I have been an entrepreneur for three decades now. I bought my first auto repair business during the recession of 2008. Those times were challenging and we were able to survive through it. Although those were difficult times, the impact of COVID-19 has been global and unprecedented.
Today, I am a multi-franchise owner in the auto and motor vehicle repair business. This is what it’s like to keep the doors open as a small business owner during the pandemic.
We are still open because the government has decided that during the pandemic, auto repair businesses fall under the category of transportation essentials. This category includes the following businesses:
- Gas stations, diesel, propane, and heating fuel providers including providers of motor vehicle, aircraft and water/marine craft fuels, and auto-supply.
- Auto and motor-vehicle-repair, including bicycle repair, heavy equipment repair, car and truck dealerships, and related facilities.
To be considered an essential business during a pandemic has its advantages and disadvantages. The advantage includes the ability to keep our employees employed longer, to be able to provide services for people who still need to get to work, to the hospital or even to the grocery store. Another advantage is the ability to bring in some revenues to keep the operations going.
On the flip side, the disadvantage is dealing with more than a 60% cut in business. Every week we are seeing the decline in the number of customers bringing their vehicles through the doors. We have to ensure that our workers are safe during this pandemic.
With a drastic reduction in revenue, we are still expected to continue making payroll for our employees, pay business loans, lines of credit, supplies, lease and equipments, and credit cards just to name a few. We realize that at this rate, our burn rate on cash will happen quickly. Although we have put some money aside, we are looking closely at the burn rate of that cash.
In a franchised business we are also expected to continue paying royalties and advertising fees.
Challenges faced by essential businesses
Small business owners and operators run most auto and motor vehicle repair shops. These businesses are not sitting on a lot of reserve cash. Although there are government programs offering help to small businesses, these are not instant programs. It takes some time to access these programs.
Plus the rollout has not been completely clear, because the government is trying to create programs that usually take years in a week.
The banks are offering loan deferment programs, however not all businesses will qualify.
Extending Cash Flow
In order to keep the doors open, we have taken the initial steps of reducing our store hours. With more people working from home, and all the schools, churches and parks closed; fewer people are driving or using their vehicles. As a result, there is less need for oil change or vehicle repairs.
With fewer hours we have had to make some tough decisions. The hardest ones have to do with our staff. Attracting talent in any industry is not easy. So letting great people go has not been tough. We have reduced our employee hours and temporarily laid off part-time workers. The plan is to recall them once we get back to normal.
We have looked at reducing our fixed costs. The biggest one is our leasehold. However, in a franchised business, the franchisor controls the leasehold.
We are working on reducing our burn rate of cash and extending our runway in order to keep the doors open.
We have taken crucial steps to help our customers feel safe to ensure that we are doing our part to flatten the curve, and minimize the risk of COVID-19. These include;
- Asking customers to stay inside their vehicles while services are being performed.
- Minimizing customer and staff touchpoints. Asking customers to roll their windows down slightly to talk to them about services needed.
- Technicians are no longer going inside vehicles to perform services such as removing and replacing cabin air filters.
- Providing customers with the option of receiving invoices digitally.
Our business model has been based on no appointment necessary for oil changes and quick repairs. Customers would show up at any time because the service could be done in a short period of time.
We only have a maximum of three cars in the store at any time. Additional vehicles will continue to wait outside as per usual. We have had discussions about the possibility of moving to online reservations to reduce the anxiety of showing up and waiting. However, at this point, we have not officially made a final decision.
As a small business, our resources have been limited and we do not see the need to move to online reservations.
These are some of the measures we have taken in the meantime to keep our doors open as an essential service. This is not an easy time for most small businesses. We will continue to monitor our numbers and make decisions on a daily basis.
Are you a small business owner? How are you coping with the change in business?