Your profitability and how to increase it!

Three secrets you can implement today to drive your business forward

By John Batten | Published:  10 July, 2018

If you’re a regular reader of this publication then you may be wondering if there’s been a faux pas and why my usual technical article has migrated to the business section.  If that’s the case fear not, all’s well.   

I figured that I’d ring the changes and let you into a secret. Many of you know my love for all things technical but I have another passion - building businesses.

I’ve been incredibly fortunate to have spent my most of my career running and owning independent automotive repairers. I’ve started, built and sold other parallel businesses as part of my entrepreneurial journey but my love for our industry always pulls me back to my core. This marvellous world of fixing cars.

Once upon a time...
Like many, we started small, moved to larger premises, the team growing with us and sometimes the headaches to match. There have been some amazing highs and some pretty bad lows (all of my own making) but here’s the deal – life’s a great teacher and if you’re willing to listen, the lessons are straightforward. Implement these business lessons and success often follows.
So why is this important to you? Good question. For some time I’ve been coaching the business owners of our technical training clients on how to develop their businesses. They’ve been working hard, implementing our systems and it’s paying off. The blood, sweat and sometimes tears often culminates with an increase in profit and a decrease in stress. So it’s with that in mind that I’ve decided spread the love and let you into some of our secrets. What’s not to like about that? Not much!

My ultimate goal for all of my clients is the same. Help them build a business that serves their lives. After all, isn’t that why we start a business? For some that’s taking the family on that extra holiday, for others it’s another Ferrari (you know who you are) and for some it’s financial freedom, early retirement or to leave a legacy.
Regardless of your version of success it quite often rests on one thing; How do you create the profit making machine to get you to your destination? Read on and you’ll discover secret number one.

Secret number one: Start with the end in mind
Auto iQ has an online Facebook group especially for garage owners. It’s full of proactive ‘go get em’ ladies and gentlemen who’ve all taken the leap and started a garage business. We’ve got all shapes and sizes (between one and 26 employees) from all over the UK, they’re all different, but they all share a common goal.

Before they join I ask them all a single question: “What does your business have to do for you?” There’s often commonality amongst the answers: more money, more time and less stress, are our current top three but therein often lies the root cause of why a business is underperforming.

No clear goal.

‘More’ is a difficult and ever changing target and how do you know when you get there? Is there a key performance indicator (KPI) for more? Without a clearly defined objective only luck will assist in attaining your success. We’ve all experienced a little luck but it’s often short lived and hardly a foundation for our repeatable profit generating machine.

How do we remedy this lack of objective? Quite simply by starting with the end in mind. Have a clear ‘end’ that you’re decided upon reaching and put a financial figure on it. If success for you is a great trip to Disney each year with 2.2 kids and your spouse and you’re not taking that from your business currently, then you need to plan how to earn an extra £20k to reach your version of success. If it’s to retire at 55  and you’re 35 now (with no plan in place) then that’s a much bigger number and we better get our skates on. Regardless of how big or small your number, one thing’s for sure: Once you stick a flag in the ground and move towards this daily, your chance of success has just increased exponentially!

Secret number two: Patience and persistence
Bill Gates had a great saying: “People overestimate what can be achieved in 12 months and underestimate what can be built in 10 years.” It certainly resonates with me.

As a business owner I want everything to happen now! I want instant results with instant change. Decades of ownership though has taught me that Bill was right; I might want it but business isn’t like that.

To build a great business (even a small one) takes patience. With your flag firmly set in the ground though you’ll know the size of the business you’re looking to build. You can then “start with the end in mind” and design your ideal team to help you grow your business; add the systems required for success and train your team to run them.

“Easy!” I hear you cry, with a somewhat sarcastic tone. Well, that’s where the patience comes in. It takes industry experience to build a successful repeatable system, you may not get it right first time but like I said, slow and steady wins the race.  After all. We’re building a long term profit generating machine, surely that’s worth the time, consideration and effort?

Secret number three: Business systems
This is one of those BIG questions. Do you have great systems? Successful businesses are just a hierarchy of effective systems. As the business owner if you’re not taking the wage your position deserves, the company isn’t creating the profit it should, or you have many frustrations and well practised fire fighting skills, then it’s safe to say that your systems may need a little love. But which systems to implement first? Marketing? Sales? Finance? HR? Fulfillment? Operations? The list is endless. My rule for this is straightforward. Let’s go for the low hanging fruit first.

Quick wins
Every time I analyse a business I look for the quick wins first. Fast results and extra profit show what can be achieved,  as well as giving the owner a really good reason to persevere when the going gets a little tougher. I had an update recently with a client (we’ll call him Mr G) to see how the business had developed in six months.

Mr G owns a mid sized small independent repair business (five technicians). He’s an amazing technician, has a willing team but like many, thought it should be producing more and wasn’t sure how to move forward. He’d outlined that the overall efficiency was 55% (not unusual for so many independents) and as soon as I knew that we’d just found our first quick win!

Most garage management systems will now track technician efficiency but some will not identify the root cause of the problem. There are multiple reasons as to why hundreds of labour hours get lost into the ether each month and we use a really simple system to identify why this is.

Some large gains were made immediately with our system, raising awareness with the workforce. Secondary gains were also made as Mr G used our system and identified that parts supply was a problem. Measures were taken to rectify this.
The result of this single, simple to implement system was gratifying for Mr G to say the least. It lifted overall efficiency from 55% to 96% (small fluctuations withstanding) in a six month period across five technicians. The additional profit on Mr G’s bottom line, as you can imagine, has been significant.

What did it take? A flag in the ground to head for. Six months of patience. One well designed, well implemented small system. Imagine what happened when we took a look at the sales system. That though will have to wait for another article.

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