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Shop management skills are a development process

Thursday, March 1, 2018 - 08:00
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Shop operators from coast to coast are experiencing challenges like no other era ever seen before in our industry.

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Consider the level of development of vehicle technology over the past five years. Consider the change in vehicle service intervals. Consider the cost of diagnostic equipment to even begin the process of entering and sustaining this profession. Consider the technical skill level required today to be on the shop floor. Consider the uninformed consumer who doesn’t truly understand its complexity. Consider the change in vehicle sales mix with the dramatic increase of import vehicles and the decline of the North America brands. Consider the lack of supply of larger facilities which are required to provide the shop the space to hold more equipment then ever required before in the history of our industry to meet complexities of vehicle service. Consider the longer period of time required to properly diagnose and service the vehicle to manufacturer recommended standards. 

The shop business has changed drastically, yet it is not being acknowledged properly within the industry. Every level of the industry still talks about the desire to drive more “sales.” The commodity side of the industry has the loudest voice and spends the money on marketing that screams to shop owners “more activity” and “make more sales with our products and programs" and "be price competitive.” The commodity side of the aftermarket does not seem to understand at all how the shop business level has really changed and the need to address the real shop issues called “productivity” and “sustained individual client relationships.” They seemingly give this issue lip service only, without substance supporting or backing up their words.

Step back and consider the following: The manufacturer, warehouse distributor and part suppliers are in the commodity business, and they require volume sales of their products to survive with full payment. All their marketing displays their desired results. The service provider, however, is in the knowledge business and does not require the commodities to survive to the same extent, but rather requires proper billed hours at the right rate to survive and prosper. The service provider owner is not getting exposed to, or taught, the real issues of his/her shop that ensure proper net income is achieved and retained, allowing them to grow, prosper and enjoy a rewarding professional career. Instead, shop owners are approached by the commodity side and sold on the idea to attend and listen to a presentation that is 1, 2 or 3 hours, or a 1- or 2-day seminar that preaches more sales, more vehicles to service, more activity. These are “motivational” or pep talks only and do nothing to teach the shop owner proper business acumen and best business practices. The shop owner is never introduced to his/her own numbers and allowed to work with them and clearly understand what they mean. 

Can you separate the fact from fiction?

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This is an absolute tragedy within our industry.

Consider that high percentage of shop owners who have high school level education as their last year of formal education. From there, they worked very hard, paid the personal price and achieved the designation of holding a technician license. They are knowledgeable about the vehicle and the best shops have a concerted effort in place to stay on top of this issue. However, one must ask, “Where were they taught how to read the balance sheet of their own business? Where were they taught how to measure and manage their current business properly? Where were they taught the difference between mark-up and gross profit? Where were they taught the workings of shop site efficiency and its effect on the bottom line? Where were they taught how to manage gross profit and measure net profit? Where were they taught how to create a shop team through personnel development? Where were they taught the costs of accounts receivable and the 'cancer' it can give a business?”

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