Part 1 of this series debuted online last month at AftermarketBusiness.com/DeemedEssential, and introduced us to four shop owners: Kyle Logue, Essex County Repair in Middleton, Mass; Amy Mattinat, Auto Craftsmen in Montpelier, Vt.; David Roman, Done with Care Auto Repair, Kansas City, Kan.; and Lucas Underwood, L&N Performance Auto Care, Blowing Rock, NC. Delve into Part 2 to continue learning how these businesses navigated success amid COVID-19.
Early April had been hellish to Mattinat. Tire changing season in Montpelier, which was typically the most significant source of revenue for Auto Craftsmen, was about to begin. If social distancing proved ineffective, or if an employee were to become infected, Auto Craftsmen would cease to exist. Worries about Mattinat’s financial health played out in her mind, where she repeatedly worked out various cash flow models to keep the shop running.
First, she contemplated using credit cards. Fortunately, however, the local Sanel NAPA and O’Reilly auto parts stores agreed to a payment schedule. Most of all, at the top of mind, it was about making payroll. “I don’t see the light at the end of the tunnel. Right now, I’m focusing on what I need to do about keeping my business healthy,” explained Mattinat.
Congress threw out a comprehensive federal aid lifeline — the Payroll Protection Plan — valued at $349 billion to the nation’s small businesses.
But in execution, Mattinat said the local credit union initially struggled to interpret the terms tied to PPP. Failure to comply could result in a financial penalty, defeating the purpose of protecting a business. Just in case the government accused Mattinat of fraud, she set aside a cache of payroll stubs, utility bills and other overhead invoices. Would Auto Craftsmen receive enough monies to carry a full staff load through June? Not knowing when the pandemic will end, Mattinat said, “My goal is to keep my business solvent.”
Mid-April
“We’re not having a super busy week,” groans Roman. Despite hurting his lower back a few days earlier, he shifted his focus to economic pain. Even though customers were dropping off their trucks, cars and SUVs for routine maintenance work, few seemed in a hurry to return as Kansas City adjusted to the reality of staying indoors.
Roman scorned the idea of cutbacks. “We just hired a tech who I’m going to hold onto,” said Roman, while pointing to a higher-than-average ticket price for each approved estimate. If anything, Roman added, “my customers have been gracious toward my shop where I see a greater sense of community.”
Roman speculated that his clientele was quietly adjusting to converting their homes into virtual offices. He projected optimism about new drugs and vaccines, and when it does arrive, “COVID-19 will come to an abrupt end.” But Roman did not specify when he thought commerce would kick back to life.
Factory Motor Parts, his first-call supplier, shuttered three of their nearby pick-up warehouses. WORLDPAC delayed orders from hours to days and Amazon suspended their 24-hour turnaround time. Thankfully, Roman said that few of his customers were anxious to get their vehicle at the end of the day.
A simple tweet reversed weeks of single-digit customer intakes. Three jobs averaging $650 each marked a record low for five days. Then Logue went digital. “I texted 700 customers, reminding them that we’re open for business. Forty-four of them inquired, and 24 approved the quote,” he says. It was a lesson learned in implementing a low-cost, high-tech customer engagement as Americans spent more time online shopping and working from home.
Late April
Knee-deep in a first-of-its-kind recession caused by a forced lockdown, Roman’s bookings were falling. “Business is slowing down, but we’re holding our head above water. We took fewer calls this week, but I’m doing my best to spread the word.”
To Roman, he viewed preparedness for any unforeseen event as the proprietor’s responsibility to protect the company. “When the coronavirus broke loose,” said Roman, “we had a short supply of cash on hand.” Roughly two weeks to be exact, and Roman vowed to raise enough cash reserves to carry him for at least six months.
Roman wanted no part of government intervention, let alone the Paycheck Protection Program. At some later point in time in the nation’s recovery, he believes that the taxpayers will ultimately shoulder the price tag to support the relief package approved by Congress. He blamed the “draconian measures imposed on my state of Kansas with unreliable data that generated crappy models.” Too many people, he believes, were unnecessarily furloughed or laid off. Noting that Kansas is unlike New York City, strictly enforced face mask rules and social distancing measures in public spaces should have been enough.
And people are growing agitated, he observed. “Things could quickly turn into a powder keg,” he said, but then respects the reality of the consequence to the country’s economy if a second or a third wave were to hit.
Unsure what the future would hold for Done with Auto Care and the country, Roman focused on the next steps and said, “If the government extends the closure through the end of May, I’ll cycle back to email blasts.”
Meanwhile, Mattinat nearly broke out into a happy dance. The monies approved by the Paycheck Payment Program filled her bank account. “That’s a heavy boulder off my shoulders,” she giggled. “Now I’ve got an eight-week money supply. The first thing I’m going to do is pay my team full time.” Ever since mid-March, to conserve expenses, Mattinat paid her employees for 25 hours out of 40 put in for the week. Right from the start, Mattinat sacrificed her entire take-home pay. She reasoned that if she had to let someone go — even just temporarily — that employee may never return when Montpelier comes back to life. Besides, it’s not just six employees that she supports; it is their families, too.
