Business Problems

[pgoyal]

This thread is started with the intent that we will share our ideas on possible solutions to interesting business problems.

So let us post interesting problems and equally interesting insights into possible solutions, build on ideas of others and grow by learning from and sharing with each other.

Thanks for your active participation.

[pgoyal]

You want to start an auto-mechanic garage. Your have surveyed the market and the competition. You are confident (entrepreneurial gut reaction) that you can be successful if you can get financing to equip your garage and have working capital to cover expenses for the first 12 months.

You know a couple of very good mechanics who are willing to come and work for you -- initially at a lower rate for a share of the profit. You have identified what seems to you to be a top-location -- right next to a new shopping mall being built.

Your idea is to start with a set of service offerings and continue to add others, including additional equipment.

You approach a bank for a loan with your idea and a rough business plan. The loan officer asks you for a formal business plan but more importantly for a section clearly outlining your differentiation.

You sit down and scan newspapers and visit a number of garages to get pricing for every type of service. You divide the other garages into the low-priced, medium priced and premium providers (the one's with very clean shuttle services). You list their prices for various common a la carte jobs, and their hourly rates for the others. You list the number of garages of each type, the number of households (categorized by number of vehicles per household) and business employees within a 2 mile range of your selected site, and within a 2-5 mile range. You have noted the opening hours and these seem to be pretty much standard; M-F: 0700 AM to 0600 PM; Sat: 0700 AM to 0100 PM. You have considered how your loyalty program would work.

After doing this exercise as you begin to develop your differentiators doubt keeps raising its ugly head. Do you have enough of a differentiator? You feel you are missing the WOW factor?

What would be your WOW factor? (Please state any and all assumptions.)

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I will present one of my ideas next week.

[Kevin Johansen]

The 'wow' factor for street level retail service businesses is generally their ability to get referrals. Step 1 to that process is to get the job done right. If it isn't, referrals won't happen. Step 2 is to ask for them. But don't start this process without thinking it through. Referral marketing has become something of a science. Here's a link for more info on that: http://brand.ducttapemarketing.com/2005/06/index.html

Also, note that most of this info won't translate well into a business plan. Business plans written for asset based lenders like banks generally require a large balance sheet for the bank to be interested. This means that most businesses need to bootstrap, which I strongly encourage. Sell yourself into existence!

Best,
Kevin Johansen
Entrepreneur in Residence
The Davinci Institute
www.DavinciInstitute.com
www.Linkedin.com/in/KevinJohansen
KWJ@DavinciInstitute.com

[David Sandusky]

You know a couple of very good mechanics who are willing to come and work for you -- initially at a lower rate for a share of the profit. You have identified what seems to you to be a top-location -- right next to a new shopping mall being built.

Here is the key to building and expanding the business. Good people. If the good mechanics have a loyal following of existing customers -- those customers will follow. Sustaining the business with continued excellent service and genuine customer service will inspire referrals. The location helps too. These are the soft issues the issuing bank may want to know about to help close the deal.

[pgoyal]

Thanks to Kevin and David for excellent thoughts.

It is really amazing how some companies are able to create a distinct differentiation even in mundane and crowded service industries. One of the most succesful of the differentiators is creating an "experience."

Many auto-garages have spent quite some effort in sprucing up their service areas and even provide lounge and work spaces with fast internet capabilities. These are all attempts to create an "experience." These are all ideas that can be replicated.

But I would like us to start to think of the customer's end-to-end process of getting their vehicle sreviced/repaired. Majority of the work is routine maintenance services. Let us assume that the customer drops-off vehicle and then picks it up at the scheduled time.

Customer calls Garage for an Appointment
Experience factors: wait time, suitability of available times, interaction pleasantness, knowledge, etc.

Customer arranges pick-up from Garage
Even where garage may offer drop-off transportaion -- it usually runs at predetermined times

Customer drives to Garage
Experience factors -- although beyond garage's control include drive time, congestion, weather, etc.

