I remember the first day I met my first mentor, Seamus O’Rourke, nearly forty years ago. I had seven motorcycle shops and two furniture shops and had massively over expanded and he could see I was in trouble and carrying the weight of the world on my shoulders. We talked things through and he gave me a concrete action plan to get back into profit – quickly. I agreed a massive cost cutting exercise with him, then I asked when we should begin to implement the plan. I don’t know why, but I had in mind next month or perhaps the month after but his response stunned me. “We start now, immediately, if not sooner”, and with that we jumped in a car and drove to each shop with Seamus in his famous “hatchet-man” man mode.
I was very nervous as I introduced Seamus to each manager, but he took great pains to establish a rapport with each of them in the shortest space of time, but then immediately got to the core of the problem; that if we didn’t carry out a dramatic cost cutting exercise we simply weren’t going to survive. We then got each manager so sign up to a commission only deal whereby they got a split of the profits made from repairs and bike sales. Wherever we could we would see the landlord of each shop and re-negotiated the rent – downwards.
I was amazed at how receptive they were once they realized we were serous about slashing our overheads. When we couldn’t get a substantial reduction we searched out cheaper premises and moved very quickly. Seamus taught me that overheads have legs and wherever we could, we’d get rid of staff who weren’t paying their way or get them to work on commission only. Failing that we would get rid of them. This really turned out to be the longest, most uncomfortable day of my life but by the end of it, like Seamus promised, I started to breathe freer.
We also looked at all ways of slashing utility bills, insurance, magazine subscriptions, window cleaners, (and anything that we could do ourselves) anything where that was an outgoing expense came under the scrutiny Seamus massive magnifying glass and sharp pencil. I have mentioned about five items here, but in reality there were literally dozens of expenses that got the chop, some small other large. This day I learned about massive immediate action, no-sentiment and doing the right thing. The very next day we started to activate many different ways to make the shops more profitable, see yesterdays blog for a few of them.