AKRON (Aug. 4, 2008) — When all's said and done, the owner or manager runs the business and ultimately is responsible for it.
This may sound like a foregone conclusion, but some tire dealers and service shop operators I encounter seem to need this reminder.
Regular Tire Business readers know I've been covering the automotive repair industry for a long time. One of the most persistent problems I have encountered is owners and managers who don't charge enough for the services their businesses provide.
The main reason they don't charge properly is that they don't seem to understand their true costs of doing business. From one side of the mouth, this boss claims to know the cost of doing business. Sadly, he or she then makes decisions that suggest otherwise.
No one ever said running a business was or is easy. Simply put, it takes discipline, backbone and a commitment to a company's long-term health to make the tough decisions that best serve a service shop or tire dealership. It's infinitely easier to give in to a motorist and do a job for a cheap price than it is to sell a job successfully.
To me, selling successfully means convincing a doubtful motorist that you're really worth what you're charging for a diagnosis and repair. Specifically, this means you're pricing the work based on your actual overhead—including factors such as tools, equipment, training and knowledge.
In other words, your price is not based on what competitors are charging! After all, a competitor's cost of doing business is rarely the same as yours. For that matter, the competitor's quality of service is seldom the same, either.
Meeting or exceeding customer expectations is a worthy goal. But doing so doesn't mean giving the store away. Being a responsible business person doesn't mean allowing motorists to run the business, effectively, by dictating the price of maintenance and repairs.
Fundamentally, your cost of doing business—not what consumers perceive is a good price—largely determines what you charge for your work. When customers attempt to dictate price, it sounds like a bidding war of some kind. If they're so convinced they're entitled to bid on something, let them go to eBay.
The ugly, unavoidable fact is that literally thousands of auto service establishments have gone out of business—especially in this brutal economy we're experiencing—by trying to win an unwinnable battle called price. Experience shows there's always some “price whore” in your area who will do the work cheaper than you can. Those types will always cater to and attract a certain clientele.
Meanwhile, the competent auto service facilities that survive and thrive cater to that percentage of the motoring public who appreciate and value quality work—repairs done correctly the first time.
Experience tells us that the weaker the economy, the tougher the service sale becomes. The more challenging the sale becomes, the greater the risk of behaving irresponsibly. Allowing customers to dictate price in order to get a job is irresponsible.
This is not a healthy practice for the long haul. Rather, it's the sign of a desperate boss taking desperate steps in order to keep the bays busy.
Tell me if you believe you're a responsible boss. If you think you are, then answer some timely questions. For instance, how did this tire dealership or service shop get to the point where it's so desperate for work? What have you been doing in the way of image-building? What have you been doing to promote ongoing maintenance? What have you done to attract and retain value-conscious motorists as customers?
I predict this current economic slowdown will take another round of casualties from the automotive service sector. Bad times tend to thin the herd in every kind of service business. It's a crying shame to see any business die. But tears won't negate the fact that irresponsible management usually put a service shop or tire dealership in jeopardy some time ago. This recession just happened to be the straw that broke the camel's back.