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Profits 101: A Little Education Can Increase Your Bottom Line

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Profits 101

A little education can increase your bottom line.

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Attention, class.

It’s a phrase that many throughout the tire industry have heard numerous times. It’s a phrase that many more still need to hear.

Finding properly trained help is something everyone in the industry wants. Poor performers are financial drains on any business.

But training can be a double-edge sword. Dealers do not have the time to send their employees away for training, and are often not qualified to train their own tire or service technicians. On the other hand, a well-trained tech will require a higher salary and will be more highly sought after by other service shops and dealers in the area. It’s a risk dealers have to take, because not having qualified, well-trained help can be more costly than not.

"In 1999, we surveyed our membership and the industry as a whole, and we found that 94% said finding trained and qualified employees was a problem for their business," said Ross Kogel, executive director of the Tire Association of North America (TANA). "The industry is crying out for training, and the vast majority of businesses feel they need more highly trained employees. I think this is a serious problem for the industry."

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Tire dealers want, need and are starting to demand well-trained tire and service technicians. They’re more expensive, but the money they can save in the long run is well worth the price tag attached. On the retail side of the tire business, the search can be a grind. Taking a lot of time and resources, finding qualified help may wear thin on a shop owner.

On the commercial side, however, separating the helpful from the helpless doesn’t take as much – training isn’t suggested, it’s required.

"In the commercial tire business, training is not an option. The Occupational Health and Safety Administration (OSHA) requires a training program," said Kevin Rohlwing, director of training for the International Tire and Rubber Association (ITRA). "If your employees are touching a truck tire, they have to be trained, and the training has to be documented. OHSA requires specific training, and the fine is $1,000 on average per violation. Very simply: it’s the law.

"And we don’t speak entirely on our own. We rely on the manufacturers of products related to tires and wheels," he said. "They all have specific guidelines, and people need to know them. We add our own information to fill in what’s needed. I think the training has given the guys who come through the program some pride in their work. They’re more knowledgeable, and they feel better about the role they play."

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Not Just for the Help
But training isn’t just for your employees. What educational opportunities are there for the tire dealer who wants to improve his business health?

"Our most attended International Tire Expo (ITE) seminar by far is ‘How to Improve Profitability,’" said Kogel. "People always want to know what they can do to make extra dollars. One of the key focuses for TANA is to get dealers to talk to each other about the different ways to improve profits and long-term financial health."

But training isn’t just about learning to retread a tire or getting the inside scoop on a new marketing tactic to improve your bottom line. It’s about changing perceptions. "The number one goal of training is to positively change behavior," Rohlwing said. "The dealers will tell you the training has had a positive effect on their business. They’ve returned to their business and implemented changes they learned while in training.

"As an example, I’d venture to say that more torque wrenches have been sold in the last three years than in the history of this business," Rohlwing said. "Now, the ITRA’s not going to take credit for all of that, but it’s been an issue we’ve been hammering on for the past few years."

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Interactive Panel Discussions
Just as Kogel said, one of the great things about training and seminars is that it gives dealers a chance to interact with each other. Dealers who would ordinarily never meet have the chance to discuss events and ideas, tactics and problems that can have an impact on their business.

Such was the case with TANA’s profitability seminar at the recent International Tire Expo in Las Vegas. Dealers were able to sit in front of a five-person panel and talk frankly about profitability issues. It provided a forum to bounce ideas off each other and see what’s working for some and not working for others.

"I considered the fact that I could be sharing some of my secrets, but the way I look at it, there are no secrets," said Larry Morgan of Morgan Tire & Auto Inc. in Clearwater, Fla., who participated as a seminar panelist. "Some people think they have special knowledge and don’t want to share that information with others. But I disagree. I think it’s a matter of execution.

"The biggest things I get out of the seminars I attend are ideas and solutions. That’s the bottom line. I either get solutions to problems I’m having, or new ideas that I would never have thought of on my own."

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Ideas and solutions were what many dealers wanted when panelists and attendees tackled the subject of whether dealers should be open on Sundays. A lot of pros and cons were tossed back and forth, but there was no real resolution to the big question of if it was financially worth it to be open seven days a week.

