by Alexandros Aslamazis
As a business owner, you may have already found yourself thinking over one dilemma. Shall I expand my business or work to improve profitability instead? Unfortunately, it is not easy to achieve both in the same time. Usually this question arises when a business, let us say a bodyshop in our case, is well established and mature. Profits are there, customers’ base is loyal. What is next? Maybe the owner should leave everything as it is. The answer is no. In business, if you stand still, you actually go backwards. As Frank Lloyd Wright once said: “Business is like riding a bicycle. Either you keep moving or you fall down.” Thus if your car body and paint business reaches the point of relative stability, a decision must be taken how to move forward. Below I present a simple infographic, which can guide you through your decision-taking process.
It is important to understand that choosing either road is actually moving forward. Both roads require some kind of commitment, be it time or financial investment. If you choose the growth path, it means that you want to attract more customers. More business needs more space, equipment and more people to do the job. If you choose to optimize your business as it is, it may require other things, where better equipment or training of personnel will be indispensable.
Obviously, growth strategy is more demanding from investment point. If you do not have available money in the bank or credit line, it is not advisable to start some major expansion project hoping that funds will come along. Next crucial parameter is human resource. Can you take on board new painters with needed experience and skills? Equally important is to have in your mind clear picture of your bodyshop’s competitive advantages. Are you sure that expanded facility will be busy enough to break even? Finally, growing your collision repair shop if you plan to retire soon, and your siblings show little interest in taking over, may not be the right strategy to follow.
On the other hand, optimizing any business is quite a challenge too. The main fields for improvement are profits, productivity and cash flow. Believe me, there is always space for progress. Review your bills, expenses, payment terms with customers and suppliers and pricing policy. It is worth paying attention to your equipment condition, which affects productivity along with consumption of the major materials and consumable.
Whatever strategy you choose, do not dwell on.