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Learning How to Succeed

Steering More Customers His Way

New owner of auto repair shop knows how to run a business, but needs help in expanding his clientele.

September 20, 2000|CYNDIA ZWAHLEN | SPECIAL TO THE TIMES

The clock is ticking for Professional Motorcar Inc., a luxury-car repair shop in San Juan Capistrano, but the sound may be too soft for the new owner to hear.

Jim Little, who bought the shop last year, knows he needs to attract more Porsche, Mercedes-Benz and other European car business to his spotless facility. But he still hasn't figured out how after trying a slew of tactics that didn't work. The former owner, now an employee, is his best mechanic and a draw for loyal customers. But recently he's talked about cutting his hours.

Little, 43, is typical of many small-business owners. He worked at a big company for years, then used a severance package to buy his own business. And like many new business owners recently sprung from corporate America, Little brings solid administrative skills, in addition to cash, to his new venture.

"I feel pretty confident on how to run a business," said Little, formerly in procurement at an aerospace company. And he's confident in the quality of work done by his shop, which had about $300,000 in revenue last year, down a bit or flat compared with previous years.

"Once we get them in here, by and large [customers] really like the place and come back," he said.

The hard part, he said, is finding new customers. He wants enough to keep his three mechanics busy but not so many that they can't get the work done on time.

Though Little and other former corporate managers may have administrative know-how, they often are not sure how to keep a newly purchased company profitable and to bring in more business, management consultant Phil Borden said. They also often are unaware of the need to move quickly to make the most of their new assets, which may include a former owner as an employee, and to hang on to existing customers.

Little has a limited window of opportunity to capitalize on customer goodwill and to add his own value to the enterprise, Borden said. "I think he's got a couple of years to make the business snap, crackle and pop," said the consultant, executive director of the Women's Economic Development Corp. in Long Beach.

To reach his goals--Little wants to increase sales by 20%, take $5,000 a month salary and be able to step back from the business in a few years--he'll have to do some analysis and planning, Borden said.

That may not be the owner's preferred use of his time but it will save him time and money later.

Little, who does not have a business plan, said he knows without complicated analysis how much business he needs to do each month to survive. Monthly revenue of $25,000 is not good enough, $30,000 is OK, $35,000 is a good month and allows him to pay himself comfortably, he said.

"You could analyze that stuff to death and it wouldn't do you any good," he said. "It just comes down to how many people are comingthrough the door and what exactly you are doing to their car."

That's a good start, Borden said. But there is a lot the owner could do to attract more profitable business and to increase the profit margin on the work the shop does.

The first place he should look is in the back shop, where Michael Stanek, one of the two former owners, works. Stanek, a certified master mechanic, has said he wants to cut back to three days a week.

Stanek's experience means he can diagnose cars faster and repair them faster than the average mechanic. In addition to happy customers, that can mean more profit for the business because most repair work is priced according to standard labor-time guidelines used by all shops.

Stanek's desire to cut his hours raised a warning flag for Borden. Eventually, he said, the mechanic could leave the business and Little has to prepare for that day.

"When he loses Michael, he loses the expert to whom everybody turns, as well as hands-on repair, as well as customer continuity," Borden said. "That is not trivial."

Little should consider doing three things quickly to protect himself from losing the former owner, Borden said. His suggestions could apply to many new business owners who employ a former owner.

First, Little needs to find a way to pass Stanek's knowledge to the other mechanics. Second, he needs to work out how the master mechanic can best spend his time. Third, he should reexamine his own role in the business.

The consultant suggested that Stanek record his knowledge about specific cars and repairs on a tape recorder, building a library of information for Professional Motorcar mechanics to access in the future. He also could begin to formally train the other mechanics.

Borden also recommended that Little consider having Stanek spend his time talking with the customers or ordering parts or maybe penning a technical Q&A for the shop's Web site (http://www.professionalmotorcar.com). He might even be the best person to write thank-you notes to customers, the consultant said. The point is to make the job attractive enough to keep Stanek interested while benefiting the company, he said.

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