As a full-blown recession looms, inflation has likely already started double dipping on the success of your auto repair shop. Your customers’ purse strings may have tightened, resulting in a decrease in your revenues. On the other side of the equation, all your vendors keep hiking up their prices and eating into your profit margin.
With that one-two punch of pain comes the need for a plan to survive the challenging months ahead. Or better yet, you need a plan that allows your auto repair show to grow and thrive through it all.
Ready to get started? Here are 15 things to keep in mind as you create your plan on how to help your auto shop thrive through the recession and beyond.
1. Get Out of Your Comfort Zone
As you achieve success with your auto repair shop, it’s natural to start feeling comfortable and letting things slide. You might not worry much about hitting your average repair order (ARO) targets. Or maybe you just let the expenses creep up since you have the income to cover it all with ease.
Either way, you can bet that the minor discrepancies will add up fast. To get out of your comfort zone, perform an expense audit, calculate your ARO, and start taking back control.
2. Eliminate All Distractions
COVID brought many challenges to the business landscape, resulting in the need to focus on success in every way possible. After making it through that gauntlet, distractions feel like a blessing, resulting in your customer service quality backsliding.
If you want to keep thriving through the challenges, you need to take it back to the basics and renew your focus on offering the best quality of service around.
3. Expect Lower Spending
As inflation keeps bringing the hits, consumer spending will keep decreasing. Your customers simply won’t have the cash available to complete their auto repairs outright.
To help them out, you need to provide several different financing options to help bridge the gap. As a part of your offerings, think about letting your customers set up easy payments that allow them to pay off their major services over several months.
4. Drive Innovation Always
Innovation drives success, so ditch the “we’ve always done it this way” mentality in favor of doing things differently. After all, industry advancements are always coming your way, giving you a chance to improve efficiency and service quality.
Digital vehicle inspections, cloud-based POS, and texting your customers are the industry standard. If you’re not embracing them now, you’re already years behind.
5. Keep Your Ear to the Ground
As always, it pays to keep your ear to the ground, so you can anticipate what’s to come. Beyond that, you should trust but verify, allowing you to prepare for the worst without overwhelming worry. Watch the news, understand what a recession might mean for you, and respond accordingly.
6. Pay Off Existing Debt
Debt looms like a dark cloud over your auto shop and threatens to wipe you out as soon as your income starts to fall. The repayment obligations remain no matter what happens to your income, so it’s best to get rid of the extra weight on your shoulders as soon as you can.
To best create a solid repayment plan, put the Profits & Cash Flow System to work for you and then use the funds to pay down your debt quickly.
7. Know Your Numbers
If you don’t know your numbers, it’s pretty much impossible to gauge the financial health of your auto shop. In fact, you should know your total sales, gross revenues, net profits, and all your other financial figures right off the top of your head. If you don’t, then you’re disconnected from your shop and could quickly end up in hot water.
8. Expand Your Customer Base
Even if you’re booked two weeks out at this moment, it’s time to start expanding your customer base. You need to boost your max car count and diversify your revenue streams to keep things going through the recession. Otherwise, you could end up hemorrhaging customers much faster than you can bring them through the doors.
9. Cut Your Expenses
Times are good now, but what will you do if your income drops out from under you? You need a plan on where to cut expenses to ride out the tough times and come out the other side unscathed.
To do that, simply look at which suppliers you could replace without compromising quality. And then, figure out which vendors and services you’d be able to live without—at least for a little while.
10. Save Money Now
With a steady income coming your way, it’s high time to start socking away the funds as quickly as you can. You have to build a strong safety net to keep your shop afloat through the lean times. If you don’t, you’ll risk losing your top talent and even shutting down your shop just due to a brief lapse in income.
11. Keep Inventory Low
If you carry a large inventory month to month, you’re keeping operating funds tied up unnecessarily. Avoid that by taking a good, hard look at your inventory and calculating the turnover.
Ideally, it would help if you were selling all the items in your inventory once a month at least. If not, consider sending items back or even having a fire sale reclaim your funds and start anew.
12. Diversify Your Marketing Channels
Omnichannel marketing is king when it comes to best reaching and supporting new and existing customers. By diversifying your marketing channels, you can connect with all your customers wherever they spend time online.
Market your auto repair shop through social media, email, text, paid ads, your own website, and beyond to achieve great success with all your campaigns.
13. Establish a Success Attitude
It’s easy to stay in good spirits when things go your way. What happens to your attitude during the hard times? Hopefully, you can remember that mind wins over matter and keep that positive attitude going. A positive mindset fosters innovation and expansion, after all, and keeps employee morale high.
14. Think About Your Credit Scores
Do you know your business credit score? It’s separate from your personal one and speaks to the creditworthiness of your firm.
If you’re unsure, it’s time to check and then get ready to build it up. Consider opening up a line of credit for emergencies well before you need it. If you wait until the recession hits, you might find the door has already closed.
15. Prepare for the Hard Times Ahead
Preparation is key in surviving—and thriving—through the challenges. So, get ready to tighten the ship and get your shop on a steady footing for the long term.
Look to the next five years and ask yourself if you’re ready to weather all storms that come your way. If you don’t know the answer or find it’s a resounding no, look to auto shop coaching for the support you need.
With help from Chris Cotton with AutoFix Auto Shop Coaching, you can get your auto repair shop ready for great success now and in the future. You’ll learn how to improve your shop’s financial health, create a great company culture, and much more.
All you have to do to get started is schedule a call today.