 has brought uncertainty to consumers and outgoing communications must reassure consumers that the business is open, adapting and a viable option for them. Consumers will choose a business that demonstrates empathy with their situation, provides direction on how to conduct business safely, and instills trust for them to take a risk in a public interaction. Social media, text messages, emails and personal phone calls will all have their place to reassure an uncertain public that getting their car repaired is a safe choice. Shops will also need to focus on capture rate and customer retention. During normal business times, moderate capture rates were acceptable. However, in the face of a recession, capture rate will make or break a business. Shops must evolve their methods and services to ensure that nearly every customer that comes to them, repairs with them. Simply selling the estimate and scheduling the consumer will not guarantee success. The customer must be reassured and comforted from estimate through drop off. Failing to create a solid post schedule sales routine can lead to attrition and lost sales.
 

The third action businesses must take is to be in the moment. There is no definitive road map for how this pandemic and the byproducts it produces will affect consumer behavior or the economy. Strategies implemented early in the outbreak may not suffice through the outbreak. Success will hinge on owners, managers, and employees being ready to change and adapt quickly. Those that are slow or resistant to changing processes, expenses, or communications will not fair well going forward.  
 

COVID-19 has presented everyone with a challenge. It is the response to this challenge that matters. Those that view this time as lost sales, and an economy in a recession, will miss the moments available to them. Moments to be uncomfortable. Moments to analyze financials. Moments to value customers. Moments to press the throttle wide open and emerge on the opposite side of this remarkable life event stronger, better and more grateful than ever before.

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