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So you own a repair shop, now what?

There are some steps to take to prepare you to push your business ahead.
Thursday, October 30, 2014 - 07:00
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Travelling all over North America, I have the privilege of talking with hundreds of service shop owners each year. I must admit though, I usually see the better shop owners as the other owners out there who seem to be preoccupied with hunting and fishing, not the ones who are too busy to deal with staff problems or who don’t care about learning how to run a business. Those others say, “That’s bookkeeper stuff; I’m a mechanic, that is why I hire a bookkeeper.”

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It is this last point that I would like to bring to your attention.

I have talked with a number of shop owners and a number of part suppliers about this issue, asking the question, “Why do many shop owners today not want to learn about the business end of their shop?” There has been a common point of view coming to the surface.

It appears the technicians who own these shops, first and foremost, are pretty decent technicians. He appears to be morally in check in that he really wants to do the job right and try to serve the customer well. He had this desire to be self-employed from a pride/self-esteem point of view, coupled with seemingly having the perception of available perks and flexibility of owning his own business. He feels that if he is a good technician, word will get out, the business will look after itself and he will enjoy a good living doing what he likes to do the most — working on vehicles in the back of the shop, diagnosing and fixing them.

Many of these shop owners will make the comment, “I don’t need management training, because I have a bookkeeper that looks after that stuff. I fix cars — that is what I do.” The shop owners I talk to over the course of a year point out the very reality of this mind-set has created the following problems:

1. All bills of the shop are not paid in full each month.

2. Accounts receivable are too high and are out of control.

3. This shop has too high of debt load for its size, a poor banking relationship and sees his accountant once a year, because “he has to.”

4. This shop runs its business first on being price competitive, second on specials and always on cheap oil changes to create traffic through the bays in order to find work.

5. This shop always will sell to anyone who comes through the door because they actually believe if sales are up, they will be more profitable.

6. This owner feels uneasy when the shop is not busy.

7. In the northern states, this shop owner looks forward to a cold winter and hot summers, which are the main ways he judges if he is going to have a chance at making some money.

8. This shop owner has a staff making more money on the weekly pay check than he does.

9. The relationship with the shop’s jobber is one of non-business communication and only one of “give me your best price.” There is absolutely no trust between the two parties.

10. This owner complains frequently about his staff as he thinks good staff costs the business money.

11. This owner loves to pocket cash jobs on Saturdays in order to have some spending money and get by, thinking he has a way of beating the government.

12. This shop is not clean, not organized, not progressive, is under equipped, under stocked and the owner seemingly blames anyone but himself for any problems the shop has.

These are all serious problems, but the fact remains that they have nothing to do with diagnosing and fixing vehicles. They are all caused by the owner not really understanding how this business should be run today. Keep in mind that back in the 1980s, this sector of the industry made money despite ourselves, and if Dad made his money back then and is insisting that the business be run the same way, then in the end, the new owner will just end up buying himself a job, or potentially go under, and create tremendous financial hardship to the family. This isn’t worth it, and it would be better to sell the business, get rid of the stress and go work for someone else where he will be in a situation of making a fine living without the financial risk associated with this business today. 

The final point that creates this overall problem seems to be personal ego in the sense that the owner feels he was not that good at math in school, and might not understand the real business end of things that would lead him to be put into an embarrassing situation in front of his peers in that business management class. Any professional business management instructor who did that would be out of business real fast. 

There will be a number of shop owners who read this and say the writer doesn’t know what he is talking about, but please remember one thing: Your peers that mentioned this stuff to me, I’m just reporting to you.

Weak independent shops are affecting the very livelihood of independent shops around them. It is time that all independents talked with each other and figured out that maybe learning “how” to run this business would be time well spent in order to create a better personal lifestyle, less stress and a better overall operating shop for this entire sector.

As we close another year, perhaps it would be prudent to make the effort and take a chance at this “business management stuff.” There are many courses available within our industry. Check with your jobber and your industry associations, as they can find out what courses and where they are available. Consider that “excuses are the nails that build the house of failure,” and perhaps it might be worth it to make a resolution this New Year to be a good listener for once, as your ears will never get you into trouble.

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