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Letter to the Editor

15 Ways to Weather the Downturn

Experienced shop owners share how to make the most out of a bad economic period.

INSIGHT’s conversations with shops in many markets throughout the country in recent months find business down 10, 20, 30, even 40 percent in some cases. The reasons hardly need to be repeated: high gas prices have curtailed driving, and tough economic times are leading many vehicle owners to leave damage unrepaired.

Whether your business has been hit hard or more moderately, you are no doubt looking for ways to weather the downturn. INSIGHT spent much of the last month asking business owners – particularly those who have experienced similar economic situations in earlier decades – what they are doing differently now in response. Here are fifteen things we heard the most often from those determined to keep their businesses moving during a slow-down.

1. Up the ante for referrals.

Thanking and rewarding customers or other businesses when they refer a customer to your shop is hardly a new idea. But a number of shops said they are more aggressively seeking such referrals by offering more for them than they had in the past. The Starbucks card is being replaced by a restaurant gift certificate for a meal. The free car wash is being replaced by a cash reward.

“This isn’t necessarily a long-term change to what we’re offering customers for referrals,” one shop owner said. “I just wanted to get a little more attention to our referral program at a time when we need the referrals more than ever.”

2. Sell off the unneeded.

Still not ready to dive into the whole “lean” concept? Don’t want to tackle all five of the so-called “Five S’s”? You may still want to take advantage of the slow period to do a little “sorting,” looking for the tools, equipment or other items around your shop that gather more dust than actual use. Rooting out these space-wasters will not only help clean up the shop but also give you an opportunity to sell or donate items to free up a little extra cash for marketing or other needs.

3. Ask employees for help.

Everyone in your business brings a slightly different perspective to the shop. When was the last time you asked employees for ideas that help the business save money?

One shop owner said he offers a $75 reward for the best idea each month. The ideas shared have ranged from a couple of changes in products the shop stocks and uses, to not renewing subscriptions to several magazines in the customer waiting area that front-office staff said were rarely read.

No single idea has been a huge money-saver, but the shop owner said he is more than saving the cost of the rewards, and more importantly it has instilled in employees an interest in looking for ways to cut unnecessary costs.

4. Go shopping for that additional location.

Many business owners fail to sell their businesses at the most advantageous time to do so: when things are going great and the business is growing. Instead, they wait until times like now when times are tough. That is when smart buyers looking to add locations often find they can get the best deals.

The usual caveats about “smart growth” and “managed debt” apply, but if you have been thinking about expanding your business, now may be a good time to look around.

5. Keep up morale.

Three different shop owners told INSIGHT they had lost key employees during previous slow-downs and that they are making extra efforts to not let that happen again.

One owner said he is trying to keep spirits up by holding softball and bowling “tournaments” between his employees and those of another shop. One franchise shop manager has created a sales competition among estimators at the other franchise shops in the market. Another shop owner said he gave a weekend get-away package to each of his three key technicians, all of whom have seen their incomes drop this year.

6. Do a good deed.

Speaking of morale boosters, this might be a good year to get involved with donating a repaired vehicle to a family in need. Shops that have done so in the past say it is something their employees enjoy being a part of, it is a way to give back to your community, and it often brings with it some positive publicity.

If you are not sure where to begin, check the National Auto Body Council’s (NABC) “Recycled Rides” website (www.recycledrides.org). The NABC hopes to present 100 refurbished cars to 100 needy families around the country on the Monday before Thanksgiv-ing. As of late July, they had lined up more donated vehicles than participating shops. They can provide a step-by-step guide on how to get involved.

7. Follow-up on estimates.

Sometimes the oldest and seemingly most obvious ideas are the ones that get overlooked, particularly when times are good.

If you do not get a job sold at the time you write the estimate, create a system to follow-up with those customers to ask for the job (or at a minimum find out why you didn’t get it).

8. Check for vendor deals.

These can be tough times for equipment companies and other vendors in the industry as well. It can be a good time to get a deal on that new piece of equipment you have had on your wish list, particularly because the company may be able to offer more help with installation and training than they can when they are swamped, too.

9. Work on your website.

If you invest far more in your phone book ad than in your company’s website, take advantage of the slowdown to fix that. Several studies are finding that almost twice as many Americans start looking for local listings online rather than in printed phone books.

At a minimum, get a “placeholder” website for your shop, that includes your shop address, phone numbers, hours, and key selling points.

If you have a site, make sure it is updated and accurate, and work on improving your standing in the search engines via “pay-per-click” or “organically” by getting others (vendors, associations, etc.) to link to it, making sure it includes the key terms someone searching for a shop is apt to use, etc.

10. Avoid deep cuts in the advertising budget.

While it makes good sense to evaluate all your marketing efforts at this time, many business experts also say cutting back those efforts to save money during a down-turn can be a mistake.

Advertising deals can be out there for the taking, and can help get your name out at a time when your competitors may be pulling back.

“During what I consider the last two down-turns I went through, I always found other expenses to cut before marketing,” one shop owner said. “I think that’s what kept us steady enough and helped us bounce back more quickly when the economy rebounded.”

11. Make the most of your existing customer base.

Up-selling customers can be tough in a tight economy, but retail analysts say consumers are still open to lower-cost items that feel like luxuries, and things that help customize something otherwise viewed as a commodity.

The $200 detail or complete custom paint job may be a tough sell, but the $49 “express detail” or some striping or graphics may appeal.

Also consider what other vehicle services you may be able to offer them as a convenience while their vehicle is at your shop – even if tires or oil changes are not in your long-term plans for your business.

12. Building maintenance.

Lots of shops INSIGHT talked to said they are taking advantage of the slow-down to get some work done on their building and property: new paint, landscaping, fence repair – the sorts of things that often get deferred when the shop is full of work.

13. Get some new perspective.

It has always been INSIGHT’s top piece of advice and it makes sense now more than ever: Get out of your shop. You can find great ideas you can use during the downturn (and beyond) by seeking some outside perspective.

Catch up on your trade publication reading. Pick up a business book and consider how the concepts can be applied to this industry. Join a 20 group. Get to some of the association meetings you have been meaning to attend. Call a non-competing shop across town or across the country (if you are traveling on vacation) and ask if you can tour their facility.

14. Hire up.

Most shops in recent months report having more technicians contacting them looking for work than they have seen in years. If you have an employee who will be your weakest link when business rebounds, this may be the time to seek a replacement.

15. Get some training.

Too often, training budgets take the hit when a company is looking to trim costs. But this can be an ideal time to get technicians to I-CAR or vendor training, and to seek out sales or management training for yourself or office staff.

It can be tough (and expensive, given overtime) to get to such training when the shop is swamped and everyone is working 40+ hours each week.   o

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