Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Tue Feb 05, 2008 4:20 pm Post subject: Auto Repair and The Titanic
Studying many classic disasters it is clear the result was not a matter of a single mistake. Rather many factors combined to cause the outcome. For instance the Titanic was traveling faster than proper for the conditions. The night was unusually dark and the sea very still. They had under-appreciated the iceberg warnings and so on. One mistake built on the next until there was a catastrophe.
The failure of the auto repair business may not match the scope of such a disaster, but is devastating to those involved. Also, the failure of a business is often the result of several mistakes and a mis-interpretation of the warning signs. For instance, a business begins to have several “slow days.” This is a warning, for some reason the business is no longer generating enough sales. Rather than accept the warning as a call for action, many shops begin to look for causes outside of their control.
For instance: [how often have we heard]
It must be a cycle, people are just not buying.
The economy must be the cause.
My area is depressed, because of unemployment, high debt, over spending, interest rates . . .
In any case, none of these factors are within the control of the business. The market has changed, does it really matter why? What matters is, how will the business respond to put itself back in a position of service to the client. If most shops in a given area are slow, clients are saying, “I no longer want what you have to offer.” I think, lowering prices, is avoiding the warning and will not help for long. The cost of all shops in a given area will be roughly equal. One shop will not be able to lower prices substantially enough to be much of a factor over time.
Specializing in a particular make, model or service is again, missing the warning sign, in my opinion. This may offer temporary relief by lowering some cost. It also has the effect of limiting the market and making it more difficult for clients. If this were the answer, it seems dealerships would be doing very well. In fact, even with there other advantages, many are struggling.
Instead time might be better invested, figuring out what offering clients want and are willing to pay for. This will not likely be learned by studying the competition. It is also not likely to be discovered by asking the client. Any client a business has obviously wants what the business offers, or does not know that better exist. Answers might better be found by observing non-clients. How are people meeting their personal transportation needs and why?
People do not want auto repair. They want a way to get where they want to be, with a minimum of problems and at the lowest overall cost. Shops that cannot demonstrate why their service is what people want, might be wise to start looking for the lifeboats.
Joined: 19 May 2007 Posts: 206 Location: Camp Verde, AZ
Posted: Thu Feb 07, 2008 10:24 pm Post subject:
I find it interesting that you use the word demonstrate. Demonstrate is an active word, it is not passive, it has feet to it. In order to demonstrate something a person had to get up and get going.
We have to be proactive in letting clients know why we are the best choice. Do we believe we are their best choice? It is hard to demonstrate something we do not believe in ourselves.
Observing non-clients to find out how they are meeting their personal transportation needs is an interesting concept. It needs to be explored further.
_________________ David Wittmayer
Owner / Manager
Hansen Enterprises Fleet Repair, LLC
Camp Verde, AZ
www.hefrshop.com
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Fri Feb 08, 2008 6:55 pm Post subject:
Hi Dave,
Dave wrote:
I find it interesting that you use the word demonstrate. Demonstrate is an active word, it is not passive, it has feet to it. In order to demonstrate something a person had to get up and get going.
You are precisely correct. When we tell people something they may or may not accept it. When we demonstrate the principle, they are far more likely to accept it.
If you don't mind I would like to email a chapter from my book on this topic. I would like you to read it when you have time and let me know what you think.
Dave wrote:
We have to be proactive in letting clients know why we are the best choice. Do we believe we are their best choice? It is hard to demonstrate something we do not believe in ourselves.
This is an excellent point! And if we don't believe it, will our staff believe it? How will the client believe it?
Dave wrote:
Observing non-clients to find out how they are meeting their personal transportation needs is an interesting concept. It needs to be explored further.
I see this as an open invitation for everyone to contribute their opinions . . .
Joined: 19 May 2007 Posts: 206 Location: Camp Verde, AZ
Posted: Fri Feb 08, 2008 7:53 pm Post subject:
louis wrote:
Hi Dave,
If you don't mind I would like to email a chapter from my book on this topic. I would like you to read it when you have time and let me know what you think.
