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CASE STUDY

ADAM

TATUM

Adam Tatum is director of operations for the Virginia Group, a Jiff y Lube franchisee with 11 locations.

He has over a decade of experience in the industry with a proven track record of building customer counts and sales, as well as using innovative ways to bring a new look to the automotive fi eld for both the customer and the employee. Performance comes from growing your business through people.

ATATUM

@VALUBE.COM

Lots Of Cookie Jars, Not Enough Hands

How to approach the new year with a strong grasp of operations

THIS MONTH, NOLN IS GIVING SOME ADVICE ACTION items for this new year. I think that many of us have ideas to make our locations better but fail to put them into motion. I do this all the time, but I have a hundred ideas a week on ways to be the best, some short term and some long term. So, this month, I will share some of the ideas that I have been putting into place in my locations in 2023.

Maximize Your Management Team This year I am moving my lower management teams into salaried positions. As these assistants are your future store leaders, you strive to get them as much learning time as you can. Some of you will pay them higher wages, but then get killed when they go into overtime at time and a half. This salary option is the perfect way to not only eliminate that, but also get your valuable management in the stores when you need them.

This could mean extra hours for the assistant, but you can use that time to build their skill sets and use them to train their replacements as they look to move up. You can pay for this. Just lower your hourly labor expectations a bit. Think about the ROI of having your next best employee on your clock a li le longer each week.

Look at Your Pricing Matrix As the costs of inventory have risen over the last few months and more competition moves into your markets, you may be feeling the pinch of these on your bo om line. It is time to make a few changes to your pricing internally. Now, the easiest way to do this is obviously by altering the price of your oil change service. However, a more eff ective way to gain the outcome that you desire may be accomplished by thinking smaller. Air fi lters, cabins, light bulbs, and wiper blades are all preventative maintenance items that everyone off ers. Raise the price a dollar or two. Try it and see how many complaints you get versus raising your core service price.

Most people do not notice the slight increase and expect this from time to time. Now call a dealership and ask for some pricing on these services. Wow, that cabin is $25 more there? If you want to get more from less, this could be the way to go.

Now if you must raise your core service prices, do your homework. Don’t outprice your competition, that is likely moving into your markets recently. If you give a customer a reason to try the place that costs less then you now, you give them the opportunity to take your customer going forward. Stay competitive, but don’t go overboard.

Spend on Capex Projects

If you have the means to do so, this is an excellent way to build and expand your brand without spending millions on relocations or new builds. I am sure that if some of you step back and look at your stores from the eyes of a customer, you may see that you are dated. If the new clean, shiny building down the street is grabbing your customers, it’s because you are old and tired. How can you get that pizazz back? Paint your locations and change your signage, add some banners to the building or update your landscaping.

Now inside the stores, you can add equipment to add speed and opportunities. Do you have li s on each of your bays? They are anywhere from $8,000 to $12,000 for a new set to be installed. How many more tire rotations can you do when you don’t have to move cars around or knock out a brake job on any bay. Another investment is to add a new AC machine to your location. We all know that the new vehicles that you are servicing are using the new freon. Look into what the dealers charge to service these units and you will see how fast you can see an ROI on the new service addition.

As you can see, I am pu ing my hands into many cookie jars this year. When January rolls around next year, my stores will be able to service more customers faster, profi tably and add long-term value beyond 2023. I will be opening new locations and making my old ones look like they are new. These are the things that I am doing to take my stores and operation to the next level. What are you going to do in this new year to take yours there?

Action Items

With disciplined reviews, any shop owner can improve in 2023

By Leah Marxhausen

With a New Year comes the chance to restart and refresh. Resolutions in place, everyone is determined to have their best year yet. Whether you’ve decided to spend more time in the gym, stick to a new diet or promise to spend less time on your phone, these New Year’s resolutions don’t tend to make it much past February 1.

While another year ending doesn’t magically resolve shortcomings of the past, it does provide the opportunity to reevaluate your approach, learn from past mistakes, and see what needs to be changed.

Three leaders in the industry shared fi ve action items they think will help prepare your shop for the New Year.

Action Items

Evaluate Your Inventory Revisit Your Vendors

“The New Year gives you a chance to reset your numbers,” says Lenny Saucier, director of retail training at Fullspeed Automotive. “As a business you're looking at the end of the year, all the numbers are in. What did we do right? What did we do wrong? What will need to be cleaned up?”

The first thing to clean up is your inventory. As the year closes out, look at your final inventory numbers, taking special note of what hasn’t sold. By sending unused items back to the vendor, you not only gain that capital, but you are clearing up shelf space to make room for something new.

