Finance Strategy+Planning

Planning for Growth

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Thorough planning is essential to every business in every industry, including automotive service. It’s impossible to achieve your goals as a shop if you don’t have a clear path to do so, says industry consultant Larry Edwards.

Edwards, the founder and president of Edwards and Associates Consultants Inc., is a 44-year veteran of the automotive industry, having lent his expertise to everyone from major manufacturers like General Motors, Ford Motor Co. and Honda, to independent mechanical repairers like you.

Edwards spoke with Ratchet+Wrench about the importance of formulating a specific plan to generate growth in your business.

First off, it’s essential to understand what you need in your plan. Before you can use it, you need to have all of the important elements covered.

Step one is understanding the current state of your business.

You need to know your market, your competitors, the benefits your competitors claim to have, their prices—all of it. You’re not going to copy them, by any means. What you’re doing is getting an understanding of where your business sits in your market. You have to be aware.

Then you look at your own shop: Who are your customers and what is your market share? What is your shop’s capacity and its utilization?

Once you have this understanding of where your shop is, then you can plan for where you want to be. Now, you have to decide what percentage of the market do you want, what types of work do you want to sell, and if you can realize that market share, how many dollars worth of revenue will it be to your shop?

You use your marketing and merchandising activities to reach these goals.

By marketing, I’m referring to everything your shop does to attract customers—advertising signs, a guy standing on the street with a sandwich board. Those are marketing activities.

Merchandising is all the activities that a shop owner employs to encourage customers to purchase additional goods and services once they arrive. That would be things like maintenance menus, tire displays, parts displays, all of that.

From those overall activities and strategies, you develop your individual tactics. This is everything from your signs to the way your employees dress to the way your shop looks to the displays in the lobby. It’s all of it.

When you rough out that business plan, it’s good to sit down with your employees and map out where you are as a business, where you want to go, what your goals are, what your vision is, and get their input and their feedback.

Then you have to establish some realistic and attainable objectives. How many more repair orders? How many more dollars of revenue? They need to be measurable objectives, quantifiable objectives, so that you can know if your plan is working or not working.

You have to be careful in how you set your goals, though. Let’s imagine that we’re coaching high jumpers rather than running a shop. As the coach, you get to decide where you’re setting the bar. Now, you can set it so high that no one ever gets over the bar, and they all feel defeated, or you could set it so low that everyone can jump over it and declare themselves the winner.

What great managers do is they adjust the bar to a level that everyone can achieve, and then continue to raise the bar to a level that the bottom five percent of your employees can’t achieve.

If you’re setting goals that your lowest employees can achieve, then you’re only going to be as good as your lowest employees.

Now, the big mistake that shop owners make is that they don’t keep score. A business without a scoreboard might as well be a T-ball game. You don’t know how you’re doing and where you stand, and you just try to make everyone happy.

When you have clear objectives, you need to have a scoreboard, and I literally mean a physical scoreboard somewhere in your facility. You need to post individual production, company-wide production and all of the key performance items that are crucial to your business and important to meeting your objectives.

For whatever reason, business owners like to keep their employees in the dark. They want to be like the Wizard of Oz and keep everything a big secret. They’re afraid to share the results. They’re afraid that employees will be unhappy, or feel too pushed, or want a greater share.

But great leaders are the ones who share all of the good things and all of the bad things.

And the last thing to remember is that when these goals are completed, when you meet these objectives, you have to celebrate it. It can be just a pat on the back, or it can be taking employees out to a steak dinner.

You have to show them that they did it, that they completed the goals. If they can’t see and understand the finish line, then the goals never truly get met.

And, once you’ve met those goals and reached that point, you turn right back around and set that bar a little bit higher and start all over again.

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