I would be honored to be able to read it.
_________________ David Wittmayer
Owner / Manager
Hansen Enterprises Fleet Repair, LLC
Camp Verde, AZ
www.hefrshop.com
Joined: 09 Dec 2007 Posts: 21 Location: Lathrop MO
Posted: Tue Feb 12, 2008 12:10 pm Post subject: Re: Auto Repair and The Titanic
louis wrote:
If most shops in a given area are slow, clients are saying, “I no longer want what you have to offer.” I think, lowering prices, is avoiding the warning and will not help for long.
Hi Louis, I think this is only partially correct. First, if all (perhaps most applies also?) the shops in a given area are slow I would have to say there is no longer a need for the service. If only some of the shops are slow clients just don't want what it from you? Second, lowering the price may be a long term answer, depending on how it's done now. Perhaps the shop has put too high of a profit margin on the service? Or, maybe they are able to obtain a lower price and keep their profit correct through lowering their cost? Would these be two ways lowering the price could be a good long term advantage?
louis wrote:
Specializing in a particular make, model or service is again, missing the warning sign, in my opinion. This may offer temporary relief by lowering some cost. It also has the effect of limiting the market and making it more difficult for clients. If this were the answer, it seems dealerships would be doing very well. In fact, even with there other advantages, many are struggling.
I can't disagree with your observations on the long term however there are significant advantages to specializing. I believe at one time you did this also with alignments and wheels? Please correct me if this is wrong but my perception of it is you simply out grew your specialty. If you wanted to improve or grow the business you had to look in other places to do it. But what you gained in the short term helped you for the long term. It was a "baby step" of sorts. When specializing you can get really good at it, probably quicker then you could had you tried to be everything to everyone at the same time. Then as the business matures you were able to apply those things you had learned to other areas. In the long run I believe it can be benefical, although in the long run the speciality may not remain. Say for example a person started a shop specializing in Hondas, the business did very well for a period of time and gained a good reputation but after a while began to get stagnet and the owner couldn't find any ways to make the business thrive and grow doing it this way so he decided to add Toyota to the line of vehicles he serviced. It could easily be argued that working on only Hondas wasn't good in the long run. Couldn't it also be argued that this allowed the owner an incrimental success that he can now apply to other opportunities that may be much more difficult to achieve otherwise? As for the dealerships that don't thrive I think there's a lot more involved then their limitation to a paticular make of vehicle. They could (and should) use the specialty to their advantage, especially because "you gotta play the hand your delt".
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Tue Feb 12, 2008 4:41 pm Post subject: Re: Auto Repair and The Titanic
Hi Jeff,
Jeff S wrote:
louis wrote:
If most shops in a given area are slow, clients are saying, “I no longer want what you have to offer.” I think, lowering prices, is avoiding the warning and will not help for long.
Hi Louis, I think this is only partially correct. First, if all (perhaps most applies also?) the shops in a given area are slow I would have to say there is no longer a need for the service. If only some of the shops are slow clients just don't want what it from you?
Good observation, and markets can go away, for instance a very good carburetor re-builder. When we are discussing the auto repair trade as a whole, I don't believe this can be assumed. Shops in a given area compete not only with each other, but with all of a clients options. For instance:
Buying a new car
Buying another car
Not repairing the problem at all
Repairing the problem themselves and on and on
Because most shops in an area are slow, does not mean there is no need. Far more likely is, clients do not want what the shops offer or want it less than their other options. A shop that feels they compete only with other shops is in a very vulnerable position.
Jeff S wrote:
Second, lowering the price may be a long term answer, depending on how it's done now. Perhaps the shop has put too high of a profit margin on the service? Or, maybe they are able to obtain a lower price and keep their profit correct through lowering their cost? Would these be two ways lowering the price could be a good long term advantage?
