Evaluating the Results of Major Business Changes

Mar 1, 2012

In my last column, I outlined a few changes we’re going through here at my shop. I recently transferred ownership of our 73,000-square-foot facility and we’re now in our new facility that’s just shy of 6,000 square feet.

I’ll be retaining four employees and have no intentions of adding more for the next couple years. The biggest adjustment this move has required is space reduction. It’s been overwhelming trying to reduce inventory and manage the new construction while staying on top of our already heavy schedule.

The move is intended to help us continue specializing in higher-end interiors and move away from a lot of the time-consuming jobs that don’t carry the same profit margins. The key has been creating efficiencies in our space and employees.

The networking I’ve previously written about in my columns has been helping to hone our shop’s offerings into the specific market I’ve been after. Just last week we completed a 1969 Pro-Touring Hemi Charger that was a referral from JC Hetz Studio in Muscatine, Iowa. Owner Jim Hetzler and I met and became friends two years ago at the Hotrod & Restoration Trade Show in Indy. The car is a top-notch attention-getter that he laid down killer true-flame graphics on the side earlier this year. He then referred his client to my shop for the interior.

We placed two-toned tanned antiqued colors inside with an alligator inlay. This car is going to travel with us and will be at the HRR Trade Show this March if you want to come check it out.

Another friend, and probably one of the coolest customers I have, I also met at the trade show the same year I met Hetz. Jon Kosmoski, founder of House of Kolor, just delivered one of his coolest builds to my shop from Minneapolis to put an interior into. His 1934 Ford has absolutely brilliant colors-Kosmoski never fails to reach out and grab your attention with his paints. This car will also be at this year’s HRR Trade Show.

I’m normally very tight-lipped about our client list but I wanted to use these examples to stress the importance of networking. Both customers I met on the same day at the same trade show and now, two years later, I’m getting jobs and referrals from them. The benefits of professional networking don’t happen overnight but you absolutely have to put in the face time with your target audience.

As I’ve written about previously, we started testing the waters with the addition of mobile audio component sales. I started conservatively and we purchased around $5,000 wholesale worth of initial product. Without any advertising, we’ve turned over our initial inventory with only a couple of small pieces remaining. All of our sales have come from walk-in and existing customer referrals. That small test gives me confidence in the ability of the product to sustain its worth in our shop.

I added the line as a convenience since we install a lot of these components while we’re doing interiors anyway. It seemed logical to be able to have and sell the job-specific pieces. We’re currently dedicating a show space in our shop entry to display the products available.

I’ve seen a couple of negatives to our specialization and downsizing. I’m not sure exactly why, but some of the local and walk-in customers perceive our downsizing as a failure in business though it’s exactly the opposite. Local revenue is less than 10 percent of our gross. Our market for higher-end and specialized jobs is growing by leaps and bounds. We’re receiving exactly the types of jobs I want in here. Adding the mobile audio components is an attempt to still create cash flow off of local sales.

The negative is our shop is seeing fewer local repairs, but this is resulting in more time to progress on the specialized jobs. Fewer employees and specialized offerings are turning into higher-quality and more-efficient work.

As a shop owner, I can also attest to the tremendously lower stress levels that have accompanied downsizing. Easier management, lower overhead, better shop morale, and employees who value the job and want to hone their abilities have been a pleasant by-product to these changes. I can also now step back into the heart of my shop a little more to concentrate on innovations and the little details.