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Principles of Production for an Auto Service Business
Posted by Bud Abraham
|
Principles of Production for an Auto Service Business October 26, 2003 05:01PM |
Registered: 17 years ago Posts: 3,550 |
<HTML>A few months ago I wrote an article for one of the trade journals about the principles of production for an auto service business.
These principles were developed by a small business consultant to the auto service industry and I found that they really hit home with the detail business.
If one drew out a pyramid and started at the bottom with these principles as follows they would get the point of how they applied to their business.
Forming the foundation of the pyramid and moving up to the top the importance for the business becomes smaller and smaller:
1. Management
2 Personnel
3. Equipment
4. Facilities
5. Chemicals & Supplies
MANAGEMENT - how you Manage your detail business is the critical aspect of success. Do you know what to manage? In order of importance you manage:
a. People - employees and customers
b. Finances - knowing your costs of operation and pricing correctly
c. Equipment; Chemicals & Supplies - least important management area
PERSONNEL - this involves selectively hiring the best available people; training them properly; reviewing with them; motivating them and retaining them.
EQUIPMENT - purchasing that equipment that will increase production (more cars processed per day) and reducing labor.
FACILITIES - having a shop that is in the area of your target markets and one that is attractive to the motorist; one that is laid out properly for good traffic flow into and out of the shop, etc.
If mobile, having a trailer; truck or van that is properly equipped and allows you to move in; do the work and get out quickly, if you are moving from one site to another.
CHEMICALS & SUPPLIES - as you can see this is at the top of the pyramid and occupies the smallest area of the pyramid. What does that tell you? It is the least import aspect of your detailing business. What I recommend, and other consultants recommend is to pick a supplier of chemicals and supplies and stick with it. Do not waste so much of your valuable time on something so incidental to your success.
Self evaluate. Look at the posts on this forum. Constantly talking about chemicals and supplies, sometimes equipment. Few questions on dealing with the business aspects of detailing.
Every wonder why there is so much business failure in detailing? Because those who get into it do not pay attention to the "business of detailing."
Let's see what this posting brings. Will it result in over 100 postings as did the posting about the Gonzales wonder product?
Just a few well intentioned and thought provoking, I hope, thoughts and comments.
Bud Abraham</HTML>
buda
These principles were developed by a small business consultant to the auto service industry and I found that they really hit home with the detail business.
If one drew out a pyramid and started at the bottom with these principles as follows they would get the point of how they applied to their business.
Forming the foundation of the pyramid and moving up to the top the importance for the business becomes smaller and smaller:
1. Management
2 Personnel
3. Equipment
4. Facilities
5. Chemicals & Supplies
MANAGEMENT - how you Manage your detail business is the critical aspect of success. Do you know what to manage? In order of importance you manage:
a. People - employees and customers
b. Finances - knowing your costs of operation and pricing correctly
c. Equipment; Chemicals & Supplies - least important management area
PERSONNEL - this involves selectively hiring the best available people; training them properly; reviewing with them; motivating them and retaining them.
EQUIPMENT - purchasing that equipment that will increase production (more cars processed per day) and reducing labor.
FACILITIES - having a shop that is in the area of your target markets and one that is attractive to the motorist; one that is laid out properly for good traffic flow into and out of the shop, etc.
If mobile, having a trailer; truck or van that is properly equipped and allows you to move in; do the work and get out quickly, if you are moving from one site to another.
CHEMICALS & SUPPLIES - as you can see this is at the top of the pyramid and occupies the smallest area of the pyramid. What does that tell you? It is the least import aspect of your detailing business. What I recommend, and other consultants recommend is to pick a supplier of chemicals and supplies and stick with it. Do not waste so much of your valuable time on something so incidental to your success.
Self evaluate. Look at the posts on this forum. Constantly talking about chemicals and supplies, sometimes equipment. Few questions on dealing with the business aspects of detailing.
Every wonder why there is so much business failure in detailing? Because those who get into it do not pay attention to the "business of detailing."
