In The Bay: Shop Maturity
Not all shops are equal. Obviously. But why aren’t they equal? What sets one shop apart from another?
Things like location, the quantity of technicians in the area, and other local market conditions play a big role. But what if you hold those things constant? Often you’ll find two shops in the same general location, with access to the same technician talent pool, and subject to the same local market conditions, but performing very differently. We often see shops across the street from each other that have vastly different results. So what makes the difference?
It boils down to shop maturity. And I’m not talking about how old the shop is. A brand-new shop could be a lot more mature than a shop that’s been around for 30 years. Let me explain.
In his book The Seven Habits of Highly Successful People, Stephen Covey described a “Maturity Continuum.” On one end you have less mature, “dependent” people. On the other end you have fully mature people who have achieved what he calls “interdependence.” And in the middle is “independence.” Basically, achieving true maturity is a journey from dependence to independence, and then from independence to interdependence.
Shops work the same way. The least mature shops are completely dependent on others for their business to succeed. For example, they don’t take much action to sell new business; instead they wait for it to come through the door. More mature shops have achieved some measure of independence: they actively work to bring business in the door, but don’t necessarily get to know their customers well. And the most mature shops have achieved interdependence: they have close, high-trust relationships with their customers, who willingly provide a steady stream of repeat business.
So how does a shop go from dependence to independence, and then from independence to interdependence?
Dependence to Independence
Sitting around waiting for business to come in the door is a frustrating situation. You’re basically blowing in the wind, completely subject to the decisions of others. Whether your business survives or not is much more dependent on luck than it should be. You’re essentially an object waiting to be acted upon. So how does a shop break free from the shackles of dependence?
Covey describes three habits that break people out of dependence, and these same habits apply to shops as well. Put these into place, and you’ll move your shop from a state of dependence to independence.
1. Be Proactive
First, successful business owners don’t wait around for things to happen. They make things happen. They become an agent to act, rather than an object waiting to be acted upon. This is called being proactive. Proactivity applies everywhere, but is especially important for controlling expenses and increasing revenue.
One way to proactively control expenses is to regularly count your inventory. We recently released the State of Heavy-Duty Repair report along with the ATA’s Technology Maintenance Council (TMC). This report shows that 16% of shops never count their inventory, and 20% count it only once per year (this is usually because they’re required to for tax purposes). Shops that proactively count their inventory have lower carrying costs than those that don’t. Fullbay makes this easy with things like our cycle counting feature.
You can proactively increase revenue by working your shop’s revenue funnel. We recently released an article on how to do this.
2. Begin With the End in Mind
Second, you need to decide what you want your shop to eventually be. Are you building a lifestyle business that is essentially a replacement for a job you left? Or are you building something to really grow and scale – at a minimum something that will enable you to get out of the day-to-day and work on your business instead of in it.
3. Put First Things First
Third, you need a plan. Covey calls this “putting first things first.” Don’t leave things to chance. Every year, plan where you want your business to be by the end of the year. Don’t try to boil the ocean by setting too many goals; one to three are enough to focus on each year. We have a free financial plan you can download that is pretty much all you need for an annual plan.
Once you have your plan down, take time every quarter – every 90 days – to go offsite and do some strategic planning. Books like Traction can help you do this. Set one to three short-term, 90-day goals that roll up to your annual goals, then work as hard as you can to achieve them all. Once the 90 days are up, do your strategic planning again where you evaluate how things went and set a fresh set of goals.
Independence to Interdependence
Being independent is a great feeling, because you now control your own destiny. But there’s an even better state to achieve: interdependence. This is where you begin collaborating with other businesses, including your customers, to achieve greater heights than any of you could have achieved on your own.
Covey has three more habits that get you from independence to interdependence. This journey doesn’t happen overnight, and it requires others to adopt the same approach. Not everyone you do business with will go along with it. But in a commercial repair business, it’s the key to achieving success.
1. Think Win-Win
A common misperception of deal-making is that in order for one side to win, the other side must lose. It’s just a matter of making sure you’re on the winning side. This is called “win-lose.” The problem is that the supposed “winning” party soon creates a reputation for itself, and finds a dwindling pool of people willing to do deals with them. So the reality is that “win-lose” doesn’t even exist at all. It’s just another form of “lose-lose.”
The best deals are win-win agreements, where both parties truly win. That doesn’t mean you lay down and forfeit to the other side just to give them a win. That’s also a “win-lose” attitude, which is ultimately “lose-lose.” It means you go into conversations determined to find a deal where everyone truly wins.
2. Seek First to Understand, Then to be Understood
You need to be a good listener, and to be able to empathize. Commercial repair shops are a perfect example of the power of empathy. Fleets want to maximize unit uptime and prevent any unscheduled downtime. Shops want a steady stream of business. The better a shop can empathize with their fleet customers about what the fleet’s pain points are, the more business the shop can win from the fleets. Listen and empathize first; talk and present once you absolutely understand the other’s position.
This is a ’90s buzzword, but it is oh-so-powerful. Synergy, simply put, is where 2+2 equals 5 or more. It’s where the whole is greater than the sum of its parts. Continuing the commercial repair shop example, once a shop truly empathizes with its fleet customers, they will realize that they can really help the fleets by taking over things like tracking PMs, getting pre-authorizations for certain repairs so trucks get up and running faster, and proactively performing yard checks and PMs before the fleet even has to ask.
There’s an economic phenomenon that describes why this works. It’s called the Law of Comparative Advantage. Basically, as a company tries to produce more and more products, or provide more and more services, quality will go down and cost will go up. It becomes a “jack of all trades, master of none.” But if that company focuses on just a few things, quality goes up and costs go down.
So for commercial repair shops and their customers, the fleets, it’s basically: You focus on running the fleet; we focus on keeping the fleet up and running.
Embrace the maturity continuum. Moving your shop up the continuum while your competition coasts will absolutely mature your shop, give you a competitive advantage, make you more money, and make it easier to achieve your goals.