Are You Positioned to Profit?
How is your shop stacking up to the competition in your market? When was the last time you really hit the books and checked?
Specialization is on the rise. I’m not talking about the transmission, or muffler, or diesel shops you knew 30 years ago.
Sure, those are still around. But today’s specialty shops are focusing on specific brands and models. That’s where the industry’s moving. And it’s not just so those shops can get a handle on all of the latest technology in the cars hitting the road these days (although it doesn’t hurt). And it’s not just because they happened to have a tech with top notch specialty training and experience on staff. It’s because they did their homework.
We’ve all heard the saying there are riches in niches—not only can you grow, you can grow quickly. You can concentrate business on a brand that’s been turning profit, narrow down shop processes and market your new clear expertise.
And that all sounds great on paper, but specializing isn’t viable for everyone. You’ve got to be positioned for profit. Of course, every business wants to be set up for success right out of the gate, but before you narrow down your business with a specialty, you have to know what you’re banking on and how you’re going to back up the business.
As it’s explained in Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renee Mauborgne, you have to find your blue ocean, the part of your market that’s untapped and has yet to be claimed. A red ocean is filled with sharks on the hunt—your competition—leaving blood in water. Blue ocean is free and clear leaving you plenty of space to roam and grow.
To find that blue ocean, you’ve got to dig in and take a long, hard look at your environment , which means asking those big data-driven questions. Questions like: What room is there for growth in your current setup? What is the low hanging fruit in your market? What are people driving and how is that changing in your market? How many of those cars are on the road this year? How many are expected to be on the road in five years? How many Euro or Asian or other specialty shops are you up against? How many general repair? What brand or dealer is doing a poor job in their service dept? What are people bringing to you and asking you to work on? What specific repairs are you seeing over and over again in your shop? How often exactly?
Finding that blue ocean means knowing your specialty will be worth the risk. You’ve got to know your market like the back of your hand and understand how your shop’s going to line up with the demographics influencing your potential customers.
These are factors every shop owner should have tabs on, whether considering a specialty or not, but they take on new meaning the moment you dive in and decide to specialize because you have to be ready to tread water.
You’ll have to start saying “no” to jobs—jobs that were bringing in a profit but no longer fit your new business model—in order to start growing your new clientele. Business will slow down. You’ll freak out the moment you have a bad car count. You’ll think you’ve made a horrible decision and begin to question your every move. A great book that explains this concept is The Pumpkin Plan by Mike Michalowicz.
It’s that homework, that market research, that you’ll need to lean on through those growing pains. With a business model pivot like a specialty, you’ve got to stick it out for at least a year or two to give those investments in tools and training and marketing a real shot, but if you’ve found your blue ocean, if you know you’ve set up shop in an untapped market, you can have faith and settle in knowing you’re not going in blind. You may be diving in, but you did your research. You’ll know you jumped into a 10-foot pool, not a shallow pond. There’s plenty of untapped potential out there if you know where and how to look.