Let's see what this posting brings. Will it result in over 100 postings as did the posting about the Gonzales wonder product?
Just a few well intentioned and thought provoking, I hope, thoughts and comments.
Bud Abraham</HTML>
buda
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Re: Principles of Production for an Auto Service Business October 26, 2003 08:23PM |
Registered: 17 years ago Posts: 1,838 |
<HTML>Bud:
Great topic.
While #1/Management is secure in my operation now, #2 doesn't pertain to me, but will within the next several months. I'm always in contact with my customers either by phone or email. This let them know I'm not just a service but a friend as well. They tend to like that and keeps loyalty.
This forum has helped me reconfigure my management with pricing. I call competition all the time to be kept up-to-date and get "We start at $135." I didn't know my prices were so low so now I'm looking forward to increasing my revenue substantially.
#3 and #5 is also important for reasons you states...more cars per day with the right equipment and procedures.
Hope this helps.</HTML>
Take care,
Brian
Precision Auto & Marine
Learn to detail boats! Visit www.detailtheboat.com
Great topic.
While #1/Management is secure in my operation now, #2 doesn't pertain to me, but will within the next several months. I'm always in contact with my customers either by phone or email. This let them know I'm not just a service but a friend as well. They tend to like that and keeps loyalty.
This forum has helped me reconfigure my management with pricing. I call competition all the time to be kept up-to-date and get "We start at $135." I didn't know my prices were so low so now I'm looking forward to increasing my revenue substantially.
#3 and #5 is also important for reasons you states...more cars per day with the right equipment and procedures.
Hope this helps.</HTML>
Take care,
Brian
Precision Auto & Marine
Learn to detail boats! Visit www.detailtheboat.com
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Re: Principles of Production for an Auto Service Business October 26, 2003 11:54PM |
Registered: 17 years ago Posts: 751 |
<HTML>Bud, interesting post.
While I agree with the pyramid, I think that chemicals should not be overlooked. They are a critical part of our business .
We did a complete review of our chemicals and usage. We found that we had 15 or 16 different products for doing the same job, 8 or 9 different compounds. 5 or 6 different waxes etc. By taking a long hard look at our chemicals and vendors, we have saved over $3000 in the last 6 months. So managing the chemicals is a very important part of the job. I don’t mean that this should be the most important part of our business , but it is worth spending the time in the first place to get the correct chemical, and the correct supplier. Once this is done, then it can more or less run itself . Our vendor visits now take about 5 minutes instead of one hour .
As to equipment, I would say again, too often we look at the cost of a product instead of the investment, and I am a guilty of this as anyone else. Not looking beyond the cost, failing to see how much potential the equipment has. I have had a really hard time selling this principle to our dealership. While the cost of the new equipment my be high , the investment is good because it will increase productivity, and cut costs, for example, a chemical dispensing system, costs a lot to buy, but makes it easier to work. So it saves on labor and chemical costs.
I think a large part of the reason that people fail in business is that they are simply ill
prepared. It’s too easy to get in to the business , it seems anyone can pick up a detailing kit and pretend to detail cars. How many times have we seen the questions “how do I start a detail business “, or “I am starting my own business detailing cars, where do I start “ posted on the forums ? These people usually fail, either by not knowing how to work out the cost of doing business, or by providing poor quality work. I would venture to say that the major reason they fail is that they simply lack a business plan. They have no idea of the demographics in the area, or who to advertise at . Out of curiosity, how many people who post here know the size of the potential customer base in their town/city ? How many have sat down with a small business advisor and worked out the size of the potential market ? Who knows even where to find this information ? How many people know the average income in their town ? I think the answers may surprise us all. The information is out there and freely available, the research is easy enough.
