From the Desk of Mike Anderson: Creating an Action Plan is Key to Reaching Business Goals

Collision shop owners often have a goal, but they don't always have a strategy in place to achieve it.

A good business plan lays out what is going to happen, who is involved, and when and how they are doing it.

Just saying something doesn’t make it so.

Too often I hear collision shop owners say that they’re going to do something -- improve customer satisfaction, increase sales or reduce cycle, for example. But when pressed for exactly how they’re going to do that, their answers are often pretty vague.

Ladies and gentlemen, just because you say something is going to happen doesn’t mean it will. That’s a wish, a desire that something will happen, rather than a plan to make it happen. A goal is when you actually have an action plan -- preferably in writing -- on how to accomplish it.

A good action plan answers: What are you going to do? Why are you going to do it? How are you going to do it? Who will be involved?

Let’s take shop owner “Rob,” who wants to increase his shop's sales by $400,000 a year. He built an action plan for accomplishing that goal.

One step, he decided, is to capture more necessary but not-included labor operations the shop is already doing, but not consistently including on estimates or final bills. He and his estimators looked through some of our “Who Pays for What?” survey reports, and decided it’s realistic they can capture one more labor on every job. At 100 jobs a month and a $63 per hour labor rate, that would add $6,300 per month (or $75,600 a year) to the shop’s annual revenue.

So how will they get that extra labor hour per job? The first Thursday of each month, Rob will have a meeting with his blueprinting and sales staff to go over two or three not-included items the shop is doing regularly that could be included on estimates. Together, they will discuss how to negotiate for those items.

Think about that plan: It lays out what is going to happen, who is involved, and when and how they are doing it. That’s a goal, not just a wish.

The other part of Rob’s action plan is to improve the shop’s closing ratio. Right now the shop has a 60% closing ratio. That means it is writing about $900,000 in estimates every month, but only capturing about $540,000 (60%) of that potential work.

Rob sets a goal of improving that closing ratio to 63%. That would mean the shop’s sales would rise to $567,000 per month (63% of $900,000) without needing to get a single additional customer through the door.

How will Rob accomplish that goal? First, he is going to bring in some after-hours sales training for his team. And every estimate for a job not immediately scheduled by the customer will be put into a file; an estimator or customer service rep will call each of those customers the next day with a script Rob and his team develop to help get that job scheduled. If unsuccessful, that estimate will move into another file for another follow-up call a certain number of days later.

The added labor hour per job will generate an additional $75,600 in revenue over a year. The improved closing ratio will generate an additional $324,000. That puts Rob within $400 of his goal. And it’s not just a wish. He has an action plan for how to accomplish it, with specifics about what will be done and who will do it.

So enough with the wishes. Set goals. Put the plan in writing. Keep it to a manageable four or five action items. And delegate but don’t abdicate; get others involved, but don’t just dump it on them. Then regularly show them how the shop as a team is making good on that plan.

Mike Anderson

Mike Anderson is a columnist for Autobody News and president of Collision Advice, a consulting company for the auto body/collision repair industry.

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