GOOD MONEY AFTER BAD

A whole lot more of less, is a whole lot of less

Column by STEFANO LIESSI

Are you feeling a wee bit stunted in your growth? Interestingly, from recent inquiries, I have been told on multiple occasions that shops are booking weeks and even months out. This information tells me—a neighbourhood leader in analytics—that growth isn’t the problem; it is managing the growth and retaining some revenue from it.

My question to you: how much growth are you leaving on the table?

When processes get out of control, we throw good money after bad or leave the good money on the table. It is tough to say ‘NO’ to more work coming through your door; the fact is, if you are over your capacity, you are stunting your growth. Having a pile of vehicles that have yet to be repair-planned outside ‘waiting,’ is a waste of time. Anytime you are waiting for someone or something, you are wasting time.

Growth is more than just a bunch of jobs waiting in line; it is getting the revenue out of them and possibly reinvesting it. Ask yourself this, “do I have any vehicle in my shop waiting for a part or parts?” If you answer this with a yes, that vehicle is not growth but a cost. Now ask yourself this question; “how many of my stalls are without a tech?” or “how many techs have more than one stall?” You are stunting your growth if you do not have a tech per stall. It is physically impossible for a person to work on two vehicles at once. Studies show that every time you drop one task to begin another, it takes an average of 20 minutes to get back to the flow you were at on the first task when you come back to it. The argument has been presented that “my tech needs a second stall for reassembly or (my favourite) small jobs. If the shop has a dedicated reassembly area, then lovely. However, this decision needs to be part of your scheduling; this balances your KPIs, which, as you have heard me say before, many of you are held hostage by.

Let us say for a moment you could grow your business without investing a wad of cash and by reducing the intake to reflect your actual capacity. Yes, that is right, you read it here first for the umpteenth time ‘more OUT of less.’ This is NOT the same as ‘more FOR less’.

Repair planning is a crucial element, as is scheduling. These two processes go hand in hand. You ask why—well, because you create accuracy when you account for all the line items, parts, and processes upfront. This accuracy is what you need to have an accurate schedule to keep your actual capacity running smoothly. Missing an item or operation, creates a bottleneck. This means waiting on something or someone. If you can have a tech in each stall turning through work that is correctly repair planned without delays, you will see exponential growth. The art of repair planning reduces supplements, increases touch time, reduces LOR, and improves cycle time, all of which are reflected in your bottom line because you are billing for the operations performed.

Yes, it is true that you will have to deal with some friction, but rationalizing the confirmation bias is also not the answer. Let’s clarify; accounting for all your line items will bring in more true revenue, needing less vehicles (more out of less). Leaving out line items is equal to discounting your work; ergo, you try to make it up on volume (or leaving line items off the RO) means (more for less). A race to the bottom. A whole lot more of less is, a whole lot less.

Now, what you could do is buy more shops! Yes, great way to grow your business. Or is it? When the decisions are made based on true proper data that reflects reality, then yes, this could be very lucrative; however, if the shop[s] you are about to purchase rely on volume to make up revenue then you could be sliding down a very slippery slope. Recently, in an article in Collision Repair magazine, we learned of a large MSO that has gone into protection for bankruptcy. This is not an experience anyone wants to go through, and sadly it is a very vicious vortex once operations reach the point of no return. It may sound equivalent to, “you can make it up on the next one.” No, no you cannot.

Why would I be able to make it up on the next one when I can’t make it on this one? It will never happen. Never has, never will. As I stated earlier, often people throw good money after bad, and unfortunately this occurs when they are leaving good money on the table. It only takes one hiccup for the ‘high-volume, low margin train’ to come to a stop. Instead of buying up shops to grow your business from the outside, grow it from within first. Once you do this, you are better equipped to take on the outside revenue. Having all that money tied up in multiple operations with all of them leaving money on the table, sounds like a recipe for disaster, doesn’t it?

The most accessible place to gain growth is in front of you. There is no magic, no special equipment, no special training certificates, no Keebler Elves, just the simple operation of slowing down and accounting for everything. In my opinion, and you are all entitled to my opinion, correctly managing what you already have through proper repair planning will be more growth than you imagined. Anything after that is a fine wine. And a fine wine pairs nicely with a plate of tuna pasta.