"There were a lot of good points made, and all the guys on the panel are successful in their own right," said John Wogan, the owner of Topline Tire locations in Brooksville and Springhill, Fla. "I have a couple of stores, and I reached a flat spot in my business.

"One issue that I’ve been contemplating was being open on Sundays and some of the lesser holidays. I just wanted to get an opinion from the panel, to get their thoughts on the subject."

As it turned out, of the five panelists, only Morgan maintained Sunday hours. A representative from Big O Tires said that the decision to be open on Sundays was left to the individual store managers, but of the 40-plus stores he knew of, only one was open all seven days of the week.

"Some of the panelists thought it was a good idea, some thought there wasn’t enough money to be made, and some didn’t want to be open purely for religious reasons," Morgan said. "And I thought the attendees got an open, honest perspective on the issue."

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"It’s always nice to get input from guys like that," Wogan said. "One person asked if I would be there on Sunday, and I said no. The point was if you don’t have someone who really wants to be there, you’re not going to make a lot of money.

"I went away from there thinking that being open on Sundays wasn’t the right way to go. If I was a multi-store owner and could rotate my employees, that would be different. I’m more of a small business, and Monday is always my busiest day. I have customers who said they had problems coming in on Sunday, but they were happy to wait one day to get the personalized service that I offer."

Missed Opportunities
Interaction like that is exactly what makes attending seminars important. You never know what you might be missing. "I thought there was an awful lot of talent on that stage, and what blew my mind was that even though the seminar was well-attended and the seats were filled, I thought it should have been standing room only," remarked one dealer as he left the seminar. "It was a great opportunity for dealers to come and hear some ideas that could help them in their business."

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Morgan also saw a value to the interaction of the profitability seminar, simply because it helped shed a different perspective on things. "There were some subjects where the panelists were in tune with each other, such as on the importance of employees. We differed on the issue of pricing, though. Some said they wouldn’t sell a tire if they couldn’t make a good gross profit. Others said they would sell at a low margin just to attract customers. I thought there was a good cross section of people and ideas."

What’s Involved?
Dealers recognize their techs need training. However, some dealers have no idea what’s involved when it comes to sending employees to class. And sometimes, not knowing can make a dealer reluctant to send his techs away. How much money will it cost? How far away will they have to go? How long will they be gone? All valid questions, and all fairly simple answers.

TANA’s retail training classes are held the same time every year – on Tuesday, Wednesday and Thursday afternoons of the ITE in Las Vegas. The classes are compact and to the point (about an hour and half long) and dealers and their employees can attend many of the classes and still be able to experience the trade show.

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The TANA Off-the-Road Conference is usually held in the first quarter of the year. The event is about three days long, and is held in an easily accessible resort location that makes it tough for dealers – especially those in cold winter climates – to turn down. This year’s conference will be held Feb. 15-17 at the Amelia Island Plantation near Jacksonville.

"You have to train your people the safe way to mount and dismount OTR tires. Safety is important for both the dealer and customer," said Al Chicago, TANA’s OTR Conference chairman, who noted that dealers and technicians can also learn about the latest OTR tire repair techniques, tread wear diagnosis and other key tire service techniques during the program.

TANA also offers an basic passenger/light truck tire technician training modules for home use, which includes a CD-ROM, training guide, and 91-question test. The association is working on additional components to what should prove to be a popular series.

The ITRA’s commercial tire training classes are all held in its facility in Louisville, Ky. The association runs between 20 to 25 training classes per year, some covering commercial tire service and others focusing on retreading. The classes are between three and four days long, depending on skill level, and can cost between $200 and $300 per person.

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"That’s counting paying the employee for the time, paying to cover the shifts, and paying for the class," said Rohlwing. "Overall, the training we offer is cheap when you look at how much training costs in other industries. But this industry isn’t used to paying a lot for training."

The four-day programs start on Tuesday, with the three-day programs starting on Wednesdays. The extra day is mandatory for techs with less than two years experience, but is an option for anyone else wishing to have more time.

"We start with a flat repair. We remove, fix, remount and install the tire during the Tuesday session," said Rohlwing, who conducts the training sessions. "For some of these guys, this is the first time they’ve ever changed a tire."