Despite the monetary lifeline approved by the PPP, Mattinat treaded cautiously with future expenses until the gates officially swing open. She was optimistic that declining sales are about to bottom out for Auto Craftsmen. “We are back to half throttle. My customers will only spend so much on their vehicles until they can get back to their real spending ways.”
Peering into May
Like most of the nation, the 51,000 citizens of Watauga County — where L&N Performance Auto Repair enjoys a solid reputation — had been lingering in a restrictive holding pattern. Since mid-March, 22 million Americans filed for jobless claims.
Month-to-date revenues were falling by 30 percent. Yet outwardly, Underwood chatted undistracted by the financial turbulence. Whatever happened to L&N Performance Auto Repair, Underwood renewed his focus on navigating his business through the bumpy ride.
Part of his business psychology of coping with COVID tied into adapting to and equipping himself and others to emerge stronger. Over Facebook, Underwood moderated a support group called Auto Shop Owner’s Group, where he ministered best practices to the highly motivated membership. During spring, the highpoint of maintenance season, Underwood reminded his peers to take advantage of continuous communication with their target audience with postings and videos about how their repair shops intend to keep everyone safe. A few days later, Underwood, wearing an L&N stitched black polo shirt, appeared over a LinkedIn video, updating his audience on more safety measures and a new promotion for the week.
Other forces converged. As spring warmed North Carolina, quarantine fatigue tempted people to move outdoors, says Underwood. Fringe movements protested their frustrations in Raleigh and other state capitals.
Roman has been monitoring the demonstrations. He pointed out that angry citizens have been pressuring their politicians to decide between protecting people’s health or reopening the marketplace. Too many businesses, he told me, felt unfairly punished by something they didn’t cause.
No one disagreed. Giving commerce the green light too early, Roman believed, may result in the second wave of infections. Georgia’s governor, a former businessman, announced that he okayed a phased-in plan to allow tattoo parlors, beauty salons and restaurants to resume operations.
When policy falls on the politicians to make an informed decision guided by science, Underwood said, “nobody wants to be on the wrong side of history. I am not in a hurry. I’d rather follow the state guidelines.” As might be expected, Underwood looked forward to seeing the tourists and summer residents return to his part of North Carolina.
Back in Massachusetts, Logue stressed differently. “We can’t source parts! Our standard ordering procedure through no fault of our own flew out of the window,” he grumbled. Ordering hard parts, particularly OE applications, from the local retailers and auto dealerships had been worsening due to supply chain disruptions. What typically took 15 minutes to finalize the repair estimate could last one hour, sometimes longer. In one case to find a popular clutch for a Ford 350, Essex County waited three days, resulting in losing out on billable productivity.
Adding to Logue’s headaches, he and his girlfriend still couldn’t find a babysitter to look after 18-month old Maeve. That prevented him from opening Essex County Repair on Fridays. Four days of income fell short of its full potential to turn a profit.
Ebb and flow
We caught up the following Monday, and that morning’s bookings have become “one crazy busy week so far,” laughed Logue. He speculated that he absorbed a share of new customers from two closed service garages. Good news aside, Logue intended to hold a 12-week money supply. Even though it expired on July 31, the PPP cash infusion wouldn’t carry him through the summer in the event of a relapse of lower bookings.
One job applicant who initially showed promise in becoming the next service writer flopped on the first day of the probation period, lamented Logue. Despite the best intentions, the applicant fumbled aimlessly about the software system. Logue said, “It was painful to watch him make repeated mistakes over the computer keyboard.”
Back to square one, Logue posted a job listing for someone to process customer intakes and persuasively sell the repair estimate. In mid-May, state residents readied themselves for phase one reopening. But to Logue, the start date seemed artificial as more people were driving to work or maybe enticed by warm spring temperatures.
Frustration weighed heavily on Roman. Light traffic during the weekdays on one of the city’s most congested roadways resembled a Sunday. “Things have died down here even with the restaurants open, and the streets are dead,” said Roman.
So were the email inbox and the phones, except for cancellations. Roman scaled back the techs’ shifts and encouraged them to take the day off without pay. This trend, Roman prayed, should at its worst last weeks. With no PPP monies, layoffs would only serve as the last resort for Done with Care whose sales — about 90 percent —depended on repeat business.
Most of Roman’s clients had been driving less because they had been working from home. Technologies such as video conferencing apps had been working out, which could strengthen telecommuting’s appeal. A handful told Roman how the twin health and economic crisis are directly impacting their budgets. “After the stimulus checks arrived, people spent their monies, and the appointments began to peter off. I’m looking at a $900 job, another one at $850, and there’s a lot of paperwork to do this week,” said Roman.
Notwithstanding the pressure, Roman was determined to attract new customers through a targeted advertising campaign. Ideally, he wanted to appeal to the consumers who treat their cars as they would their health. Typically, Roman said that during economic booms, that kind of multi-platform marketing approach may take months to pay off, which was still risky at best. But as the unknowing of what is to come continued, the timeline of a profitable outcome may last longer than a few months.
Look for Part 3 of the “Deemed essential” series online in November at AftermarketBusiness.com to continue learning how these shops endured during a pandemic.
