Will Your Repair Shop be Here in 5 Years?
When was the last time you thought about your retirement? If you're like many small business owners, you may not have thought about it as much as you should. In fact, a study conducted by Manta finds that one-third of small business owners don't have a plan for their retirement at all. Can you imagine working your whole life, only to get to retirement age and realize you don't have the money to stop working? Don't let this happen to you and your repair shop. Make sure that you have the systems in place to keep your doors open for not only the next five years, but until you're ready to leave—and maybe even beyond.
It all starts with you. As the business owner, you're the one who needs to make the plans for the future success of your shop. Many diesel repair shop owners find themselves caught up in the day to work of the shop, rather than planning for future growth and profit. These are the businesses that fail. If you want your business to keep its doors open, you need to be the one to guide it. You can manage this by setting goals and creating the necessary systems to maintain a steady or increasing profit. Even mature businesses can fail without proper systems and oversight, so make sure that you and your repair shop are on the right track!
The following infographic lays out some steps you can take:
What is Your Goal?
Set a goal. Figure out what your shop needs to be making for it to remain open each year, thinking at least a few years ahead, but ideally keeping in mind the time when you want to leave the business. Having this goal listed out will give you something to work toward, a solid reason to try and keep the doors open every day. Your goal might look like:
To have a repair shop that makes X dollars per year so that I can sell the business, or retain ownership and earn passive income on my retirement in X years.
Who is Responsible?
Think through how your shop is organized. Remember that you as the owner can't do it all. Consider what kinds of work needs to be done in order to achieve your profit goals. Odds are, you'll need an accountant/bookkeeper to let you know where you stand profit-wise, as well as some kind of office staff to interact with customers. And of course you'll have your shop crew—your parts and/or service advisor and technicians—who do the work to bring in your profits. This would be just a basic staff, with obvious room for additional employees, depending on the size of your shop. You might want to hire someone to handle marketing for the shop, or an office manager to run the day-to-day. Regardless, each employee should know who they report to directly to help the shop run smoothly and move toward stable profit. Clear communication is vital. This particular goal should involve every one of your employees, all working together to keep the shop open and profitable.
One of the most important things is making sure that each job has a defined role—and this includes you as the owner/CEO. When everyone knows what they're responsible for, it's easier to ensure that everything gets done. And know that you can't do it all yourself. Set your goal and lay out what each employee will need to do in order to help achieve it. How many quotes will your service writers complete? How many customers will sales need to convert? How efficiently will your technicians need to work? That is your job as the owner, to think about the business goals and how to achieve them, rather than making sales or turning a wrench yourself. You need to end up with a profitable shop that can still operate when you're retired.
How Are You Going to Measure?
Since this particular goal relies on profit to achieve, you'll want to plan the measurements to match. Our past series, the Profit Boosting Boot Camp, describes 10 key metrics to measure to help boost your repair shop profits. These would be good numbers for you to track as you work toward consistent profits in your shop. This way, you'll know if you're hitting your goals, as well as areas to work on if you're falling short. It would also be good to decide who is responsible for reporting these numbers to you. For example, do you want each technician reporting on their productivity directly to you? Is your accountant or sales person responsible for preparing a report on your profit margins? Ensuring that everyone knows what they're responsible for makes sure that you're getting all the reports you need.
Developing the habit of tracking these numbers will allow you to know if your business is secure, or if some other action is needed. It also falls within the role of the business owner to monitor these numbers and plan accordingly.
What Systems Need to be in Place to Make Your Goal Attainable?
To properly ensure that you are moving toward your goal, it's important to have systems in place. Systems lay out exactly how tasks are to be completed and make sure that everyone does it the same way. This brings a sense of uniformity to the shop, as everything should be completed the same way each time, to the same level of quality. If properly put in place, your shop should be able to run without you looking over everyone's shoulder.
When systems aren't set down, chaos can occur. It leaves room for your employees to interpret what you want and decide on their own which things should take priority. It becomes hard to do any kind of quality control, as it's impossible to pinpoint exactly where things went wrong.
So just what kind of systems do you need and how do you go about putting them in place? For this goal, it will probably involve systems for the majority of your shop. For instance, you'll want systems similar to the following:
- How customers should be greeted when they entered the shop: This can go a long way to retaining customers, and there should be a universal way your front office staff is trained to greet and interact with customers
- How quotes should be written: If your estimates are uniform, it's easier to ensure that nothing is missed. It also makes it easier for the customer to understand what's being quoted to them, as well as the salesperson to sell it. (This is especially true if the service writer is not the one who interacts with the customers directly).
- How each job should be performed: This includes where tools should be put and any other seemingly small details that will help your shop run more smoothly.
- How reporting should be done: This way, you know how and when the reports should come to you, and your employees know exactly how to give you the information.
This is by no means a comprehensive list of all the systems you should have in place, but that depends on your business size and company structure. In many cases, the above list could be broken down into smaller items to suit the needs of your business.
As you begin to systematize your business, you might find yourself thinking that there is simply too much to lay out in systems yourself. And you would be right. Creating systems is not necessarily something you need to handle on your own, especially when your employees are a valuable resource. You can have them do a lot of the leg work for you, writing out their work processes. Then, you'll only have to tweak and approve to set a shop system, rather than having to write it out for yourself. And by having your employees help write the processes, they may be more likely to follow them. They'll feel less like a command from on high and more like collaboration between you and them. In the end, you all win. You get a shop that you'll be able to retire from when you need to, and they get a great place to work for years to come.
What Kind of Review Process Should I Have in Place?
It's one thing to set up systems, but you also need to make sure that they're working for your shop. That's what makes metric and performance tracking so important. If you’re employees aren't meeting their personal goals, or your shop isn't profiting as projected, you should take a look at the systems you set out. At what point is it beginning to fall apart? Once you identify that, you can work toward a solution to fix the broken system and get your shop back on track.
To aid in this review process, it would be good to have meetings with your staff to make sure that processes are still being followed and to hear what is going right and wrong. It also keeps you in touch with the shop. Just because you aren't doing the repair work yourself, your employees should still know you as a presence.
Following these steps should set you on the path to build a business that lasts. You'll be in control of the direction it takes, and able to know whether or not you're making enough money, not only to keep your doors open for the next five years, but to allow you to retire when (and if) you're ready.
If you're looking to make more money in your repair shop, check out our Repair Shop Value Program. It can help save you money on the parts you already need!