Auto Repair Shop Growth During a Recession

Businesses are buckling down and tightening their checkbooks in an effort to control expenses to avoid or reduce the effects of a potential recession.

But in the auto repair industry, there are unique opportunities that come with uncertainty in the market – and that’s more business opportunities.

As people across the country reduce their spending, they are more likely to repair vehicles than to replace them, offering auto repair shops the opportunity to actually increase business. With the right strategies, you may find that it’s entirely possible for your shop to not only survive an economic recession – but thrive and grow.

What Growth During a Recession Looks Like

The concept of growth in a recession can look different for individual businesses. Some shop owners might consider maintaining consistent business to be a success.

This is a conservative, but fully acceptable approach – keeping consistent business can keep your shop open when many others might close.

Other shop owners, however, might be asking themselves, “How can I increase my bottom line during a recession?”

This perspective may sound like a pipe dream, but it’s highly realistic if you know the best strategies to implement for your shop.

Expanding business when facing economic and unexpected challenges might seem impossible; however, the COVID-19 pandemic proved that great success in the auto repair industry can be achieved in uncertain times.

Throughout the pandemic, people chose to repair and maintain their existing vehicles, rather than purchase new ones. This actually increased the need for repairs, and people were saying yes to maintenance they might have turned down before, simply because they realized the necessity of keeping their cars in good shape.

As an added bonus, shops began to add a no-touch element, providing a great opportunity to enhance the customer experience.

While the pandemic was an uncertain time for everyone, it actually brought great advantages for auto repair as it allowed the shops that adapted to create a customer experience that customers continue to enjoy today.

In preparing for the economic uncertainty in the coming year, the lessons learned through the pandemic have become highly valuable, and they can be narrowed down to two keys to success: understanding your customers and creating a consistent process.

Understanding Your Customer

No matter what state the economy is in, the driving force behind all business comes down to the customer – the people who keep you in business.

Therefore, as you prepare for a potential economic challenge, you must pay particular attention to your customers’ needs – and any changes – to properly adapt your business to meet those needs.

Pay attention to what your customers appreciate about your shop or the extra services that make them come back to you for service rather than someone else. Think about why a customer agrees to the work you do.

Customers don’t buy brakes because they want to, and they don’t get excited about a new water pump or alternator.

However, they do understand that purchasing these car parts can get them a safe, reliable vehicle – an end goal that you can support.

As the shop owner, this means meeting the customer on their terms and showing them you understand their needs and wants.

A key factor that applies to this is establishing trust. Customers want to understand the repairs they are agreeing to.

You can offer them a greater understanding with tools like digital vehicle inspections (DVIs), photos and videos of the vehicle and text updates with clear communication of the repair process.

When you prove that your business is one customers can trust to complete the repairs safely and effectively at a fair price, they are more likely to agree to the repairs, and then return for more business.

Establishing a Consistent Process

In addition to understanding your customer, you must also offer a consistent experience, so they know they will receive the same great service and repairs every time they walk into your shop.

Consistency in your operations can make the difference between surviving and thriving during a recession.

One of the best ways shops can establish and maintain a consistent process is through the use of the right tools – particularly a cloud-based shop management system.

This type of software gives you the opportunity to track your shop’s data.

This allows you to remain aware of finances and business trends and make adjustments as needed, as well as automate processes, such as scheduling or maintaining a parts matrix.

This increases the efficiency of your shop, so even without adding new bays or staff, you can take on more work because you’re managing each repair order effectively.

On top of that, you can improve your customer communications with the ability to communicate via text to share images from DVIs and get their work orders approved, all without requiring another in-person visit.

A consistent process maintained through an effective shop management system makes it easier on everyone: you – for better data tracking and management of your shop behind the scenes – and your customers – for a more efficient, transparent customer experience.

How to Achieve Growth in a Challenging Economy

Overall, growth in a recession is an attainable goal if you are in tune with both your shop and your customers.

As you gear up for the year ahead, make sure you have a clear understanding of your customers and their needs, as well as how you can meet them.