Customer received at garage
Experience factors: wait time, documents ready,

Customer arranges for Drop-Off at Garage
Experience factors: drive time, congestion, weather, etc and hence the sense of gratitude/debt to "ride"

Customer Returns to pick vehicle up
Experience factors: wait time, clarity and simplicity of bill and payment process, condition of vehicle

Customer Drives home:
Experience factors: drive time, congestion, weather, etc

_________________________________________________
The above is a simplified representation of the customer's experiences -- it starts with making an appointment to finally reaching home (or wherever). This process is repeated with numbing regularity every X thousand miles or months.

So how can we take the totality of the Customer experience and see how we can make an impacting difference.

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I have my own ideas but really want to learn of yours.

Best

[foundit]

I find that most service industry businesses have poor customer service. Telling a bank that you will have great customer service will not get you a very large wow factor.

I would focus on the garage providing a unique overall experience, including:

-Mechanics that do not reek of cigarette smoke
-Cable TV and leather couches in the waiting rooms
-Offer an espresso bar
-How about clean restrooms?
-Free shuttle to and from the garage
-How about picking customer's cars up from their offices for oil changes?
-Mobile oil changes
-Add a car wash too
-Hip background music
-Clean cut people working the desk
-Cool interior design like a Starbucks

The wow factor will not be one single item, but rather a complete package that forms a great and unique customer experience. That is what needs to be sold to the bank.

Barring that, buy used equipment and mortgage the house.

[pgoyal]

Rob: Thanks for your excellent suggestions. Some of the luxury car dealers are attempting to just do that. They have spruced up their facilities and provide the kind of facilities that you list (couches, cable/satellite TV, espresso bar with snacks, clean restrooms etc) plus broadband internet.

One thing that they lack though is what you suggest "picking customer's cars up from their offices for oil changes." If someone analyzes the process from the customer's perspective (as described partially in an earlier email) then customer service has to address the hassles related to taking the car to the garage from your home/office. Some may prefer the car being picked up from the home after 8 or 9 PM (typically the family would have access to another vehicle) and being returned before 5 or 6 AM, the next morning. The garage would try and optimize pick-ups by neighborhoods. Similar set-ups can be done for offices also (I have been informed that there is a service in the tabor Center, downtown, Denver).

Would you as a customer be willing to subscribe to such a service? Regular maintenance, tire pressure, tire rotation, etc. Premium services could include internal cleaning/detailing (external car wash included in regular service). How much extra would you be willing to pay (in percentage terms)?

Thoughts/Criticism?

[Jenita]

Hi,

I am new here. Here are some business tips.

Do what you love. You're going to devote a lot of time and energy to starting a business and building it into a successful enterprise, so it's really important that you truly deeply enjoy what you do, whether it is running fishing charters, creating pottery or providing financial advice.

Start your business while you're still employed. How long can most people live without money? Not long. And it may be a long time before your new business actually makes any profits. Being employed while you're starting your business means money in your pocket while you're going through the business start up process.

Don't do it alone. You need a support system while you're starting a business (and afterwards). A family member or friend that you can bounce ideas off and who will listen sympathetically to the latest business start up crisis is invaluable.

[David Sandusky]

Do what you love. You're going to devote a lot of time and energy to starting a business and building it into a successful enterprise, so it's really important that you truly deeply enjoy what you do, whether it is running fishing charters, creating pottery or providing financial advice.

So true. This is one of the common denominators in the successful business owners life.

[David Sandusky]

Would you as a customer be willing to subscribe to such a service? Regular maintenance, tire pressure, tire rotation, etc. Premium services could include internal cleaning/detailing (external car wash included in regular service). How much extra would you be willing to pay (in percentage terms)?

Thoughts/Criticism?

My immediate response is, yes, I would be willing to pay extra for the services and convenience. As far as percentage increase over existing cost: very little, but yes I would pay a premium. I see value in my busy life and value in the health of the vehicles and long term savings on gas mileage and more severe maintenance.
The dealership would earn loyalty and more regular work orders from what I assume they would see as average. I think they would see a better buy in if the premium package was only a few points higher.