Strength in Numbers: 20 Groups Offer Benefits That Are Measurable
People often ask me, “What is a 20 Group?” Every time I am asked, I truly have to think of the answer because a 20 Group is so many different things to different people.
When I was first asked to join DSP, I asked the same question, and the answer I received hit all these amazing points, but I was still unsure. I was told what I now tell so many people: “You have to see it to truly understand it.”
They were so right… it was so much more than I could have imagined.
Norm Gaither and Stu Zurcher brought the 20 Group concept to our industry about 12 years ago when they started Twenty Group, now known as Dealer Strategic Planning Inc. (DSP). There are also 20 Groups focused on specialty segments of the industry, like commercial business or multi-unit operations.
20 Groups exist in nearly every industry, from medical, restaurants, manufacturing, you name it. The goal of the concept is to learn from others’ ideas, innovations and mistakes, rather than try to figure it all out from an island by yourself.
Rather than me try to tell you in my words, let me share with you what some 20 Group members say about it, why they joined and what it has done for them personally and financially.
Dave Byma, co-owner and service manager
Byma’s Tire & Auto Service Centre
How much do I charge per hour? What should my parts markup be? Am I making enough gross profit? Are my expenses out of line or in line? All of these are different questions for a business to figure out.
Financial benchmarking is when you compare your financials against other similar businesses. Without knowing what our industry can handle through pricing, how do we know what we should be charging? In a group of similar businesses every company can contribute with their own personal financials and see what a fair rate is, what expenses should be at, and what your goal should be for gross profit.
I’m sure we have all worked as hard as possible with high car counts, and at the end of the day, wondered where all the money went! How do we make money — and in a difficult and competitive industry? Hitting our benchmarks and goals, in our DSP 20 Group and ultimately in our individual businesses, allows us to reinvest in our companies.
‘I’M SURE WE HAVE ALL WORKED AS HARD AS POSSIBLE WITH
HIGH CAR COUNTS, AND AT THE END OF THE DAY, WONDERED
WHERE ALL THE MONEY WENT!’ DAVE BYMA, CO-OWNER AND
SERVICE MANAGER, BYMA’S TIRE & AUTO SERVICE CENTRE
Tom Ceniglis Jr., CEO and president
Tom’s Tire World Inc., dba
Tom’s Tire Pros (two locations)
(He is also CEO and president of Ceniglis Enterprises LLC.)
When we joined DSP 20 Group in 2012, we were in a place with our business where we had to make major changes or go out of business. The benchmarks we were using were antiquated and no longer relevant to today’s low margin tire industry. Not only were our benchmarks antiquated, so were the rates we were charging for our services and products.We had always prided ourselves in providing topnotch service and warranties, but we were delivering these at the bottom end of the price range in our market. Best prices in town and top-rated service: It’s very difficult to deliver both of those at the same time, if not impossible. It simply doesn’t add up.
The first DSP meeting we attended I realized that the margins and mix we were living with were not going to sustain our business, so we had to make a decision about our pricing. This was especially true with our service pricing, where our labor rate was essentially at the bottom of the market and our parts margins were flat (no true matrix) and we were quick to give discounts. We were afraid to upset a customer. I should have been more concerned with my family’s needs rather than whether we were going to upset a client with our prices.
I went back after the first meeting and raised our prices on our service items and raised our labor rate $20 per hour and raised it again after three months another $10. We did not have one complaint and I kicked myself in the butt for months for not doing this earlier. How much money had I left on the table? How much did I cost my family and employees by not charging what we were worth? We now charge almost double the labor rate per hour from where we were when we joined DSP.
You know what it’s going to cost you each month to pay your people and your expenses, and you must align your prices to be able to do that with whatever volume you are doing and charge enough to put some in your pocket when everything else is paid. Of course, the market has bearing on pricing, but if you are good at what you do, have a nice location and deliver a good customer buying experience, you should not be at the bottom with your pricing.
