Management – Page 7 – Virag Consulting

The Voice of Experience

This is a funny little story with a serious message. I improvised this coffee timer, pictured here, for the break room here at Safe-Guard. On days when I arrive before Yarileen and make coffee, she can see that it’s from this morning, and not left over from the night before.

There is general agreement that “whoever made that thing is a genius.” Well, actually I picked up the idea from another client some years ago. This reinforces what I wrote in Why I Freelance. If you keep moving, and keep your eyes open, you can’t help but pick things up. I may not be the smartest knife in the shed, but I have been consulting a long time. Más sabe el diablo por viejo que por diablo.

Why I Freelance

Recently, Linked-In reminded me that I have been an independent consultant for fifteen years. Thanks to all who called and wrote with congratulations. In fact, I have been either consulting, at a startup (or consulting for a startup) since business school.

I used “freelance” in the title because this word is in need of some rehabilitation. There was a bitter post on Linked-In about how “freelance photographer” means “unemployed guy with a camera.” I get that all the time. I spoke with a recruiter recently who was startled to learn this is really what I do, and not just a placeholder on my resume.

According to McKinsey, there are 49 million of us “free agents,” equal in number to those who do it out of necessity.

I started consulting for a Big Six firm, back when there were six, and I noticed that our projects were always a big deal for the client staff. They felt lucky to be on the client’s once-in-a-lifetime project. We consultants, meanwhile, were continuously assigned to the good projects, client after client. It becomes addictive.

If I were recruiting here, I would recount some groovy projects and then pitch the glamour and excitement – but I have a much more practical argument. When you work for a long time at one company, you accrue specific knowledge about its organization, procedures, and history. If you ever leave that company, the value of this knowledge falls to zero.

I was engaged by GMAC just before the crash. Suddenly, my entire department was shuttered – desks empty, lights out. It was a disaster for the faithful, lifetime employees. Some were out of work for a year. The consultants, however, rapidly found new jobs.

Job security no longer exists, and the good wages, generous benefits and secure retirement that used to be guaranteed with full-time employment are in decline or have disappeared – Tom Peters

It is a little scary not knowing where I’ll be working next year. I won’t deny that. My point about GMAC is that the people who thought they had job security were mistaken. They were the ones most at risk.

Tom Peters writes that job security does not come from allegiance to your company. It comes from having skills and accomplishments, plus a network of people who know about your skills and accomplishments. This is where the exciting projects come in. When I call around looking for work, I want people to recognize me as “the guy who created Provider Exchange Network,” or something like that.

Changing jobs enhances your value by exposing you to new people, technology, and business models. This has certainly been true for me. F&I is a small community, but it includes dealer groups, software companies, and finance sources. This is great because it allows me to move around without violating any non-competes.

This article in Harvard Business Review echoes Peters’ observation about job security. The author is a B-school prof, who writes that the gig economy is the future. Focus on finding work, she says, not a job. I am lucky that this attitude (and related skills) were drilled into me at Coopers. In case you’re inspired to quit your day job, I’ll follow up with a “how to” article.

Ten Networking Tips for the New Consultant

My son, Paul Virag, has hung out his shingle as an independent. Paul’s challenge is differentiating himself as an ace developer, in a market dominated by price competition and cheap labor. My boss at Coopers lamented the same thing, years ago, as a “buy it by the pound” business.

Mind your Rolodex. Along with maintaining a marketable skill, this never-ending job tops the list of must-dos for the independent contractor.

The solution, of course, is assiduous networking. The quote above, complete with antique Rolodex reference, is from the Tom Peters Seminar. In today’s post, I present my networking routine.