As for managing people , this is # 1 on the list , and possibly the hardest. It is also a
potential legal minefield for the employer. If you are planning to hire employees now or in the future, then you need to be learning up on these laws right now . The laws are wide ranging and complex. For example, you are interviewing for a position you have advertised in the paper, applicant # 1 is a single guy, no ties , no kids etc. . Applicant # 2 is a single Mom looking for work. It would be easy to say “ well, I’d like to hire you but what happens if one of your kids is sick and you cant get in to work “. This would be breaking the law as it is discrimination. These are all things that as an employer we need to be on top of .
Lee Iacoca (one time President of Ford ) once said ..
“in the end , all business operations can be reduced to three words; people, product and profits. People come first. Unless you’ve got a good team, you cant do much with the other two”.
Learning how to manage your business and your ‘team’ will be the best investment you can ever make in your business.
Jim.</HTML>
While I agree with the pyramid, I think that chemicals should not be overlooked. They are a critical part of our business .
We did a complete review of our chemicals and usage. We found that we had 15 or 16 different products for doing the same job, 8 or 9 different compounds. 5 or 6 different waxes etc. By taking a long hard look at our chemicals and vendors, we have saved over $3000 in the last 6 months. So managing the chemicals is a very important part of the job. I don’t mean that this should be the most important part of our business , but it is worth spending the time in the first place to get the correct chemical, and the correct supplier. Once this is done, then it can more or less run itself . Our vendor visits now take about 5 minutes instead of one hour .
As to equipment, I would say again, too often we look at the cost of a product instead of the investment, and I am a guilty of this as anyone else. Not looking beyond the cost, failing to see how much potential the equipment has. I have had a really hard time selling this principle to our dealership. While the cost of the new equipment my be high , the investment is good because it will increase productivity, and cut costs, for example, a chemical dispensing system, costs a lot to buy, but makes it easier to work. So it saves on labor and chemical costs.
I think a large part of the reason that people fail in business is that they are simply ill
prepared. It’s too easy to get in to the business , it seems anyone can pick up a detailing kit and pretend to detail cars. How many times have we seen the questions “how do I start a detail business “, or “I am starting my own business detailing cars, where do I start “ posted on the forums ? These people usually fail, either by not knowing how to work out the cost of doing business, or by providing poor quality work. I would venture to say that the major reason they fail is that they simply lack a business plan. They have no idea of the demographics in the area, or who to advertise at . Out of curiosity, how many people who post here know the size of the potential customer base in their town/city ? How many have sat down with a small business advisor and worked out the size of the potential market ? Who knows even where to find this information ? How many people know the average income in their town ? I think the answers may surprise us all. The information is out there and freely available, the research is easy enough.
As for managing people , this is # 1 on the list , and possibly the hardest. It is also a
potential legal minefield for the employer. If you are planning to hire employees now or in the future, then you need to be learning up on these laws right now . The laws are wide ranging and complex. For example, you are interviewing for a position you have advertised in the paper, applicant # 1 is a single guy, no ties , no kids etc. . Applicant # 2 is a single Mom looking for work. It would be easy to say “ well, I’d like to hire you but what happens if one of your kids is sick and you cant get in to work “. This would be breaking the law as it is discrimination. These are all things that as an employer we need to be on top of .
Lee Iacoca (one time President of Ford ) once said ..
“in the end , all business operations can be reduced to three words; people, product and profits. People come first. Unless you’ve got a good team, you cant do much with the other two”.
Learning how to manage your business and your ‘team’ will be the best investment you can ever make in your business.
Jim.</HTML>
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Re: Principles of Production for an Auto Service Business October 27, 2003 02:32AM |
Registered: 17 years ago Posts: 1,838 |
<HTML>Jim:
It's not illegal to not hire applicant #2 because of those reasons. It means she wouldn't be a responsible candidate for the position due to those reasons. It is however, illegal to not hire someone because of color, age (over 16 here) religion affiliation, etc. You have a right not to hire someone if you feel they won't be an assett to your company.</HTML>
Take care,
Brian
Precision Auto & Marine
Learn to detail boats! Visit www.detailtheboat.com
It's not illegal to not hire applicant #2 because of those reasons. It means she wouldn't be a responsible candidate for the position due to those reasons. It is however, illegal to not hire someone because of color, age (over 16 here) religion affiliation, etc. You have a right not to hire someone if you feel they won't be an assett to your company.</HTML>
Take care,
Brian
Precision Auto & Marine
Learn to detail boats! Visit www.detailtheboat.com
|
Re: Principles of Production for an Auto Service Business October 27, 2003 02:37AM |
Registered: 17 years ago Posts: 751 |
<HTML>Brian, my mistake, I didnt explain that very well.
