Small Steps = BIG Results

John Batten gets philosophical talking systems, processes and the potential of ‘desk diagnostics’ to change a businesses for the better

By John Batten | Published:  01 December, 2017

There’s no doubt about it-  the technical challenges that face an independent workshop grow daily and this has the ability to not only affect the commercial performance of the business but also the morale of those at the sharp end.

There’s nothing more frustrating for a technician and business owner than watching the minutes, turn into hours and possibly hours turn to days  as a resolution to technical repairs sometimes remain elusive… It almost makes you ask the question “Why do we do take on this kind of work?”

Do we need in-house therapists? Is it all doom and gloom? Far from it! In fact with the right attitude and the tools to assist, reducing everyone’s stress levels and improving the situation for all involved is incredibly straightforward. There’s even a challenging argument for making this type of work an integral part of your business and with practice turning this into your unique selling point (USP). Once you have the reputation for being the business that fixes all those ‘difficult’ cars you’ll be amazed how that can positively affect, with a little marketing savvy what you’re able to charge for all your repairs. How can I be so certain? We did this within our own business and we’ve been helping others do the same for many years.

System addict
So what’s the secret? Systems; nothing more than the robustness and repeatability of your fault finding system. Great businesses are just combinations of great systems. Systems to find new customers, systems to convert them, systems to complete the repairs to the same high standard day after day. I guarantee that you already apply systems to all sorts of repair work in the day to day running of your business. Take a service for example. How successful would a service be if every time that work was carried out each individual element was processed in a random order? Sometimes the oil drained first, sometimes the brakes inspected first or just for the hell of it why not change the cabin filter first. It stands to reason that items would be missed and the time to complete a service would undoubtedly take longer. Now I know you’ll be using a system for servicing, so the BIG question is do you have a robust system that you or your technicians apply to each fault finding mission? If you nail those jobs day after day and the answer to that question was a resounding “yes” then you can stop reading now. If not then stay with me and I’ll give you some tips you can use immediately.

Philosophy for technicians
Confucius I’m not, but he did have a point when he said; “Life is really simple, we insist on making it complicated”. This is a statement that resonates with me. As a younger technician I often made the path to a solution more complex than it needed have been. Now I’m no philosopher, but with increased experience, mostly gained from every job that fought back, I have reconsidered the techniques I applied for diagnosis. My Eureka moment was when I swapped frustration for pragmatism. Rather than kick myself in the derriere when I perceived a job had taken too long I’d take a step back and consider what I’d do differently next time. The decision to consistently and honestly evaluate my system of diagnosis was a game changer with an return on investment (ROI) way higher than any tool I’d ever bought. You just can’t beat those hard won lessons you teach yourself.

I recalibrated my thought process, pushed frustration to one side and embraced those jobs that challenged my current diagnostic system, safe in the knowledge that I’d always fix it and the time I invested now would pay dividends time and time again as I improved my system for the long term. After all this is a marathon, we’re part of not a sprint. The best lesson I learned also happened to be the hardest one to implement as it involves reading. Now if you’re like me you’d rather be doing than reading. I hate to break this too you but if you want an easier life then you’ll have to make ‘desk diagnostics’ part of your system, sooner rather than later. I could give endless examples of how this has paid dividends over the years for myself and those that I have trained but a vehicle that presented itself this week typifies ‘desk diagnostics’ quite nicely.

That elusive quick fix
I stumbled across this repair by accident. I’d left our training centre and was walking through the workshop next door. The lads had finished their tea break and I was on the hunt for biscuits. Between me and the tea room though was a Seat Leon that just happened to have my friend and all round ‘super tech’ James sat in the driver seat with ODIS (the VAG diagnostic system) on his lap. This was a situation that proved more enticing than the tea room; the biscuits would have to wait.

The customer had outlined that the vehicle had a warning message displayed on the media display. It said “Fault: Vehicle lighting.” A visual inspection of the vehicle bore no fruit as all lighting systems were found to be operating correctly and no fault codes were present in any vehicle system. So the car thinks it has a fault but we can’t find one! Should we perhaps starting changing the bulbs hoping that matching ones will fix the issue? Or is it time for ‘desk diagnostics’?

