Example 3: Flanking the Competition
A busy neighborhood service (gas) station with an owner/manager and 7 total line employees had been in business for 5 years, but revenues had not improved in the past three years of operations. In that same time, operating costs had increased 34%, and profits had decreased by almost 50%. In year six, the owner was working harder to earn 50% less income than he had his second year in business.
My work revealed an owner with no real desire to operate a hugely busy business, but who was interested in reducing the amount of time needed to run the business, while enjoying somewhat better profits.
My research work showed that the station had actually been in business in the same location, over a combined 28 year period, under four different owners; that both of the cross streets at the corner location were conduits into affluent bedroom communities with very high income families; and, that the station had operated for the first 21 of its 28 years as a full-service station.
After performing a customer survey and two neighborhood polls, I determined that the flat revenue trend was principally due to three newer self-service mini markets that had opened closer to town along the same feeder streets. Despite having to purchase fuel from an independent distributor, the client had tried to match fuel prices with these stations.
My recommendation was a detailed plan to change the entire approach taken by the station, based around returning to a full-service operating format, eliminating major repair work, adding a tightly defined (franchised) fast oil change operation in the three repair bays, and brightening up the station's appearance, signage, decor, and even the uniforms worn by the attendants.
My plan has allowed the station to successfully raise its gas and oil prices an average of 12% above its nearby competitors, plus replace its sporadic auto repair revenue with what has grown to be over 8 times more revenue from high-margin oil change work.
Altogether, by implementing my plan, including promoting two experienced attendants to assistant manager positions, the station now has shown a revenue lift to 212% of its Year 5 numbers, is earning its owner 4.8 times his Year 5 income level, and is allowing him to work an average of only 26 hours per week, rather than the 60+ hour schedule he used to work.