Pricing should also be tested — raised — occasionally as well to see if you are near the threshold of where your prices can be. You can always go back down if you must. You must realize what you are worth and start charging that.
‘I SHOULD HAVE BEEN MORE CONCERNED WITH MY
FAMILY'S NEEDS RATHER THAN WHETHER WE WERE GOING
TO UPSET A CLIENT WITH OUR PRICES.' TOM CENIGLIS
JR., CEO AND PRESIDENT, TOM'S TIRE WORLD INC.
Scotty Zimmerman, owner
Scotty’s Tire & Automotive
I must honestly say that joining the DSP 20 Group 11 years ago was the best thing I did in my career for my family, myself and my business. I will never forget the words of advice that my dad once told me years ago, that you are only as good as the people you surround yourself with, and this is so true with the 20 Group family that I belong to.
I am one of the original members of the group I’m in and after attending the first meeting, I knew that I was in the right place, surrounded by some great people. Everyone in the group was just about in the same boat with their business as I was, and we were starving for help and advice on how to get our businesses where they needed to be for profitability.At that first meeting we were told that if we committed ourselves and took the responsibility to listen and make the changes that were needed in our business, over time everything would fall into place. At the time I joined the group my net profit was at a negative 3%, and I knew if I didn’t do something to change the situation I was in, things were going to get worse. By learning what needed to be done, I made the commitment that I was going to be profitable, took all the knowledge that was being taught and was able to make all the recommended changes. I was able to maintain an average of 17% net profit and able to enjoy my business — and best of all, sleep at night.
Once I got the business running the way it was supposed to be, my son, who had just started college, was planning on graduating and taking over the business, and I would then be able to start taking it easy and start enjoying life. Well, my son graduated with degrees in business management, finance and marketing. I am so proud of him on his accomplishment, and this was perfect for him to take over the helm and continue to run the business.
Well, not really. My son decided to go in another direction with his career, (and) I support him 100%. So now I was asking myself what I was going to do with this business. I then reached out to my 20 Group family about my situation and was told if I wanted to sell my business, they can help and teach me how to prepare the business to be sold. After executing all the advice given to me to get the business in position to sell, I am happy to say that I just signed a letter of intent from a major tire and auto care company to sell them my business.
So as my dad once told me, surround yourself with good and smart people, and you will be successful.
Chris Cloutier, co-owner
Golden Rule Auto Care (two locations)
(He is also president of AutoText.me.)
The 20 Group challenges you to be better than you would be if you were just doing it on your own. We want to share our ideas with others in exchange for their ideas, or their best ideas. We know we need to continually develop better systems and processes, and hearing what others have done allows us to put ourselves in their shoes.
This industry needs to adopt some massive change when it comes to the new digital landscape. Being in the 20 Group allows us to challenge each other and push each other to adopt and adapt to change. We all know change is the hardest part about improving ourselves and our shops.
‘WE KNOW WE NEED TO CONTINUALLY DEVELOP BETTER
SYSTEMS AND PROCESSES, AND HEARING WHAT OTHERS
HAVE DONE ALLOWS US TO PUT OURSELVES IN THEIR SHOES.’
CHRIS CLOUTIER, CO-OWNER, GOLDEN RULE AUTO CARE
Lynn Massengill, owner
Premier Tire & Auto Service
I’m Lynn Massengill, third generation owner of Premier Tire & Auto Service. Prior to becoming a 20 Group member, I ran our business the same way it had been since 1959. I had been taught to sell more, do more, keep your team busy, give your customers a great deal and the business will take care of itself.It’s easy to pound your chest, say you’re busy and that business is booming. But at the end of the day, you’re often not making any money. In late 2017, I realized just that! Our business seemed to be booming, our gross profit was 50%, but the business was not taking care of itself and we were definitely not making any money! We were working ourselves to death and were a break-even company, at best.
