A good friend of mine has a wife who drove a leased SUV. One day about three months before the vehicle was due to be turned in, the engine warning light came on. She hadn’t been paying any attention and kept driving even as the temperature gauge was indicating hot.
Then he got the dreaded cell phone call, followed by the tow to the nearest dealer, where they found not a drop of oil in the crankcase. It cost them more than $3,000 to have a rebuilt engine put into a SUV they had to turn in 90 days later.
Guess who ended up being blamed for this unfortunate incident? “You know the owner’s manual shows the last time I had the oil changed,” the wife complained. “If you weren’t so busy you would have taken my car in for service and this never would have happened.”
From my experience, cars and companies have a lot in common when it comes to keeping them running smoothly and achieving top performance. The owner’s manual for any business is the strategic plan that has been developed. The gauges are the financial reports that are generated on a daily, weekly, monthly, quarterly and annual basis.
Beyond those gauges should be warning lights that tell you when something needs your immediate attention. It may be a significant drop-off in car count. Perhaps inventory seems to be disappearing, or cash flow is not meeting daily operational needs, and credit is being extensively utilized.
As with a car, the appearance of a warning light is often tied to a failure to follow the plan, or an ongoing lack of attention to the financial reports. In today’s harsh business environment, just as with operating a vehicle in extreme cold or heat, the failure to invest in such maintenance can have almost immediate and extremely costly consequences.
The only place a vehicle will run by itself is downhill, and the same can be said about a business. So often in business, we let things run by themselves and never take the time to perform ongoing preventative maintenance to ensure it continues to run smoothly. To start, a preventative maintenance plan for your business needs to have several elements. There needs to be daily or ongoing maintenance, a monthly analysis, and a yearly review.
Every time we drive we make certain there is gas in the tank, regularly glance at the gauges, and stay alert for strange noises. We also check tire pressure on a regular basis, and even run the vehicle through a car wash from time to time.
Tire dealers should follow a similar routine of daily monitoring and maintenance. Look at items such as daily car count, average repair order, tire and service sales and profit results to ensure performance is meeting the target. There will be good days and bad days, but you should be constantly looking for any trends.
Negative trends can be addressed by making modifications to the weekly advertising or its focus. Results should be posted and shared with your team. There are a lot of key items that can be looked at, and depending on your business model you should develop a short list that can be reviewed and point you in the right direction when the numbers are off.
Examine your facility the same way a commercial pilot does a walk-around before take-off. The facility needs to be kept clean floors swept and mopped, trash emptied, bays clean, restrooms clean and stocked, and the showroom well merchandised with current displays.
Engage in ongoing coaching to remind your people of the need to take excellent care of your customers. Remind them to perform courtesy checks, recommend needed tires and services, and look for additional business, such as selling tire protection plans or service warranties. “Huddle meetings” with your team each morning are a great way to stress these points. Be quick to reinforce positive behavior, and coach those in need of additional direction. Make sure they stay motivated and understand the business objectives.
The point of ongoing daily maintenance is to ensure that minor issues are addressed before they grow into big problems. Far too many tire dealers get a rude awakening at the end of the month when they find that the actual performance did not jibe with the happy face they tried to put on things. As with an underinflated tire or low engine oil, the failure to make timely adjustments frequently ends up requiring a major expense.
Develop a daily routine that is supported by a checklist. Pilots use a pre-flight checklist for one simple reason the consequences of an oversight can be devastating. According to Dr. George Lucas, a senior associate with U.S. Learning Inc. in Memphis, most businesses that crash do so not because of a single major problem, but rather from a series of oversights that combine to create massive consequences. He says, “Some of these issues are more subjective, and others are more numbers related.
“The subjective ones mostly involve your people. In many cases you can walk into a business and sense in just a few minutes whether there is positive or negative energy in the place. When it’s negative, there needs to be an immediate change and that energy begins with the leader.”
For the objective issues, Lucas recommends the creation of a simple dashboard that can quickly tell you whether performance is meeting or exceeding expectations, as well as where it is lagging.
“You want one sheet that can be produced each day or week that tells you at a glance where your attention is needed. Color coded ones may work best, with a green, yellow and red orientation.” He recommends that this dashboard be highly visible on an ongoing basis. “They don’t put the temperature and oil pressure gauges in the back of the headrest. You want your dashboard to be in your line of sight.”
Lucas reports of one extreme case where the head of logistics for one of the largest retailers in the world made all of his “daily maintenance” decisions based on the input printed on a 3×5 file card. “It is not about drowning in data, instead it is about making informed business decisions in a timely fashion. A couple of hours invested with your bookkeeper or accountant to create the proper dashboard can save you many wasted hours, put money in your pocket, and can be the ultimate key to thriving and growing your business.”
Monthly and Quarterly Maintenance
Daily maintenance ensures that you can get your car out of the garage and on the road. Monthly or quarterly maintenance rotate and balance tires, alignments, checking belts and other fluids keeps it performing as an efficient machine.
Note that these are not on your dashboard you have to raise the hood and get your hands a little dirty.
Same with your dealership. There are a few things that need regular attention each month or quarter to keep your business achieving peak performance.
