What might have been, and still could be
Take a journey with me into a world of possibilities – where things could have been different from the start. Imagine this: You get the chance to start your shop all over again. What would you do differently?
The learning curve is steep, and resources may have been tight the first time around. But now, picture this — a genie appears, emerging from your favorite beverage bottle.
With a knowing smile, he addresses you: “Master of the Bays, I grant you one wish. Ask me anything about starting your shop over, and it shall be so.”
What would you wish for?
If the genie is truly wise, he might challenge you to think beyond just a simple wish with some thought-provoking questions. They’re not always obvious; think before you answer.
- “What was your biggest challenge when you first opened, and how would you handle it differently now?”
- “If you could start with one key hire who would set your shop up for success, who would that be?”
- “Would you choose the same location or is there a better spot you overlooked?”
- “What pricing mistakes did you make in the beginning, and how would you set your labor rates now?”
- “If you could attract your ideal customers from day one, who would they be?”
- “What marketing strategy would you invest in immediately instead of waiting years to figure it out?”
- “What systems or processes would you implement right away to avoid unnecessary chaos?”
- “If you had to double your revenue in half the time, what would you focus on first?”
- “How would you train your team differently to create a culture of excellence from Day One?”
- “If I could give you unlimited wisdom or unlimited capital, which would you choose — and why?”
Let’s explore the most straightforward and most actionable questions and kick a few ideas around.
MARKETING
One of the primary areas we focus on with new clients is marketing, because it is so easy to waste marketing dollars today.
A nice-looking ad in a publication or a slick postcard that reaches thousands each month can be appealing. However, in both cases, if you have no tracking in place, you won’t know whether your marketing dollars are yielding results.
We typically observe two perspectives from shops that aren’t confident in their plans: some don’t market at all, relying solely on word of mouth, while others spend a lot of money on ineffective marketing methods without allocating any funds toward retaining customers.
To make an impact, budget about 6% of your sales, with 75% of that budget dedicated to retaining your current clients, while using the rest for acquiring new customers.
Most importantly, ensure you track the return on investment for each marketing program you implement.
LOCATION
You often hear clichés about the location and the benefits of a shop situated on prime real estate. Both prime and less desirable properties have their pros and cons. Affordability is frequently a crucial factor at first; as the shop builds its clientele, it may outgrow its initial demographic. This is acceptable, as once your shop has earned a stellar reputation in the community, you’ll be amazed at how far customers will travel for a top-tier establishment.
PRICING
When first starting out, many shop owners, myself included, set their prices too low. Before you know it, you’re extremely busy, but something is missing: cash in the bank account. You may have attracted the wrong type of customer, and your hair is on fire because there is so much to do in a short amount of time.
To be profitable, you’ll need to implement pricing strategies that establish and maintain a solid labor gross margin of 75% and an overall gross margin of 62%. Improving your margins will require a plan to increase your labor rates and profit margins on parts. Having a labor multiplier and, more importantly, an effective parts matrix is essential.
Relying solely on the “dealer list” or the price of a part on a website is a guaranteed way to fall behind in parts margins. Your target margin for parts is 52%. Remember, this refers to the parts profit margin at 52%, not a markup of 52%. Do you clearly understand the difference between margin and markup?
UNLIMITED WISDOM OR CAPITAL?
On the surface, unlimited capital may seem to be the easier choice; however, in actuality, it’s all about wisdom. Do you know what to do with the money?
All you need to do is look at the cautionary tales of lottery winners. Two stories stood out as I read accounts of those who “won it big,” only to find themselves penniless years later. Jack W. won the Powerball in 2002 and hit it big, scoring $315 million. He seemed set for life. Yet, by 2016, he found himself broke. David E. took home $27 million in 2001, but by 2013, was living in a storage unit, having lost it all.
Having unlimited capital may seem like the easy path to success, but true financial security comes down to wisdom. The stories of Jack and David, both lottery winners who had it all but lost everything, highlight how mismanagement can lead to financial ruin.
TIME TO CHANGE?
Changing anything is never easy, especially if you’ve done things the same way for a long time. The journey of a thousand miles or changes begins with a single step. Taking that first step is the most crucial part.
While you’ll never have the opportunity to ask a genie for help, you can ask yourself his questions, reflect on your thoughts, and make a series of changes today and over the coming years to bring that new vision of your shop into reality. You can push yourself to reflect on your journey, ensuring that your “wish” is not just about fixing the past but about setting up a better future.
Would you like me to expand on any of these?
My journey to where I am at today has been pretty bumpy at times, feeling a lot like rolling down the interstate at 75 mph with four tires about to come apart. Looking back, though, I honestly wouldn’t change a thing. Simply because the mistakes I have made and the experiences I’ve had created learning opportunities. These challenges build us into the service professionals we are and who we’ll be, which is better with each opportunity to grow and learn.
You might never have the chance to start with a clean sheet of paper but dreaming about it just might spur you to make changes today and propel you toward your perfect shop!
Ready to take the first step from the past to the future? Contact me to discuss how working with a coach can benefit you and your shop.
Vic Tarasik has been an independent auto repair professional for more than three decades and is the former owner of Vic’s Precision Automotive in The Woodlands, Texas. He is the founder of Shop Owner Coach, a coaching and training organization that is committed to helping independent repair shop owners achieve their dreams through the intentional application of best business practices. Vic can be reached at Vic@ShopOwnerCoach.