that these are their main problems. Their shops have either grown to a certain
size in gross monthly sales and have then flattened off, or they can’t seem to
take home enough money. It does not matter how big a shop has grown, when it
comes to the owner’s checkbook, you should hear him groan.
The average business goes through four stages of
development. These stages reflect the development of the shop owner’s business
and management skills. Unfortunately some shops seem to get stuck in one stage
of development and are unable to expand beyond it. Other shops are able to grow
fairly quickly but can’t seem to make any money.
In this stage we have the technician that has opened his
first shop. In most cases, he is doing most of the work on the cars and
handling the customers as best he can, along with doing all of the paperwork.
Basically he is doing everything himself. This is the normal startup procedure.
Some shop owners get stuck in stage one and never really
grow out of this condition. They hit a certain level of monthly sales and that
In stage two we have a shop owner who has decided to go
primarily into the front office to handle the customers or hire someone to do
this for him so he can work on the cars. If he is the service writer he still
helps out with fixing the cars in the shop.
In stage three the shop owner has expanded to the point that
he has delegated the primary jobs to others. He has a service writer running
the front office and other people fixing the cars in the shop. He helps out in
the front with the customers in the morning and then will go into the shop to
help solve the problems of his technicians. Delegating responsibility
successfully gives him an opportunity to do other things to help the business
Here we have a shop that has successfully expanded to high
levels of volume. The owner is not required to be there to run the day-to-day
operations. Profits are high and relatively stable. He is at a level where 80%
of the shop owners in the country would love to be.
There is a rule of management that you will always expand up
to the level of confusion that you can handle. When you get confused you go
slow and make mistakes. This means that over time a shop owner may develop a
big operation, but unless he really understands all the key areas of his
business — personnel, marketing, finance, production, quality control, public
relations, sales and management — his bottom line will suffer.
Some shops do a million dollars in sales a year and aren’t
making any money! If they are making money it isn’t a good return for the
amount of business they have or the amount of effort they put into their
business. Time and time again I have found shops doing more than $750,000 a
year and not making any real profit.
If you want to narrow all of these conditions down to one
broad statement that defines the problem in the auto repair industry, it would
be that the owners of these shops are very good at FIXING CARS. They can solve
any problem with the cars in their shops if given enough time.
But the problem that is beating them up is that they don’t
know how to FIX THE BUSINESS. They lack management skills and knowledge. Their
lack of management skills is the primary reason they are not making enough
money in the business.
In each of the four stages of a business, the solution is
for the owner to quit being a mechanic and start being a businessman. He needs
to learn to run his business. Running the business and making a profit is what
a businessman is supposed to do. If the owner does this right he can slowly
move up stage by stage.
Eventually he will move out of the hectic, overworked stages
one and two until he arrives stably at stage three or four and is making DOUGH.
That is my wish for you!
Management Success has been helping shop owners for over 20
years achieve their goals, and have the life they envisioned. Find out what stage your shop is in by going
to www.ManagementSuccess.com and taking our free Stages
of Shop Expansion Test!
For more information please contact Morgan Scott at Morgan.Scott@ManagementSuccess.com
or call (818) 500-9631.