Adjusting to today's economic challenges

June 22, 2016
When the economic cycle changes to a downward trend, we must re-examine the business as to how to increase productivity so we can still create a bottom line.

We all know the aftermarket is changing and that topic is well discussed; however, economic times have dramatically changed in many regions of this country as well. When the economic cycle changes to a downward trend, we must re-examine the business as to how to increase productivity so we can still create a bottom line.

Clearly remember the following:

  • You cannot discount yourself into prosperity.
  • You still require the right staffing level to maximize productivity.
  • A slash-and-burn approach to expenses can create service levels to drop dramatically, which in turn affects your client satisfaction and business image. We know 95 percent of business expenses within a shop are fixed or common sense expenses required to maximize net income.

These are always three big challenges during tough economic times.

The tendency to lower labor rates or discount jobs in hopes that it will drive more business does not work over the short or long term because a message has been sent to your clientele that works totally against the business. Remember, you pay all bills out of gross profit dollars and working 50 percent harder to create the same dollars can kill the attitude of you and your staff. The math does not lie.

In the ’70s and ’80s when there was an abundance of potential staff to bring in to the shop, layoffs during slow times were common. If people left, we just brought others. Today’s realities have proven that we must retain competent people every day. Without the right staffing level, you cannot maximize the right productivity level to make the bottom line required. This also demands that management’s time is more focused in working in the business rather than on it.

Slashing expenses is a common trick out-of-touch shops try, and then they wonder why their service levels drop, they can’t afford required equipment, training or important business services and customer complaints start to roll in. The message here that shop owners must remember is that expenses can be reviewed to see if a better value for the same service is possible; however, ensure you are comparing apples with apples and not apples with oranges. Also examine what “relationships” are you leaving behind to spare a few dollars. Take the total money you think you would save and divide it by the monthly average of your last six months of labor hours billed. Then take that answer and divide by the number of days you are open per month to give you the daily increase in billed hours required.  

Solutions are available

1. Review with the team the shop’s reality in productivity terms. What is causing productivity to drop? Is accountability in check? Key in on all of the key shop processes required to maximize productivity.

2. When your clients are cutting back on services or declining more work, ensure you have the conversation on their vehicle safety and reliability issues and document what you told them. Then when the item does become an issue, you cannot be accused of not informing them. You must maintain their trust in the shop, and your credibility. To achieve that, document, document, document!

3. Work to attract new business with a focus on service and quality. When you focus on price, you attract price-focused people. You lose in the end because they are not profitable. You want service and quality at the right price.  Distinguish what makes your shop unique in these tough economic and changing times.

4. Is your attitude positive and optimistic, or are you negative in your language, tone and body language? Have that talk every morning in the mirror about the person you want to be. At night, think of three positive things that happened to you that day. Slow down and take control of your thoughts instead of allowing the negative people to influence you.

Notice how much of working on the business still requires your personal discipline to be in check? When you end up running around, things really start to go wrong for you and within the shop and the tendency of pointing the finger starts over again. You know better but sometimes you must be reminded — here is your reminder! It’s time to get back and work ON your business.

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