Sales & profits down? Time to revisit the basics!

Motor,  Feb 2003  by O'Connor, Bob

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Most shops today report that car counts are down and repair order averages for those vehicles that are coming in are plummeting. Shops that maintain or increase their sales and profits in tough economic times all have one thing in common: They understand and monitor the basics of their business.

The general automotive repair industry has been rapidly changing, due mainly to the advancement of technology and a significant increase in competition from other segments of the industry, including franchises and dealerships. Combine the increase in competition with the current economic downturn, and operating a profitable business becomes very challenging for many and impossible for some.

What should a repair shop owner do? Return to the basics. Implementing basic business procedures usually pays off handsomely for most shops. Let's take a look at some areas that can help a shop's bottom line.

Company Leadership

It's imperative that shop owners involved in the day-to-day operations clearly demonstrate a positive outlook for both the industry and their business. They should exhibit an upbeat attitude, which often makes employees feel good about their jobs, their place of employment and their customers. If an owner speaks negatively about the business or the industry, some employees may show a lack of enthusiasm when work does come in, and even seek employment elsewhere.

Don't let your staff mill around with nothing to do. It makes the days seem longer and often leads to depression that can very quickly spread like a virus throughout a company. Instead, make sure your staff is kept busy doing productive work, even if it doesn't generate income. Servicing equipment, reorganizing workflows, taking inventory, cleaning and other such tasks can be fulfilling and help maintain a positive attitude.

Staff Skills

Take the time to review your training program and budget. Competition dictates that shop owners employ technicians who are at the top of their game. Therefore, you should assess the skills of each of your staff to determine which skills need to be either acquired or honed.

Before you perform an assessment of your technicians' skills, you first need to determine the makes and types of vehicles your shop currently services, as well as the types of maintenance and repairs that are performed on them. Then match the skills needed to perform the work against the skills currently possessed by your technicians. This will tell you who needs what training.

The position of service advisor is one of the most important positions in the shop. This person is solely responsible for every sales dollar and every gross profit dollar earned by the company. Depending on the technicians' compensation plan, the service advisor may be responsible for their earnings, as well.

In many smaller shops, the owner often assumes the role of service advisor. Unfortunately, in most instances, he doesn't have the training to maximize sales and gross profits. Frequently, the owner is hesitant to sell the work for its full value; that, of course, will keep profits down.

To be a viable competitor in this industry, unless an owner is very skilled in sales and customer relations, he should hire a service advisor and continuously invest in that person's training. A service advisor must possess advanced selling skills (telephone and face-to-face), people-handling skills and communications skills. Without such a person, the business could suffer-in some cases, drastically. For more detailed information regarding the service advisor position, refer to the article "When to Add a Service Advisor," in the June 2001 issue of MOTOR.

Sales Procedures & Tools

Sales are the core of every business, and to maximize sales, a business needs to follow established procedures and use the right tools to make the process easy and efficient. The major sales-building tools in the auto repair business are vehicle inspection forms, maintenance menus and diagnostic information resources.

Our organization performs hundreds of repair order audits each year, and we frequently find low-dollar repair orders. These shops have the inspection forms but fail to utilize them on a consistent basis. Most repair shops have access to OE maintenance menus but are reluctant to use them to sell services. So, if your shop does sell maintenance, you'll be providing something your competitors don't! Implement more basics by reviewing your sales procedures and forms. Require your staff to consistently perform vehicle inspections and recommend OE required services.

In addition to following proper procedures and using inspection forms, a review of credit policies and types of payment is appropriate. Make sure you accept as many different types of credit cards as you can, and that you implement 90-day/12-month same-as-- cash programs. The more credit options you make available to your customers, the more they'll spend, thus increasing your average repair order.

For more detailed information regarding sales procedures and tools, refer to "Building a Profitable Repair Order," in the March 2001 issue of MOTOR.