Las Vegas -- It's a fact that business owners make mistakes. The key is to learn from those mistakes. Mitch Schneider, a fourth-generation shop owner who operates Schneider's Automotive Service in Simi Valley, Calif., revealed the 10 most common blunders he and many other shop owners commit during a recent seminar at Automotive Aftermarket Products Expo (AAPEX).
"If you're not making mistakes, you're not doing anything," Schneider told an audience of repair shop owners at the seminar on Nov. 1. He pointed out that those mistakes generally fall into two categories, leadership and management.
Don't assume
Making assumptions is the first blunder that Schneider said he made. Whether it's assuming employees understand the owner's vision or purpose for the business, or assuming that competitors down the road know what they're doing, is a mistake, he warned.
Schneider admitted that over the years, he experienced anger and frustration toward people working for him. "I failed to communicate and share my vision with them," he said, adding that he couldn't understand why they weren't doing the things he wanted them to.
Just as Schneider made internal assumptions with his employees, he said he made external ones, too.
"I thought people were smarter than me, and I copied them," Schneider said of his competitors. "They were just doing what they had always done," he said. "I didn't know the model was flawed.
"One of the most pervasive things is that our industry is married to the clock," he said. "A lot of the tension and pressure we face is because we have a craft-based industry and we're trying to force it into a mass-production environment."
Too expensive? Never
The second most-common blunder is that most shop owners think that customers believe their prices are too expensive, Schneider said. "You just think you're too expensive because no one has ever walked in and complained that you were too cheap," he said, adding that people are simply trained to ask about price first. Schneider said he once raised his shop labor rate by $6, and not a single customer questioned it.
"Unless you understand your shop's key performance indicators, you can't know whether or not you're too expensive," he said. "It's so more expensive to work on vehicles today," he added, pointing out that things like road test time and specialty tools must be accounted for.
More work to be had?
Early in his career, Schneider said he believed he could be too busy. "You can't be too busy," he said, "not unless your service bay productivity is 100 percent or more." Service writers must sell every available hour, he said, and you need technicians that are meeting their quotas.
Sales don't equal profits
"I believed that the higher our sales numbers were, the more money we were going to make," Schneider said, adding that that doesn't work unless you know what your accurate profit margins are. "Marry the two (sales and profits) with margins that are correct," he urged the audience.
A 70 percent profit margin should be made on labor, he said. "You need a certain amount of profit per hour to float the boat," he said. "It doesn't matter where it comes from. Ask yourself, 'If my margins aren't right, why aren't they right?'"
Why don't I know what to do?
Don't assume you know what to do when starting out, Schneider said. At the outset of his career, he said he thought he should inherently know the repair process.
That means someone will have to inspect and test the problem, which takes time, he said. "Getting paid for the inspection and testing isn't enough."
When a vehicle comes in with a problem, it requires a 15-step process that starts with information gathering and ends with a follow-up with the customer. "This takes time," Schneider noted.
Word-of-mouth marketing isn't enough?
Shop owners need to put their name in front of customers six to eight times a year, Schneider said, adding that word-of-mouth marketing is not sufficient to accomplish that. It's human nature for people to want to share pain, he said; conversely, people who have a positive experience only typically tell three people.
"You have to build top-of-mind awareness," he said. "When they have a problem, you want them to think of you first."
Price isn't enough, either
The seventh blunder is a shop owner's desire to offer the lowest price, Schneider said, a tough area in which to compete. "There's a difference between price shoppers and bargain hunters of good faith," he said. "Some people can't afford to make a mistake. These people make wonderful customers."
Satisfaction doesn't equal loyalty
"Research across all industries shows that 65 percent of all satisfied customers will try another vendor if the right circumstances present themselves," Schneider said. Shop owners must be able to distinguish between consumers, customers, and clients -- the ones who fully trust a shop, he said. "It's important to know the difference. We have to learn what turns a customer into a client."
You're not alone
Being independent shouldn't be the goal of a shop owner, he said; rather, it should be working toward interdependence. "I thought I was John Wayne," he said of himself as a young man. "The shop down the street isn't your competitor." He urged the audience to join trade associations such as the Car Care Professionals Network, a segment of the Automotive Aftermarket Industry Association, to network and learn from others' mistakes.
Leadership and vision
"I didn't realize that it's all about leadership and that leadership is all about vision," Schneider said, adding that it's the job of a business leader to shift paradigms through vision. "Walking on water is easy if you know where the rocks are.
"It doesn't matter how smart you are unless you can communicate with others," Schneider pointed out, adding that the message of, "What's in if for me?" should always be kept at the forefront. "As a business owner, you must recognize that you're the one responsible."