For the smart operator who understands his overhead and is dedicated to attracting new customers, that can portend good things ahead, said Newton, owner of the Educational Seminars Institute (ESI). 

"At the same time, this can be devastating for the old-style business that says they have never needed to advertise because they have always been busy," he said.

"There is definitely pressure building on shops at all levels of the industry," Newton said, "but the owners who aren't really business people will feel it first.  The better managed the shop is and the more financially sound, the more tolerant they are to this sort of market pressure.

"I think that the way you're going to survive this is to understand the dollars and cents of your business," he said.

For those shop owners that feel overwhelmed, Newton said, "you are not alone.  I would say that fully 80 percent don't understand their numbers.  I find a lot of people are absolutely amazed by what it costs to run their business because they've never added it up."

Because owners often are unaware of the underlying financial issues affecting their profitability, Newton said they often spend a great deal of time and money on the wrong things.  "It's like diagnosing a car," he said.  "You really can't fix it until you know what's wrong.

"If you're going to turn this around, you have to become a student of your business," he said, adding that there are many places to begin gathering the knowledge you need, including a good accountant, community colleges, trade associations, and training groups, such as ESI.

"It's going to take a little time, but the most important thing is to figure out what needs to be fixed first," he said.  "Then you have to be actively seeking knowledge at all times."

If money starts to tighten up, the first things that many shops cut are marketing and training, Newton said, just what's most needed.  "While we are in the process of finding out what is happening financially, you have to keep marketing your business because everyone else is marketing for your customers," he said.

Newton said that for the last four to five years, he has been urging shops to increase their marketing efforts.  "The shops that are geared up to advertise and who are offering customers a better value are going to do very well in the long run," he said.

Marketing does not have to mean spending a lot of money, though, Newton said, noting that a lot of marketing, including going to local chamber of commerce mixers or joining your local Kiwanis club, requires an investment of time but not much money.

"You can go through your previous month's invoices and look for recommendations that were made but not purchased and call the customer to see if they might be ready now," he said.  "Or if you have an e-mail list and you see that work is light, you can send out an e-mail blast that can generate work for you tomorrow.

"I think what affects this more than anything is the owner's attitude," Newton said.  "You can be reactive or you can be proactive."

Newton said ESI uses a combination of approaches to help owners improve their operations, including a series of 10 management classes, a service writer school, and several levels of personal consulting.

The company's 10 class series is offered on a regular schedule and focuses on a variety of management subjects, Newton said, including financial structuring, sales, customer service, employee development, communication, and advertising and marketing.

"The goal is to give them -- on a regular basis -- another piece of the puzzle," he said.  "This allows them to gradually build on what they have learned."

Unlike some trainers who focus just on the owner, Newton said, ESI's training is for the entire shop.  "We firmly believe that we need to train the entire staff," he said, "rather than just train the owner and then leave him to take it back and try to interpret it for the employees.  New ideas have more impact when they come from someone else."

The program can be purchased as a set of 10 clinics or separately, Newton said.  Those who are participating in the full schedule receive unlimited free phone support as well, he said, while those who purchase a single class receive a month of phone support on the subject they attended.

ESI's Service Writer School is 16 hours of training over a Saturday and Sunday.  The class, with a maximum of 10 students, covers subjects such as personal development, telephone skills, handling objections, and Bureau of Automotive Repair laws.
 Newton said ESI also offers coaching and consulting through regularly scheduled phone calls or on-site visits.  "It depends on what they need and what they want to accomplish," he said.

For a potential new customer, Newton said ESI likes to sit down with them in person or on the phone to discuss their troubles and tailor a program to fit their needs.

"If they want to make immediate adjustments, the fastest way is through in-shop coaching," he said, adding that they prefer that shops also sign up for classes.  "The classes develop the groundwork for changing their thinking.  We certainly don't think there is any one-size-fits-all answer."

In fact, Newton said he thinks ESI is just one part of a corporate team that a shop needs to truly excel.  In addition to a trainer/coach, he said, he suggests a good attorney, accountant, insurance professional, and a financial planner.  "With these five people, you are going to get different pieces of the answer, and the owner's real job is to bring them all together."

 Because financial problems often come on gradually, especially for shops that have achieved some measure of success in the past, they sometimes don't realize it is happening until it is serious, Newton said.  "They are losing market share and profit," he said.

Newton said he likes to help shops set realistic expectations for what can be gained through the training and coaching.  "My ultimate goal is to teach the shop owner to know their business so well that the ultimately don't need me."

"To me the biggest compliment is for an owner to say they don't need me because they understand their business so well," he said.  "Getting to that point often takes two to five years," he said, adding  that there are usually things they can do to help improve cash flow in 30 to 60 days.

"It usually took them five to 10 years to get to the point where they call me, so give us a couple of years to help turn it around," Newton said.

While issues such as consolidation and increases in technology are challenging shop owners, Newton said it is important that they decide whether they are committed to continuing in the market and improving their businesses.

 
"I think we're approaching a milestone very much like what blacksmiths faced with the horseless carriage," he said.  "Many said, 'I'm out of business.  There are no more horses or wagons,' but others said, 'Look what I get to work on now.' 

 
"I think there are great opportunities," Newton said.  "The business is definitely changing, but it doesn't matter what the car is fueled with; somebody is still going to have to fix it."