Silver Bullet City
I’m not a fan of silver bullets. Looking for that ‘quick fix’ can be detrimental to a technician's long term development. That being said there is always a middle ground and knowing when to look for one is half of the skill required. So where do we go for our silver bullet to fix the Leon? Do we post a question on a forum? Call a technical helpline? Phone a friend? You could but there is a much more robust and methodical route. This is where ‘desk diagnostics’ meets Silver Bullet City. It stands to reason that the manufacturer knows more about the vehicle they produce and service daily than anyone else. They just happen to incorporate all their silver bullets in one place and call them ‘Technical Product Information’ or TPIs for short. How did we get our hands on this diagnostic gold dust? Nothing more than a couple of clicks within ODIS. A little reading revealed that this was a known issue and the fix required was a software flash. The current software on the Leon was checked to see if it had been carried out already. It hadn’t. The update was applied, the relevant post-fix processes carried out. The message was no longer displayed and the vehicle returned to the client. In this example a little reading bore fruit. Not only that, but it happened in a timely manner, without frustration for the business owner, technician or customer. A winning situation all round.

An honest appraisal
Here’s the thing; It wasn’t always this easy. It takes a little pain before you realise that change is required. We need a reason to change. It took a change in perspective and a pragmatic approach for me to change the system I used for diagnosis, as well as a commitment to constant re-evaluation. Once that’s in place everything else is pretty straightforward it’s just a case of taking small steps each day.

The steps that you need to take will be individual to you and your business. Take a pragmatic look at those ‘problem’ jobs and add a little more ‘desk diagnostics’ to the mix, you may unearth your own answers on what to do differently next time. What’s the worst that can happen?

Want to know more?
If you’re not sure that you have the foundation to self assess, or you’d like to benefit from the system for diagnosis that we’ve developed then call John on 01604 328 500. Alternatively if you’d like to see how using ODIS can give your business the advantage it needs then take a look at this video link: www.autoiq.co.uk/odis1

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  • part TWO: Succeeding with succession 

    Businesses change hands for all manner of reasons, but crucially for family businesses, change has the potential to damage family harmony as well as destroy the future wealth of all concerned. But what happens should no family members want to take on the business and the business has to be sold?
        
    In this instance David Emanuel, Partner at law firm VWV and head of its Family Business team, says the family should take advice on the options. He advises seeking recommendations and says to “think hard about engaging people who work principally on a success fee percentage commission-only basis – the overall cost may be higher, although you may be insulating yourself from costs if a deal doesn’t go ahead – but there can be a conflict of interest for people remunerated only if a deal goes ahead.”
        
    One step that will ease the process is to undertake some financial and legal due diligence as if the seller were a buyer, to identify any gaps or issues that may affect price or saleability.

    Seeking a valuation
    Businesses will generally be valued on one of three bases – the value of net assets plus a valuation of goodwill; a multiple of earnings; or discounted future cash flow.
        
    Nick Smith, a family business consultant with the Family Business Consultancy, sees some families seeking the next generation pay the full market value for their interest, and other situations where shares are just handed over.
        
    “In between the extremes,” says Nick, “there are a raft of approaches and solutions including discounted prices and stage payments. There are also more complicated solutions such as freezer share mechanisms, where no sale takes place but the senior generation lock in the current value of their shares to be left to the wider family and the next generation family members actually working in the business receive the benefit of any growth in value during their time in charge.”
        
    What of an arm's length sale? Here David says: “The family will ideally want to be paid in cash, in full, at completion, rather than risk the possibility of deferred consideration not getting paid because the business gets into difficulties under its new owners, or a dispute arises over what should be paid.” However, he says that may not be possible, and there may be many good reasons why the retiring shareholders keep an equity stake or agree to be paid over time or agree that some of what they get paid is subject to future performance. Even so, he suggests starting with the idea of the ‘clean break’ and working back from there if you have to.
        
    It’s important to remember that in a succession situation, where one generation is passing the business to the next, and the retirees are expecting a payment of value to cover their retirement ambitions, deferred payment risks may be looked at differently depending on the circumstances – families will be more trusting.
     
    Tax planning and family succession
    As might be expected, tax planning is important and should always form part of the decision-making process but it should never be the main driver. That said, no-one wants to hand over, by way of inheritance tax, 40% of the value of what they have worked for.
        
