Just ONE Thing
How to Take the Right Risks in Your Auto Repair Shop
Episode 220
with Rick White, 180BIZ
Good morning. My name is Rick White from 180BIZ. We're a coaching and training company for the independent auto repair and truck shops, and this is my Just ONE Thing.
What are we going to talk about today? We're talking about RISK today, and I think this is a really important thing to talk about.
I came across this quote last week, and I absolutely loved it. It simply states: Your success depends on the risks you take. Your survival depends on the risks you avoid.
Think about that for a second. What do I mean by that? Do you know which risks to take and which ones to avoid? I think that's a really great question to ask today.
First, let's understand what risk really means. Risk is exposure to uncertainty with potential for gain or loss. Think about that again: exposure to uncertainty with potential for gain or loss. It really is a double-edged sword, isn’t it? It can either be a driver for growth or it could be a banana peel for the business. You really don't know which it's going to be.
Once we start thinking risk, we immediately think it's a negative. But it's not. Risk can be a positive. Risk simply means uncertainty. So how do you know which to take?
There are two kinds of risks. This is where the science starts to make a difference. This is where being able to step back and think about things makes a difference. And if this video is resonating with you, please share it. We want to get as many people in front of this information as possible.
So what do we have? We have two kinds of risks. You have calculated risk and you have careless risk.
Calculated risks are proactive risks. This is where you step back, do research, look at facts, and forecast. It's a calculated risk. You can see clear potential that justifies the risk.
An example of this might be deciding to get an alignment rack and an alignment machine after you've analyzed the positive impact that purchase is going to have. You've done the calculations. You realize it's going to save you this much time driving back and forth with cars to another shop. It's going to give you increased opportunities to find additional work that's needed. And you've done the math. That’s a calculated risk.
A careless risk is based on impulse, emotions, ego, or assumptions. You don't have any data. There's no contingency plan, and there's no clear reward.
Let me give you an example: the dumbest thing I ever bought. Back in 1986, Ford had a system out just before that called EEC III. It was very, very hard to work on. Nobody had equipment for it. It didn’t plug into a regular scan tool or anything like that.
I had two cars that I could not fix. I got on the phone for three hours calling OTC and everybody else around until I finally got somebody that would sell me that piece of equipment. It was $5,000 back then. There were actually three pieces of equipment that allowed you to service that system. And I went and bought it.
After I bought it, I probably used it three times. This is where I allowed my ego to create careless risk. That is the problem.
If you can share this video, I’ve got four minutes left. I want to make sure I’ve got everything covered here.
So let’s talk about what these differences look like. Calculated risk is recognizing that people aren’t spending money the way they were, and saying, “I need to have a plan for this. I’m going to reach out and access financing options that are prime options for people with great credit and subprime options for people with poor credit.” There’s very little risk on my part in order to be able to continue to help people and make sales.
A careless risk is letting people pay you over time. How many can give me an amen on that one? Who has done that and made that mistake?
How about having a marketing plan where you figure out what your message is, who your people are, what your method is, then putting a calendar and a budget together, and then measuring it? That’s calculated risk.
Careless risk is just getting slow and spending money on ads. We call that reactive marketing—the most expensive, least effective marketing you’ll ever do. That’s careless risk.
How about putting together a plan for working with fleets, talking about the benefits and the things they’re going to get, helping them focus on the income they’re going to continue to enjoy because their fleet is up and running, versus just giving very deep discounts in order to get some work without even realizing if it’s profitable or not?
So what skill sets do you need for this? Number one, you’ve got to be able to see the gains, the losses, and the probability of each. You’ve got to understand what the financial part of it is. How is it going to affect cash flow? What does your return on investment look like? What does it do to your break-even issues?
Then you’ve got to take a look at scenarios. What’s the worst that could happen, and can you survive that scenario?
You’ve also got to look at your decisions. Every decision is either moving you closer to where you want to go or taking you sideways or backwards. Is it helping you achieve your goals?
And then the last thing you’ve got to have, as far as skill set goes, is some emotional control. You’ve got to avoid letting FOMO—fear of missing out—or excitement like, “Oh my gosh, this is going to be so awesome!” take over.
I’m going to give you five questions to ask. These five questions are going to filter whether you have a calculated risk or a careless risk.
Number one: What’s the best outcome? What’s the best case scenario?
Number two: What’s the worst case scenario? Write these down. Think them through.
Number three: What’s the most likely scenario? A lot of times when we’re looking at best case, it requires us to do stuff that, if we’re honest with each other, isn’t going to happen. So what’s the most likely?
Number four: Can I survive the worst case scenario?
Number five: Does this move me closer to my vision, my destination?
Put that checklist right on your desk. The next time you’re thinking about making a risky decision, run through those five questions.
Here’s the thing: success comes from taking the right risks. Survival comes from avoiding the wrong ones. It’s your job to be able to tell the difference and then act accordingly.
Before your next decision, run through your checklist and make sure you’re chasing success and not flirting with failure.
Everybody, thank you so much. I love you. Have a great week and go make some money. See you next week. Bye-bye.
