IGA Finishes with a Flourish

The Independent Glass Association (IGA) annual meeting and Spring Show wrapped up Friday with attendees getting lots of practical advice in a series of strong educational presentations.

Take a Break Even

David Carnahan, Mainstreet Computers, told the group how to calculate their break-even point. He said that it is estimated that 80 percent of smaller companies operate without a formal financial plan. But, he added, it is not enough to have a plan, it has to be managed. Successful companies are proactive, not reactive, he pointed out.

Successful companies know their market and their sales mix, Carnahan said. "They track critical data and use it to direct their decisions," he stated.

The break even sales volume is when a company earns neither a profit nor a loss, he explained. This comes from information on a company's income statement. There are the fixed costs, the variable costs (glass, labor, fuel, commission, etc.), sales revenue. The gross profit is gross sales minus variable costs (cost of sales). This is the amount of profit left to pay fixed expenses. The gross margin is the gross profit as a percent of total sales. The unit cost is the costs associated with selling a particular windshield. This is a tough one, Carnahan said. The unit selling price is the price charged for a particular windshield.

Knowing the break even point helps to answer these questions: What is the minimum dollar volume of sales needed to cover cost? How low must variable cost be to break even, based on price and sales forecasts? How low must fixed costs be to break even? How many units must be sold to achieve break even? What is the marginal profit contribution from each additional unit sold above the break even point?

How do changes in price levels affect the break even sales volume? This came into play with the NAGS rebalancing, he pointed out. A company had to look at what sales and profit were for a unit under the current pricing and then take the new numbers and do the same thing so that it could see what the impact was going to be of the change.

One piece of advice he gave is that all the financial information should be constantly reevaluated so that a company is checking to see that the assumptions made (sales, sales mix, cost of sales) are what is actually happening.

Money Honey

Lynette Hartman, NEON, talked about how a company can collect more of its money.

She provided guidelines if a company wants to set up in-house collections to get full payment from insurance companies. She said that if a company sets up in-house collections, specific personnel should be designated to do this and they should be knowledgeable about what is involved in the task.

The sequence of events, she said are to resend the statement, send a first letter and then a follow-up letter. Next comes a demand letter and then phone calls to get the insurance company to pay the total amount owed. If this does not resolve the issue, a complaint can be made to the department of insurance. She advised knowing if the state department is truly helpful or not. Small claims court is the next step. Regular court can be very helpful if the numbers start to get large, she said.

Arbitration may come into play at this point.

She said that IGA is trying to build a database of the financial interactions between glass shops and the insurance companies to show that the insurance companies are acting in bad faith in terms of their payment policies.

It's Marketing, Stupid

IGA President David Zoldowski, discussed the marketing plan which has been successful for his company in a session entitled How to Market Windshield Repair Services. His company has 18 locations and approximately 45 people who do repair.

"We use glass repair to market our company and have found it to be a very successful method," he stated. If you're in windshield repair, you have to be able to build value for this to the consumer, he added. When repair is the better alternative to replacement, make the consumer aware of this, he said.

His company has done an informal survey of people at tents to ask why they are getting a repair. It most cases, it is an impulse decision that is made because they see the tent. "It's convenient and a time saver. It takes a lot of shoe leather, but it can be very profitable for you," he added.

Customers without insurance can be sold the value of the repair. You should explain how repairs will prevent spreading of the crack, he told attendees. He said that he doesn't think State Farm stopping payment for repair on policies with deductibles is an industry trend. "We talk about the repair being a mechanical fix and the fact that it can't be 100 percent removed," he said. He predicted that State Farm will go from 30 percent repair in Minnesota to the 20s. He pointed out that insurance agents like repair because they are paid a bonus on loss ratios. "Working with your local insurance agent becomes a good tool in growing our business," he said. "By engaging the insurance agent, he or she is going to work with you and pre-notify his or her mailing list whenever you have a repair event and you can have the agent work the tent with you,"' he advised. He added that AAA sponsors approximately 50 tent events a year in his state.

He also suggested planning a chip event around community events with their high traffic. He said that to keep fly-by-night competition out of these community events, check to see that they have the required permits. "We're active in our town and we don't hesitate to contact the police to shut them down." Remember, you are protecting your brand, he said.

He said that sites his company targets for repair tents are shopping centers, car washes, high traffic store locations and major fuel station corners.

"It's all about building your brand and strengthening your relationship with insurance agents," he said.

Once you've done the repair, sell your brand. Have the technician in uniform so that it looks professional, he advised. Have the technician hang a thing on the mirror with the name of the technician who completed the job and a $10 coupon that can be used for another service at the company. "We have a small guide that explains the repair so that the customer knows what was done," he explained. "We also have a products and services brochure which explains what our company does, and we pass this out to consumers," he added. "We also follow up 10 days later with a coupon offer that offers a 10 percent discount on the customer's next purchase or $20 off any purchase over $100 at the company. We want to make them a customer for life," he said. "It's the little things that allow you to expand our business."

Diversification

John Hennessy, Crystal Clear Window Works, discussed diversification. "If you always do what you've always done, you'll always get what you always got," he said. "You've got to change and diversifying is an important part of that." He gave examples of companies which have established markets based on innovative ideas and marketing such as Microsoft, Google, eBay, Staples, Starbucks, Home Depot and WalMart. "They have changed the business rules and turned billion-dollar ideas into billion-dollar businesses."

He said that companies which successful diversify challenge the way they are doing business. "Auto glass is only 27 percent of the glass market. There is also residential, commercial and the specialty glass markets. You have to think about what you want your business to be and where you want it to go," he explained. "Stop working in your business and start working on your business," he advised.

Marketing without Advertising

Jamie Glazebrook, Coach Glass, spoke about how to build customer confidence and inspire them to recommend your business.

"Marketing means running a first-rate business and letting people know about it," he explained. "Every action your company takes sends a marketing message."

He pointed out that customer recommendations are better than paid advertising because it is more cost effective and it builds loyalty. It is also trustworthy because someone the consumer knows is recommending it.

Make a service effort, he stated. "In addition to returning the car clean, polish around the windshield. How about wiping the windshield with a Rain-X cloth? It makes an impression."

Have a service attitude, he advised. "Greet each customer by opening the door and saying welcome."

Employee attitude is important, he stressed. Why do customers stop doing business with a company? A total of 68 percent quit because of an attitude of indifference toward the client by the owner, manager or employee, he said Chamber of Commerce studies show.