I check Linked-In every day for news about people I know, and then I write or at least “like” the update. It has gotten Facebook-y over the years, but Linked-In is still the best (only) site for professional networking.
I am not a “Linked-In whore,” though. I actually know most of my connections. I call or email at least one of these people every day, especially when I am not looking for work.
Maintain a web site, obviously. Mine is overdue for its periodic update. Something like Mike Cohn’s blog will be more relevant to Paul.
As a developer, Paul will also want to be noticed on Github and Stack Overflow – though this means mostly peer developers, not hiring managers.
I post roughly twice a month on my blog. It gets about 100 views per month. WordPress shares my posts to Linked-In. They get more views on Linked-In than they do native on the blog.
I collect relevant content for my Twitter feed, and then I load Hootsuite to make at least three posts every day. I find content using my RSS reader and the blogroll from my blog.
This is in addition to spontaneous tweets, retweets, and conversations. I follow a great group of people, whom I rely upon for industry news, so for me this is a natural process.
A few tweets every week lead back to my blog. I use bit.ly to track the hits. Twitter provides analytics for free.
Keep your resume up to date. People still like to see a resume. When I was starting out (Coopers again) I maintained different versions tailored to our practice areas. “Virag specializes in nothing but healthcare,” … and auto, and retail, etc.
Go to conferences, and get on the podium if you can. My main one is the F&I conference held every fall in Las Vegas. This is also an opportunity to hike Red Rock Canyon.

All of this activity takes time, especially writing original content. I spend five or six hours per week. Hootsuite helps because I can stoke Twitter on the weekend, outside of billable hours. Bonus eleventh tip: write blog posts that start with “Top Ten Tips.” People love that.

Dealer Megatrends Part 1 – Consolidation

In the 2006 data, NADA noted a “moderate consolidation trend.” Since the recession, sales have recovered but the dealer population has not. My chart, below, is based on the last eleven years of NADA data. You can go back as far as you like. The dealer population has been shrinking steadily for fifty years.

This means the surviving dealers are selling more cars per store, but the real story is consolidation – the powerful trend toward fewer owners and bigger groups.

In 2005, the top 100 dealership groups were 9% of the total. In 2015, they were 17%. The Automotive News ranking is by gross revenue but, for simplicity, I am counting stores. I imagine that the big, efficient groups command more than 17% of the total gross.

Gee group’s purchase of 16 Tonkin stores, backed by private equity, is instructive. Both groups are family owned, with seven and 21 stores respectively. Brad Tonkin will join the combined entity as president. The Automotive News article also describes a Soros-backed purchase by the McLarty group, bringing its count to 19 stores.

The owners may be public, like AutoNation and Penske, private equity, or something in between. Larry Miller group, for example, is still family owned but independently managed. An IPO seems the next logical step. Broker Alan Haig predicts his buy-sell business will continue strong in 2017.

This is about economies of scale, obviously. The New York Times mentions efficiency in staffing, technology, and inventory management (as I did, here). There is a lot of money chasing this trend, and only so many operators who know how to exploit scale. That’s why Haig also has a recruiting arm.

Small dealer groups can compete online only by joining platforms that aggregate inventory.

If you are running a small group, you might want to start thinking about M&A. That’s not my area, though. I am interested in the related trends toward technology and process change. I’ll examine these more in my next post.

One example is online retail. Small dealer groups can compete online only by joining platforms that aggregate inventory, like TrueCar or Autotrader. What I am proposing is that the (relatively) little guys compete with the consolidators by consolidating themselves online.

Dealers should seek help from their OEMs and software vendors. Well, maybe not the OEMs. GM’s Shop Click Drive only searches inventory for a single dealer, and it makes you choose the dealer first. Not only will it not give you a price, it won’t even present a model list until you’ve selected a dealer. No one shops this way anymore.

Modern shoppers will have found a model and trim level, a price, and even a lender, before landing on a dealer. While Shop Click Drive has the machinery to structure a deal, and even sell protection products, some genius decided to make the “choose dealer” button its primary focus. Most GM dealers I looked at were also on Autotrader.

I did a survey of platform capabilities last year, with Cox Automotive far in the lead. The other guys seem still to be in the world of single-dealer web sites. I also noticed that these sites are mostly hideous, and lacking consistency in even simple functions like credit application.

The consolidators have strong tech teams devoted to online shopping. Dealers may fail to see the threat, because it’s not a physical presence. If you owned a hardware store, and Home Depot went up across the street, you would notice.