She’s the boss

Hannah Gordon tells us what is has been like becoming the boss in 2018 as she starts her own garage business

Published:  05 July, 2018

After learning the ropes and being on the tools for 14 years I decided 2018 was the year to bite the bullet and go it alone with starting a new workshop business.

For years I have been working for two or three different garages, enjoying a huge amount of variety and picking and choosing what days I work where. I have been extremely lucky with the people I have met along this incredible journey. Also, working for some real characters of the trade certainly doesn’t lead to a boring work life.

I have always worked for independent garages, the interaction you get with customers and the personal experience you are able to offer is for me what car repairs is all about. I love hearing how much people value their car, not financially but in a kind of ‘member of the family’ way and it fills me with a great sense of achievement when I can get their car back on the road in good working order.

Bright idea
It is not the obvious choice for a ‘young lady’ and I use that term in the lightest possible sense as I can hardly call myself a lady when things go wrong and the air turns blue, but that is another story for another issue. It isn’t a normal career choice but fixing cars is all I have ever enjoyed doing, it is the only thing I haven’t lost interest in and it is the only trade I ever want to be a part of.

So January 2018 came and I had the bright idea of starting up my own business in the village I grew up in. It has been nearly six months now and progress has been slow, trying to keep costs down I am distributing leaflets myself and offering incentives such as 10% off.

Best asset
A workshop business’s best asset is its reputation, and that takes time to build up. I am also finding out that being self-employed requires a million more hours than just turning up to a garage and working.
    
It is not that I am naive it’s just I am rubbish at paperwork, invoicing and doing all the other grown up things that a business needs. To say it is a massive learning curve is an understatement. Before January I didn’t have to bother with business plans and meetings with a bank manager, I didn’t have to spend hours at a computer trying to write down why I am worth investing in and what my plans for taking over the car repair world were.

Passionate
The car repair industry is something I feel hugely passionate about and I firmly believe that when starting a business you make sure it is an area you are knowledgeable in otherwise you will never strive to make it work. At the moment I feel slightly overwhelmed by paperwork and getting on the tools is always first priority but I am hugely excited about the future and what Spanner Tech Services has in the pipeline.

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  • Do you have a business or a profitable job? 

    It’s a favourite of mine, and one we ask of all garage owners that join the Auto iQ business development programme...
      
    “Do you have a business or a profitable job?” Not sure which one you’ve got? Carry on reading.
        
    That question is a doozie and is often met with a few seconds of silence followed by a mixed range of answers whilst the questionee arranges their thoughts. The question is designed to be thought-provoking and entice the garage owner to work through the differences between the options.

    Different sides of the coin
    What’s the difference between a profitable job and a business? It’s a fine line with a BIG difference.
        
    Quite simply if you have a profitable job the income from your work (where you spend your hours in the day) reduces when you’re not doing that work. You might be able to get away from the business for a week or two but longer than that will have you sweating, you’ll wonder if your techs are efficient without you in the building, concerned that your numbers are going south.
        
    A business on the other hand will run without you being there for a significant length of time. Which one do you have?
        
    I can feel the tension elevating as some of you may be rising from you chair ready to give me a good talking-to. Hang fire though and hear me out. In no way am I saying that having a profitable job is wrong. Quite to the contrary. If that’s what you set out to achieve then who am I to say any different? Here’s the deal though. Most garage owners don’t embark on this amazing journey to be ‘self employed,’ they do it to build a bigger and better future for their families. They did it to have more time with their loved ones, the funds to allow this and probably have early retirement thrown in with the business providing the income. Can a profitable job do this or do you need a business that’ll run without you? I think you know the answer.

    What’s the difference?
    So you’ve decided that a business is preferable to a profitable job. But is there really that much of a difference? Let’s take a look. It often comes down to nothing more than a state of mind that separates these different sides of the same coin.
        
    Let’s compare the owner with a profitable job and the business owner. At first glance I’d challenge you to notice the difference. They’ll both have a business that they’re proud of and rightly so, they’ve worked hard to build it. More often than not they’re both skilled technicians, have the respect of their team as well as their customers. Then how can it be that one earns significantly more than the next. One word, focus.
        
    Our owner with the profitable job will be very focused. He’s focused on his own ability to fix the vehicles in his workshop often working shoulder to shoulder with the technicians. The technicians respect him because of his technical ability and work hard alongside him. All admirable qualities.
        
