Clear Answers

July/August 2001

Clear Answers
hot advice

Auditing Your Own Business
by Tom Hughes and Donovan Trana

For our first column, we chose to answer a commonly asked question:

Question: As an independent auto glass shop owner, what steps or procedures can I implement right away to offset eroding sales and profits?

Tom: I can handle that question, Donovan. It’s simple. The first step is to fire your accountant! (Just kidding!) Actually the first step is recognizing the problem, which goes something like this: If you continue to do what you’ve been doing, you’ll continue to get the results you’ve been getting … only less. Clearly, this downward spiral is not a very healthy cycle for you and your business.

Donovan: No kidding! But you know, Tom, eroding sales and profits are only symptoms of a larger picture, general business failure—something that is nipping at the heels of many glass businesses. Every business carries within itself the seeds of failure and self-destruction. And, as if this isn’t enough, with the pressures created by several large retail players employing self-predator pricing, corrupt third-party billing entities and greedy (or, at best, indifferent) insurance claims managers, there is plenty of fertilizer to feed a business failure.

Tom: So, with all this fertilizer around, where do you step?

Donovan: The owner needs to step up, be honest with himself and ask this question: am I in the right business? Face it, this industry has gone through a lot of changes over the last decade, and that makes this question very important. So, I recommend that you resurrect that person who had the vision and entrepreneurial spirit to start your business. Remember him or her? He can answer that question for you.

Tom: Now, to those of you who answered yes to that question, it’s time to move on to the next step: A complete business and marketing audit including a thorough check-up of your facility, operations and procedures. Here’s how you do it.

Donovan: Visit your shop one day after lunch as a prospective buyer. Imagine and pretend that you’ve never seen the place before. You have no idea what you’re walking into. Ouch—that hurt a little, didn’t it?

Now, you’ll get a better idea of what your customers see and hear!

Tom: Remember, you’re pretending you’re a prospective buyer. Would you buy this business? Is the staff well-cast and trained? Are the lines and scripting edited and well-rehearsed? Looking at your business as a buyer forces you to look at every point of contact with the customer from an impersonal, third-person observer’s viewpoint.

Donovan, remember when you did this last year? I suggested that you take a camcorder with you and make notes.

Donovan: Oh, I remember Tom—a little too well. What an eye opener! I realized that this type of exercise is tough love. You don’t spare anything. Look at everything from the way your employees act and react to each phone call, to how customers are greeted as they walk through the door. You know, the way your facility looks inside and out, and how it functions sends a multitude of messages that could be costing your business thousands.

Tom: What you’ll uncover is the truth about your business—the truth that a perfect stranger would demand before even considering purchasing your business. So why deny yourself the same honesty?

Donovan: Exactly, Tom. A business and marketing audit forces you to look at your shop in the cold light of day, and see it for what it really is—a business—and not just as a place you go to get out of the house for awhile. It will quickly reveal where you’re making money and where you’re losing it.

Tom: And every day you delay is just another day you’re wasting by continuing to get the same results you’ve been getting … only less of them.

Donovan: The positive action you take and at what speed you take it will directly affect just how fast the sales erosion will reverse itself and that elusive thing called profitability can begin to reappear.

Tom: You’re right, Donovan. Let’s make a copy of our Essentials of a Business and Marketing Audit available in this issue for AGRR readers!

Donovan: The Essentials is a list of great questions you should be asking yourself. This list will guide you to make sure that you ask the most important questions when conducting your audit.

If you are interested in a complete business and marketing audit form, simply go to www.clearvisions.org and click the Business and Marketing Audit form button. There’s no charge.

Donovan: This is just like the glass industry ... give it away ... sheesh!

Tom: Get over it, Donovan!

Essentials of a Business
Marketing Audit

Business Financials:

• Annual sales?____________________
• Annual auto glass related sales?____________________
• Do you know your break-even point? What is it?____________________
• Do you manage by budget forecasting? yes no
• Do you personally review each invoice or payment? yes no
• Do you have a written credit policy for your commercial
• customer accounts? yes no
• Percentage cost of auto glass goods sold?____________________
• Payroll percentage to sales?_________
• Advertising percentage to sales?_____

Sales types as a percent:
• Percentage of replacement? _______
• Percentage of repair? ____________
• Percentage of in-shop work?________
• Percentage of mobile work?_________
• Percentage of retail business?_______
• Percentage of commercial work? _____
• Percentage of fleet work?_________
• Percentage of dealer work?_________
• Percentage insurance work?_________
• Percentage of cash work?_________
• Percentage of network or sales?_____
• Value of inventory?_________
• If you own your building, what is your equity position?_________
• Loans – purpose, original amount borrowed, payment, current payoff?_________
• Amount of past-due payables over 30 days?_________
• Amount of past-due receivables over 30 days?_________
• Amount of past-due tax obligations?_________

General Administration:

• Have you developed a formal business plan? yes no
• State your company’s goals in terms of sales, size, market share.________________
• What makes your product or service unique?___________________
• What is your exit strategy?________
• Do you have a documented auto glass installation procedure? yes no
• Do you have a documented adhesive usage policy? yes no
• Do you fully understand the FMVSS and how they relate to auto glass? yes no
• Are you familiar with the laws regulating auto glass replacement in your state? yes no
• Do you have a business attorney that understands your goals and issues? yes no
• Do you have an accountant that understands your goals and challenges? yes no
• Do you have a banker that understands your goals and financial needs? yes no
• Do you have a supplier(s) that understands your goals and service needs? yes no

Human Resources:

• Do you have a current organizational chart of your company staff?    yes no
• Do you have detailed job descriptions for you and your employees?    yes no
• Do you have an employee manual?    yes no
• List and describe key employees in terms of strengths and weaknesses.________
• How often do you have regular formal employee meetings?________
• Do you have a daily staff meeting?    yes no
• Do you have a formal in-house technician training program(s)?    yes no
• Does your office staff wear uniforms?    yes no
• Do you supply?    yes no
• Do your technicians wear uniforms?    yes no
• Do you supply?    yes no
• Do your technicians normally use power auto glass removal tools?    yes no
What kind? ______________________

Marketing and Advertising:
• Do you have a business logo?   yes no
• Do you have musical imaging (jingle)?   yes no
• Do you have a marketing plan?   yes no
• Do you have a message on hold?   yes no
• Do you have a completed web-site?   yes no
• Do you have a customer satisfaction indexing program? yes no
• Do you consider yourself the low-cost or high-quality leader and why?   yes no
• Describe what you consider to be your market niche?______________________
• Describe your typical retail customer’s demographic and social profile.______________________
• Do you maintain a customer data base?______________________

Market Information:

• City population? ___________________
• Total market area population? ________
• Percentage of auto glass sales share in your market area? ____________________
• Percentage of auto glass sales share in a 10-mile radius? ______________________
• Do you believe your shop would be one of the three top choices a consumer would list? yes no
• What would your strategy be if you lost your two largest accounts?_________________________

Tom Hughes and Donovan Trana are the co-founders of a web-based auto glass consulting company. For more information, the website address is www.clearvisions.org.

AGRR