    Both Nick and David consider tax planning key. Says Smith, “the most important point is what is right for the family members and the business itself.” He believes the UK offers a fairly benign tax-planning environment for family business succession so that most family businesses can be passed on free of inheritance and capital gains tax to other family members. However, the risk of paying a bit of tax pales into insignificance if passing on the family business to the next generation means passing on a working lifetime of misery and a failing business. David points out that if Entrepreneur’s Relief is available, the effective rate of Capital Gains Tax is just 10%.

    In summary
    Family businesses are peculiar entities, caught by both the need to compete in the marketplace and the need to keep familial factions onside. Whatever course is taken to secure the future of the business, one thing is certain – everyone needs to keep the lines of communication open.


  • Is the knowledge gap closing?  

  • The Future’s bright: The future’s… orange 

    We have to confess, Aftermarket's garage visit articles tend to follow a formula. We pick long-established businesses, and as part of the piece we will hear about how they got started, and see where they are now. That's great, but sometimes you want to mix things up, do things differently.   

    How about, for a change, we go and see a business in its very early days, and see how a garage is built from the ground up? Yes, we like that idea. When we found out that 2018 Top Technician Shaun Ferguson-Miller was opening his own business, we knew we just had to be there.

    Fergie’s opened its doors, and unveiled its big, bright and very orange sign for the first time in late February. Based in a converted warehouse on a business park on the outskirts of Thatcham in Berkshire, Fergie’s has been set up as a German marques specialist, catering for drivers of the VAG group output, as well as cars from BMW and Mercedes-Benz.
    With Shaun is a small team covering marketing, sales (front of house), finance, and of course Shaun’s area of expertise, all things technical in the workshop. The technical team will grow as the business picks up. All being well, he’s looking to take on two more technicians this year.

    Differentiation
    Starting out is hard, particularly if you are aiming to start at the top, but Shaun was upbeat about the businesses potential: “We’ve had a great start. Each member of the team is very focused on their individual roles and we’re hitting our targets that were set out in the business plan. It’s very early days but we’re all putting in the hours and committed to making this a success.”

    They are getting the customers they want too: "The marketing team are busy behind the scenes. From day one we’ve had a defined focus on who our clients are and we’ve built a marketing plan based around that. We’re very keen to get off on the right foot and build a strong reputation based around outstanding customer service. It’s the part of the business the customer sees and touches. It’ll be our point of differentiation.”

    A new chapter
    Readers may remember that when he won Top Technician in 2018, Shaun was head technician at Millers Garage in Newbury. What a difference a year, and a big trophy, can make: "I have been on a journey over the last three or four years, and have met some great people in the industry. Like they say, It’s good to talk, and my new network gave me a different perspective.
    “I’ve fancied going it alone for a while and it seemed like the perfect opportunity. I started planning at the end of last year, and got the keys for here on 1 January."

    Winning Top Technician was a factor: "I realised that I had to do it this year. If I left it for three or four years, I couldn't advertise that I was setting up, and that I was the winner of Top Technician. It would be old news. I was speaking to a lot of people in the industry about it, and I just decided it was time to go. I set about doing the business plan, looked at what I wanted to do, arranged additional finance on top of the money we had, then set about finding the right equipment to meet our budget.  I started planning in November and into December, got the keys on 1 January, and that was it. From that point we were here full time. This was a warehouse that had been used by a parts supplier. It was just a bare shell. We turned it into this within three months, and opened on 25 February, and we have been open a month now.”

    Shaun was thoughtful for a moment, and then said with a laugh: "When you look back, you think 'how did this even happen?' I still don't know how it happened!"
        
    That was then, and this is now. Let's look at what Shaun has set up: "We have four two-post service ramps, a dedicated wheel alignment ramp, and a Class 7 MOT ramp. We are setting up as an MOT station at the moment too. In the meantime, are working with a local garage that is carrying out the MOTs for us. In return, we are doing their diagnostic work. It’s a system that works well for both of us currently.

    “On the tooling side, as we are a German marques specialist, all the diagnostic tools are for the VW -Audi Group, Mercedes and BMW. We have to have that as a specialist. We have some generic scan tools as well as a backup but, factory tooling is a must.”
    Shaun and the team are thinking long-term. One of the things he wants to create for Fergie’s is a positive working environment. With this in mind, upstairs, we found the bones of a staff lounge: "We’re focused on building a great team and staff retention is a big part of that. Having a great place to work as well as the right culture in the company is really important. You need somewhere they can relax, and eat in comfort.”

