General Fixed Operations Department

Lead Fearlessly: Reaping the Rewards of Risk

Order Reprints
Lead Fearlessly: Reaping the Rewards of Risk
Take the occasional calculated chance and guide your fixed ops department to higher financial ground.

Every time Eric Mihelich sizes up a potential business risk, he considers the potential for failure.

Then, he often takes a leap anyway.

“Anytime you take a risk, you have to be prepared that it could go the other way. … You could fail,” says Mihelich, the general manager of Porsche Atlanta Perimeter. “And it’s okay to fail.

“You know what you’re made of when you fail. No successful person in the world has never failed.”

That said, it can be overwhelming to jump into a big investment, or to implement an innovative shop process, when an entire staff is counting on you to shepherd them to financial security. Mihelich has experienced that anxiety, so his risk assessment isn’t made hastily.

Mihelich, who has been in the industry a quarter century, explains how he assesses risk with regard to business decisions.

 

You cannot risk what you’re not willing to lose. When you’re taking a chance, you have to look at the benefits, and do they outweigh the potential risk? And is it going to fit into our core principles? So, for example, if you decide to make a change to your advertising budget, campaign or strategy: Can you afford to take the risk of losing some sales to see what the results are? If you’re trying a new source of business, can you afford to spend the money to try it, even if you don’t get a return on it? Finally, if you truly believe the risk will facilitate profound change in your business, can you afford not to take the risk?

So, take some risks when necessary, but make sure that they’re calculated, and they’re well thought out.

 

Any time I’m looking at spending additional dealership money, I ask: How is this going to affect my business? Do I see my team getting on board with this new initiative that we’re launching? I make critical decisions with my team, and get the input of all involved before making that type of decision. And, in those types of situations, I also ask: What return on investment do I expect? And what are peers—people that I trust in the industry―saying about it? Have they tried it? I definitely like to get feedback from other people.

But, if you need special tools—or more lifts, or a new alignment machine—you buy it.

 

When you take a risk and you want to move on to a new company, for example, see what the people in the company are saying, from the lowest employee up. When you walk into a place and you see people in the hourly positions, and you see that they’re happy at their jobs, that they have smiles on their faces, that’s a big, telling sign when you walk into a dealership.

 

I can tell you a big risk that I took: I had a vendor that I thought was hurting our gross profit. Against a lot of people’s wishes, I decided to sever a relationship with this vendor. It was an Internet lead provider that we felt was strictly suppressing margin and creating a race to the bottom for our product. And we felt that not paying this company for the right to speak to these customers―and by us providing them excellent service―we would, in fact, make more money. And it proved to be true.

In those situations, I give vendors ample notice that I am dissatisfied, let them know what needs to be corrected, and give them the same time and patience I would ask for. If they can’t correct it, I’ll meet with them personally and let them know I’m changing directions. With companies I buy services from, I let them know from the beginning that I’ll be monitoring the ROI, and what my expectations are; if they aren’t meeting them, I’ll let them know each month, and I’ll cancel at the 90-day mark.

 

One of the ways you can get burned is by hiring, just for example, in service, the superstar from a competitor, only looking at what results they produce. You’re not necessarily looking at their character, and if they fit in. Is their attitude, their philosophy and their demeanor going to fit in with the team, or will it cause friction? A dealership operates on a team principle. If you have a breakdown in your team, it’s not going to work. From detail to accounting, to the general manager on down to the salesperson, everybody in the dealership depends on everybody to do their jobs.

Related Articles

Implementing a Quality Customer Rewards Program

The Anatomy of the Perfect Customer Greeting

How to Get the Most Out of a Detail Department

You must login or register in order to post a comment.