Advancing technology, increased competition and the squeeze on customer spend are just some of the obstacles we all face in these somewhat turbulent times, but there’s a real opportunity to rise above the competition and increase a loyal customer base through transparent business practices, continual knowledge and skill development and going the extra mile. In each issue of Autotechnician this year, we will feature technical and business advice to help you stand out from the crowd.
It’s fair to say that running a repair workshop is not as straightforward as it was once was, where mechanical fixes were the bread and butter of workshops, the most basic of repairs now require electronic adjustments and coding to instruct relevant modules of their presence. While vehicle technology continues to evolve at a pace, and game changers such as the widespread adoption of hybrid/ electric vehicles and autonomous vehicle repair looms on the horizon, a skills gap widens, as technicians face the challenge of gaining the knowledge and skills to fix the latest vehicle technologies. Throw increasing competition from vehicle manufacturers trying to claw back post- warranty repair into the mix, and the increasing use of online job bookings and reviews, and you could be forgiven for thinking, is it really worth it?
But every cloud has a silver lining. On our travels, we have met workshop owners nearing retirement age that have given up trying to keep up, but we also know of many others who are doing very well, embracing the shifting landscape. They regard these challenges as opportunities to stand out from the crowd – by becoming early adopters of hybrid and EV repair, masters in diagnostics, providing preventative maintenance services or going the extra mile with customer service. In the coming issues, we’ll focus on individuals who are looking to make a positive difference to their business by focussing on training and skill development, investigate the growing trend of sharing knowledge, once fiercely held onto for fear of helping out competitors, and the strengths that can be absorbed from being part of a network.
We start by looking at the basics. We ask Andy Savva, aka The Garage Inspector, who has helped many independent workshops develop their businesses, what areas workshop owners/managers should consider, or those looking to start their own business, when looking to stand out from the crowd. “I would encourage garages to answer the following questions to give them a basis on which to structure their offering:
Who are my competitors?
What services do they sell that compete with me?
What price do they charge for these services?
What type of customer am I trying to attract?
What is our unique selling point, or points?
Is our offering clear to our customers?
Can I honestly deliver what I claim?
Getting to grips with a workshop’s finances, and Key Performance Indicators, is vital when setting labour rates. Andy stresses the importance of understanding the value of the products and services you provide…
FINANCIAL UNDERSTANDING IN THE GARAGE BUSINESS
Once upon a time, conventional wisdom suggested that if there was money in the bank account at the end of the month, things were going reasonably well. Bookkeeping and accounting were fine, but only for accountants. Servicing and repairing vehicles were for garage owners and technicians – people like you and me.
In a world of compressed and declining margins, what was good enough for our predecessors will not be good enough for the competitive and ever challenging business climate you and I face today and certainly not good enough to sustain an efficient garage business in the future. Understanding your numbers – especially the Key Performance Indicators (KPI’s) that tell you at a glance just how well or not so well your business is doing – is CRITICAL.
The demographics of most garage businesses up and down the country have been born out of good technicians who really have the skill set in repairing vehicles all of sudden owning a garage business.
Most don’t have the skill set needed, the business acumen to apply skills needed, in marketing, customer service, operational management, reception management etc. And, why should they? There is no qualification needed, unlike Germany, where you would have to undertake a 3-year graduate programme before you can manage or own an independent garage business.
The garage business like most other service businesses is all about raw materials and finished goods. It’s all about commerce – the exchange of goods and services for the compensation of one kind or another, in our case revenue. It’s about creating value, adding value, and creating services and products that we can sell for more than what they cost us, in order to make a profit. Isn’t that what business is all about? Is profit something to be ashamed of? Is it a dirty word?
The only commodity that a garage sells is labour, we can call it skill, time, knowledge. Some may argue that we also sell parts, well we may do; however, we don’t have control over these purchases, these are by-products of what and how much labour we sell. More to the point most garage owners and managers fail to recognise the value they add to the process in terms of service, skill, competence, quality, reliability and ability to respond to customer wants, needs and expectations.
CALCULATING YOUR LABOUR RATE
So, what happens is that garage owners set their labour rates because it’s the going rate in the given area. The only thing we sell, our only revenue stream, which we decide the value of by plucking a figure from the sky.
