A Profit Building Tip For Shop Owners

Most shop owners and dealerships provide their service advisors with some flexibility in pricing. The objective is to give them the ability to adjust prices in order to ensure customer satisfaction, close sales that would otherwise be lost, and reward loyal customers. All good reasons. The problem is ... it becomes easy for your employees to give away money when it's not theirs, and these discounts can become sales crutches.

By Bob Cooper

Most shop owners and dealerships provide their service advisors with some flexibility in pricing. The objective is to give them the ability to adjust prices in order to ensure customer satisfaction, close sales that would otherwise be lost, and reward loyal customers. All good reasons. The problem is … it becomes easy for your employees to give away money when it’s not theirs, and these discounts can become sales crutches. To make matters worse, those discounts and refunds come right off of the bottom line. So here is what you need to do …

Take a look at the discounts that you have provided over the past year, and come to a conclusion as to what you feel a reasonable discount total should be. For example, you may discover that you gave away an average of $300 per month, but that with a little extra effort from your advisors, they would have only given $200 in discounts per month. If this were the case, you would need to tell your advisors that you are setting up a monthly budget of $200 that they can use, at their discretion, for discounts and refunds. At the end of the month, you’ll then give them 50% of whatever is remaining in the budget.

By taking this approach, your advisors will still have the ability to use discounts as sales tools, but they’ll also realize that it’s now their money to lose. If they decide to give a customer a $50 discount in order to save the job, they’ll quickly realize that it’s going to cost them $25.

There is no question: If you use this technique, not only will your advisors think twice before they offer discounts or refunds, but since you would be spending the money anyway, this gives them a chance to help you save a good amount of money. If they are able to effectively limit the discounts, then they have earned their reward, while helping you put more money on your bottom line at the same time.

For the last 20 years, Bob Cooper has been the president of Elite Worldwide, Inc. offering automotive professionals sales, marketing and employee management solutions. To learn more about how Elite can help you build your auto repair business, visit www.EliteWorldwideStore.com.

When Your Shop Is Worth Much More Than You Thought

Although every sale of a shop in which I am involved has its own unique set of circumstances, which makes my job both very interesting and very challenging, Cowden Automotive stands out as particularly memorable because I was able to demonstrate to the long-time owner, Paul Cowden, that his business was worth about three times what he had initially thought.

Case Study: Owner of San Francisco-based Import Service Shop Delighted to Discover Just How Valuable His Business is to Qualified Buyers
I sometimes share case studies of the clients I have been able to assist in my role as an aftermarket business broker and provider of intermediary and advisory services. I do that when I think the story will provide a reader in similar circumstances with new insights or helpful information.
In the case of Cowden Automotive, Inc., I acted in a consulting capacity assisting the owner and his broker in valuing the business, creating a marketing plan, finding a qualified buyer, and arranging financing for the sale.
Although every sale of a shop in which I am involved has its own unique set of circumstances, which makes my job both very interesting and very challenging, Cowden Automotive stands out as particularly memorable because I was able to demonstrate to the long-time owner, Paul Cowden, that his business was worth about three times what he had initially thought.
Needless to say, delivering that kind of good news to a shop owner is a rewarding experience. Discovering that the sale of his business would result in his retirement nest-egg being substantially larger than he had ever thought was a fitting tribute to someone who had spent his entire working career as a busy automotive service shop owner.

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