“Having a group of items on the shelf that don't move it's just like taking money out of your wallet and putting it on the shelf,” says Saucier. “I have this shelf to make me more money, and if I don't do that, then I'm just wasting that money sitting on there. Removing old stock increases your cash flow.” The new year can also be a time to examine those who supply inventory and services.

“We make sure we're partnering up with the right vendor in terms of pricing support, logistics, you know, types of products they off er,” says Eric Galindo, owner of Oil Change Express in San Antonio. “There's been a lot of changes in our industry in the last fi ve or six years. There used to be hundreds and hundreds of independents now there's maybe a handful of six big companies throughout the U.S. When we’re looking at vendors, we’re making sure we have a solid partnership.”

Who you choose to work with can be a huge determining factor in your shop’s success. Partnering with quality vendors who align with your shops standards of service can create an equally benefi cial partnership.

“For us price is important, but it's really about service a entiveness and making sure we're ge ing our products on time,” says Galindo. “Logistics pricing and support is really what we look at, you know, we try to stay with the same products. We’re very selective of who the distributors are to make sure we have a great relationship.”

As prices continue to infl ate, revisiting who you are partnering with and checking competitors to make sure you are making the best decision for your business is a process that should take place multiple times throughout the year.

“Ten years ago, you would see a price increase maybe once a year maybe now it's every two months just depending on who you're doing business with,” says Galindo. “We don't like to jump from distributor to distributor. We like to stay faithful, but we typically check in multiple times during the year to make sure we have the right support.”

Be Selective with your Services

Shelf space is a valuable asset, but so is your time. Take a moment to evaluate what your most valuable services are and what services you need to limit.

“Look at your services and start reviewing your goals and expected profi t margins in these areas,” says Saucier. “This a good time to start looking at your actual service items as far as the costs incurred and the retail price. This will give you a pre y good chance to price shop.”

Focusing on successful services can help you determine what strategies made them successful and how you can apply that to other services or areas in your business that are struggling.

“Ask yourself, what were the areas that you've really focused in on that that were successful,” says Saucier. “Look at what you did to change those numbers from last year and take that and bring it over to another service, or another part of your business that is struggling.”

Make Sure You Have the Right Staff

Pete Frey, former Take 5 Oil Change president and current shop owner, says his fi rst step in the new year is to ensure staff members are in the right roles.

“Should I simply focus harder on my training aspects?” Frey says. “Am I giving them my expectations frequently enough and following up so that it's just not like a ship without a rudder?”

Make sure your staff aligns with your shop’s values and that you have the right number of staff to support the volume of your shop.

“We overstaff just a li le bit so we can upgrade,” says Galindo. “We make sure we have the right people on the team that believe in what we're trying to do. We want the right number of staff so we can do a quick service.”

In order to maintain this level of service for his customers, Galindo recommends overstaffi ng. By starting new hires in their slow season, he can avoid potential crises that may come along if an employee is unable to work. To make up for this added cost, he provides incentives to motivate more sales in the shop.

“We want to make sure we're doing the best we can in terms of speed for our customers,” he says. “As long as they're making sales, I think extra bonuses and extra income will pay for the extra hours and manpower that we have.”

Check in on Your KPIs

Frey focuses on aspects of his business that he can control, the biggest aspect being his shop’s performance. Working alongside his best employees, he examines his weakest KPI to see where there is room for improvement. Frey also gives his team an opportunity to evaluate where these shortcomings originate from.

“Ask questions like, ‘Why are we struggling with this particular KPI? Is it cost, are we too expensive? Are we not educating the customer? Is it just simply a presentation? Is it our timing?’” says Frey. “I'm going to see how we can improve our weakest KPI and turn it into our strongest KPI.”

The Final Takeaway

“It’s a numbers game on January 1st,” says Saucier. “It's not about feelings. Feelings won’t get you very far past January 3rd. The numbers show you what you actually did and give you the ability to move forward.”

Oil changes are one of the most frequent services a customer needs. While this used to be a service needed every 3,000 to 4,000 miles, new vehicles are able to go 6,000 to 8,000 miles before needing to be serviced. This along with increased competition can put a strain on your business.

“You have to be better than the rest,” says Frey. “Your experience has to be better than the rest. That's how you survive. Price matters, but sometimes price is hard to control especially in a world we live in. That's a battle that everybody who's in the oil change business is going to fi ght this year. I see that as a challenge.”