Your right, it isnt illegal not to hire her, but it would be illegal to give that as a reason, because you would be discriminating agaisnt her. In turning down that applicant , you would just tell her if she asked that "you have found a more suitable candidate for the position" or words to that effect.
Sorry for the confusion.
Jim.</HTML>
Your right, it isnt illegal not to hire her, but it would be illegal to give that as a reason, because you would be discriminating agaisnt her. In turning down that applicant , you would just tell her if she asked that "you have found a more suitable candidate for the position" or words to that effect.
Sorry for the confusion.
Jim.</HTML>
|
Re: Principles of Production for an Auto Service Business October 27, 2003 04:38AM |
Registered: 17 years ago Posts: 56 |
<HTML>First of all, how did you find out if the applicant is a single mom? If you asked her if she's married or divorced and has any kids, you've brokien the law. If she has volunteered that information without coaxing from you, then you can use it in making your decision.
Discrimination would occur in this case, if you asked her a direct, forbidden question (there's several pertaining to race, marital status, alternative lifestyles, criminal record, etc.) that an employer can never directly ask or have on an application. Now, once the interview is over and you've hired that person, you can ask them just about anything. Of course, they don't have to answer and you have to be careful not to push so far as to make them uncomfortable. If you do, you may be committing harrassment, which is viewed as badgering, belittling, or favors (usually of a prurient nature or for financial gain) being requested by someone who is in a position of authority or who has influence over the person's work or employment status. In other words, if the employee is made to believe that they have something to gain (threat implied) if they divulge information or perform certain acts (service delivered) and that if they do not perofrm said act or service, then their job or reputation is in jeopardy (intimidation) then they could have a legitimate discrimination/harrassment claim against you. If they do, this is absolutely not covered by any insurance policy and your entire business is at stake. Judgements in these types of cases are almost always in the 6 figure range and many are in the millions. Easily enough to drive most any detailing operation out of business. And if you're operating as a sole proprietor, they can come after your personal assets as well.
One MAJOR rule of thumb that must NEVER be overlooked is to check and see if the state you operate in is an "at will" state. If it is, then this means fire people at will with very little cause as long as there is an at will clasue in the application and the employee has signed or initialed it and understands it. If they refuse to sign, then you don't have to consdier them for employment. It's the only thing that gives the employer the right to dismiss someone if they find out something later on during the course of checking references, criminal background check, etc.
Another thing that's a must is to have reference, credit and criminal background checks done. You don't want to be hiring an embezzler or someone who's been convicted of aggravated assault because a guy told him he's going bald and has a shiny head. Imagine what he might do if a customer tells him that he didn't get a stain out of the carpet or seat that was supposed to be removed!!!
And don't forget about a probationary period. 90 days is customary. This gives your P.I. or confirmation service to conduct the forementioned background checks and during the 90 days, you can dismiss an employee without any explanation at all without the threat of repercussion.
You've really got to think ahead with this stuff and arm yourself with the proper tools. Sure, there's law protecting prospective employees, but there's also laws that protect the employer. Make sure you spend the money and meet with a lawyer that specializes in employment law who will advise you and help you design a legal application for employment. It will cost some money, no doubt, but it could save your business and possibly, your family's financial future in the long run.
