One part of the job that quick lube owners learn quickly is that in a growing operation, their duties at the top start to be less involved in automotive service and more in business operational matters.
That’s not necessarily a bad thing.
Most operators’ passions and expert skills are in vehicles. All of a sudden, your growing business requires you to be an expert in human resources, accounting, tax code, marketing, and a host of other things that make a business successful.
When the business really starts to grow, it gets even more difficult to maintain the same level of managerial attention that led to your early success. Jason Thomas, co-owner of South Bay Lube in Florida, has a term for it in his organization.
“When you do three or four [stores], you can still have what I like to call ‘the magic,’” he says. “But when you get to 30, you have to teach other people to get the magic. And that’s a lot harder.”
In that spirit, it’s time to brush up on some areas of your business that don’t have to do with your process in servicing vehicles. You’re probably already an expert there. Take a look at these nine key strategies that don’t have to do with automotive maintenance but have everything to do with maintaining your business.
The Experts
Jason Thomas is co-owner of South Bay Lube, which runs 31 Jiffy Lube locations in central Florida. The company started in the early ’90s and has had successful growth since. He’s an expert in operations management.
Nelson Rodenmayer is the SVP of sales and marketing at Upswell, a national marketing agency whose specialties include automotive service shops. He’s an expert in marketing.
Alex Woodie is the founder and CEO of Ledge, a consulting and accounting service for automotive shops. His family runs Woodie’s Auto Service in North Carolina. He’s an expert in bookkeeping and performance tracking.
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Manage risks—but take them.
While South Bay Lube has had great success overall with its network of Jiffy Lube stores, Thomas says that there have been plenty of learning experiences. The key is that he never would have had those opportunities to learn if he didn’t first take the risk.
“You have to take risks,” he says. “We’ve taken risks that haven’t paid off. We’ve taken some that have paid well. You don't win every time you go to grow or add a location. Sometimes, take a step back and learn from it.”
As an example, he points to a previous acquisition that the company made years ago. The shop was hours away, near the Georgia border. It had been passed over by other outfits.
There was a risk involved. One was a regulatory matter that required Thomas to spend more time researching the shop, doing research to resolve it.
Another challenge was the prospect of managing a group from hundreds of miles away and implementing his system.
It was a long road to make the deal, but he benefited from the extra time spent at the location. It ended up being a successful store for the company, and sales grew as a result.
“It taught me something. It taught me to not immediately say no. Don’t immediately say yes,” Thomas says. “And when you have a store that could potentially be a good acquisition or good growth opportunity, you get caught up in just looking at numbers and paperwork. Go physically to a location. Meet the people. Meet the store.”
Keep accurate books.
This may seem like the most obvious tip you’ve read, but Woodie says that this is actually a common oversight with operators.
“Where we’ve seen the biggest issues is they’re either so late that they're too late to help you, or they're so misconstrued that you’re trying to manage from numbers that aren’t right at all,” says Woodie, whose company mixes financial and business consulting services.
This is key if you’re trying to get a real-time picture of your business’ health. One of the biggest errors that operators make is misunderstanding their cash reserves. It’s more than just the number on the page.
“Your Quickbooks account shows that you've got $10,000 in the bank,” Woodie says. “You might have a check that didn’t clear. You might have a payment that you thought you were paid for but it wasn’t good, or you might have something coming up that you need to make sure you've got cash for like if you have a big payroll day.”
Your reserves need to be enough to cover those coming expenses or unexpected errors.
Stand out in tough times.
Shops often pull back on expenses during lean times. UpSwell’s Rodnemayer says that owners might slash their marketing budget without considering the potential damage to revenues.
“What we see time and time again across industries is that the folks who invest when times are tough tend to gain market share,” he says. “So the pie is a smaller pie, but you get a bigger piece of that pie.”
He says that operators should view their marketing as an investment rather than an expense.
The key to this strategy is more than just brand awareness. You’ve likely noticed how marketing has changed in recent months. Ad claims of touchless processes and sanitation procedures are everywhere. It might be overwhelming to see every day, but your quick lube customers might only check out your marketing when they need your service. And when they do, you’ll want them to see how you’ve altered your processes.
“It’s only the people who happen to be looking for our services at that time. If you stop doing it, then you might lose a competitive edge,” Rodemayer says.
Whenever possible, be present in your shops.
This is one aspect of ownership that becomes tougher, but more important, as you grow your network. You won’t know how successful a shop will be by looking at spreadsheets in your office.
