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A place to talk about general business discussions.
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  #11  
Old 12-15-2009, 08:51 PM
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Well what I mean is, initially when you are getting all it started and money is tight, would it make more financial sense to have a loaner and buy yourself some time with that to order the part and get it repaired?

Say for instance, someone comes in with a mower that has an issue. If it's a 21" push mower, what would it take to have a used push mower loaner they could take with them while you work on the mower for them?

I can understand stocking some high volume items but I bet there are a ton of items you don't use regularly that might be easier to order than to stock?
Yes, very true. Sorry for the misunderstanding there. But the big companies are not looking at what makes the most sense to me and other small dealers. They want dealers with the big bucks to shell out to start a business. They want someone who will stock everything that way the customer will not go elsewhere. That is understandable but do they remember where they started from? Someone gave them their big break sometime or another...

Ok, so about today... They were telling us about all the new parts that are coming out because of all this EPA stuff. For example, Honda redesigned most of their engines just to be able to meet EPA standards that take affect 01-01-2011. This EPA stuff is throwing a big monkey wrench into everything.

I know this is sidetracking from the original topic but lets go down this rabbit trail for a bit....

EPA says we need to do blah, blah to slow down global warming (that is not occurring to begin with). Now I have no problem with my engine using less fuel and saving me money, and there being less gas fumes for me to breath, but it is coming at a VERY untimely point in our economy. Here is why.....

Example: Honda had to redesign almost every single engine in their lineup and with so doing, they have to manufacture a LOT of new parts. Most parts will not interchange (because the old parts will not fit the new EPA design). So because of that, I believe it will hurt the economy or at least slow it down on this basis. Redesigning a new engine costs lots of money. Who pays for that? The end user, via the distributor and dealer.

Next step down the line. Now the distributor still has to stock the parts for all the old engines PLUS the new engines. This means a much bigger investment and therefore they have to add more MARGIN to still make the same amount of profit. Plus they will now sell less of each because there are still essentially the same number of engines on the market, but just different models (split up between pre-EPA and post-EPA). That makes sense so far?

Next step. Just like the distributor, now the dealer has to stock all of these new parts (basically doubling their inventory for each given manufacturer). If they had $100,000 inventory before, now they have to come up with another $100,000 to invest in parts. Plus, most times this also means new special tools to invest in. So tell me, who pays for this investment? The end user HAS TO. The dealer has to be able to make enough profit to basically be paid "interest" or a return on his extra $100,000 investment. Plus this normally requires the techs (on company time and now they are not at the shop to EARN income...)go to an update school and new software, blah, blah, blah.... More expenses.

To top it off, higher parts prices means customers won't be able to afford them and will buy less parts. This only compounds the problem...

Ok, I'll get off my soap box.... (stepping down for now)

Eli
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  #12  
Old 12-16-2009, 04:21 AM
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I would think there are a bunch of different niches in the outdoor power equipment repair business.

I have seen some shops that look top of the line and are authorized dealers of certain equipment.

Then I have seen 2nd tier looking shops that provide good service at a reasonable fee.

Lastly, I have seen crappy shops that offer crappy service.

It seems to me, to get into this with a limited financial backing, one would have to focus on friendly service.

Most people want to have a local spot to get their equipment repaired and not feel they are being raked over the coals when it comes to repair fees and part costs.

I would try and limit any unneeded costs. If my focus was going to be on repairs, I would focus on repairs and not try to become a dealer in any equipment until I felt I had a large enough customer base to do so.

From what I have heard, these dealership agreements want you to sell X amount of product each year. Committing to such an agreement early on could sink a new business. Even stocking too many parts could sink a business as well.

Maybe you could sell used equipment that has been refurbished? Or something like that to bring people in. This equipment could potentially also be used as loaners?
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  #13  
Old 12-16-2009, 06:35 PM
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I would think there are a bunch of different niches in the outdoor power equipment repair business.

I have seen some shops that look top of the line and are authorized dealers of certain equipment.

Then I have seen 2nd tier looking shops that provide good service at a reasonable fee.

Lastly, I have seen crappy shops that offer crappy service.

It seems to me, to get into this with a limited financial backing, one would have to focus on friendly service.

