The weather is nice, business is busy and everybody is hustling to get more done in a day than sometimes can be done. We have sore feet, sore eyes and sore backs but our ego or sense of accomplishment is somewhat restored. This is the good season to be in the automotive parts and service business.
But a danger lurks if you, like me, have diversified your business so much to get you through the slow season and you failed to realize that all of those other things you delved into are also going to boom during the busy season.
To recap my entire business: auto parts jobber; full-service seven-bay modern garage; large U-Haul dealer; pre-fab building, shed and barn dealer; and a Dixie Chopper dealer/service repair facility. All of which, except the building dealership, are designed to drive parts and service through our core business. With such an amalgamation of businesses all under one roof, your core business might begin to mutate, and take on a life of its own.
That is what’s happening with our business right now. We’ve always been a good parts store and service center, so it stands to reason that any other thing we do could possibly be considered egotistically able to achieve the same level of performance. But what happens if things break loose with a rush of business that harbors visions of the Hoover Dam bursting and you are downstream trout fishing in a rowboat? You are in for a ride, that’s for sure.
Suffering from too much business? That’s like complaining about being exceedingly handsome (I’m not, but often try to imagine). The floodgates have opened for every aspect of our business and we are struggling to keep up, and it’s my fault for being unprepared. I’m about to explain why.
Diversification, or adding business segments to an auto parts store and service center are often thought of as like adding a bucket of beef jerky at the check out register. Truly, impulse items are good profit additions, but adding a rack of key chain flashlights does not require having a person on staff that is a spectral engineer, nor does a display of disposable breakaway knives require the skills of a swordsman’s unique salesmanship.
Major additions to your business lineup should never be thought of as complimentary, quirky or niche. Major additions require an equal amount of infrastructure in regards to sales, inventory, accounting and support. And the most overlooked thing is qualified people to manage your new forays.
That’s what I overlooked as I tried to be the champion of every worthy cause. I told my wife that we now have what appears to be a perfect Frankenstein monster on our hands. The fabled monster was assembled from various pristine parts except the flaw of an abnormal brain. I’m not going to go as far as saying my complex thought patterns are abnormal, but my “bucket of beef jerky” business plan was obviously ill contrived. It seems that my wife and I can keep the unruly beast contained and capable of awesome feats of customer service. But if we are away, the villagers come to the door with pitchforks, clubs and torches when the unfettered “monster” is unleashed.
So here’s my advice on things you need to consider for diversification.
1. Your core business. Will this new thing add or detract from your core business? Certainly some things pair vey well and others are just silly. For instance an alignment shop that also offers chiropractic services really have little to do with each other, although both set things straight. Think this through or people will think you are nuts.
2. Current employee situation. Lots of things to consider here, but the main concern should be are you willing to invest in people, and equally important, the correct people to manage and operate this new venture? I am seeing more and more automotive businesses offer products that are not quite mainstream, yet within the same wheelhouse. Like me, they’ve tried to use existing personnel that are master techs or seasoned countermen to move products like chainsaws and weed eaters. Or, the owners take the new venture, and make it their pet project. I did this and Frankenstein was born. Oh, I forgot to mention, the villagers I referred to a few paragraphs above are not your customers, they are your employees that are entirely unwilling or untrained to assist in anything new. Mostly unwilling, however.
3. Your identity. If the name of your shop is Larry’s Muffler Shop, and your new endeavor is wildly successful, will you feel compelled to modify your shingle to read Larry’s Muffler and Donut Shop? I’m for keeping my same business cards, but maybe adding a few extra logos when I reorder. Your reputation will keep you sustained as some of the new widgets profit margins will ebb and flow. Keep your customer base focused, and you will be too, regardless of whatever mutation that transforms as a result.
4. Your sanity. New products require training, but diversity will bring adversity. Ordering the correct carb kit for a 70 Chevy C10 requires a skill set you already have. Ordering a carb kit for a Briggs & Stratton 5.5 horsepower might require a skill set you have not mastered, but your customer base will expect you to have it.
5. Your finances. New adventures from the start seem very rewarding because they are new. Investing in fad items, like say truck nuts, are very short lived. Early success might lure you to invest more than you will ever gain. Sustainable sales are not often instant sales and it does not matter how cool you feel about the possibility.
6. Finally, your exit strategy. What? Hacky-Sack beanbag balls, and Beanie Babies will surely corner the market on rice and irregularly shaped beans, therefore investing in a $15k inventory seems plausible. It’s quite simple, if you don’t make money, it’s time to get out, and it should not cost you money to take a hiatus. It’s a lot of fun to inject some new blood, but bloodletting is entirely different.
It’s easy to be intrigued by opportunity to hit it big on niche marketing. However, when you operate outside your wheelhouse of expertise, very seldom will you prosper for long. The only absurd endeavor worth trying is life, and proportionally absurd is the cost – death.
True, selling a ball joint with a Vera Bradley purse to carry it home in is also absurd, bordering on ignorant. Trying new things makes our existence no less absurd than should be expected, and somewhere in all of that ridiculousness, we make sense of who we are, were, and were meant to be. Parts men, service writers and techs that now use the art of feng shui when we perform a diagnostic.
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