Monday, 02 July 2007 07:52

Proactive decision-making defines the difference between success and failure

Written by Lee Amaradio, Jr.
    As businessman we are forced  to make decisions everyday. Some we like. Some we don’t. Nevertheless, we must make them. I like to purchase new equipment but I hate to let an employee go.

    As businessman we are forced  to make decisions everyday. Some we like. Some we don’t. Nevertheless, we must make them. I like to purchase new equipment but I hate to let an employee go.
    Our employees rely on us to make good business decisions. They must trust our judgment as decision makers whether they want to or not. We control their future.
    We must make some decisions in a hurry without any research, and other times we are allowed the luxury of time and research. We need to be capable of making the majority of our decisions instantly. You should never make any big decisions without taking the time to research everything you possibly can.
Research pays off
    I took two years before I purchased my new management system. After purchasing two previously that didn’t work for us, I was quite skeptical this time around. I took the time to contact other companies that used this system and ask them how they liked it. My research paid off and I now use what I believe is the best management system to date. I wish I had taken the time to do the research before deciding to purchase my previous two systems.
    There are three things you should try to consider before you make any important business decisions. First, ask yourself how this decision will affect your company’s finances, (will it make you money? will it pay for itself?). Next, ask yourself how this decision will affect those that work for you. The third and most important thing you must do is count the cost. Remember, the wise man always checks his destination before purchasing his ticket. Ask yourself if this decision is wrong, and if the worst happens, will your company survive the outcome? Then create a contingency plan just in case things start to go wrong.
Take chances but set boundaries
    Never put yourself so far out on a limb that you risk everything. Always create a way out. Have a plan that you can implement immediately if things go wrong. We all have heard the success stories of someone that put everything on the line and got lucky and succeeded. But for every success story there are one hundred failures.
    As businessmen we have everything on the line everyday. If we don’t make money we don’t get paid. This doesn’t mean we throw caution to the wind and hope for the best. Before I make any significant business decisions that could possibly have an adverse affect on my company, I always have a contingency plan. I never put it all on the line.
    This doesn’t mean I haven’t come close many times and pushed the limits. If you want to be successful you need to be comfortable taking chances but have enough wisdom to set some realistic boundaries.
Prepare for the unexpected
    One thing I’ve learned over the last 28 years in business is that as soon as I think things are going good, they start getting bad. How many of us have hired that extra tech only to watch things instantly slow down as soon as his toolbox arrives.
    Collision repair is full of so many variables that can cause a repair to go wrong, that it is the exception, not the rule for everything to go right. As a body shop owner you should always be prepared for the unexpected and try to imagine what can go wrong before it happens. This is proactive decision-making, fixing the problem before it happens. The value of being proactive is something that took me years and years in business to learn.
    Most of the decisions we make as shop owners are reactive and usually have something to do with damage control. Proactive decision making usually eliminates a much larger problem before it arrives and will ultimately be more cost-effective.
    Example: It’s easier to borrow money when you don’t need it. You will find that if you wait until you need a loan you will pay more for the money - if you get it at all. Banks are willing to give you an umbrella while the sun is shining but when the rain starts falling they want their umbrella back. I’ve learned this the hard way. Now I borrow money when I don’t need it, and I get my credit lines in place beforehand.
    This should be part of every contingency plan because you know that cash flow is the most important part of any business. If cash flow is so important to your business shouldn’t you be proactive and not wait until you are desperate to borrow money? Knowing that this type of decision is so important to the future of your company, it should be taken care of way ahead of time.

Borrow money before it’s needed
    If you pre-arrange your lines of credit when you don’t need the money, you will never put yourself in a desperate situation. If you happen to find yourself in need of extra cash, it will be there whether you use it or not. Proactive financial decisions will keep your future secure and will keep you from a desperate situation. I’ve accessed my credit lines many times but I never allow myself to borrow money after the fact, always before. I had to learn this the hard way by being denied a loan when I was desperately counting on it.
    There are so many aspects of the collision repair business that are out of our control. We should control what we can by making proactive decisions whenever possible. Every time you react to a problem, write down what you did to solve it and how much it cost you. Next, write down the solution that could have solved this same problem if you were proactive. If you compare the cost difference you will always find that the savings for being proactive will be substantial. Never allow yourself to react time and time again to an ongoing problem without checking for a proactive solution to that problem. Make this a business guideline, one you live by, and you will see a more manageable and more profitable business.
Cross training your staff
    You should never allow your company to depend on any one person. Although you may value all of your key employee’s individual input, you shouldn’t allow your company to be dependant on any one individual. What if something happened that was unexpected, (like your key person got hit by a bus) how would this affect your bottom line? My proactive solution to this was to cross train everyone in my office. This has saved me more than once.
Proactive decision-making
    The majority of the decisions we make are reactive and they always will be, but we need to train ourselves to look for ways to become proactive whenever possible. We should search constantly for solutions to potential problems before they happen. For example; I have implemented a process for calling on our accounts receivable daily instead of waiting until the bank account is empty to start worrying about it.
    I remember when payroll would blindside me even when there was more than enough to cover it in accounts receivable. I would run around my office asking everyone to call on the receivables. Now I make sure I tell them to call on the receivables so often that it automatically gets done. This is being proactive.
    We had similar problems with bumpers. We would paint and assemble bumper jobs without checking the color, only to discover the color didn’t have an acceptable match. We would then have to disassemble the bumper cover to re-paint the bumper. Our proactive solution to this problem was to make the tech responsible for the color match. You wonder why we didn’t make the painter responsible. Because when the painter was the one responsible, the body tech expected to be paid twice. If the vehicle needed disassembly for repaint, by making the tech responsible he would be required to do the disassembly for no additional pay. This solved our problem; now we rarely have a vehicle assembled if the color doesn’t match.
    Another proactive decision would be to adjust your labor rates based on your companies needs and not wait until the other shops raise theirs. We always want someone else to take this step for us. We want to follow not lead. If you think this way, you are depending on someone else’s business skills to make your decisions for you. How do you know if he is a wise man or a fool?
    So why would you trust someone else to make your business decisions for you? We see this every day within our industry. No one wants to be proactive and make this decision. We will blame the industry or the shop down the street for the lack of profit within our own companies. The simple solution is to be proactive and just make a decision.
    Being proactive needs to become a way of thinking and we need to retrain ourselves because our industry has always reacted to problems instead of solving them. We need to make a list of all of the problems that face us in our day-to-day operations and find ways to solve them. Next week try picking just two problems that always occur over and over and find a solution to them. Then find two more and solve them. If you keep this pattern of proactive thinking constantly as your main focus, you will find that most of your problems can be solved.
    If you continue to make your decisions by reacting to the problems nothing will ever get solved and you will continue to get the same results. Nothing will change.
    In business for 26 years, Lee Amaradio, Jr. is the president and owner of “Faith” Quality Auto Body Inc. in Murrieta, California. With 65 employees, he attributes his success to surrounding himself with good help, claiming to have some of the best office staff and techs in our industry. Amaradio has been in this industry long enough to see the handwriting on the wall. He feels that now is the time for us to unite as an industry before it’s too late. He can be reached by email at lee@faithqualityautobody.com.