The Truth About Setting Up An SME…

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Setting up your own business sounds so easy on paper, even exciting, but no-one explains the impact on you and your family when faced with so many challenges on a daily basis.  So, here is the truth about setting up an SME: the highs, the lows and our motivation to keep going.

 

Setting up

We’ve gained a vast expanse of knowledge through many years’ experience in different franchised main dealerships.  This exposed the challenges faced by operating under a manufacturer, most importantly how a large corporation makes profit (sales – costs = profit).

 

To increase sales, staff are incentivised through targets which are heavily bonused.  This gives rise to the temptation of overselling such as reporting car faults a little early than necessary, or finding fault in an MOT to repair, or upselling a service plan which doesn’t cover wear and tear.   There are many different ways garages optimise their income.  We are different.

 

The desire to be able to deliver excellent customer service in a transparent and honest way became an opportunity we were compelled to pursue.

 

We wanted to compete with the best.  An independent garage, changing common perceptions by delivering high quality service and exacting standards, providing a real alternative to a main dealer.

 

Whilst delivering this, we also wanted to spend more time together as a family.  With 4 growing children, finding quality time to be with them was essential.

 

Ian ran the local Saab dealerships and, in 2012 when Saab met its demise, it presented the perfect opportunity to set up a repair centre.  Ian continued to work and Melanie provided a joint role bringing up the children and supporting a new business.  A highly competent Service Manager, a Technician and an Apprentice were appointed.  Saab parts stock were purchased from the Administrators which paid the rent and staff for the first 6 months whilst planning permission was sought.

 

The Planning Nightmare

At the time, the Government were driving the growth of SME’s, so we didn’t expect red tape to prevent us from opening.  An inability to be able to talk to someone at St Albans District Council led to numerous submissions being made.  We even attended a Redbourn Parish Council Planning meeting to gain their support.

 

The neighbouring units on the Industrial Estate were also obstructive as we became tarred with the same brush as many independents.  After submitting an 80-page document responding to all objections and countering those that we anticipated, we were eventually granted change of use and opened as Redbourn Auto Solutions on 11 July 2012.

 

However, the 6 months it took to open had a significant negative impact on our financial plan, made worse when the Landlord increased the rent because we were an automotive business.

 

We sought bank support, but because we had already started trading (in parts) and making a loss, the bank would only give us minimal support.  If we had approached them before trading, they would have offered more support… it was a tough lesson to learn.

 

With the support of friends and family, we progressed to purchasing new vehicle lifts and specialist equipment.

 

Know your customer

There’s no point dedicating time and energy attracting the wrong customers.  It leads to frustration and dissatisfaction.  You can’t please everyone, so identifying your own customer is essential.

 

We needed customers who understood good quality service, appreciated the high level of capability we can offer, who respected honesty and trusted judgements being made.

 

There are many garages offering ‘deals for cash’ or those who fit cheap parts to lower their costs, but we wanted to be different and unwilling to compromise our standards (cheap parts often don’t fit properly, wear prematurely or break).

We wanted to trade honestly and have faith in our staff’s abilities and in the parts we were supplying.

 

We deal with many different vehicles from milk floats, horse boxes, classics and transits to Aston Martin, Porsche and Ferrari!  So, our customer base is wide and varied, but they all understand quality and good customer service.

 

Customer feedback has been important to shaping our business:

We originally set up as a Saab specialist, but our customers owned cars from a variety of manufacturer. So, we broadened our technical knowledge and bought in diagnostic equipment to cope with the emerging demands.

 

Our geographic demographic expanded into Harpenden and St Albans, so we provided courtesy cars and collection and delivery service for our customers convenience.

 

Some customers had 4×4’s and light commercial vehicles, so we purchased larger vehicle lifts to cope with this demand.

 

Our customers said they would like tyres from a trusted supplier, so we provided tyres from budget to performance tyres and added 4-wheel alignment.

 

We became the first garage in Hertfordshire to gain the Trading Standards mark and Which accreditation.

 

We streamlined processes to ensure efficiency in every area of the business ensuring customers received their cars back quickly, which was especially important for our corporate clients. It ranged from working with suppliers to ensure the correct parts arrived on time, to allocating areas of responsibility to secure a clean and tidy workshop.

 

Stunning Staff

We’ve always believed in employing people who are better than we are, but in desperation when work flow was peaking we recruited in haste.  It was the only year our upward financials took a dip whilst we ‘moved-on’ those who were harming our business.

 

We changed our recruitment process and stayed firm in our requirements.  We also took the opportunity to benchmark our salaries and benefits.  Now we have the best team!  Highly qualified Technicians from Master to Apprentice, with skills that complement each other.  Above all, we all understand the importance of exceptional customer service, because we all have similar backgrounds.

 

Flaming Finance

We both came from backgrounds where we managed budgets.  The notable difference is that it was someone else’s money!   Setting up a new business is about risk taking and financially this can be a difficult decision to make.  It’s the bit that prevents starting up, continued progression and in some cases businesses fold… and cash flow is usually the cause.

 

The first few years were not easy.  We borrowed, sold our cars, and certainly didn’t pay ourselves.  The children regularly ate beans on toast and family shipped in the odd monthly shopping.  We couldn’t afford to go out… not even to the local pub.  Holidays were a thing of the past.  The hardest thing was losing friends.  We couldn’t afford to go out and so their lives continued without us.  We had to make the most of what we had and the children got involved in the business.  Cleaning, sorting, filing, litter picking… our lives centred around the business.  Our house was on the line, so we had to make it work.

 

5 years on, and the business remains in debt but is moving forward at unprecedented levels year on year with significant profit increases.

 

What’s next?

We’re continuing to grow!  We’ve moved from a customer base of zero in 2012, to welcoming over 10,800 cars through the door.  Customer satisfaction and retention is high.  We’ve seen an increase in commercial business, tyres, and in the variety of vehicle we look after, welcoming more prestigious vehicles than before.

 

We haven’t let a recent rent increase of 40% hold us back.  It’s just another challenge to overcome.

 

We’ll continue to go where our customers take us, without compromising our high standards.

 

Conclusion

We love what we do!  We’re achieving our aspirations and have our own successful business.  We offer a sensible alternative to a main dealer and our customers receive honest feedback on their cars with no overselling.  We even write articles for local magazines on car related topics.

 

We have planned our first holiday as a family in 5 years (it’s only a week, but it’s a start) and we’re working on daily family time.

 

We’ve met many people on our journey who have helped us on the way.  They may not necessarily understand their profound impact on our business.  It could have been a comment by a friend, thoughts from a networking meeting or a chance read.  Our recommendations to you are:

 

Have a clear vision of what you want to achieve and how you’re going to get there, but be prepared to change.

Don’t get distracted! Hold tight to the belief you have in your business.

You’ll face many hurdles, but dealing with them will make you stronger.

Build a network of people who will support you. There will be plenty to hold you back.
Understand that everyone has their own views. Just because you’ve started a new venture, doesn’t mean that everyone will change to accommodate you!

Be brave. If an opportunity presents itself, take the risk and work it out later.

Be genuine. Be yourself.

Above all… don’t look back! Keep moving forwards

 

Find out more about Melanie and Ian and the Team at Redbourn Autos here