    Next door, Shaun has set aside a room for training. Training is really important to Shaun and having the right environment to do that is essential. “When we do training in the evening, they will come up here. Treating the staff right is the biggest thing for me. I want to get great techs here, so they need to be treated well.”

    The staff are not the only ones getting good treatment. Shaun also became a father for the first time last year, and they have found room for a little creche for son Quinn also. We told you it was a modern place didn't we?

    Customers
    Apart from the technical stuff, you always need to remember that a garage business needs customers. When they arrive, Shaun has presentation covered thanks to a comfortable, warm-wood-and-armchairs reception that could be an upmarket high-street cafe: "I initially wanted it to be all white and fresh and clinical, but I had my mind changed and this is so much better. Everyone who comes in says how nice it is, and wants to chill out, read a paper, have a hot drink, they love it. Because we are a little bit out of the way, we wanted to create somewhere people can wait."

    To have them waiting, you need to have them in the first place. With this in mind, Shaun sought out advice: "I did a lot of business training with John Batten at Auto iQ and he has helped me massively. I didn't think advertising was important before I started the business. As far as I was concerned it was all word of mouth. Starting a new business, that is not going to happen though. We are literally at the bottom of a road with no passing trade. I’m too busy in the workshop to give marketing the focus it needs which is why we bought in someone to do this from the start. That and our front of house team are every bit as important as the technical ability we have in the workshop.”

    It's a hard slog starting from scratch, but with a young family, a big vision and a great team, Shaun is on his way: “I am doing long hours at the moment- I am here until 11pm every night. I just want to set everything up, systems, equipment, etc. All of that effort will be worth it in the long run, getting it all right from the beginning. Doing this, I have learnt almost everything in one go, from a business point of view, which is really cool. Luckily my mum is an accountant with a massive company, so she has helped with it as well. With mum's, my wife’s, and my friends support as well as a great team, it was the ideal time, and the ideal recipe. Now we’ve all just got to put in the hours and do the work.”
    We know he will succeed.  


  • Top Garage 2019 finalists announced 

    The finalists for Top Garage have been named. The following businesses will compete to become winner within their own group, as well as for the overall championship for the year.  

  • clear view of the aftermarket 

    While many garage businesses in the sector probably have a pretty firm idea of what trends and changes are affecting their businesses, it is always helpful to be able to look at the whole picture and see where you fit in. This means you can see where you are, and gives you an idea of what to expect going forward.
        
    With this in mind, a recent report on the global automotive aftermarket from corporate finance house Clearwater International provides a useful view of the trends influencing the sector, taking in the local, regional and global landscape.  Overall, liberalisation of the market, changing technology and shifting consumer habits and expectations are identified as being the key drivers in the way the sector is moving.
        
    On liberalisation, the changes have a range of aspects. On one hand there is increasing penetration by OEMs looking to claw back market share in terms of supplying parts to the traditional garage sector. At the same time, OEMs are obliged to provide information about the exact identification of replacement parts, albeit on their own terms. The report pointed to ‘European automotive aftermarket landscape,’ a report from BCG, which observed that independents have been effective in broadening their market share at the expense of the manufacturers and their networks.
        
    OEMs are also looking to take back a piece of the market through the formation of aftersales networks. Another part of this trend has been the increasing ability consumers have had to use aftermarket providers to service and repair newer vehicles, as seen through the Block Exemption Regulation (BER).
        
    Changing technology in terms of the emergence of electric vehicles and hybrid drivetrains is having an impact. Back in the workshop, key drivers going forward, according to the report, include digitally enabled services, telematics, e-commerce and 3D printing. Remanufacturing is also seen as having a strong place in the future, with OEMs investing in the segment.
        
    The report found that the average age of cars in the EU is 11 years, an age that puts a major chunk of the transcontinental car parc firmly in independent garage territory, is certainly good news for garages.
        
    The picture looks bright in fact. The report cites a finding from Frost & Sullivan’s ‘Global automotive aftermarket outlook 2018’ that showed global automotive aftermarket demand was set to rise by 4.4% in 2018, a view shared by many sector analysts according to Clearwater’s report. Another forecast that the report pointed towards, ‘The changing aftermarket game’ from McKinsey, predicted that the market will have a worldwide worth of €1,200bn by 2030. On that basis, underlying global growth on a year-by-year basis would be 3%.
        
