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Succession in Real Life [AW 180]

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Bob Ward discusses the importance of early and thorough succession planning, using real-life examples of both successful and unsuccessful transitions. Bob emphasizes the need for business owners to develop their successors and to consider their employees' career goals. It's never too early to start thinking about the future of your business and who might be capable of carrying it forward.

Bob Ward, President of Wardden LLC, Look for Bob’s Previous Episode HERE. Perpetual Business Co website HERE.

Show Notes:

  • Real-life examples of succession planning [00:00:58] Bob and Carm discuss the importance of succession planning and share real-life examples of successful transitions.
  • The reality of leaving a business and the need for planning [00:04:01] Bob emphasizes the importance of not procrastinating succession planning and highlights the need for business owners to plan ahead for their departure.
  • Qualifying potential buyers and employees [00:07:21] Bob explains the process of qualifying potential buyers or key employees by discussing their desires, goals, and qualifications for taking over the business.
  • Grooming potential buyers [00:10:22] Discussing the process of grooming potential buyers and the knowledge and qualifications they need to run the business.
  • Success rate and honesty in the process [00:12:11] Explaining the high success rate in succession planning and the importance of being honest with both the owner and potential buyer.
  • Internal candidate and outside buyer [00:15:33] Exploring the role of the succession planning expert when dealing with internal candidates and outside buyers, and the different considerations for each scenario.
  • Developing the Company [00:20:12] Discussion on the importance of owners developing their skills beyond just technical expertise.
  • Qualifying the Buyer [00:21:25] Exploration of a success story where a buyer accumulated equity equivalence over seven years to purchase a business.
  • Failed Succession Attempts [00:25:11] Examples of failed succession attempts, including a candidate backing out at the last minute and a forced arrangement that didn't work out.
  • Succession planning process [00:29:43] Discussion on the minimum and typical number of stages in the succession planning process, including the development and grooming of potential buyers and sellers.
  • Starting succession planning early [00:30:27] Importance of starting succession planning at a young age, including strategies such as golden handcuffs, development agenda, and profit sharing bonuses to retain key employees and build a successful succession plan.
  • The highest calling of leadership [00:31:26] Highlighting Harvey Firestone's quote on the growth and development of people as the highest calling of leadership, emphasizing the importance of developing others for long-term success in succession planning.

Thanks to our Partner, Dorman Products.

Dorman gives people greater freedom to fix vehicles by constantly developing new repair solutions that put owners and technicians first. Take the Dorman Virtual Tour at www.DormanProducts.com/Tour

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  • Have you checked out Joe's Latest Blog?

      Auto shop owners are always looking for ways to improve production levels. They focus their attention on their technicians and require certain expectations of performance in billable labor hours. While technicians must know what is expected of them, they have a limited amount of control over production levels. When all factors are considered, the only thing a well-trained technician has control over is his or her actual efficiency.
      As a review, technician efficiency is the amount of labor time it takes a technician to complete a job compared to the labor time being billed to the customer. Productivity is the time the technician is billing labor hours compared to the time the technician is physically at the shop. The reality is that a technician can be very efficient, but not productive if the technician has a lot of downtime waiting for parts, waiting too long between jobs, or poor workflow systems.
      But let’s go deeper into what affects production in the typical auto repair shop. As a business coach, one of the biggest reasons for low shop production is not charging the correct labor time. Labor for extensive jobs is often not being billed accurately. Rust, seized bolts, and wrong published labor times are just a few reasons for lost labor dollars.
      Another common problem is not understanding how to bill for jobs that require extensive diagnostic testing, and complicated procedures to arrive at the root cause for an onboard computer problem, electrical issue, or drivability issue. These jobs usually take time to analyze, using sophisticated tools, and by the shop’s top technician. Typically, these jobs are billed at a standard menu labor charge, instead of at a higher labor rate. This results in less billed labor hours than the actual labor time spent. The amount of lost labor hours here can cripple a shop’s overall profit.
      Many shop owners do a great job at calculating their labor rate but may not understand what their true effective labor is, which is their labor sales divided by the total labor hours sold. In many cases, I have seen a shop that has a shop labor rate of over $150.00 per hour, but the actual effective labor rate is around $100. Not good.
      Lastly, technician production can suffer when the service advisors are too busy or not motivated to build relationships with customers, which results in a low sales closing ratio. And let’s not forget that to be productive, a shop needs to have the right systems, the right tools and equipment, an extensive information system, and of course, great leadership.
      The bottom line is this; many factors need to be considered when looking to increase production levels. While it does start with the technician, it doesn’t end there. Consider all the factors above when looking for ways to improve your shop’s labor production.
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