“If you’re like myself, you didn’t grow this business by understanding demographics,” Thomas says. “You do it by knowing people, getting a feel for the store.”
That’s how you maintain the “magic” that Thomas explained, and that’s how operators get an edge in management. They’re able to see smaller details by being in the facility.
In day-to-day operations, it’s that personal leadership by operators that can pay dividends. It can even make up for factors that might appear to be deficiencies on a spreadsheet.
Thomas says that he’s seen it lots of times in the quick lube market.
“You could pick a spot that’s off a beaten path, and it’s a mom-and-pop location and they care about their people and they care about their community, people trust them and they’re unbelievably busy,” he says.
Seize the seasonal opportunities.
This is a common part of auto maintenance marketing. Winterization, battery replacement, fluid checks and lots of related services will pique customers’ interests when the temperature drops. Rodenmayer says the most successful shops are thinking ahead to the change of the season and advertising now for that.
“They’re really good about switching their offers up to help with seasonality,” he says. “Fall and winter, it’s all those things that consumers probably care about the most that they haven’t thought about.”
Take customers out of the normal advertising cycle that they’re used to—getting their attention. Don’t run the same ad year-round. Stand out and appeal to their needs as the season changes. More than that, advertise what your shop can do for automotive maintenance above a single oil change. Package deals are one way of doing that.
“Can I upsell to the synthetic oil? Or can I sell them a three-pack of oil changes and they pay for it now and the third one’s free?” Rodenmayer says.
Reconcile accounts receivable and accounts payable.
Woodie cautions operators to steer clear of sweetheart deals for customers who aren’t able to pay right away. These can wreak havoc on books.
“You saw the profit on your balance sheet the month that it occurred, but you never got paid for that,” Woodie says.
On the accounts payable side, there’s a direct link to the cash reserves advice. Anticipate your coming expenses before blowing all of that revenue. That’s where operators get into trouble. During a busy stretch of business, those deadlines can get lost. Keep a clear calendar of those expenses.
“They don't realize, next week, all of their vendor statements come in. They’ve got payroll. They’ve got their quarterly tax payments,” he says.
Match KPIs and people.
Woodie admits that this might be a pain—how many operators split out their bay times by individual team members? But this could be a valuable tool to maximize efficiency.
With that data, you can find the optimal team mix for each bay. A really fast tech can help offset a slower tech so that the entire shop is working at top speed.
“If you’ve got one group that’s performing at half the speed of the others, all you need to do is work on the speed of the other group and you could have a 25 percent increase in your car count,” he says.
The same goes for sales. Woodie says that owners might have one great salesperson on staff. Putting him or her together with someone who isn’t as good at sales might help in the training effort. Or, their skills could complement each other for placement as hood tech or pit tech.
Operators tend to think in terms of the right product or the right system. By individualizing some KPIs, you can help optimize some of the work that’s being done between the lines of those factors.
Manage your confidence.
Thomas says that he’ll find himself thinking in terms of what not to do with his business rather than what he should do.
That’s not to say there’s a lack of confidence. He just knows that going too far has its own perils.
“It does take confidence, risk, guts and all that,” he says. “But too much confidence puts you in a bad spot.”
It’s important to be self-aware with your ambitions and to have a great team around you to add perspective. Thomas says that some acquisitions in the past didn’t end up performing as he thought they would, and he chalks some of that up to overconfidence in the location. It goes back to the fundamentals of being present, putting in research and managing risk.
“I think when it doesn’t [work out], it’s usually because you had your eye on the facility and the location more so than the people,” he says. “When you’re not meeting your goals or expectations, you need to take a step back and reset. Have you done the right things with your people? Have you made the right decisions in hiring? Have you put in the quality time?”
Make trust investments with customers.
Rodenmayer says that often, it’s the indirect appeals to customers that make big impacts. That is, marketing or customer service that isn’t a direct sell. It’s more of a nice gesture.
“Is there something you can do through email or direct mail or another form to, first of all, thank your customers?” he says.
A little goodwill can go a long way with certain customers. And that’s not limited to marketing and advertising. It might be tough for a tech to break away from the normal sales pitch, but in the right situation, that can be a way to keep someone coming back.
“Sometimes maybe don’t upsell them to the next level and you convince them not to do something so that you build that trust,” Rodenmayer says.
Longtime operators will say that this is a huge part of the business. Make personal appeals to customers, play the long game, and they will help your shop weather the tough periods.