Additionally, take the time to standardize your processes to keep them consistent. Utilize the right tools to help automate what you can, increase efficiency, and track data to monitor your shop’s progress and adapt as needed.

With these adjustments, you will put your shop in a position better prepared for growth and success, no matter how the economy is performing.

FAQ

Within an auto repair shop, data serves many functions: streamlining day-to-day operations, helping service advisors and tracking a shop’s cash flow. But you can also harness the power of data to plan for the future. In fact, strategically leveraging data can help you determine when it is time to open a new location. Think of it as your roadmap to multi-shop success. Data helps you every step of the way, from optimizing your existing business, to creating a plan for a new shop, to maximizing workflow across all locations.

Looking at the Big Picture: The New Location Roadmap

When you start planning for a new location, your strategy should prioritize the big picture of your business, allowing you to strategically determine the process for opening the next shop. Key metrics and analytics can help you monitor your business performance and plan for both the long- and short-term future. Whether you are expanding for the first time or the tenth, leveraging data can help make the process smooth, strategic and simple. It’s as straightforward as 1… 2…3:

1. Getting Started: Make Your First Location the Best It Can Be

Before opening a new location, ensure your existing shop is optimized. Your goal is to maximize efficiency and productivity, so you can replicate the process at a new location. Take a good, hard look at your numbers, and be honest with yourself about your business performance. Some key questions to ask include:

• ​What are your ARO and car count, and can you increase them?
• ​How many repeat customers do you have versus new customers?
• ​How effective are your mechanics at completing their work?
• ​Will adding another mechanic or bay be enough to support my current levels of business growth?
• ​How frequently are customers approving your full estimate or returning for follow-up work on previously declined jobs?

Once you have determined that your existing business is performing at the highest level possible, you are ready for the next step.

2. Creating a Plan: Determine Criteria for Your New Location

As you look to add a location, it is important to identify your business needs and the assets you have available. Data from your existing location(s) is key to this step. Not only can you analyze business performance to determine your financial ability to open a new shop, but you can also identify opportunities with new customers to target or niche services to offer.

For example, if your existing location is overwhelmed with customers seeking same day or next day service, another shop might be the solution. Or, if you are targeting customers in a different area of town, building or buying another location closer to the population you are targeting might draw them in. Here are some questions to ask when determining the criteria for a new location:

• ​Have I maximized the efficiency of my existing location(s)?
• ​Can I afford to build a brand-new shop, or should I buy an existing business?
• ​What is my close rate at my existing location(s)?
• ​What demographic am I targeting, and how can I meet their needs with this new location?

3. Setting Up for Success: Use Tekmetric Multi-Shop to Maximize Workflow

Once you have multiple locations, it is critical that you maximize workflow between all locations. You can compare locations using Tekmetric Multi-Shop to monitor performance, track key metrics and determine each location’s strengths and weaknesses. A good question to ask yourself is: how can I leverage each location’s strengths to support continued business growth?

First, ensure that you have replicated the optimized processes from your original location(s) at the new shop. You have worked hard to ensure your business was performing at the highest level possible before opening a new location – make sure to keep that momentum moving!

Second, play to the strengths of each location so they support each other. For example, determine which locations are high versus low volume to maximize your technicians’ time at all locations. If one shop is a high-volume location overwhelmed with work, you can leverage a lower volume location by moving some cars there for same-day repairs. Just don’t forget to move the cars back to the original location for the customer’s convenience!

The idea of multiple auto repair shop locations can seem daunting, but by maximizing your data, you can simplify the process to ensure you are prepared for the next step. First, put all your efforts into running a top-tier business with your existing location(s). Once you are satisfied with your performance, utilize data to establish a clear plan for opening your next location. Finally, use tools like Tekmetric Multi-Shop to maximize workflow and leverage each location’s strengths to support the overall business. This approach will maximize your productivity and efficiency across all your locations, increasing your overall bottom line and keeping customers satisfied.