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Five Ways to Optimize Your Tire Business in 2021

Are you working “on” your business or are you working “in” your business? What’s the difference? Those who are working “in” their business are spending their time putting out fires, answering phones, sweeping floors or maybe even picking up a wrench. Sound like you?

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Those activities don’t grow the business—they just keep it going from day to day. I’m not saying that business owners shouldn’t do those things from time to time, but if the majority of your days are spent on activities rather than strategy, you’re missing the opportunity to grow your business and plan for the future.

Here are a few things you might want to consider as you work “on” your business.

1. Understand Your Customers

Millennials are now the leading demographic in the automotive aftermarket and understanding their repair and maintenance preferences is essential. How are you reaching out to millennial customers in your area? What are you doing to make sure customers can find you on Yelp and other ratings apps? Are you managing your feedback on these apps? Do you have a presence on other popular social media platforms (Instagram, Facebook, YouTube and TikTok)? Be where millennials gather—and that means online.

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2. Be Ready

Recently, the owner of an automotive warehouse told me a secret about his most successful dealer customers: They order the parts a day in advance for vehicles that have “known” repairs and appointments.

For example, if your shop inspected a vehicle last week and decided it needed brake pads, rotors and caliper hardware for a front brake job and you scheduled an appointment, order those parts one day in advance. This gives your supplier a chance to draw any needed items from its DC and still deliver all the parts to you first thing the next morning. When that vehicle arrives for the appointment, the parts will be there, and you can put your technician to work right away. This can help your overall technician and bay usage efficiency. 

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3. Operational Improvements: Cost of Goods 

Evaluate your service and parts rates. Are you charging enough? Over the last year, we have seen the U.S. government impose tariffs on some imported goods and that has translated into higher prices for those goods throughout all parts of the supply chain. Have your parts and tire suppliers increased prices, and, if so, have you raised yours? What about service rates? Are you competitive with nearby shops? 

Looking at what you charge and finding opportunities for modest increases can help drive additional revenue. It can also help you keep current with any increases in cost of goods.

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Review all inventory and pricing agreements with suppliers, especially those providing automotive parts, for tiered arrangements that offer a lower price for greater volume. Consolidating from multiple sources of supply to no more than three primary vendors should make for better pricing and greater efficiency of the procurement process. This can improve overall gross profit per repair order and provide some flexibility on pricing that can be used in competitive pricing issues that occur with customers.

4. Operational Improvements: Shop Overhead

Always be on the lookout for opportunities to reduce your overhead expenses. One of my mentors likes to ask, “Is the money you are spending today helping drive revenue or improve the health of the business?” If the answer is “no,” then take proactive measures. Even a modest savings every month on non-essential or unnecessary overhead spending will flow through to your bottom line. This includes:

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  • Property and casualty insurance values;
  • Workmen’s compensation insurance for proper classification of employees;
  • All supplies being used in the business;
  • Credit card fees for payment processing;
  • Rates on equipment leases and telephone/data providers.

Review all overhead expenses for possible reduction due to changing business conditions as they are dollar-for-dollar savings and drop right to the profit line.

5. Differentiation

Consumers have a lot of choices where to get their vehicles serviced. When you find efficient ways to stand out from the crowd, you raise the visibility of your shop with potential customers. Here are some things to think about that don’t cost very much—and sometimes don’t cost anything!

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  • Provide “valet” service for customers who are working from home so they can get home and then back to the shop to pick up their vehicles. One of the biggest obstacles to consumers getting their cars serviced is lack of transportation while the car is in the shop. You can have a driver on staff, or contract with local Uber or Lyft drivers, to do this.
  • Offer a “First Responders/Essential Workers” sale day per week with specials on preventive maintenance items. This shows recognition of the work these individuals perform and your commitment to ensuring safe and reliable service from the owner’s vehicle.
  • Offer a free 35-point vehicle inspection to teachers and school staff and provide a discount on parts and services. You can be a “partner” to teachers by helping ensure their vehicles are reliable and ready.
  • Consider mobile services where specific repairs and maintenance can be performed at a customer’s home or place of business. Small fleets such as HVAC, plumbing, electrical, etc. contractors can use a preferred partner for this type of work, and, if necessary, service work can be performed at the brick-and-mortar location after hours for better utilization of the facility.
  • Review your advertising and marketing spend for effectiveness. What is the split between digital and traditional dollars spent on marketing? Is your marketing service/partner providing measurements of the impact of their recommendations?

Looking for ways to stand out from competitors is critical to the success of any business. This does not have to be complicated or costly. When you stand out from your competitor down the street, you have an opportunity to drive revenue and improve overall business performance.

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There are many ways to optimize your business, and we have addressed only five topics in this article. The point is that you should spend as much time as you can on the strategic direction of your business, rather than in the day-to-day tactical operations. It’s a difficult shift to make for many business owners, but if you aren’t planning and guiding your business for the future, who is? 

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