In the current economy you have two basic choices. You can agree with the naysayers and believe that there will be a couple years of recession to ride out, it is going to get worse, and there is nothing you can do—or you can decide to ignore the recession and take positive steps to maintain and grow your business. That’s right, I said ignore the recession… let me explain why.
When you started your business how many people told you it wouldn’t work, you shouldn’t do it? Did you listen to them? NO! You rolled up your sleeves and built a business of which you are very proud. It’s time for you to revisit the basics.
a. Know Your Metrics
A metric is an indicator of how your business is progressing. Some great indicators are number of calls, invoice count (car or unit count), sales, gross profit, hours per repair order, parts to labor ratio and customer satisfaction.
b. Monitoring Your Metrics
Monitor your metrics more frequently and review your progress more often than usual. Think of it as zooming in on the detail. Look at things by the week instead of the month or by the month instead of the quarter. Don’t wait for the results to play out, look early and often to allow for proactive course corrections to keep your business on target.
2. Customer Service
Now more than ever, provide excellent customer service. Who determines the level of your service? Your customer does! Ask them how you are doing and what can you do even better to help them during this difficult time. And then respond accordingly within reason to meet their concerns. By all means let all customers that gave you feedback know what changes you are making to help them out.
We are seeing more and more questions about employee engagement during this economic downturn. People are nervous, scared and unsure right now, including your employees. It is your job to keep your employees positive, helpful, focused on the customer and results oriented. No matter how hard you plan, layoffs may be necessary but don’t make the mistake of laying people off too soon. Remember that this recession will end and people are hard to find, especially trained people who know your business. Instead entertain the idea of temporarily cutting back on wages and/or reducing hours per week with the entire staff (including you).
4. Be Profitable
Make sure your business model is a profitable one now! Too many times we start coaching a client to find that their business is geared up for a level of business they haven’t yet achieved causing them to make at best minimal profit and more likely lose money. Don’t grow to profit…be profitable now! Review your business model and staffing to ensure profitability at your current level of business. Then develop a plan to increase your volume and add staffing as volume requires.
5. Cash Flow
Cash is king! Make sure you’re not spending more than is coming in. Take your fixed costs (expenses plus technician wages if paid hourly or salary) and divide the amount by the number of days open in the month. This is your daily breakeven amount. You need to generate at least that amount in gross profit every day to stay positive. It won’t take long when you dip below your breakeven amount to start losing capital and, if unchanged, possibly going under.
“Good times, bad times, there will always be advertising. In good times people want to advertise; in bad times they have to.”
—Bruce Barton (1886–1967)
The first expense cut is typically the marketing or advertising budget. This is the worst place to cut back. In the short term there is no adverse effect, in the long term it is disastrous. We recommend reviewing where the marketing budget is being spent and measuring the results. Every piece of marketing should include a call to action; small businesses shouldn’t be trying to build a brand. Marketing that isn’t bringing in an acceptable return should be reworked or scrapped in favor of other avenues. Your marketing budget should be 8% of sales minus rent to maintain your current volume of business and 10% of sales minus rent to grow your business.
7. Think Outside the Box
Don’t follow the herd mentality and wait for outside circumstances to change your business. After speaking with customers, use their feedback to improve your operation (within reason of course). Separate yourself from your competition, making it a no-brainer knowing where to bring a vehicle for repairs. Is a dealer closing in your area? Prepare an ad that positions you as the repair solution for that particular carline. Is an independent closing? Call the owner and offer to purchase his customer list and develop a letter together you can send to his customers. Create non-competing strategic alliances. Is there a business that you frequent that has customers that would value what you have to offer? Would your customers value what he has to offer? Develop a letter that he sends to his customers recommending you with some type of offer extended. Return the favor by sending a letter recommending him to your customers.
Look at other industries for ideas that can add value and help build your business. The best advice that I can pass along to you is that you should develop a plan with a crystal clear desired result and then ACT on it! Don’t get stuck on working the original plan until it produces the results. The plan may need to be modified along the way to get the desired result. But the result stays the same. Waiting until you have the “perfect” plan is not possible and ill-advised. You will never think of everything. As Dwight D. Eisenhower said, “The plan is useless, but planning is essential.”
Attitude is so important, especially now. It is vital to your business that you stay positive. Be realistic but don’t let fear take hold. With steadfast determination you will get through this current season of challenge and come out on the other side stronger. You need to feed your attitude daily by reading books on positive attitude.
9. Get Help
There are times when a business owner can’t see the forest through the trees. A business coach can be a great investment providing an objective viewpoint, help ground the owner focusing him on what is important and developing next action steps. This process allows you to determine your goals and needs and then build an action plan for getting to your desired results.
Rick White is a managing member of One Eighty Business Solutions (180BIZ), a Virginia based coaching and business solutions provider to the automotive and truck repair industries. For more information, email firstname.lastname@example.org or call (540) 833-2014.