There is always a silver lining
This has been another big year in the history of the collision repair industry, and one where change has touched many. What is the value of anything? The answer is “whatever the market will pay,” so this month I want to explore the term “value” and its vital impact on you and/or your business.
Recently I met a guru, then he sent me his book “How to Increase prices– and keep the customer”. Then about the same time I received the finalised costs of a large smash job, and finally the word came out about variable rates panel shops are getting for the same job and expertise.
It occurred to me all these things are connected; it’s all about the perception of value – and most of that is inside the head of the business owner! It begins when you write up a job and sell it to the customer. It continues through any negotiation process and into the staff doing the work.
To keep up with the constant rate of change, review how you do things and consider what can be done to make improvements. At this point I want to relate a real live situation that you can easily relate to – the major repair of a late model vehicle, and how business system support improvements can assist.
Some would have said it was uneconomical to repair and would have left it to the assessor to write it up. However, this particular repairer has the gear and the expertise, so took the time to write it up.
We went through the job together, and after some negotiation a price was agreed and the repair commenced. In due course all invoices for parts and services arrived, and an invoice arrived from the repairer.
It was crazily different to the estimate as the part names and pricing had all changed, but the labour and paint were not unexpectedly similar. I soon discovered the workshop administrator had already spent a lot of time trying to reconcile things and had in the process earned a few more grey hairs!
Unfortunately, this well-documented confusion was still a long way from being correct, and it took a great deal of effort to figure out the double-ups and parts in the estimate that were actually repaired.
Long story short, the supplier had apparently invoiced the original parts list and credits had not been applied. We eventually figured it out, but it was a mission, and one I hope I don’t have again. The moral of this story is that everyone involved in sorting it out lost productive time and there was a significant loss of value from a job otherwise completed to very high standard by the repairer.
The above example was a genuine situation where a supplier had created the problem. Workshop administration is no easy task, and a vital element that needs careful attention.
Estimating repair costs, adjusting them to reflect the changes made by the assessor, ordering the parts, receiving them, returning incorrect parts, getting approvals for additionals, matching supply invoices with jobs, and reconciling all these elements into the final invoice requires a high degree of diligence.
As a business grows (or contracts), internal systems need to be constantly tweaked; however sometimes it’s necessary to review everything to see how it can be done better. As you can probably understand, the costs of doing it inefficiently are significant in terms of value lost to the enterprise.
At the recent 2014 Road Transport Forum I met one of the guest speakers – Geoffrey Vautier.
Although I wasn’t at his session, I was impressed at this former chief financial officer’s understanding of the dynamics of small business, and how even small changes make huge differences.
Pricing and communicating value are in Geoff’s view major influencers on the success of a business.
It turns out Geoff is in demand as a guest speaker/consultant, and travels internationally doing this.
His book includes seven steps on the things you can do to increase your pricing and keep the customer.
You might like to consider Geoff’s boot camp: “How to Increase Prices”. It’s a six-week training programme with work book and videos. As Geoff states: “Pricing is one of the most important activities in your business” and changes to your mindset result in bottom-line improvement.
If you are interested in learning more about this or ordering his book; email him at the8020co@hotmail.com