Most people want to have a local spot to get their equipment repaired and not feel they are being raked over the coals when it comes to repair fees and part costs.

I would try and limit any unneeded costs. If my focus was going to be on repairs, I would focus on repairs and not try to become a dealer in any equipment until I felt I had a large enough customer base to do so.

From what I have heard, these dealership agreements want you to sell X amount of product each year. Committing to such an agreement early on could sink a new business. Even stocking too many parts could sink a business as well.

Maybe you could sell used equipment that has been refurbished? Or something like that to bring people in. This equipment could potentially also be used as loaners?
Well either way I turn, there is a reason I named my shop what I did. I truly want to provide nothing but SUPERIOR service. But I believe I do so for a reasonable price. I have damaged something for customer and told him I would not charge him for the labor to fix it. I think that made a believer out of him.

When I get going full time I will most likely charge similar to other shops but will try to make sure I give them more for their money. One thing that I will do my best to avoid is cutting corners. I think I will be using more and more OEM parts versus aftermarket, at least on select parts. There are some aftermarket that are better and stronger (and less expensive) than OEM!! Go figure!

Whole goods are not that big of a money maker anyway, its just that it tends to bring in customers which brings the service customers. Service is where a shop will break even and make a little profit. Warranty is NOT a money maker. Typically they do not pay enough hours to get the product repaired. So either the shop has to eat the rest or than try to explain to the customer why they have to pay the rest of the bill (good luck with that).

Warranty difficulties is why many shops are now requiring payment up front even on warranty and then refund it to the customer when they get paid from the manufacturer.

I will see what happens when spring rolls around. In the mean time I may try to get to more service schools...
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Old 12-17-2009, 01:35 AM
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Warranty is NOT a money maker.

Warranty difficulties is why many shops are now requiring payment up front even on warranty and then refund it to the customer when they get paid from the manufacturer.
That is fascinating! I wouldn't have guessed that. I'd figure this would be what would entice a shop to be an authorized warranty repair facility, but if it's not going to be a profit center, then forget it!

This industry seems really messed up but maybe it doesn't differ much from other industries where you have dealerships and dealership agreements. You should be able to simply order what ever product you want to sell at your store. Get some kind of commercial price break from the manufacturer and for go all this other stuff. But it seems they have it locked down.

I wonder if auto dealers run into the same problem with warranty jobs? I have yet to see an auto dealer charge in advance to service a warranty issue, but who knows, maybe a lot of them do!
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Old 12-18-2009, 06:20 PM
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That is fascinating! I wouldn't have guessed that. I'd figure this would be what would entice a shop to be an authorized warranty repair facility, but if it's not going to be a profit center, then forget it!

This industry seems really messed up but maybe it doesn't differ much from other industries where you have dealerships and dealership agreements. You should be able to simply order what ever product you want to sell at your store. Get some kind of commercial price break from the manufacturer and for go all this other stuff. But it seems they have it locked down.

I wonder if auto dealers run into the same problem with warranty jobs? I have yet to see an auto dealer charge in advance to service a warranty issue, but who knows, maybe a lot of them do!
Being authorized to do warranty work is only one step. It brings in customers and at that point you can break the bad news to them that their machine is:
a) not worth repairing
b) The problem is not covered by warranty and then you can offer to repair it for whatever it will cost. This is an up sell, just like the lawn care industry does with their customers.

The auto dealers seem to have a bit more control over the auto makers. The power equipment dealers take a BEATING from the manufacturers and distributors. Many times it seems that warranty claims that by a common sense point of view should be covered by warranty, are denied by the manufacturer.

Here is why the dealers require prepayment:

The customer picks up the product, when everyone agrees that it should be under warranty, and the dealer sends it off to the distributor and then off to the manufacturer. The distributor or manufacturer denies the claim and now the dealer MAY have no luck tracking down the customer anymore. Guess who eats the repair cost? The customer needs to, but good luck finding them if they find out they owe the dealer money.....

Just a simple question, why should the dealer subsidize the warrant repair costs for the manufacturer where the manufacturer denies the warranty claim? This should be the customer's responsibility once the customer has purchased the product.
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Old 12-19-2009, 03:20 AM
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I certainly hope all the would be small engine repair shop owners are paying attention to this conversation. There are a lot of issues a repair shop has to deal with.
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