I go to quite a few tire industry conferences, trade shows and training events each year. Inevitably, there’s a session about working with millennials in the workplace (or how to deal with millennials) and it’s led by someone who’s about my dad’s age. It’s not a knock on my dad or his generation. Far from it. My dad is the reason I chose a career in the tire industry. But I’m tired of people talking about millennials who aren’t millennials themselves.
If you’re going to lead a talk about building big walls, you should probably be someone who knows how to build big walls. If you’re going to talk about millennials, you should probably be a millennial. A novel concept, right?
Well, here it is. An article about millennials in the tire industry written by a millennial in the tire industry.
A Millennial Manifesto
For years and even decades, we’ve been waiting. Waiting for our turn. Waiting for our opportunity. We started in the shop changing oil and busting tires. We watched and we learned and we perfected our skills. We graduated to working behind the counter and dealing with customers on the phone. And now it’s our turn.
But of course this isn’t just about millennials. This is about who’s next in line. Last week in Wisconsin, I met a 28-year-old Iraq war veteran who bought his business two years ago. The week before that in Illinois, I met a 42-year-old longtime employee who bought the business after the previous owner died in a jet ski accident. They’re both next.
Most of the great tire people I’ve ever known are much older than me. Some of them work for a manufacturer like my dad. Some of them work for a marketing group like the now-defunct American Car Care Centers (Len Lewin, one of the finest tire people there ever was). A few of them work for tire distributors. And most of them own single tire stores.
Predictably, entitlement comes up in our conversations about the next generation. Millennial employees expect the stars and the moon and they want it right now. They aren’t willing to grind it out and wait for their turn. They won’t come in early or stay late or come in on Sundays.
The truth? The truth is that we watched our parents grind it out and wait for someone to choose them for decades. We watched them put in the long hours and put up with the politics of working for a company and dealing with the headaches. Then, in 2008, we watched them get laid off and tossed to the side. Or relegated to the sidelines in wait of retirement. The Great Recession totally and permanently tinted our view of the world. And that’s not all bad.
Most millennials are not entitled, you see. Our expectations are simply different. And I’ll go out on a limb and posit that our expectations are not simply to work for someone else for the rest of our lives. We want to own the business or at least own part of it. We want to be the owners of our reality, of our lives, and of the horizon.
And yeah, there are some of us who really are just lazy. I’ll make no excuses for them. My advice? Fire them right now. You’re doing no one any good by keeping them around.
But I’ll bet if you look hard enough, you’ll find that the lazy ones are among the minority. Or maybe you’re just not challenging and engaging them enough. Ultimately, entitlement is a learned behavior. We’re not born entitled. We become entitled based on what we see and learn and experience while we’re growing up.
My job is basically to travel the country and sign up new business. I’ve spent the better part of my career doing that in some capacity or another, probably not much different from you. And based on what I see and hear, we’re on the precipice of a monumental shift in the tire industry. The sheer number of tire and tire-related businesses that will change ownership within the next decade or less is massive. This changeover creates an enormous vacuum of leaders and owners and unless the next generation of great tire people steps up, our industry faces an uncertain future.
But as a millennial in the tire industry, I like what I see. I like our chances. Whereas some who are entering the twilight of their career might feel our best days are behind us, I see the beginning of the next chapter.
I believe there’s a literal army of next-gen tire leaders waiting for our turn out there. And if you are among our ranks, consider this your official call to action. From the concrete jungles of New York City, Los Angeles, Chicago and Dallas to the badlands of Kansas and the oil-drenched dust bowl of West Texas, opportunity is on the horizon.
Into the Owner’s Seat
Successfully making the shift from employee to next-up owner requires a fundamental shift in thinking. It’s pretty fair to say that all things worth doing are not usually easy. And this is no different. So if you’re among the next owners and leaders in our industry, where do you start? Some tips.
