Steering More Customers His Way
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 (https://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.
A larger salary is always nice, but Borden said business owners sometimes underestimate the value of nonmonetary incentives. In Stanek’s case, the mechanic, who likes to invest, might appreciate access to a professional investment advisor, for example, Borden said.
As Little negotiates a new role for Stanek, he should also think about his own role and how, in tandem with Stanek, he can best spend his time.
Borden suggested Little spend more of his own time positioning the business as the source for luxury European car repair. He liked Little’s latest advertising move: buying mailing lists of new residents in the upper-income area and sending a brochure about the shop. But he’d like to see Little refine his message, including more focus on profitable repairs and cars.
To help him determine what those are, the consultant suggested Little work with his accountant. Borden was impressed with the quality of the reports provided by Professional Motorcar’s accountant. It’s important to have a view of past business, he said, but it’s also important to plan to move the business in the direction the owner wants. Little could ask his CPA to review receipts and provide a breakdown of the most profitable services, parts and cars.
That information should guide the owner’s marketing efforts.
Before he launches another advertising campaign, Little might consider creating a focus group of existing and potential customers, the consultant suggested. Led by a marketing professional, a focus group could help Little answer some key questions about pricing, incentives and services.
“This is a guy who needs to be more aggressive about getting the information that will help his business, whether that’s what makes him the most money or what his customers want,” Borden said.
He suggested several resources, including the 2000/2001 GreenBook, a market research directory published by the New York chapter of the American Marketing Assn., which is based in Chicago. Most libraries carry the book, Borden said. It can also be searched online, or ordered for $150, at https://www.greenbook.org. That site also offers access to the Focus Group Directory, a resource of marketing professionals. That $85 directory is also available at many libraries.
The marketing association Web site (https://www.ama.org) is also a source for marketing and focus group information and resources.
With the information he gathers from his focus group and market research, and his mailing lists of new residents, Little will have important tools to keep his current customers and win new ones, said Borden. Little knows the company has to continually bring in new customers to replace those who move or buy a new vehicle or switch their loyalty to another shop.
Borden was impressed with the fact that Professional Motorcar was able to retain about 80% of its customers during the transition to a new owner. And he approved of the restrained graphic changes Little made to the logo: enough to indicate a new management but not enough to worry customers. Borden also liked the physical changes Little made to the shop, including a small inventory room, and room to expand if needed.
To capitalize on these improvements, he urged Little to move quickly to build the shop’s reputation as a quality repair source. He recommended that Little join business and car enthusiast organizations that attract high-end car owners.
Little has a laid-back style and car knowledge that will help him connect with potential customers. He owns a Porsche 928, a 1982 Mercedes 380SL, an ailing 1987 Jaguar XJ6 and two Japanese motorcycles, and is a fan of motor sports.
“This guy has a lot of pluses and a lot of potential,” said Borden. “He just has to pay some more attention to his business.”
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Cyndia Zwahlen can be reached
via e-mail at cyndia.zwahlen@latimes.com.
Would your business benefit from a make-over? Write to: Business Make-Overs, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. Or download the form at https://www.latimes.com/bizmakeform.
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* HIGHWAY 1
For more auto coverage, please see Section G.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
This Week’s Business Make-Over
Company name: Professional Motorcar Inc.
Headquarters: San Juan Capistrano
Type of business: Auto repair
Status: S corporation
Owner: Jim Little
Founded: 1989. New owner bought in January 1999.
1999 sales: $300,000
Employees: Three
Customers: Local owners of European cars
Main Business Problem
Sales and marketing, expansion and staffing issues.
Goal
To be recognized as local leader in luxury European auto repair and service.
Recommendations
* Leverage the role of former owner, now an employee. Create a focus group to discuss pricing, etc.
* Decide on target market and then sell it on most profitable products and services.
* Join associations where high-end car owners congregate.
Meet the Consultant
Phil Borden, a management and technical consultant, has been executive director of the nonprofit Women’s Economic Development Corp. in Long Beach for five years. His professional experience includes a seven-year stint as president and chief executive of Microexperts Systems Inc., a software consulting firm in Los Angeles. He also has taught at UCLA and USC.
