Beyond auto glass
In today’s competitive auto glass market, more shop owners are looking to add new products or services to re-invigorate company profits. Diversification is happening across the board, at small single-site businesses on up to full-scale multisite enterprises. Business owners are looking to increase sales and profitability, and leverage their existing know-how, resources and capacity for growth.
Typically, shop owners consider diversification from an offensive or defensive perspective. Defensively, business owners diversify to offset declining auto glass margins, a shrinking customer base or an oversaturated market. Offensively, they diversify to take advantage of new markets that promise greater profitability or to extend complementary products or services to their current, loyal customers.
Diversification can be a tricky proposition that requires the right planning, personnel, software and partnering to pull off successfully. By following a few simple guidelines, shops can pump new life into once struggling businesses by extending their offerings beyond auto glass.
Factors to consider
Diversification can be a risky growth strategy. Carefully weigh the risks and costs of diversification against the benefits. Evaluate both the internal company organization and external market conditions before launching a new business.
Gain a complete understanding of the operating infrastructure needed internally to launch and run a successful income-producing venture. Ask yourself: Do you have the technical skills required? Can your current facility accommodate the new products? Will you need to add or retrain staff to successfully sell and deliver new products? Can your business systems support the new products’ requirements? How can you accommodate the needs of the new business without sacrificing your existing business?
Going into a new market with an unfamiliar product offering might require new commercial and technical skills. It also might require new personnel, financial resources and business-management software.
Externally, learn as much as possible about your new market opportunity. Talk to current or prospective customers to understand their needs. Also, talk with other vendors in those markets to understand best practices, and take advantage of existing industry information and training to smooth out startup wrinkles. In addition, look to industry experts and software providers who support those markets for guidance in determining business system requirements and best product fits.
Lack of training is an obstacle keeping many glass shops from embracing diversification. Thirty-five percent of auto glass repair and replacement shop owners who reported they did not offer glass services beyond AGRR said the primary reason was a lack of training, according to a 2006 AutoGlass magazine survey. (See May/June 2006 issue.) The good news is there are a number of industry resources available to help you through a diversification transition.
If your company needs to advance its technical capabilities to compete in the full-service market, one great resource is the National Glass Association’s www.MyGlassClass.com, a convenient and affordable online resource for improving worker skills and achieving professional certifications. (AutoGlass magazine is a product of the Mclean, Va., based association.)
One forum that works extremely well for our customers is the company’s annual client conference. Retail glass shop owners and managers connect with fellow businessmen and women through panel discussions and informal gatherings to share ideas and best practices on how to successfully increase profits through diversification. Take advantage of these and other similar industry events.
Business software requirements
It is crucial your core business has a solid foundation because of the risks involved in diversification. When evaluating the software you’ll need to support your new venture, first determine what specific requirements those products bring with them. The business-management system you choose should be flexible and advanced enough to accommodate those requirements.
For example, if you want to offer shower doors, mirrors, window replacement, storefronts, residential window tinting or residential products like mini-blinds, you need a business-management system that can support the specific catalog and configuration options that come with those kinds of product orders. The system also must be capable of handling the new and complex business processes required in the flat glass market, such as document management, scheduling, contract management and inventory management.
Some important questions to consider:
• Will my current software be able to accommodate the new products and services I want to offer?
• What specific configuration requirements will the software need to accommodate?
• How can I minimize training curves and continue servicing my current customers effectively while bringing on new products and services?
• What specific cataloging requirements will the new products have?
• How will my software be able to accommodate measurement requirements or algorithms specific to the new products I want to sell?
• What specific pricing requirements will the new products have?
• Does my software have an Internet component?
There are software vendors that serve both auto and full-service glass shops. The transition from one software program to another doesn’t have to be a training roadblock. In some cases, the software you already have might be able to accommodate new products without much retooling.
As a business owner, form industry partnerships to connect to additional resources you can leverage to beat the competition. The same holds true when partnering with a business-management software provider. Choose a provider connected with industry leaders and one that re-invests those leaders’ input and best practices in software innovation. This will ensure that your business-management software continually evolves as the market changes, allowing you to capitalize on trends faster than your competition.
The prospects for business owners looking to diversify today are exciting. Advances in software products and the increasing availability of industry training and resources can ease the transition and re-energize businesses looking to increase profits and extend a broader product mix to their customers.
Business owners have several diversification strategies to choose from. When making your selection, consider how each strategy aligns with your company’s strengths and risk tolerance.
• New products or services that are similar to current products and appeal to new customers. The company can operate with familiar products and exposes itself to less risk.
• New products or services that are unrelated to current products but might appeal to current customers. This can be beneficial to companies that have a loyal customer base. This strategy tends to increase the firm’s dependence on certain market segments.
• New products or services that are unrelated to current products and appeal to new groups of customers. This strategy poses the greatest risk and the highest potential rewards.