If a shop is slow at their current price, but busy at a reduced price, it seems to me, the need was already present, but clients felt the service was not worth the price asked. Lowering the price did not create the need it merely showed what people think of the value of the service.
If prices are out of line with value offered, gaining clients will be difficult [impossible?] This will be the case regardless of where the price is, relative to the market. For instance some shops may be overpriced at $20 an hour. Other shops may represent value at $130 an hour.
My thoughts on pricing are here. If prices are capriciously set, they could be too high, or too low. In either case, I feel they should be adjusted to a figure that covers cost and profit needed. If that price does not represent value, the business strategy should be questioned. Lowering the price cannot solve such problems long-term.
louis wrote:
Specializing in a particular make, model or service is again, missing the warning sign, in my opinion. This may offer temporary relief by lowering some cost. It also has the effect of limiting the market and making it more difficult for clients. If this were the answer, it seems dealerships would be doing very well. In fact, even with there other advantages, many are struggling.
Jeff S wrote:
I can't disagree with your observations on the long term however there are significant advantages to specializing.
There are short-term advantages, to the shop from specializing. Long-term this overlooks the market, in my opinion. For instance a very good client drives a Toyota. This ignores her husband drives a Suburban and their neighbors drive Ford, etc. It also ignores that clients do not always stay with vehicle makes, they change.
Looking to the future, perhaps we may specialize in our clients and simply fix what they drive. Tooling for and training for multiple makes is not that difficult. Continually filling the shop with great clients that refer others may be a better goal.
Jeff S wrote:
I believe at one time you did this also with alignments and wheels? Please correct me if this is wrong but my perception of it is you simply out grew your specialty.
Rather I could see the warning signs that this was no longer a viable business strategy. Had I stayed with it, our sales might be about 30% of what they are today.
Jeff S wrote:
If you wanted to improve or grow the business you had to look in other places to do it.
We could have continued to expand within that limited field. To do so would be to overlook my client's other needs for full service.
Jeff S wrote:
But what you gained in the short term helped you for the long term. It was a "baby step" of sorts. When specializing you can get really good at it, probably quicker then you could had you tried to be everything to everyone at the same time. Then as the business matures you were able to apply those things you had learned to other areas. In the long run I believe it can be beneficial, although in the long run the speciality may not remain. Say for example a person started a shop specializing in Hondas, the business did very well for a period of time and gained a good reputation but after a while began to get stagnant and the owner couldn't find any ways to make the business thrive and grow doing it this way so he decided to add Toyota to the line of vehicles he serviced. It could easily be argued that working on only Hondas wasn't good in the long run. Couldn't it also be argued that this allowed the owner an incrimental success that he can now apply to other opportunities that may be much more difficult to achieve otherwise?
I think a business growing and expanding into new fields is very different from a business that is slow [as per this post] and moves to a specialty as a remedy. One is to see the market and expand into it in order to serve more clients. The other is to eliminate a great many potential clients.
Jeff S wrote:
As for the dealerships that don't thrive I think there's a lot more involved then their limitation to a particular make of vehicle. They could (and should) use the specialty to their advantage, especially because "you gotta play the hand your delt".
Certainly there may be any number of reasons any business may do poorly and I hoped this would illustrate that point. When I wrote:
louis wrote:
Specializing in a particular make, model or service is again, missing the warning sign, in my opinion. This may offer temporary relief by lowering some cost. It also has the effect of limiting the market and making it more difficult for clients. If this were the answer, it seems dealerships would be doing very well. In fact, even with there other advantages, many are struggling.
I intended that dealerships normally specialize and yet many still do poorly. By this I mean, specializing will not cure-all when other problems exist. I do not feel it is a cure-at-all, for a slow shop.
A poorly run dealership will do poor, as will a poorly run shop that moves to specialization as a cure. Rather the reason the business is doing poorly might be sought.
Thanks Jeff, I appreciate your reply and your comments.
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