By Nevil Jay
I'm currently looking into a business acquisition. It's a wheel repair shop based in South California. I have questions in terms of profitability and also, the expenses involved within the business.
I have profit and loss statements of the business. They currently operate 24/7 and have 30-35 employees. I am looking for someone who has experience in this sector that may be able to give me some unbiased advice. I also wanted to somehow come up with a valuation of the business. It operates out of a leased building, but consistently profits the owner a large amount of money. Who should I look for to verify these numbers? Will any CPA be able to understand?
Thanks in advance,
By Joe Marconi
It was a busy Friday morning when Tom called me for an update on his vehicle. I let Tom know that his car would be ready at the end of the day. There was a pause, and then he blindsided me with this, “You know, Joe, I did a little research on that water pump you’re replacing on my car. I can get that same part for $30 less. Why does your part cost so much?” I fired back at him by saying, “That’s impossible; it can’t be.” I went on and on attempting to defend myself, but I could tell I wasn’t getting through to him. After a few more words back and forth, Tom finally said, “Look, you started the job, so you might as well just finish it.”
You’re probably thinking Tom went online to check the part. Well, this happened in 1980, my first year in business, and years before the Internet, as we know it today, even existed. Tom simply called a local part store. The parts store gave him a discounted price and then figured he would challenge me.
Consumers checking your prices is nothing new—it just got a whole lot easier these days with the world wide web. Now, let’s clarify one thing: I am not going to tell in this article that there is a foolproof way to train consumers not to go online to check your prices. However, what I can tell you with certainty is that if you continue to feature products and not the customer experience, you are telling people to please check your prices.
Consider this: You’re out to dinner and you ask the waiter for the wine list. As you scan the list, you recognize a brand and then look to the right at the price. Do you Google the bottle of wine to check what you could buy it in the store? We all know that a $10 bottle of wine in the store can cost well over $40 at the restaurant.
Here’s the bottom line: The restaurant is selling more than wine and food—it’s selling the customer experience. And if all goes the way it should, we pay for the meal and the bottle of wine, even when we know the wine is priced higher than we could purchase it at the store. And, we are OK with it.
Our business is no different. We need to focus on the experience, not the products. Yes, we install water pumps, control arms and radiators. But, that’s not our main focus. Our focus is on the value and the benefits of doing business with us. Now, with that said, there’s a delicate balance between being competitive and being profitable. But, as value goes up, price becomes less of an issue.
Here’s the difference between our business and a product-driven business. When you buy a product—let’s say a watch or a cell phone—the experience lives on long after the sale. Every time you put on the watch, or use your cell phone, you are continuing the experience. And if the product is high quality, the experience gets reinforced over and over every time you use it. With auto repair, in most cases, what we do, does not live on after the sale. Once a customer leaves with a new timing belt and water pump, there’s not much about that repair that lives on in the eyes of the consumer, except the customer experience. Your entire sales process—your marketing, the look of your shop, the people you employee and every aspect of your business that the customer sees—must tell the customer that what you sell is worth the price.
Let’s remember one thing: Your prices will be challenged from time to time. So, here are a few more tips. Get the right training for your service advisors, especially in the area of customer service. Make sure your marketing and advertising communicates your brand and your culture, and please be careful with discounting. Claims that you have the best price on tires or brakes only results in consumers checking online to see if that’s true. Highlight your warranty, which has a lasting impression on the customer. Above all, communicate the benefits of doing business with your company.
Let’s get back to Tom. After 39 years, Tom and his family are still customers. I have to believe it’s because Tom appreciates the level of service we have given him throughout the years and the relationship we’ve built. Tom has learned what Warren Buffet has often said, “Price is what you pay; value is what you get.”
This story was originally published by Joe Marconi in Ratchet+Wrench on May 1st, 2019
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By Hands On
I need to find some employees fast and I am having no luck, anyone willing to help me write an advertisement or help me with postings, over the phone or through e-mail, please let me know.
Just found this, not feeling good about this.
By Joe Marconi
I have never met a shop owner who didn’t have the desire to be successful. People go into business with dreams of changing the world and to make a positive influence in the industry to which they have dedicated their lives. They’re devoted, sacrifice time away from family and, at times, drive themselves to exhaustion—all in an effort to become the best they can be and make their mark. However, all too often, something happens along the way and the business begins to suffer.
While shops owners may start their business with passion and vision, they tend to create a world in which everything revolves around them. When the business is small, the owner pays careful attention to every detail. Every car is repaired with the highest degree of excellence. Quality time is spent with each customer and a bond is created, which gets stronger and stronger as the years pass.
As the business begins to grow, the owner realizes that the amount of work to be accomplished each day is overwhelming and hires more employees. Everyone is working, but not necessarily with the same culture the owner has. They do their job, but they are not really aligned with the goals and vision of the owner. The shop owner continues to work on his or her skills, learning everything that is needed to run a successful business. After a number of years, the shop owner becomes skilled at running a shop and proficient in nearly every aspect of business, except one: the area of people. And that is when the downward slide begins.
The owner recognizes that, in spite of the dedication to excellence, things are not right. The shop owner has established the goals of the company and put everything in place. Everything is attainable. But it’s not working. Frustration sets in, and it’s not long before the owner begins to complain about the lack of performance and drive from the employees, which is the perceived root of the problem.
Well, the root of the problem is the owner. We all know that running a business is not a walk in the park, but if your business is struggling, you, personally, are struggling. If your people are not performing the way they should, then you are not performing the way you should. Granted, there are employees that are a problem, and if that’s the case, they need to go. But even superstar employees will turn sour under poor leadership.
There are endless issues and problems you encounter each and every day, and some of those problems are out of your control. But, excluding a cataclysmic event, you can trace most of your problems back to you. You are the shop owner, you are the leader. The strength of your business begins and ends with you. Given two equally talented ball teams, the difference between winning and losing is usually leadership.
Employees need to know you care about them. The people you employ have vision and goals, too. Not the same as yours, but real nonetheless. One of your jobs, as leader, is to align their goals with yours.
We throw this leadership term around a lot these days, and for good reason. It’s the most powerful skill you have in terms of getting the results for which you are looking. The horrible truth is there are too many bosses and not enough leaders. Anyone can be a boss. Bosses order people around. And people will follow, but not for the long term. A leader motivates others by understanding what drives the individual. A leader gives credit to others, never seeking gain at the expense of others.
Next time you walk through your shop, pay attention to the mood of your employees. Are your employees laughing and talking to each other? You know, having a little fun at work. Do your employees look to engage in conversation with you, or are their heads buried under the hood of a car as you pass them by? Even worse, does everyone stop talking when you are around? These are signs that your employees are not engaged, which means they are not aligned with the goals and vision of the business, and you are not aligned with theirs.
A leader finds out what’s important to others, and works to help them achieve it. Aligning the goals of the individual with the goals of the company will achieve great things. When employees are respected as people, they become motivated and perform at their best; not because they are told to, but because they want to. This is the highest form of team spirit and becomes your driving force toward success.
This story was originally published by Joe Marconi in Ratchet+Wrench on October 1st, 2018
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By Joe Marconi
We know the value of technical and sales training, but what about in-house training. What I am referring to is review policies and procedures. By reviewing in house written procedures gets everyone on the same page, improves production and also improves quality in the repair process. A simple process such as everyone following the same procedure for a cooling system problem will add to the overall shop's production and in the long run procedure a better quality job.