“Fix-It” Factory — Close this Drain on Profits
These are difficult times for those in the detail business. Volumes are down and costs are rising. As a result, many detail business owners find themselves up against it in the profit column. For many it is difficult to get the money needed to continue their business. You can’t depend on cost-conscious customers to let you sell your way back to profitability. So how can you increase revenues without increasing sales? The simple way is to cut costs.
Look carefully and you will see that some companies thrive in a down economy and blow past their competitors. You could be one of them.
How? There are opportunities in your daily operations that you have not taken advantage of by using common sense, gut feel, and even trial and error. The very same things that allowed you to bootstrap your detail business and grow it to the current level will hit a wall and stop working at some point — and you will have an error rate that devours your profits. In a recession you can’t market or sell your way out of a hole, because customers are not spending as much. You can’t do it by creative thinking because customers want proven solutions, not new, untried ones.
You can, however, systematically improve your overall operations — eliminating defects, delay, and waste — that will mean immediate profits. No waiting! Best of all, these processes are totally within your control. You don’t have to rely on anyone else to achieve your goals.
In short, you can fill your revenue dips with money that has been lost in inefficient operations. You can turn your employees’ attention to solving operational problems.
While many detail operations might cut the usual expenses — supplies, training, bonuses, pay, and personnel — some are using this down economy to streamline their business so that they can not only weather this economic storm, but future ones as well. These detail business owners seem to know what only a rare few seem to know: some employees work in the fix-it factory.
Every detail business has two “factories:”
- One factory that creates and delivers detail services.
- One, hidden, fix-it factory that cleans up all the mistakes and delays that occur in the other factory. You need to shut this one down.
How do you know you have a fix-it factory? Easy, pay attention to how much time you spend on overtime, re-dos, and crisis management. Do you consistently rely on heroics to save the day? Do you reward fire fighting, but not fire prevention? Do you have a lot of employees inspecting the finished detail service? If so, the fix-it factory could be costing you $20 to $40 out of every $100 you generate. If your revenues are $100,000 a year, that’s $20,000 to $40,000. Just think what saving a fraction of that could do for your profitability.
FIX THE PROCESS
Whenever there’s a problem with a detail service, someone always wants to place the blame. Most often, the blame falls on the person who created the problem, made the mistake, or caused the error.
Wrong! It’s the step-by-step process that allowed the person to make the mistake, error, or defect. Instead of punishing the person, ask him or her to figure out how to change the process to prevent the error in the future. This is called mistake proofing.
Everyone benefits from mistake proofing. For example, you can’t start a car today without a foot on the brake. Mistake proofing! You can’t plug in an electrical cord with the prongs reversed. Mistake proofing! With a little bit of concentrated thought, there’s a way to mistake proof any detail processes.
FOCUS FOR MAXIMUM BENEFIT
Most business owners think that mistakes are spread evenly over the business like butter on bread. The truth is that mistakes tend to cluster in a few key steps of the process. All you have to do is:
- Count the number of mistakes that are made.
- Categorize them by process step, locations, or other grouping.
- Tackle the biggest category of mistakes first.
- Analyze the root cause of the mistake.
- Change the process to prevent the mistake.
As few as four steps out of every 100 cause over 50 percent of the mistakes, errors, and defects (the 4/50 rule). Correcting these errors in the fix-it factory can cost 10 to 100 times more than doing it right the first time. Poof, there goes your profit.
Good businesses count their errors, but few do anything with them except flog employees, especially when they ask for a raise. Will you be one of the rare few that use these numbers to find ways to mistake proof the mission-critical processes and shift employees out of the fix-it factory into the service of customers?
With a slow economy, there will never be a better time to work on these issues than right now. Then, when the economy turns around, as it always does, you will not only have more money, but also be able to offer better prices than your competition and still make excellent profits.
Keith Duplessie is technical services manager for Portland, OR-based Detail Plus Car Appearance Systems. You can reach Keith at email@example.com.