Last month, as a way to look at how businesses face different challenges, we introduced two new business owners trying to stake out (or keep) their places in the auto repair industry.
Every business is a mixture of strengths and weaknesses — when was the last time you took a serious look at yours? When you do reflect on the state of your business, what might you be missing because you’re too close to see it?
Many aspects of our lives are improved with help from an outside perspective: we seek advice from medical professionals or personal trainers when we want our bodies to be fit and healthy. Yet, when it comes to the health of a company, many business owners think that, as the boss, they must find all the answers themselves.
Let’s see how our hypothetical business owners, Fred and Stan, are doing now that they’ve had some time to get the hang of running their businesses.
ChuckM@EagleCorporateAdvisors.com
(702) 451-3250
A Tale of Two Businesses: Part 2
Fred’s Luxury Auto Services
When we last saw Fred Jr., he had inherited his father’s established business, along with its staff and longstanding reputation. Although the garage and equipment were owned outright, the probate process would take time and hold up the legal transfer of assets. Meanwhile, Fred would be stepping into his father’s shoes to oversee day-to-day operations, learning them along the way.
So, what’s happening now? Fred’s initial confidence has waned and he feels overwhelmed as he manages the staff while learning the operations. Without a documented set of procedures, each new supplier invoice or utility notice is a surprise that often comes with a late fee. After Fred failed to get paychecks issued on time, due to trouble accessing bank accounts, he started losing the confidence of the mechanics and the office sales team. Customers have offered their sympathies on Fred Sr.’s passing, and some asked if he’d be selling the business soon.
Fred Jr. still believes he has a solid, proven business and a good team, he just has to get through the transition process, have things legally transferred, and continue to learn. He’s trying to update things as he goes, and he hopes to move some operations online, but the staff of mechanics — most of whom are over 55 — are resistant to change and adding new technology.
Stan’s Car Repair
Stan, meanwhile, took out loans and rented equipment to start his new business from scratch. Shouldering much of the work himself meant he was spending long days away from his wife and family. A motivated and skilled mechanic, Stan knew he could do the work — but could he run the business?
Stan has been feeling stressed in all parts of his life. He has trouble prioritizing because there is so much to do. Calling clients back is last on his list, as he has never been good at talking to people. So, while his repair work is top-notch, customers are upset at having to wait so long to get estimates. Stan’s wife is starting to resent that he’s never home, and she, too, worries that the business loans will end up costing them everything.
Because of his ingrained work ethic, Stan feels his business will succeed if he keeps his nose to the grindstone — but what does that success look like? More long hours, for the next few years or decades of his life? Even though he is strapped for cash, he decides to ask for help, especially in his weakest areas.
What a SWOT Analysis Can Reveal
When we sit down with business owners like Fred Jr. or Stan, we often begin with a SWOT analysis, which ends up being an eye-opener. After taking a long, honest look at a business’s strengths, weaknesses, opportunities, and threats (or SWOT), business owners completely revise their once-narrow view of the company they have been running for years.
There is value in the process, as it is a collaborative brainstorm involving everyone: owners, employees, and advisors. Hearing other viewpoints, like from Fred’s mechanics, could shed light on missed opportunities or overlooked dangers. At the end of the process, we narrow down the three strongest items for each category.
It’s our job to help bring out all aspects of how a business runs, good or bad, so that we can help with anything from a minor tune-up to a major overhaul.
Strengths and Weaknesses
Running an established business, Fred Jr. can benefit from strengths like its reputation and customer base, cash and inventory reserves, and experienced team. Since it’s at a much earlier stage in development, Stan’s business relies heavily on him, personally — his talent and technical skill, his shop’s quality of work, and his humility and work ethic.
Each of these businesses have weaknesses, too: Fred Jr. is a newcomer to the field and an inexperienced business owner. His business is also located in an older part of town, in an older building with older equipment. Fred’s mechanics, while experienced, are inflexible and resistant to change and new technology. Stan, meanwhile, has very little capital and lots of debt, lacks any reputation in the market, and, though he is good with cars, struggles with the people side of things.
These strengths and weaknesses will affect what opportunities and threats apply to each business. As you first read about these businesses, were you able to identify what each had going for and against it?
Opportunities, Threats, and Next Steps
Once Stan and Fred Jr. are able to take a long, hard look at their strengths and weaknesses, then what? How can each of them parlay that knowledge into action? Opportunities and threats, by definition, must be met with decisions and actions. To succeed, a business must capitalize on opportunities and shore up defenses to withstand looming threats.
Fred Jr. will have to contend with threats to his business that include aging employees, loss of recurring customers, and a long estate process. Yet, the opportunities he can tap into are the business’s established brand and reputation, acquiring new technology and improving old processes, and his own personal network of connections like a college alumni association.
Stan is dealing with immediate threats like low sales revenue and lack of capital, his inability to act as customer service representative, and a looming possibility of family issues at home. (Remember, divorce is one of the five D’s that can sideline or terminate a business.) Stan’s opportunities include new marketing to build a brand from scratch, improvements to customer service, and hiring new staff — all of which require some capital to get going but will yield revenue so those debts can get paid down.
Next month, we will see what steps Fred Jr. and Stan decide to take, and whether those steps result in growth or losses for their businesses.