    Our business owner also has a laser-like focus, his target is a little different though. His gaze is firmly fixed on a vision of the business he’s building and knows that long term success requires not only focus but patience. He’s acutely aware of the one thing that will bring freedom and the time with his family (the reason he started this venture) is the team he builds and trains.
        
    This isn’t to say that he doesn’t roll up his sleeves and lead from the front when required, it’s just that his daily focus is on the strategic functions of the business that drive success, rather than the day-to-day tasks that so many owners get caught up in. There’s a huge benefit to this as well. You get to keep the skin on your knuckles.

    Dominant thoughts
    It’s a proven fact that we all move through our day in the direction of most dominant thoughts. What does your typical business owner ponder?. Now I can’t read minds (how cool would that be?) but I do know that these are the questions that need to be answered:

  • What’s new pussycat? Throwing light on the new Directive  

    I work in and around MOT testing every day and yet I am daily confronted with new terms and abbreviations, new rules and guidelines faster that I can possibly keep up.

    So, just for fun here is a run through the latest DVSA guidance notes where I have added some more easily palatable descriptions and cleared away some of the ‘noise’. If you are a tester then this should help re-enforce your annual training syllabus and if you are involved in the MOT scheme it with hope expands upon the latest DVSA offerings.

    New defect categories
    Dangerous defects that are fails and present risk to road safety or the environment. Major defects that are fails and categorised as major within the fail criteria. Minor defects that we used to term as optional advisories, but now must be listed. Advisories can still be added manually.
     
    New vehicle categories

  • Part one: Succeeding with succession  

    According to the Institute for Family Business (IFB), two thirds – 4.7m in total of UK businesses are family owned. Crucially, the IFB believes that around 100,000 of these firms change hands each year.

  • Exploiting Aircon 

    Although it may be hard to believe given the weather so far this year, but a lot of customers will soon be starting to use their aircon systems only to quickly realise that their system is not working as expected, leaving them hot under the collar! So an ‘exploitable opportunity’ exists as the people in suits might say, but will you be in a position to exploit it most profitably?

    Modern systems
    With the majority of new cars now having some form of HVAC (heating, ventilation and airconditioning system) fitted as standard, it is no longer considered a luxury, just another part of the vehicle’s array of functions that should work when needed – summer or winter.
        
    Many modern systems are designed to be highly efficient and rely on much less refrigerant than previously. Unfortunately, most customers do not understand that the system will naturally leak the refrigerant at a rate of between 10% and 20% per year (depending how often the system is used to circulate oil around the various pipes and seals) and it therefore requires regular servicing and maintenance to ensure continued efficiency. Ultimately, if the refrigerant level gets too low, the system will not operate at all.

    Added value
    The easy way to deal with this is to offer an ‘added value’ service whenever the vehicle is in your workshop – namely a free air-con system efficiency check. If the system does not perform to expectations, or emits a bad odour, then the opportunity exists to sell the service to your customer. So, make sure that you optimise the opportunity that aircon maintenance and servicing presents ensuring that your customers can keep their cool when summer finally arrives.
        
    The fully automatic units available from the leading suppliers will allow full functionality with a minimum of technician’s time – who can still be servicing other aspects of the vehicle while the unit does the work. A printout at the end details what was done and if any problems exist – useful for both the customer and as an activity record for the F-Gas regulations.
        
    If a problem exists with the vehicle air-con system then there is a requirement to diagnose and repair. A good understanding of the principle of operation and system design is necessary to both identify and repair profitably, in terms of time and for fitting the correct parts. The typical mathematics for the return on investment (ROI) are something like (prices as of May 2013 for illustration purposes only):

    Cost of equipment                     £2,795
    Cost of training                         £350
    Marketing materials                   £250

            Total costs:                       £3,345

    Air-con service                          £65 (net workshop revenue)
    2 x air-con services per week     £130 net income

    ROI    3345 ÷ 130 = 26 weeks.


    This excludes any additional repair/parts revenue and is based on only two vehicles per week. With this in mind I really think the decision to invest in the training and technology is a no-brainer.

  • Bigger is better – right? 

    I was asked whether expanding a garage business to become multi-site was practical or, indeed, even feasible, which got me thinking.
        