    Speaking to Aftermarket about the report, Tobias Schätzmüller, Partner and International Head of Automotive at Clearwater International said: “There are a lot of challenges out there for the aftermarket, as well as  opportunities. First of all, the liberalisation of the independent aftermarket. I think this gave it a boost. Also, technology-wise, there are new entrants. Some pose a threat but also offer many opportunities. Then, of course, there is the powertrain discussion, connected vehicle, and autonomous driving, which will all change the picture.”
        
    One of the aspects the report covered was the ongoing trend of mergers and acquisitions taking place in the sector. The report cited the ongoing purchase activities of LKQ Corporation and Euro Car Parts as an example. It also pointed out the purchase of The Parts Alliance by Uni-Select two years ago, as well as the acquisition of Borg Automotive by Denmark’s Schouw.
        
    Tobias thinks the smaller suppliers will continue to gravitate towards larger companies:  “We see from the M&A analysis that there are still a lot of small and medium-sized businesses around, in small units but with a relatively limited range of products. They are now trying to redefine themselves in terms of international reach, as well as in terms of covering additional markets, and product ranges. For some of them, they recognise it is not possible to gain scale on their own, so they are joining forces with others.”
        
    Expansion is the keyword: “There have been a host of cross-border transactions. In the report we have published a list of many of the deals that have been completed in recent years. Every month there are new deals going through. We are advising players to grow and refine their strategies, and they are bringing access to new product categories. We also advise those players to invest in technology, into automatic warehousing etc. That is the challenge, but for some of the players it is an opportunity to develop greater professional capability, and grow through investment.”
        
    Tobias then pointed out the key trends where businesses need to pay strongest attention: “On the environmental side, it is certainly the change in the drivetrain, with electric vehicles coming in. Nobody knows in the future when, or even if, this dramatic shift will happen but I think everyone still believes we are in a mixed period of combustion engines, hybrids, and electric vehicles. However, if you look 10 or 20 years into the future, the prevalence of electric vehicles will be much stronger. This will of course change the complexities of the engine, and the powertrain. This means less components and less moving parts which is a threat to the spare parts market, although the components in an electric vehicle might have a higher average value per unit. However, this would probably not compensate for the very complex engine that is now in use in combustion engines. There will be a reduction of complexity and, assuming that with the numbers driving there may be less accidents, which will also have an impact on the spare parts business.
      
    “On the exterior side, there will be pressure from OEMs because they now see an opportunity. While increasing liberalisation has seen the independent aftermarket gaining market share, with all the e-solutions in the car, it is possible for an OEM to be the first to provide pre-emptive maintenance. If the car has to go to the garage, they are the first to know that and can make use of this information. They are all desperately looking for alternative profit streams beyond the process of selling hardware, i.e selling a car, which is also a driving factor.”
        
    For the garage on the ground this may seem a long way off, but there is a way forward. “I think it is important to offer the whole spectrum of products, to be present everywhere and to reach a critical size so the parts can be sourced cheaply, and they have more marketing power. Additionally, they also need to increase their competencies, to be able to offer customers the wider range of products.”
        
    On the potential impact of Brexit on the aftermarket, Tobias said it was too early to be drawn on likely outcomes: “Parts supply either comes from the OEMs or tier one suppliers, or it is sourced in Asia. I don't know, looking at the UK market, whether they would have problems sourcing parts from abroad. It depends on what the regulations will be, but Brexit will probably have an impact.”
        
    On whether concern over Britain’s exit from the bloc is warranted, Tobias speculated: “I trust that they will find an economical and reasonable solution. Brexit concerns the UK most, but given the highly integrated automotive value chain, it will also affect the continent.”
        
    Looking ahead, Tobias concluded: “There will be continued consolidation in the market. In the independent aftermarket there is a lot of activity, with many M&A transactions coming up. We are actively tracking this. Companies will seek to be more international, aiming to cover more markets, and will get a broader cross-section of products. On the technological side, advancements in connectivity will mean more preventive maintenance, and overall professionalism within the market will increase. Transparency will also continue to increase thanks to the impact of the online world, and that will have an impact on price.”

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