1) Buy an Existing Business: While the world may be your oyster and the internet is infinite, the tire industry is still a brick-and-mortar world. And in our case, that means either buying an existing business or creating a brand new business. It’s difficult or perhaps impossible to specify exactly how long it takes for a new business to reach profitability based on a few dozen factors, but according to most reputable sources, it’s fair to say that most new businesses won’t reach profitability until year three or four. But I’ve met new business owners who made money the first year and I’ve met business owners who never become profitable after nearly a decade.
That said, it’s usually easier to grow a garden where sun, soil and water already exist. Even if the former business and/or owner had a less-than-stellar reputation in the community, you’d be amazed by how much ground you can make up on the internet and social media. Organic growth is hard and expensive. Acquisition growth gives you at least a solid base from which to grow and improve.
But this recommendation comes with a warning. There’s an entire generation of business owners who have invested decades of their lives into building businesses that are worth a fraction of what the owners’ think they’re worth. Be careful of the “blue sky” payment – the amount paid above and beyond the price tag of the depreciated assets. Grossly overpaying for an existing business is a surefire way to ensure you’ll stay in the proverbial hole for a long time.
2) Owner Financing or Suiting Up: Instead of going to the bank for a small business loan, the former business owner may offer to allow you to make monthly payments to them or to their estate over time. This is preferred to “suiting up” and meeting with a banker. Oftentimes, you’ll be able to negotiate lower interest rates with the previous owner than what the bank would offer. And although we’re still living in a low interest rate world, those rates are rising.
3) Decide What You Will and Won’t Do: What makes companies great is as much about what they don’t do as what they do. So decide from the very beginning what you will not do. For example, there’s a particularly massive opportunity for next-gen tire leaders to move into the Ag tire service segment. What are you willing or not willing to do? Farmers are among the most frugal customers there are – and there’s nothing wrong with that. But do enough negotiating on price and you’ll quickly negotiate yourself right out of business. Learn those lessons in the beginning and don’t repeat them. Are you willing to be open on the weekends or not?
Are you willing to take on the liability of selling used tires or not? Will you buy a service truck and offer truck tire road service or not? Be clear on your plans.
4) The Customer Experience Will Never Exceed the Employee Experience: My dad told me a story about one of his good friends in the tire industry. This tire dealer and his wife were excellent operators and retailers. They were both 10s. And when it came time to grow the business and hire more people, those first hires were crucial and the first few employees were also 10s. But later on, they realized they were hiring 4s and 5s out of necessity.
Hire tough and manage easy, or hire easy and manage tough. Then take great care of those great people. It really is that simple.
5) Profit Heals All: Simply put, “Revenue is vanity; profit is sanity.” Would you rather own a business that nets 1% on sales of $1 million or would you rather own a business that nets 10% on gross revenues of $500,000? Who cares that you sold 5,000 tires last year if you gave them away at cost or close to it? Who cares that you did 40 $19.99 oil changes last week if you don’t have a great 30 or 100-point preventative maintenance checklist and service writers who know how to sell? Profit is the end. Everything else is a means to the end. Begin with the end in mind. Always.
6) Replace Expectation with Gratitude: If you enjoy learning, check out Tony Robbins. He’s written many books and also does a bunch of podcasts. Tony advocates replacing expectation for appreciation. This one goes back to the entitlement; stop expecting and start appreciating. You can’t be grateful and hateful simultaneously.
And to be clear, ownership is not an entitlement. It is a responsibility because as an owner, you’re no longer responsible for only yourself. You probably have employees. There was a good (not great) tire business in western Indiana that changed ownership about 18 months ago. The previous owner wanted to retire and a longtime employee bought the business then promptly ran it into the ground. The new owner is young and he confused entitlement with responsibility. If you’re going to own a tire business, absentee ownership just doesn’t work in the majority of cases. As an owner, if you’re not willing to sweep the floors and take out the trash, how can you expect anyone else to do it for you? Ownership is a responsibility.
7) When We are Closed to Ideas, What We Hear is Criticism; When We are Open to Criticism, What We Get is Advice: This one is tougher than it sounds because sometimes it means getting feedback that you don’t like. Feedback that stings. It sometimes feels like a personal attack. The question is not whether you can radically improve overnight, but rather, can you improve 1% every single day? Are you better in some way at 6 p.m. than you were at 6 a.m.?
