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Managing Company Assets To Enhance Your Shop’s Revenue Potential

Financial subjects are dry and usually at the bottom of the shop owner’s list of desirable activities, but, typically, they are the number one reason for poor performance or failure.


Financial subjects are dry and usually at the bottom of the shop owner’s list of desirable activities, but, typically, they are the number one reason for poor performance or failure.

Are your company assets ­behaving themselves? Are you kidding? Company assets need constant, educated and dedicated management to keep them in line and earning a living. This management skill alone, many times, determines the ­difference between the highly successful shops and those that are just getting by or disappearing altogether.

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One method of judging a company’s success is its return on investment (ROI). Today’s successful automotive repair business requires a tremendous investment in both time and money, and managing the assets needed to make the business successful takes dedication, time and various skills.

This article is going to touch on the various shop asset classes and how to make them work best for you in order to make your business more successful.

TEAM MEMBERS. You will immediately notice that I did not say employees. That is ­because your people do not ­really work for you. They work for themselves as part of your team. Your team members are your most important assets and as long as their wants and needs are met, they will stay with you. And, money is not the most ­important reason for a team member to stay or leave. Other than the ability to perform the functions required, a sense of family, cooperation, skill sharing and integrity are very important in building a great team, which is a requirement for any successful business. We’ve all had the prima dona who usually keeps the rest of the team on edge and requires most of a ­manager’s time.

TECHNICIAN TIME. An automotive repair shop has only one commodity to sell, and that is TIME. How you manage the efficiency, productivity and quality of this asset will determine your ultimate success. A shop owner’s responsibility is to keep the shop full of profitable work through marketing, service selling, scheduling and parts procurement. Without a steady flow of customers, the rest of the business formula falls apart. Of course, parallel to selling time is selling parts. Selling is not a bad word and is only used to sell needed work. ­Productivity and efficiency are ­dependent on technician skill levels, scheduling, availability of parts, and, of course, selling the job.

REPUTATION. This will spread like wildfire, whether good or bad, especially in today’s Internet world. It’s estimated that a dissatisfied customer will tell six to 10 other people, while a ­satisfied customer will tell only one or two. So, the deck is stacked against us. Bottom line — take care of your ­customers and they will take care of you. Do what is necessary to keep them happy. And, when you have a customer who you just cannot seem to satisfy, no matter what you do, diplomatically suggest he/she take their business elsewhere. Life is too short to deal with these people.


FACILITY. A new specially designed facility is nice but, wherever you are, keep it clean, presentable and have a place for customers to wait, read and enjoy a complimentary cup of coffee or cold drink. WiFi today is almost a necessity and well appreciated by customers. Keep your shop freshly painted, well lighted and clutter-free. Consider your shop area a “showroom” and be proud to give ­customers a tour.

CASH. Today, more than ever, Cash is King. Money makes the world go around, so always keep an adequate sum of working capital available. Cash flow is also very important as you cannot make payroll or pay parts accounts with ­accounts receivable or work in progress.

ACCOUNTS RECEIVABLE. This asset gets more businesses in financial trouble than just about any other. With today’s credit cards and 90-days-same-as-cash programs, why extend credit to a customer? If they don’t have a credit card or it’s maxed out, do you really want to carry them yourself? There are exceptions for “A” level customers or the customer who wants to mail you a company check, but financing the marginal credit risk will usually burn you. And, don’t invest more in a car than you can quickly recover if the customer walks away from it. Don’t be bashful about asking for a deposit on large jobs. Attorneys do it and call it a retainer. Also, be very careful with promised payments from extended service contract providers.

WORK IN PROCESS. This is almost the same thing as accounts receivable as it represents an investment in time and money. These have a way of growing legs and never getting billed to the customer and, thus, not getting paid. Constantly review this asset category and turn it into cash. The longer a WIP repair order stays unbilled, the more likely it will not be paid.

I cannot over-emphasize the importance of building, keeping and managing an excellent credit rating both for the company and personally. An excellent credit rating will always get you the best deals and terms. Your credit rating is quite simple. It broadcasts your ability to keep your word. For example: Do you pay your obligations as promised?


PARTS INVENTORY. When you look at that part on the shelf, picture it as a stack of dollar bills because that is exactly what it is. If it does not turn, it’s costing you money and will eventually become obsolete. Your availability of parts will determine the amount of parts you need to stock. A car sitting on a lift waiting on parts is costing revenue to the shop and pay to the tech. The ideal scenario is obviously ­having a “just in time” flow of parts and keeping the fast-moving parts in stock, which keeps the cars moving and the techs happy.


PARTS RETURNS AND CORES. These are not only parts, but stacks of dollar bills needed to pay the parts ­account or make payroll and are, many times, sitting in a forgotten ­corner. If they’re not returned in the same billing month, then they must be paid for and represent dead inventory and cash. Be sure you have a policy for dealing with these and a follow-up method to make sure your parts ­account gets credited. 

EQUIPMENT. Having the proper equipment to work on today’s cars is an absolute necessity today. With all the electronics on cars, a dwell meter and timing light will not cut it. And, back to the cash and credit rating ­subjects, one or both are necessary to purchase the necessary equipment. Be sure to keep your equipment maintained and updated. There is nothing more frustrating to a tech than a non-functional piece of equipment.


CUSTOMER BASE. Last, but not least, is your customer base. Guard it. Long-term customers are your best source of business plus referrals and keeping your present customers satisfied should be a prime objective. They are loyal and appreciate the great, trusting relationship built up over the years. Trust is, in my opinion, the most important part of any relationship. Take care of your customers or someone else will. A customer will usually not leave unless you give them a reason.

Steve Louden’s shop, Louden Motorcars Services, celebrated its 33rd anniversary last year. It specializes in BMW, Mercedes-Benz, Porsche and MINI repairs, and was the first shop in Dallas to be designated as an ASE Blue Seal of Excellence facility, with 100% technicians ASE-certified. Louden Motorcars has also been a Bosch Authorized Service Center since 1986.

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