Wednesdays begin the classroom sessions and hands-on demonstrations. "We watch short videos and have up to an hour of discussion time for each video," Rohlwing said. "Then we go in the plant and the students watch while I demonstrate techniques. We’re probably in the classroom for a little over half the time."

Students are housed at a local hotel, which supplies shuttle service to both the airport and the ITRA training center, so there’s no need to rent a car. And lunch is also provided during class.

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The TANA training classes reach nearly 1,000 people annually. There are an average of 40 students in each csession at the ITE, and 200 to 250 people at the OTR conference. ITRA’s courses reach 250 people per year, and the instructional seminars at its World Tire Expo probably reach another 500 or so. Those are all good numbers, but they far from cover the total industry.

"We’ve conducted dozens of training programs and there’s still a lot that needs to be done," Kogel said. "We have to find out just how well-trained dealers and technicians really are. Once we find that, we have to figure out how to raise the bar."

Teaching the Future
Besides government mandates, there are several reasons why dealers go through intensive training sessions themselves. In one case, thanks to the ITRA, dealers and retreaders can become instructors themselves.

ITRA’s train-the-trainer Commercial Tire Service Instructor Training and Certification program has reached some 525 individuals, who have, in turn, trained nearly 3,000 commercial tire service techs.

Doug Smock, risk manager for Rabin Tire in Indiana, attended the ITRA’s Commercial Tire Service class in January so he could be certain the technicians handling the tires at his company knew what they were doing. And it’s worked. In just over 300 hours this year, Smock has trained 65 of his company’s employees.

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"In our business we do a lot of truck tire service, and it’s vital that our employees go through certification programs," he said. "Rabin has 32 stores and so many employees that it was important I obtain the training. Once a quarter I go around and put on some classes. I usually do two per quarter in Indiana, Kentucky, Illinois, Mississippi or Arkansas."

Not only does Smock feel he’s passing on valuable tips that will help others do their jobs better, he feels as though he could be helping to save someone’s life. "The biggest thing that our people receive is the training so they understand the safe way to actually do their job," Smock said. "This is a perilous business. There are a lot of small, hidden dangers in this job. And there’s a lot of unnecessary injuries and deaths that occur due to improper procedures."

Jeff Faubion of Tire Distribution System in Denver agrees with the hidden danger point. "It’s an excellent program, and it’s pretty much the only one out there that covers safety issues and OHSA compliance," he said. "I’ve trained more than 130 people.

"The last several years, I was an OTR tire technician," Faubion said. "I was moving into sales, and the company wanted to send me to learn how to become an instructor. It was an easy decision to make."

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For some, going through the ITRA’s training program was seen as a new venture. Perhaps even a way to change some perceptions in and of the industry. A challenge, as Aaron McCann, fleet development manager for Tire Centers in Norfolk, Va., put it.

"My background was in service, and my boss asked me if I was interested in going through the course," McCann said. "I was ready to take on a new challenge and I felt I was good enough with people to handle it.

"I believe in the training because changing and servicing tires has been looked at as backyard, shade tree mechanic-type stuff. Training is something that is needed. I may not have saved the world, but I think I’ve made a difference."

Beyond Round-n-Black
Tire and service technician training is a basic. And the industry-oriented conference seminars help dealers and retreaders garner ideas and concepts they can use in their businesses. But what about non-tire educational opportunities? How can dealers and retreaders learn to be better businessmen?

Some of the answers aren’t so cut-and-dried as going to ITE or attending an ITRA training session. Many tire companies offer seminars and classes on day-to-day business subjects like accounting, business law, personnel issues, and financial affairs.

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Depending on your location, local community colleges or even four-year schools are a good resource for more detailed business classes that can help you better understand more specific accounting methods, economic and financial issues, and legal affairs that impact small businesses. In addition, many offer classes on selling, customer relations, marketing and advertising, and computer sciences that can be of benefit.

Even your local community, either through city or school district programs, offers adult education classes you may find helpful.

We’re not suggesting you go get an advanced degree in business – unless you want to – but in today’s complex business world, it often takes a lot more than simple sweat equity to build and maintain a successful and thriving business.

Someone once said that profits are wherever you find them. Getting the right tools – education – is the first step to finding more bottom line dollars.

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