When you honestly ask for feedback from people you trust and genuinely listen and learn from what they have to say, what you hear is advice. When we close our minds, what we hear is criticism. Crafting a constructive culture of candor is like buying insurance to guarantee your business will be around and profitable as long as you want it to be. It’s this discipline that results in freedom. And ultimately, isn’t that freedom the point of ownership in the first place?
8) Find Your Partners. Choose Your No. 1 and No. 2. Everyone Else Can Kick Dust: A lot of business leaders talk about how it’s lonely at the top. And it probably is if you’re doing it wrong. But ownership requires partnerships.
In this case, think of your business as a box. You decide what goes into that box. Now find partners that support you the way you want to be supported, who give you the tools you need to make that box exactly what you want it to be.
As a business owner, you’ll meet or talk to several salespeople every day. I’m one of those people. It’s my job to sell you what I want to sell you. But what I want to sell you may not be what’s best for your business. You get to decide what goes into the box that is your business.
My company sells 46 brands of tires, but that doesn’t mean your business can or should try to sell 46 tire brands. My recommendation is to pick a primary program that constitutes 80% of your tire sales, then a secondary program that makes up 10-15%. The remainder is the customer who absolutely insists on Brand X or Brand Y and isn’t open to your recommendations.
This is where a little homework will go a long way. Take the time to do your own unbiased research on brands and programs. If you have a tough time getting your hands on the programs, contact a good multi-branded distributor and ask for all that they have to offer. The good ones will be happy to send you the info. For example, did you know that the Continental Gold program can pay about 9.8% in program money alone if you max it out? Did you know that the Yokohama Advantage program can pay up to 9.5%? Other programs can pay even better, but you’ll need to also consider the competitive landscape in your area so you can make some money on invoice while staying competitive in your market.
Bottom line: Decide on your No. 1 and No. 2 tire brands. Decide on your first and second call for parts. One supplier is not enough. Two or maybe three suppliers is the sweet spot. More suppliers causes paperwork and billing headaches that nobody has time for. Everyone else can take a hike for now. But be nice. You might need them later on.
9) Stay Hungry, Set Goals and Continuously Improve: Last week, I found myself 40 feet in the air, installing a Continental Tire sign at a tire dealership on the south side of Chicago. The business owner is one of those guys who is a top 1% in the industry – just a great person and an excellent operator. It shouldn’t have surprised me to hear that he’s part of a 20 Group and that it’s the single best decision he’s ever made as a business owner.
I’ve never been part of a 20 Group myself and I’m not paid by any of the companies that run 20 Groups. Nor am I here to tell you that everyone should be part of a 20 Group. But in the words of this Chicago tire dealer, working on your business is not the same as working in your business. If your net profitability is below 10%, there’s room for improvement.
In the sage wisdom of management guru Peter Drucker, you can’t improve what you can’t measure. So start measuring your key performance indicators, set financial and non-financial goals and enlist the help of someone who will hold you accountable to those goals. Joining a 20 Group is a great way to do that, but it’s certainly not the only way. It just might be the best. (Note: If you want more details on 20 Groups, contact editor Patti Renner at [email protected])
The Time Is Now
These nine tips are not an exhaustive list. There is no single recipe for owning a remarkable tire business. What I can tell you is that the opportunity is there. There is under-serviced demand in the marketplace. There is a place for you and frankly, we need you.
In our lifetime, we’ll see autonomous cars, more efficient transportation and more people moving out of the rural areas and suburbs for the cities. But for every 100 things that will change, there are another 100 that won’t. We still need someone to service the parts of the vehicle that can’t be fixed by a software update sent via Wi-Fi. We still need someone who knows how to properly align a vehicle with 1,200 sensors, along with business owners who have the vision to invest in new equipment and training.
We need you. Now is your time. Will you accept the challenge of ownership? Will you choose yourself? Don’t wait.