Consequently, garage owners who don’t realise or understand the value of the products and services they provide are subsidising the cost of repairs with unrealistic low prices. Almost every problem this industry of ours faces – acute shortage of trained qualified technicians, the lack of interest in automotive services as a viable profession as youth chase those white-collar jobs, the technological advances in vehicle design and the absence of succession planning or exit strategies – is the result of an inadequate revenue stream for both the garage owner and his or her employees.
So, what do we need to know? I believe you cannot manage a garage from underneath a vehicle in today’s increasingly competitive marketplace. You have to adapt to managing the business rather the business managing you. Having the ability to reflect the health and strength of your business at any given time or a specific period is crucial for your success.
For most garage owners, each day is simply a matter of one foot in and one foot out, focusing on a daily dose of crisis management and damage control. I know, as like you, I have been through it many times. The problem with not knowing your figures is simple: good numbers are critical for good decision making and bad numbers certainly lead to the wrong decisions being made.
Your numbers and accounting are only useful if they are used as a means to an end – a catalyst to change your behaviour, your processes, your attitude, in order to change the direction of your business for better financial performance in the future.
It wasn’t really very complicated for me, even in my early days, as I realised how crucial staying on top of my day to day data capture was to my success. I made sure it was complete and relevant to what I was trying to measure, whether productivity and utilisation of my technicians, to my labour and recovery rate, or even knowing that every labour we sold gave us approx. another £18 profit on parts.
Take a moment to think about the financial reporting that you currently have, which KPI’s you use. Are they comprehensive enough? Are they providing you or your bookkeeper what they need to know? Where do the numbers come from? Are they accurate, and more importantly, do they help you plan for the future or merely represent something that occurred in the distant past?
Think about how much time you spend learning and understanding the KPIs and what they are trying to tell you. Determine whether or not your financial professional is helping you to understand these numbers more clearly. Start the journey right now and I can assure you, your garage business will benefit.
KNOWING YOUR WORTH
Tony Marco of Mountgrove Garage in North London believes standing out from competitors is down to building trust with customers and charging a rate that you are worth.
“Everyone is looking for new customers and it’s easy to sign up to a marketing campaign that promises you more clients but, in my opinion, there isn’t a quick fix. This is where some workshop owners go wrong; it takes years to build up a relationship with a client and our focus is to maintain our reputation in the area.
“We take pride in our work and client satisfaction is key; first impressions count, so we make sure the workshop and office are clean and tidy. It’s not always about the money, I’m not saying to work for free or even cheap because they’re not the kind of clients you need to run a successful business. What I’m saying is charge what you are worth. Our prices are set to cover our overheads and leave us with some profit and the customers don’t feel like they have been ripped off.
“I think communication is everything. We always explain what the car needs in layman’s terms with an idea of cost, we don’t just carry on working away thinking that the client will pay no matter what – they may pay, but they won’t be back. Most people that come into the garage don’t know if the parts that you have said you were going to change have been changed, but when they feel for example that the handbrake has been adjusted, windscreen cleaned or even the clock has been set to the correct time, the client will feel that someone has actually taken the time to look at their car.
“It’s important to have an invoice that’s easy for the customer to understand. I’ve seen some invoices that the client has handed to me and it isn’t clear on what has been done. Ours are in plain English with a complete breakdown on what’s been done and what future work we recommend.
“There are a few big chain garages in our area who charge less than us but sometimes the quality of parts they use are just not up to the standard we like. People often come to us and ask “How much is it for a service? They charge £xxx down the road?” After we give them our price, which is usually higher, we explain that we use higher quality parts and that we test drive the car etc. Over the years we have built up a reputation of only using quality parts, if you don’t, you can end up doing the job twice and the client being dissatisfied. News of bad workmanship travels fast.
“A few years back we decided to build our online presence by asking clients to leave reviews. We have almost 91 five- star reviews and a lot of these were customers that decided to come down and give us a try purely on our reviews.”
GOING THE EXTRA MILE
Tony Powell runs AP Autodiagnostics from Catterick, North Yorkshire – the first company to offer a mobile, seized injector removal service within the UK & Europe.
“I have in the past literally gone the extra mile. My company AP Autodiagnostics, based in North Yorkshire, has travelled all the way to the south of France to remove and replace seized diesel fuel injectors, and there’s been several trips to Jersey, Inverness, Plymouth and Northern Ireland, in fact, anywhere we are needed. My customers were happy to pay for the travel costs – there are a limited number of companies who do this work and even less prepared to travel and my reputation won out. They found our services online and by word of mouth.”