Without peer benchmarking I would not have been nearly as successful in the auto-salvage industry as I was. In an industry not known for making millionaires, I sold my auto salvage operation to Ford Motor Company in 1998 for an 8-figure sum. I considered it to be so important that I wrote a book on it, available on Amazon.
Part of what made me successful was an extraordinary amount of motivation to succeed that I got because of the circumstances of my early life. When I was 17, my father died and my stepmother threw my twin brother and me out. While still in high school, I started an auto repair business and began buying, repairing, and reselling VWs.
I was hungry to be successful and to learn how to make my business grow. It morphed into a salvage yard when I discovered that I was making more selling parts from my boneyard than I was turning a wrench.
I was doing pretty well when I got an invitation from Howard Nussbaum, a true innovator in our industry. He invited me to be part of a group of 10 salvage yard owners from across the country in 1988.
We were not competitors because our markets were remote from one another. We agreed to meet, to share our numbers for the crucial metrics, and to share the things we were doing to try to improve them.
Making time to be part of that peer benchmarking group was the smartest decision I made in early in my business career. Peer benchmarking helped me build my yard from one to 130 employees and 15M in annual sales. It was the most significant source of the ideas that made my yard better than the competition and made Ford willing to pay me for it.
Since then, I have used peer benchmarking to start, grow, and sell businesses in a variety of industries.
What is peer benchmarking?
Chances are, you’ve heard expressions that relate to the basic concept—“two heads are better than one,” “let’s put our heads together,” “don’t reinvent the wheel,” etc. Those catchphrases apply to different scenarios, but the basic idea remains the same: A group draws from a wide base of knowledge and experience and that dynamic leads to creative and efficient problem solving that no individual can achieve on his or her own.
People often tell me, “Oh, we have peer groups; we have work groups,” or something similar that they think is peer benchmarking. What is the difference? I hear that question a lot. Peer benchmarking compares real numbers, metrics, objective measurements, and shares techniques among the owners and top managers in the room.
A real peer benchmarking meeting begins with each participant writing columns of numbers that reflect his yard’s performance on a board at the front of the room—alongside the numbers of the other participants.
The numbers show whether you are an average performer, a laggard, or a star relative to your peers. Everyone wants to know where he or she is better and to learn where others are ahead of him or her.
Some learn they come in last in an area. I recall a peer benchmarking meeting that I facilitated where this was the case. One owner lagged everyone else significantly for a metrics related to labor productivity. When we drilled down, we found that he was running his yard differently. He didn’t remove a part from a car until he sold the part. All the other yards dismantled cars and stored parts. This owner thought that storing the parts on the cars was right, but the numbers convinced him to rethink.
In other cases, a particular operator will have numbers that are better than the norm for a particular metric. In the group that I was in, I recall that I had better-than-average productivity for parts delivery because I had found that my delivery drivers were much more productive when they were paid per delivery, rather than by the hour.
The crucial part of the meeting is finding out how you are doing relative to a set of peers who are working hard to improve their yards. Each participant goes home with a realistic view of how his performance for the most crucial metrics stacks up against similar yards. In some cases, a yard owner also goes home with a new vision of what is possible for a particular metric and an initiative to achieve the kind of performance the top yard in the group is achieving.
A peer benchmarking group is simply unlike any other work group because it includes owners of similar sized yards and involves much deeper sharing of performance data than typically occurs when owners meet in different settings. Of course, you should be going to state and national conventions for recyclers. You will learn a great deal about best practices and you will connect with other owners in the sessions and over a drink or two. You can learn a lot, but you won’t learn nearly as much as you will when you get the kind of inside look at how your business performs against your peers in a peer benchmarking group.
In addition to bringing numbers to the group, each participant brings the details of one or two initiatives that he or she is considering. The usual format of these sessions is that the morning is devoted to a look at the metrics and the afternoon is devoted to considering the issues and initiatives of each of the participants. At the benchmarking meetings that I have facilitated, I usually use a technique called big and easy analysis that helps participants to evaluate the work required to implement an initiative and the likely impact it will have on the performance of their business.
Although many yard owners have similar life experiences, each participant brings something different to the table. Being able to talk about the initiative that you are considering to improve performance with another eight or nine experienced owners and a facilitator who knows your industry yields valuable insights. Sometimes one of the yard owners has tried a similar initiative and can share what he learned by trial and error. The savings in time and money make joining a peer benchmarking group worthwhile.
Other times, owners use the time to discuss a problem that they are trying to solve. I recall a peer benchmarking group that I facilitated in which one yard owner needed to make better use of the space in his comparatively small yard. He couldn’t buy adjacent land. When I was growing my yard, I had faced a similar problem and solved it by expanding upward. I bought used shipping containers, cut doors in them, stacked them, and used them to store parts. He had never considered growing upward.
If you are hungry for success, I urge you to join a peer benchmarking group. Counts Consulting runs excellent groups for recyclers facilitated by Bill Stevens and Mike Kunckle.
If you want to know more about putting together your own peer benchmarking group, get my book, Peer Benchmarking Groups: One Entrepreneur’s Story of Extreme Success on Amazon.
Nothing will grow your business and your profits as fast as becoming a part of a good peer benchmarking group. Take the invitation today!
REMEMBER ONLY YOU CAN MAKE BUSINESS GREAT!
Ron Sturgeon, Mr. Mission Possible, has been a successful business owner for more than 35 years. As a small business consultant, he can wisdom and advice gleaned from an enviable business career that started when he opened a VW repair business as a homeless 17-year-old and culminated in the sale of several businesses he built to Fortune 500 companies. Ron has helped bankers, lawyers, insurance agents, restaurant owners, and body shop owners, as well as, countless salvage yard owners to become more successful business people. He is an expert in helping small business owners set the right business strategies, implement pay for-performance, and find new customers on the web.
As a consultant, Ron shares his expertise in strategic planning, capitalization, compensation, growing market share, and more in his signature plainspoken style, providing field-proven, and high-profit best practices well ahead of the business news curve. Ron is the author of nine books, including How to Salvage More Millions from Your Small Business.
To inquire about consulting or keynote speaking, contact Ron at 817-834-3625, ext. 232,
rons@MrMissionPossible.com, 5940 Eden, Haltom City, TX. 76117.