I know there is lots of grumbling about the terrorist activity, the fall of the stock market, and the overall shape of the economy, and I am sure this has caused more fallout in some areas than others. All that said, BUSINESS IS GREAT! I hear it time and again. I have 11 tenants in the auto salvage business (disclaimer, yes, most are relatives), and all of them are doing great. Many had record months in January, and most have just been open a few years or less. Their successes have actually been as dramatic as the negative news we hear. None have laid off, scaled back, or taken actions we are hearing about in other industries. That’s not to say that some in our industry aren’t suffering. A very few of them may be in really depressed areas, a legitimate handicap. But for every yard suffering in a depressed area, there are countless others suffering because of issues within their control.
Being open just a few years can be a good thing. Although businesses at that point can be very fragile, with a less than fully mature customer base, they have very little baggage. Yes, it’s a dirty secret, but many of us in this business have lots of baggage. Old methods, employees (and GASP! Owners) resistant to change, and mindsets. I will concede that some folks aren’t doing as well as others, but hasn’t it always been that way? Imagine, if you owned a restaurant, you weren’t doing well, and you are visiting with your banker, telling him that your business has been slow because the weather has been bad, or you lost your key employee, or because the economy has fallen, or whatever. Also, you have to know that, most likely, the banker has another customer in the restaurant business, and that customer is probably doing well. Don’t you think your banker has observed, privately at least, that perhaps your menu is stale, or there are other factors affecting your business? It’s sad, as the banker recognizes the reality: one customer thrives and one sways because of factors usually within their control. Very seldom are there genuine, exclusive issues affecting just your business.
Anyway, I firmly believe, and hear from folks that I trust, that business and profits are good for those that are paying attention. It is definitely harder than it used to be to make a profit. But lots of folks are proving it can be done.
Now, on to the solutions. I can’t discuss all of them here in this one article, but will discuss more in my next article. I am just an “occasional” contributor to Recycler Power Source, so not sure when that will be, but read every month and you won’t miss it! In this issue, I will discuss operating metrics. D.L. Fitz and I devoted an entire chapter to these in our recently published (and finally shipped) book, “How To Salvage Millions From Your Small Business.”
How do you really know how you are doing? Are your problems in Cost Of Goods, dismantling, sales, too many employees, or a myriad of other sources? You will never really know, nor will you be able to monitor and improve any of those areas, until you start to measure them. Some key metrics are:
- Cars dismantled per total employees
- Cars dismantled per dismantler (count all employees involved in dismantling, stocking, cleaning)
- Sales per month per employee (if you aren’t at $14k+, you are probably not profitable)
- #Invoices per salesperson
- Sales per salesperson
- % Credits to sales
- % Brokered parts
If you have a friend in the business, compare your numbers to theirs. Make sure you start gathering this information now, and take every opportunity to exchange and discuss the numbers with any friendly competitor. You can do this at recycler meetings, be it URG or ARA, or even your local or state meetings. Often times, the valuable lessons aren’t what to do, the real education is in what NOT to do. The “not to do’s” can be just as valuable to discover as the things to do.
More in my next article, but remember only you can make BUSINESS GREAT!
Ron Sturgeon is past owner of AAA Small Car World. In 1999, He sold his six Texas locations, with 140 employees, to Greenleaf. He now manages his real estate holdings and investments, and does
limited small business consulting. He can be reached at 5940 Eden, Haltom City Tx, 76117, or email@example.com.