I attended a breakout session presented by the 20 Group at a dealer conference in early 2018. The session was about financial benchmarking and compared those of a typical dealer versus a 20 Group dealer. I quickly realized that we were a typical dealer (or worse) and our sales mix, gross profit and expense benchmarks were out of control. That day, I joined the group!
Financial benchmarking with a group of peers has been the most impactful benefit in the history of our company. Learning the benchmarks for the right sales mix, margins and payroll have been priceless. Using the benchmarks as a guide and learning how to apply them to every transaction has been amazing.
We have achieved things I never thought were possible. Our sales mix is now 1/3 tires, 1/3 parts and 1/3 labor; gross profit is cruising at 62%; payroll is under control; and net profit is clicking off at 17% of sales. No doubt, benchmarking has turned our company around, and most likely, saved it!
Richie Howard, president
Bruce’s Tire & Auto Service
(eight locations) San Jose, Calif.
My name is Richie Howard and I have been the GM of Bruce’s Tire & Auto Service going on four years. Recently, I was promoted to president, which has been the post occupied by my father for over 30 years. We currently have eight locations around the San Jose, Calif., area and have opened three of those locations in the last 4 years. We specialize in automotive repairs, tires and fleet service.My first encounter with DSP 20 Group was through articles on Modern Tire Dealer’s website.
After several months of contemplating about DSP 20 Group, I was surprised that I had a few colleagues who were already members. They highly suggested that I join the group as they knew I was taking on a larger role in my company and thought there were valuable benefits to being a member. I have been a member of the group for almost a year now and make it a priority to attend every meeting as I learn more each time I attend.
After my first meeting, my first plan of action was to raise our prices. It was the daunting task that we had only done a couple of times in recent years and contemplated doing, but always found an excuse or reason not to. I raised our price matrix on parts, slightly raised tire prices, raised labor rates on mechanical repairs (and) emergency roadside tire repairs, and raised oil change prices. Although we have had some pushback, it has been minimal, and most of it has come from our own employees moreso than our customers! As a result, our sales and GP are up year over year.
Another important lesson I have learned from the meetings is that I need to spend more time working on the business instead of working in the business. Although that may not sound like a big difference, it certainly is. Before joining DSP 20 Group, most of my time consisted of going store to store, working the counter, answering phones, helping customers, and basically working the frontline of the business. This may help that store for that day, but now I focus on improvements that help the entire company every day.
Since that first meeting, I have launched and implemented a new POS and accounting system, improved processes, enhanced our store and company image, spent more time on marketing, and focused more on learning how to analyze our financials and improve the bottom line. Since joining DSP 20 Group, our sales and GP are up, we have improved our company’s image, and I am more qualified and ready to take over Bruce’s Tire & Auto Service.
Overall I see a lot of value in being a DSP 20 Group member. I take away something new from every meeting, and learn from the facilitators and other members. Being a member has accelerated my ability to take on the president role at our company. Most importantly, and possibly the biggest takeaway of being a member, is that it has instilled confidence that I can make major changes and improvements to our business. Seeing other members who face similar challenges and have creative ways to overcome those challenges and become more profitable businesses makes me motivated to do the same.
I recommend anyone who may take over their family’s business, has taken over the business, or is interested in growing and learning to consider joining DSP 20 Group.
Jeff Moore, co-owner
Moore Tires (five locations)
Rock Falls, Ill.
I have been a member of DSP 20 Group since 2010 and have attended over 30 meetings in that time span. I honestly feel 20 G members who fully participate in the best practices of the group are a minimum of 18 months ahead of our competition in new trends and business innovation. In our own operations, we have no less than 50 Best Ideas that have been presented at meetings that are now benefitting our company every day.
Joining DSP 20 Group has been one of my best business decisions ever.
As you can see, there are many benefits to a DSP 20 Group. There are several different 20 Groups in the industry, and I tell people, whether you join DSP or another 20 Group, just join a 20 Group. Often, the first meeting is an eye-opening event — “I didn’t know what I didn’t know.” But in every instance, the benefits will speak for themselves. ■