Review your monthly financial statements and compare them to your budget. This will help your cash flow as well as your expenses by category. Lucas says that unlike the Titanic, failing businesses do not have one massive leak. “They tend to bleed to death in something like reverse Chinese water torture. It is an ongoing dripping of cash, an organization’s lifeblood, out of the company. The warning may be a drop in accounts receivable or not having enough in the account to pay current bills. Once that light goes off you now have a symptom of a problem. Comparing expenditures to budgets will help you find out where the actual problems are.”
Evaluate productivity results. You may think you are selling tires and service, but what you are really selling is time. Many people go to time management workshops to improve their personal productivity, but you can’t manage time; you can only manage your consumption of time.
Time your store is open must be viewed as gold by everyone in your organization. No one would throw gold away, and all your team members must have the same mindset when it comes to available time. How effectively are you keeping your bays occupied? What about your technicians’ billable hours? What is your average ticket for the month and quarter? Don’t sell customers what they don’t need; simply find what they do need.
Review advertising plans and make adjustments as needed, always with an eye to driving traffic to your location. Most plans seem to assume that past conditions will hold, but this is rarely the case. A new competitor opens up down the street. Road construction limits access to your store. A stretch of bad weather keeps people off the road. Perhaps a large local employer reduced or suspended operations. Any of these can reduce the impact being generated by your advertising.
While smart, successful dealers maintain their advertising even in tough times, the answer is not to simply throw more money at the problem. Sometimes a revision in the approach is needed. Always attempt to track what brings customers in, and put your resources where the most impact is generated.
Plan training efforts where needed. You need to regularly assess what skills your team members in each position need, and what each person’s level of proficiency is on each critical skill. When one person’s skills are not adequate or begin to lag, that is a coaching issue. When this deficiency becomes widespread, that is a training or development issue.
Whether training is an in-house session, a public workshop, or online learning, it is the easiest thing to postpone. “We’ll do it next quarter or next year. We can get by for now,” is said over and over in all types of organizations.
Consider that the time with the highest return on investment is learning time. You can work one more hour today and that time is simply spent. When you invest time in training and learning, that one hour is multiplied a thousand-fold.
Follow up with your customers through an ongoing reminder program, thank you notes and even a monthly/quarterly e-mail newsletter. A large percentage of customers switch who they do business with based on a perception of indifference. They feel their patronage is simply not valued and if they leave no one will notice or care. Regular positive contact builds loyalty, and can root out a problem before it becomes a major issue.
The other side of this is to collect and review customer comments. You should, at minimum, offer customers a response card to provide feedback on your products and services. You could also provide a response system through your Web site, which can allow you to obtain more honest comments. Either way, you, your store management and key staff all need to review these comments as they come in, take immediate action to diffuse customer complaints, and then hold regular monthly and quarterly meetings to review those comments and actions taken.
You may recognize it requires that you block some time each month and quarter to “raise the hood.” You must put this time on your calendar and protect it just like any other critical event. If not, things could quickly spiral out of control.
Annual Check Ups
There are aspects of your business that should also be carefully evaluated on an annual basis. Near the start of a new year you should block several hours to put your organization on the rack, get underneath it and carefully examine several areas.
Review your strategic plan. Begin by looking at your mission statement and determining if it is still on point with your operation. Lucas says, “The mission statement is the most stable part of your plan. It will only change when who you are, what you do, and how you deliver value shifts. If you begin to offer extensive customization or some other expansion of the mix, then you would see slight modifications in your mission. If you find yourself changing your mission statement every year you most likely do not have an appropriate one.”
Revisit your SWOT analysis. This is the portion of your plan that addresses internal Strengths and Weaknesses and external Opportunities and Threats. You will likely see several changes year to year. You may have added new lines that are popular and considered strengths. Conversely, perhaps you lost your best technician and bench depth is now a weakness. What appears to be an improving economy could be an opportunity this year, where the downturn was a threat going into 2009.
Keep in mind that you should come up with questions about all four SWOT categories, but this should not be done on your own. A team member discussion that should take place as part of this annual process may be surprising and almost always highly beneficial.
Consider modifications in your budget. Even if you are monitoring performance to budget every month and quarter, you should take a long hard look at the annual budget itself. Capital availability may allow for expanded investment in things like equipment or a showroom upgrade if performance has been good, and a tightening of the belt if cash is tight.
Advertising budget and allocation is another item that requires special consideration. Set your allocation based on advertising mix and rates, competitive pressures, your promotional event schedule, and economic conditions. Far too many companies base next year’s budget on last year’s sales. Remember: sales do not cause advertising, advertising causes sales.
While most dealer advertising tends to be price- or product-related, this is a good time to look at using it to elevate visibility and the image of your organization, to build “your brand.” This can include community involvement with auto safety presentations to civic groups, charitable activities, and ongoing customer communication tools such as newsletters and blogs.
Human resource issues should also be considered, including staffing levels, performance and compensation review, as well as establishing a learning plan for team members. The learning plan should be done with group and individual input to gain a greater commitment to these decisions.
As you consider our vehicle maintenance analogy, you may come up with even more PM activities that should be done at regular intervals.
Look at your business and determine what needs attention and what areas will help improve your profitability and growth. Maintain the operation of your business and it will continue to run smoothly for years to come. As we have all heard time and again, “people don’t plan to fail, they fail to plan.”