    Fundamentally, a business exists to create wealth, both as cash and as an asset. This then benefits the owner(s) and employees, or any shareholders.
        
    The basic principles of the business are to provide goods and services to meet the needs of their customers, who pay accordingly. The turnover/cash flow generated then pays for the costs of providing those goods and services (employees, suppliers etc), leaving any surplus as profit, on which tax may be due. Therefore, in a logical process, the greater the turnover and the lower the costs, the greater the profit – simple!
        
    So, if a business is working well, surely if you just keep replicating what it does in other locations to other customers then you would just keep generating greater profits? Here comes the ‘but’. This concept applies but only in certain circumstances.

    Personal touch
    If we look at a successful independent garage, it is often the enthusiasm, commitment and business acumen of the owner which creates the success, frequently based on good customer service at a personal level. The ‘brand value’ of the business is quite literally in the hands of the owner. It is therefore challenging to successfully replicate this if another branch is opened as this ‘personal touch’ is then split between two locations. If three locations exist, this becomes even more thinly spread and increasingly reliant on the quality and commitment of other staff to deliver the original brand values.
        
    Therefore, a self-imposed ‘glass ceiling’ is created. It is felt that the maximum number of locations that can be successfully emulated is three. However, if you do plan to expand, how do you know when this should happen and what are the key issues to consider to enable you to create successful clones of your business?
        
    The most important point is to identify the key benefit of your business that has created the foundation of your success – your Unique Selling Point (USP). Once you have identified this, it is then imperative that you understand how this can be replicated. It will be important that you can ‘stand out from the crowd’ as any new site will have to establish itself quickly from a standing start. Remember that marketing is not about winning the war to be the best product or service but about winning the hearts and minds of your customers. Additionally, do not be too cautious about setting your prices higher as most customers do not buy on price and carefully selecting your target audience should support your pricing level. Aim to be the leader rather than just another player in the marketplace.
        
    So having identified what your new location will emulate, the next critical step is to understand the automated and integrated systems that need to be in place to allow your businesses to be effectively monitored and managed. This becomes increasingly important as any new site is created as your management time will become increasingly shared. You will not be able to rely on manual systems and the various elements of data will need to become ever more integrated. For example, wages, invoicing, workshop revenue, parts purchases and so on, need to be coordinated, otherwise, quite literally, your numbers will not add up.         Any system that you do implement must also be scalable and have multi-user access, otherwise you will lose the support of your managers and staff at this critical time of an expanding business.
        
    It will not be possible to retain your original ‘hands on’ management style and this will mean that you will lose visibility of the business as well as having to implement new legislative and policy requirements for new staff and premises.
      
    From the purely financial perspective, new businesses rarely fail because of a lack of profitability but fail due to a lack of cash. Any new location will be a cash consumer until it becomes established, so this will require adequate funding and a clear visibility of cash flow from both your existing business as well as the new location as this starts to grow. The key financial elements should include:

    •    Direct visibility of the daily results
    •    Key Performance Indicators (KPIs) and management information
    •    Actual results versus budgets or forecasts
    •    Profitability
    •    Customer debts
    •    Supplier payments (due dates and values)

    The better you can demonstrate the financial visibility, control of the business and achievement of your business plan, the easier it will be, both for yourself and when working with your bank.

    A strong team
    This then leads onto perhaps the most difficult element of growing any business – good quality managers and staff. This creates two immediate problems – firstly, who to delegate your existing business to and secondly, who to appoint to run your new business. In both cases, not only must this individual, or individuals (it could be that you appoint a single deputy and share the tasks) be professionally competent but they must also share your company ethos to ensure that what made your company successful in the first place can continue to be delivered.
        
    Finally, if what you have is truly transferrable then ask yourself if it could be franchised.
        
    My personal opinion is that this is unlikely unless your USP is based on a specialist niche part of the market. If this is the case, although this may create an opportunity, by definition, niche market sectors offer limited potential. You will also have to ask yourself if a potential franchisee couldn’t just do this for themselves without (quite literally) buying in to your franchise offer?
        
    So, if you are considering expansion into other sites, ensure you have the right systems in place, that your existing business USP can be successfully emulated, have competent managers who share you ethos and then it is just a case of finding the right location(s) – which is another different challenge altogether!


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