Business Lessons I Learned From Richard Rawlings of Gas Monkey Garage
The Discovery Channel TV show “Fast N Loud” reminds me of a comic strip dreamt up by Harvey Pekar and/or R. Crumb. Pekar and Crumb have published some of the most creative and insightful comics with the same sort of irreverent tone of Fast N Loud. Those might be obscure pop culture references to you, but if you’re familiar with the work of Pekar and Crumb, you’ll get what I mean. Even if you don’t know what the heck I’m talking about, you can still get some great lessons as a small business owner to take away from the capers of Fast N Loud’s Gas Monkey Garage.
It works on the technical merits of buying old, mainly classic cars that are in various states of decay when they arrive, and reconditioning them to modern standards and selling them off as rapidly as possible. This generally works out well for the owner, Richard Rawlings, but there are often minor fiascoes along the way. They tend to dramatize the most minor details, but in a tongue in cheek sort of way. It comes across as a self-parody, by people who know they’re goofing off a little and letting the audience in on the joke.
This is a mainstream basic cable television show. But that’s where the audience is waiting for content like reality TV and made this show so successful. This could easily be applied to small business operations at low cost. Youtube.com, FaceBook and Twitter provide powerful, free resources, the chance to get viewers at low-ish cost and, with YouTube at least, the chance to share in the reward when you have built an audience.
Three Important Practical Lessons
Velocity Is Everything
There’s something to be said for doing business fast. Get in, get it done, and get out. The more you delay the more opportunity slips away. In this case fast means proactive or taking action to move events along.
Businesses are at their most effective and efficient when they’re working at close to capacity. Turning over products and services more quickly means a larger revenue base against which to offset overhead costs. Overheads are going to rack up regardless of your revenue and they can sink you.
A faster rate of revenue turnover gives you the highest possible gross adjusted revenue to cover your costs. In that sense turnover is the velocity of your business. A more simple way of saying it is that the clock is always running and time fills itself. If you give yourself an extended timeline for a project you will likely find that you are still rushing to meet the deadline when it comes.
Go Big or Go Home
At the beginning of the second season Rawlings decided to move his operation from a crowded back street location, to one that’s significantly larger. The reason he gave was that they had to take on more business to be successful. That makes sense because, all too often, it’s volume that keeps a business afloat.
It’s true that you want to get the highest return on investment possible but there are limits to what you can practically achieve. If you get half the rate of return at four times the volume you have still doubled your net revenue.
Also, a small business can suffer from feast and famine if two or three projects start and finish at the same time. You may have team members standing around for hours and then suddenly you have to give them overtime pay or miss a deadline. That’s tough if you’ve only got four or five projects going at any one time. If you have nine or ten projects it has less impact.
The Fine Art of Negotiation
Rawlings makes negotiation look easy, whichever side of the deal he happens to be on. Of course, he plays to the camera somewhat. But that gives the haggling the theatrical quality that adds a little mellow drama to the show. When he’s selling, his starting price is always high but usually seems to get to the deal in two to three drops. When he’s buying, he works it up from the other end. As they say, the first person to give a price loses, so you have to start with an unreasonable price before you get to the right one.
Six More Things Worth Mentioning
There Is Room in The Middle
Rawlings knows when to let go. You can’t get a good deal if you only settle for a perfect deal. The need to move quickly means that the deal in hand is the one he’ll take. You never do know if a better offer is going to come along but if you have an adequate deal now, you’re going to do better if you take it rather than hold out for and unknown later.
Be Patient With Your People
People skills count too. Having the patience to let your people be “who they are” takes a fair amount of self-confidence. Particularly if they are natural attention getters, button pushers and comedians. Of course, you have to be working with the right people but assuming you got the hiring right, you have to trust that Smart Alec technician is going to produce something valuable.
Delegate
Delegation is about relationships. You can’t assign responsibility without trust and you aren’t going to build a successful business unless you let-go and trust your employees. Rawlings lets his people take a lot of the decisions and is very forgiving of them taking initiative. An expanded business model always requires that you allow subordinates to make tough decisions. They do have to be accountable to you but not in a fearful way.
Fear will kill initiative quicker than anything. A small company that works within a culture of trust can beat the big guys. The worst part of large bureaucratic corporations is that the workers will often be afraid to do anything because the consequences of making errors are felt to be too severe. At the same time, the consequences of making correct decisions will often be too insignificant as superiors take the credit for the workers’ successes. Fear will extend into communications, as the messenger always seems to get blamed. When nobody wants to tell the boss bad news it is the gateway to delusion, as the decision makers get further and further out of touch. Bosses who rule by fear lose touch with what’s going on. That’s a great way to lose control and then lose the business.
Don’t Try This at Home
Don’t try to make money at auction. It’s almost a running gag in Fast N Loud that, when they try to sell at auction, they almost always seem to end up losing money on the deal. There’s the element of gambling that is seductive about the risk of putting high value cars in auctions, with no reserve price, that could earn big rewards if at least two buyers desperately want the item. But that doesn’t seem to happen at all in the show.
Relationships matter more than transactions, i.e. direct buying and selling works better than auctions. It seems like when they send a car to auctions they get their backsides handed to them. But when they deal with individuals it works out better for all parties.
The tension between needing to turn over cars rapidly and get the best possible price really seems to dominate the choices that Gas Monkey Garage makes. Negotiation is Richard Rawlings’ greatest strength. After all the rush to complete each project they seem to benefit most when they can hold out for an interested buyer who is willing to haggle the deal on the Gas Monkey lot.
Cast A Wide Net
To be most effective you need to take advantage of as many opportunities as you can. Buy and sell on EBay, use social media for promotions such as FaceBook and Yelp. Many of these options are free to use and have a very broad, even global reach.
Take Your Opportunities Where You Find Them
Options are the key to success in business. You have to be alert enough to recognize opportunities and flexible enough to change course to exploit them when they arise. You won’t always end up in the business you started out in. It may turn out that your general-purpose repair service happens to find a high profit niche in metal working or welding. You might find that your auto body shop could do better building custom motorcycles. Be on the lookout for those special little deals that are going to keep you bringing in the revenue because there are no guarantees in business.
It’s satisfying to see classic cars go from clunker to showpiece in one or two episodes. The process that each project goes through is never the same twice and there’s always something unique about it. It’s a TV production about a manufacturing business. You might not think that would work but, somehow they seem to pull that off. Along the way you get to see the inner workings of what is presumably an authentic business operation.
Apart from a little bit of navy talk, the antics at Gas Monkey Garage are fun to watch and the tone is upbeat and pretty harmless. I really think they could turn it into a comic strip without stretching too far. I don’t know if they set up the story line on a storyboard, like a scripted production, but, if they did, that storyboard would be hilarious in its own right; maybe even a splendid American modern classic.