Sorry about the long post, but this is such a key issue to gusy like us that I cannot overemphasize it's importance. I worked in insurance claims for over 20 years and saw many a businessman and many a business go down in flames because of a slip of the tongue or some guy thinking with his "second brain" which causes logic to be tossed out the window.</HTML>
Discrimination would occur in this case, if you asked her a direct, forbidden question (there's several pertaining to race, marital status, alternative lifestyles, criminal record, etc.) that an employer can never directly ask or have on an application. Now, once the interview is over and you've hired that person, you can ask them just about anything. Of course, they don't have to answer and you have to be careful not to push so far as to make them uncomfortable. If you do, you may be committing harrassment, which is viewed as badgering, belittling, or favors (usually of a prurient nature or for financial gain) being requested by someone who is in a position of authority or who has influence over the person's work or employment status. In other words, if the employee is made to believe that they have something to gain (threat implied) if they divulge information or perform certain acts (service delivered) and that if they do not perofrm said act or service, then their job or reputation is in jeopardy (intimidation) then they could have a legitimate discrimination/harrassment claim against you. If they do, this is absolutely not covered by any insurance policy and your entire business is at stake. Judgements in these types of cases are almost always in the 6 figure range and many are in the millions. Easily enough to drive most any detailing operation out of business. And if you're operating as a sole proprietor, they can come after your personal assets as well.
One MAJOR rule of thumb that must NEVER be overlooked is to check and see if the state you operate in is an "at will" state. If it is, then this means fire people at will with very little cause as long as there is an at will clasue in the application and the employee has signed or initialed it and understands it. If they refuse to sign, then you don't have to consdier them for employment. It's the only thing that gives the employer the right to dismiss someone if they find out something later on during the course of checking references, criminal background check, etc.
Another thing that's a must is to have reference, credit and criminal background checks done. You don't want to be hiring an embezzler or someone who's been convicted of aggravated assault because a guy told him he's going bald and has a shiny head. Imagine what he might do if a customer tells him that he didn't get a stain out of the carpet or seat that was supposed to be removed!!!
And don't forget about a probationary period. 90 days is customary. This gives your P.I. or confirmation service to conduct the forementioned background checks and during the 90 days, you can dismiss an employee without any explanation at all without the threat of repercussion.
You've really got to think ahead with this stuff and arm yourself with the proper tools. Sure, there's law protecting prospective employees, but there's also laws that protect the employer. Make sure you spend the money and meet with a lawyer that specializes in employment law who will advise you and help you design a legal application for employment. It will cost some money, no doubt, but it could save your business and possibly, your family's financial future in the long run.
Sorry about the long post, but this is such a key issue to gusy like us that I cannot overemphasize it's importance. I worked in insurance claims for over 20 years and saw many a businessman and many a business go down in flames because of a slip of the tongue or some guy thinking with his "second brain" which causes logic to be tossed out the window.</HTML>
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Re: Principles of Production for an Auto Service Business October 27, 2003 05:34AM |
Registered: 17 years ago Posts: 3,550 |
<HTML>Jim:
You miss the point of the Principles of Production. Because chemicals is at the top and not as important as management and other things below does not mean it is not important.
That is the key, they are an important principle in detail shop production and profitability as you have so well pointed out. But the point is that they are not as important as management and personnel, for example.
You manage chemicals and supplies but do not spend as much time with them as you would with management and personnel. See the point?
In this case you find a supplier; make a deal with them; select your chemicals and supplies and then forget about them for the most part. Of course you always keep an eye out for new and better priced items, but most of your effort should be on other more important aspects.
REgards
bud a</HTML>
buda
You miss the point of the Principles of Production. Because chemicals is at the top and not as important as management and other things below does not mean it is not important.
That is the key, they are an important principle in detail shop production and profitability as you have so well pointed out. But the point is that they are not as important as management and personnel, for example.
You manage chemicals and supplies but do not spend as much time with them as you would with management and personnel. See the point?
In this case you find a supplier; make a deal with them; select your chemicals and supplies and then forget about them for the most part. Of course you always keep an eye out for new and better priced items, but most of your effort should be on other more important aspects.
REgards
bud a</HTML>
buda
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