4 Ways to Add Structure to Specialty Aftermarket Shops



You started off holding the tools. Behind the CAD software. In the driver’s seat. On the welder. Your friends began asking for favors, and eventually you started charging them. Then you moved into a shop and the customers kept coming. You’re great at your craft, and your growing sales and happy customers show that.

At some point, you had to hire someone else to handle some of the load. Perhaps you hire an assistant, an administrator, or someone else to take over some of your tools. While this person relieves some of the burden, you’re still left mostly responsible driving the business forward. You built the business on late nights, creative solutions, and grit. That’s what shop owners do, especially when they are car enthusiasts, serving car enthusiasts.

All your appointments are in your notebook because your system works. You know your parts inventory because you looked at it this morning. Your vendors are paid because you wrote them a check for half the account balance and told them the rest was coming. You have handshake agreements with business partners because you didn’t know how lucrative they would be.

Do any of these situations sound familiar?

If you’re good at what you do and people find out, you will continue to grow. Now you’re faced with a decision: do you continue to grow and say yes to people trying to give you money, or do you cap your workload, be selective with your customers, and raise your prices?

If you want to grow the business, you will deliver your best to your customers if you implement structure.

What is structure?

Driven Performance Advisors focuses on 4 points that serve as the basis of structure that can be or has been developed for all my clients:

1) Owner’s vs. team’s responsibilities

2) Financial management

3) Workflow

4) Strategic planning

Each of these points plays a role in a greater structure that will allow your shop and business to run smoothly and allow you to focus on giving your best to enthusiasts.

Owner’s vs. team’s responsibilities

As you begin hiring staff, make the most of the extra hands by clearly defining each team member’s role and responsibilities.

Where can you add the most value to the business? Is it through teaching new staff how to deliver for your customers? Is it designing new products? Is it managing customer relationships? Is it all three?

What do you have time for? Can you handle being 100% responsible for all your tasks that add the highest level of value to the busines? Probably not. A good way to narrow down what’s most valuable is to ask yourself this question: if you only had 2 hours per day to work, what would you do to best utilize your time?

On the flip side of your responsibilities, your team’s responsibilities must be clearly defined so that your staff can confidently do their jobs.

When hiring, make sure that you clearly explain the job description to your new hires. You are a small business, so new roles will constantly change and adapt to the needs of the business, but it’s still important to give your new staff guardrails.

I suggest to my clients that new hires be given an overall mission that can guide all of their decision making. Something like “you’re in charge of making sure every car that comes in leaves on time, on budget, and with the highest quality work” if they’re a new workshop manager. If they’re a mechanic, their mission could be “every car you touch in this shop will reliably run faster lap times after it leaves.” This mission ensures that while their day-to-day may continue to evolve and look different, the end goal remains the same.

Financial management

Sound financial management is easy, but it’s even easier to take risks. Your business depends on a structure to run smoothly and putting the below suggestions (and more) in place will create the structure you need.

Pay your bills on time, take deposits on big jobs, keep a reasonable amount of savings, take advantage of tax breaks, and understand your financial position and cash flows.

Pay your bills 2 times per month. This way you know exactly when you expect cash to go out the door. This will also help build trust and rapport with your suppliers, who know they can rely on you to pay your accounts.

Facilitate your ability to manage big jobs by taking a deposit. This is especially useful when you don’t stock an inventory of the parts and materials you’ll be using.

Work with your accountant to ensure you’re in a strong tax position and develop reports that keep you informed on your company’s finances. A regularly generated balance sheet, income statement, and cash flow statement will help you understand how your business is doing. Get a comparison to prior financial periods to watch your company grow and evolve.

Workflow

Make a schedule of the work flowing through your shop and stick to it. The complexity of this goal will vary drastically by shop and the type of work you do.

If you are going to delegate schedule management to a new employee, think about all the considerations they will need to keep in mind. If a car needs paint and mechanical work, how long is the process? What two jobs on one car cannot be done at the same time? As a specialty aftermarket shop, your jobs are usually complex, but can have a degree of similarity that can enable you to add some structure.

There are several systems available that can help with this structure. Setmore.com or Calendly.com are simple tools used to manage appointments. If you’re looking for a complete garage management system, consider shopmonkey.io if you’re in the US or carvue.com if you’re in the UK. While neither of these systems is perfect for customization to the needs of specialty aftermarket shops, they do have many useful features.

You may need to develop your own system. Use Microsoft Excel or a calendar app to create whatever system works best for you. Driven Performance Advisors has experience building custom systems that bring clarity, organization, and structure to a variety of specialty aftermarket shops.

Strategic planning

Be clear on where you’re taking the company and how you plan to get there. Are you looking to expand into parts? Racing? Sponsorship? E-commerce? Entertainment? Multi-location? There are many strategic options you can select for a successful specialty aftermarket shop. While you can possible attack all of these areas simultaneously, you’re better off doing some divide and conquer. Set one clear goal, such as “3 sponsored cars under 7.8 seconds by December” and then work backwards to determine what you’ll need to do to make that happen, and what the positive side effects of achieving that goal will be.

By running 3 sponsored cars in the mid-7s, you’re generating strong brand awareness and happy customers. Each of those will drive more potential customers and sales to your business. To get there, you need to find sponsored customers with capable cars, and make certain you can achieve those performance goals.

What structure do you need to have in place to meet your goal and your strategic plan? You need time to do the work, cash to cover the sponsorships, and promotional support once the builds are done and hitting their numbers.

Thinking about your strategic planning will cause you to add structure and have clear initiative in where you want to take your business.

In Conclusion

You’re a shop today…what could you be in 5 years? A shop, a racing team, and a parts distributor? How can you get there? Structure – your new best friend.

Want to learn how other shops are building structure into their business? Get in touch: arun@drivenperformanceadvisors.com.

25 views

Subscribe to receive the DPA Weekly, a weekly article discussing consulting insights in the automotive aftermarket, sent every Friday, and other updates from Driven Performance Advisors

  • Instagram

arun@drivenperformanceadvisors.com

Working with the aftermarket globally

© 2020 by Driven Performance Advisors.