For many independent shops, expanding business is a good goal to strive towards, whether that means growing revenue, adding technicians, or even expanding to a larger shop or a second location. But at the same time, you want to grow at a pace that’s sustainable for you and your employees without overextending yourself. And when an independent shop owner has a million and one other tasks for their shop’s day-to-day operations, planning their business’ growth might not make the top of the list. After all, if the clientele is there, your shop will just grow naturally, right?
For example, Dick Bascom, owner and president of Bascom Truck and Auto, found that earlier on in his career, the shop’s limiting factor was not having enough techs. But other limiting factors can be the size of your facility, not having enough office staff, or not having the right amount of business.
“If the problem is not enough business, then certainly attack that,” Bascom explained. “Look for how you can advertise or grow your customer base. If you have too many customers, oftentimes it's because you're working too cheap.”
Figure out if you can afford to grow
Then, of course, another critical limiting factor to growing your business might be whether or not you can afford to grow. Especially when it comes to hiring a new person for your shop.
This can be especially tricky if you have customers that pay their invoices 30 or 60 days after the repair instead of in cash the day of, as while that income is deferred, new employees still need to be paid regularly. Not to mention that you need to fund their benefits, and pay for the added parts and supplies they’ll use.
“You need to have a certain amount of capital available to you when you make a decision to hire someone, because it's going to affect your cash flow,” Bascom added. “I figure each time I hire a person, it's going to cost me about $50,000 in capital until that money starts coming back in.”
This also means considering if you can afford to pay your new help, especially if it’s a qualified technician you want to keep. For Cooper, assuming the average labor rate is $135 per hour, based off of Fullbay’s Annual State of Heavy Duty Repair report, that means you can afford to pay a new tech $27 an hour.
“If you're paying a guy $50 an hour, you can't afford that,” he explained. “And a lot of shop owners are going to say, ‘But I have to, that's what it takes to get him.’ I agree, but you can't afford it.”
Grow in small steps
Let’s say you’re a small shop with only five techs. Maybe you’ve taken the time to step away from your business and consider the big picture, and you’ve found you want to grow into a bigger shop with twice the staff, but you can’t yet afford that. So how do you grow in that situation?
Take it slow. Maybe you can’t afford to hire a new technician, but maybe you have other resources to tap to help enhance your business’ productivity. For example, McWilliams recalled that when Bascom Truck & Auto was just starting out, her mother did the shop’s accounting, and someone else’s wife ran parts when they were picking up other items they needed.
Or “You can hire someone to do only one specific task,” McWilliams suggested. “There may be ways for you to hire a smaller piece of something without hiring a full-time person, and that may help you grow before you have full-time work available.”
Or you could combine positions, such as parts runner/cleaner, Bascom suggested, and that’s someone you can afford to hire instead of one parts runner and one janitor.
After all, you don’t need to expand your business all at once. Instead, if you take it step by step and with intention, you might be able to achieve your shop’s goals faster than you think.
