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Know What Your Core Business Is
Your core products or services are those on which you make the most money. If you focus on them, they become your specialty. People will learn soon enough they can readily fulfill their special interest or fill their need at your business.
I have three sons, all of whom have established auto-recycling facilities under varying degrees of my mentoring. Two of them specialize in older-model import cars; and the other, in Chrysler and Jeep parts. It did not take long for owners of these brands to learn they could readily find needed parts at one of these facilities. Also, it didn’t take long for my boys to become experts in their fields of specialty. It’s more important to know everything about something than a little about everything.
My sons generally get more for their parts than those competitors who dismantle every kind of car because they have become extremely knowledgeable about their specialty parts. Each has identified his core customer, matched his products and service to that customer, and focused his marketing accordingly. In each case, a particular brand is his core product. They sell other items, but they make the most on recycled products related to their brand specialty.
How do you decide what your core product is going to be? You might think it’s a matter of simply going for your passion, but that’s not the foundation for a good business decision. It certainly isn’t everyone driving past your place in a used car, although that used to be a good enough description.
The market demand for your core product must be there. You’ll find it by watching trends, crunching numbers, and testing the market. You can also identify it by separating your metrics by product or service line. Intuitively, you probably know exactly what your core product is, but you may have drifted into lots of other initiatives. You want to get a good price consistently or you may find that offering a certain product is not worthwhile. Interest in and need for the product line of your choice has to be there, and you are going to want to feel confident that both the interest and the need are going to stay in the market for a long time. We have tried to be too much for too many for too long; those days are gone. We can’t sell parts, install them, clean radiators, and focus on the last dollar of scrap. Choose what your core is.
You also want to make sure your supply for the core product will be available for you to build a business around it. Remember the guy who specialized in old body Mustang parts? His market fell out from beneath him because there were only a limited number to restore. The source dried up.
It may be profitable for a while to specialize in a product no longer being manufactured. You may actually enjoy quite a markup on your ability to obtain a limited supply. But sooner or later the well will run dry. As you anticipate that drop, plan for a new core product. Remember, it takes awhile to build a reputation. Allow enough time.
Don’t forget to subscribe to my free monthly auto recycling e-newsletter, with news and tips, register at www.autosalvageconsultant.com.
Next month: More good stuff from Chapter
5 of “Salvaging Millions”.
Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. In 2001, he founded North Texas Insurance Auction, which he sold to Copart in 2002. In 2002, his book “Salvaging Millions” was published to help small business owners achieve significant success, and was recently reprinted. In June 2003, he joined the new ownership and management team of GreenLeaf. He also manages his real estate holdings and investments. You can learn more about him at WWW.autosalvageconsultant.com He can be reached at 5940 Eden, Haltom City, TX 76117, (best) firstname.lastname@example.org or 817-834-3625 ext 6#.