INTERVIEW WITH FRANK FINGER

FINGER’S RADIATOR HOSPITAL

Published in Automotive Rebuilder Magazine 11/2000

Published in Automotive Cooling Journal 04/2001

In this issue, I would like to explore even further what it takes to be successful financially in business. But this time lets look at an asset each of us has, the value of which is many times underestimated. After talking with many businesses across the country, there is a similar characteristic that the most successful companies have. They all have the following.

· They typically entrust their employees with both responsibility and authority.

· They respect their employees.

· They show their employees gratitude when they make the effort to excel.

· They reward their employees for a job well done.

· They are confident in their own decision-making ability, but also have the ability to listen and act on recommendations and observations of their employees without feeling threatened.

· They have information-gathering tools needed and use them to the max.

· They know and continuously monitor their cost for both parts and labor. And price them according to their profit goals.

I recently had the privilege of interviewing one of the most successful men I have ever met. This man is successful and motivational to his family, his employees, his vendors, and his customers. He was not in the engine rebuilding industry; but he was in an equally competitive business, the radiator industry. His name is Frank Finger; he owned and controlled 40 warehouses across the country, he owned all 40 locations until just this past year when he sold 38 of them to Ford Motor Company.

Frank started out in business in 1955 as a one-man shop, taking over as owner when his father retired. What he accomplished over the next several years entailed taking this one-man shop to a $50,000,000.00 a year company.

Thanks to Frank’s ideas about how to be as successful as possible, you can see why he was able to accomplish so much growth. What he implemented to make this happen is a formula for success. But he also said it really doesn’t matter what industry you are in; each has it’s own unique issues owners have to deal with and overcome.

There are four things common to the successful operation in all industries.

1) Know how to service your employees, customers, vendors, and have time for your family also.

2) Know what your cost are.

3) Have an information source that allows quick and accurate decision-making.

4) Pay attention to detail.

All businesses are competitive, and most are in mature industries. There is no easy money. Frank said he walked away from many jobs. If you know what your cost is you will know when to do so. If you don’t know which jobs are profitable, you are shooting in the dark. Some jobs just add cost to the bottom line, not more profit. In all businesses you at least have the opportunity to make a profit. The most successful companies are information driven. Making a profit cannot be by accident; it must be planned for in advance. Be willing to make changes in your procedures and policy; in other words be willing to make changes in the way you do business. Improvement without change is impossible.

What follows is an interview I conducted with Frank Finger concerning his best business practices.

Darryl: Frank you have no doubt been through a great many experiences in business. What do you consider the most important things in making a company successful?

Frank: There are several important things that make creating the most successful company possible. The greatest asset I have in being able to build my company to the level we accomplished, is its employees. You need good people; they must be hard working and dedicated. But as owner I must give them room – and authority to grow. By giving them ownership of the day-to-day issues I have a staff of people who are all pulling in the same direction and using there own minds. They work with you not just for you. If you believe that you have to do it all, or that you actually can do it all, you will never grow beyond a certain point.

Darryl: What do you mean by the statement “authority to grow”?

Frank: That means that I not only have to give them a task to do, but I also have to give them the authority to get the job done. I do this by allowing them make and use their own decisions on how to get it done. They enjoy the challenge if given the opportunity to excel. I cannot look over their shoulder, I need to give them latitude and allow them to experiment. Give them room, and don’t be critical if they mess up, you must show appreciation for their efforts. If you give your employees what they want, they get you what you want.

Darryl: How would you rate the radiator industry as far as its competitiveness? And how would you compare it to other industries that you have come in contact with?

Frank: The radiator business just as any mature industry is very competitive. I have dealt with many different types of businesses over the years and the bottom line is all business owners have similar wants and needs. We all face similar issues that have to be taken care of. Competition, controlling expenses, monitoring and controlling how efficiently we operate, pricing our products and services appropriately, all these and many more are common in all businesses. To overcome these issues you have to have the information that is needed to make decisions based on fact, and you need a strategy to stay profitable.

Whether you sell parts only, only labor or if you sell both parts and labor you must know the cost of each - not just the cost of a part or the cost of an employees wage. You must know the overhead that determines what you must sell your parts and labor for. If I know the cost of the parts I sell and the associated overhead then I can determine what gross margin I need to average on parts sales.

We have always had what we call a “take no prisoners” minimum gross margin on parts sales. Because we know that below this percentage we are losing money. We watch our minimums and maximums for inventory control – an extremely important aspect maintaining the proper inventory level. It’s the same for labor. It’s not just the cost of an employees wage, or their wage related expenses. It includes all expenses associated with generating labor revenue. Labor cost is a variable, and is constantly changing but this is also all the more reason to track it.

One major item that affects labor cost is how efficiently you bill hours. This alone should tell you the great need to track actual hours compared to billed hours you are charging to customers. This is crucial in determining what is needed as an hourly rate you charge customers for labor. When you finalize the invoice to your customer, you can make no more profit from this job - it is over after this. If you lost money on the job, it is to late to change it. You must know in advance that when you do finalize that invoice you have made a profit from this job.

Darryl: What do you do to help motivate your employees to maximize their input and efforts toward the profitability of the company?

Frank: One way we accomplish this is in rewarding the efforts of the people that work for me. I pay them incentives based on the profits of the company, and their individual efforts. I share the financial information with my employees. I need them to know what it takes to make a profit and to understand the real cost associated with each job. Together we can set our profit margins appropriately. We need to track all of these bits and pieces. Things that are measured tend to improve; those things that are not tend to diminish.

Darryl: Is it really worth it to track these things, and to relate to employees at this level?

Frank: It is not only worth it, you have know choice if you are in business to maximize profitability. If employees know you are not tracking theses things, they will achieve the lowest common denominator of what they believe it should be. But if they know you do track these things and you tell them what is needed, you can achieve the results you need.

We all know if things are not going well. Everyone also knows when things are going well and why. If they know they are appreciated then you have a workforce that will beat out the competition ten fold. They just need to be a part of your successful business.

Darryl: What do you think is the most important role you have as the owner?

Frank; I set the tone, if the atmosphere is tense then I have created it. If it is free flowing with all of us going in the same direction with the same objective in mind then this is my roll and what I need to achieve. My father told this saying early on in my business career. He said, “ If the fish stinks, it stinks at the head”. This means that I the owner set the tone. You cannot say, “Do as I say not as I do”, it doesn’t work. I can’t tell them they need to go to church on Sunday if I don’t go myself.

Darryl: In summary what do you see as a plan for success in any business?

Frank: It is very simple. As owners, we must manage our businesses with the information gathering tools needed. Don’t be afraid to seek help in the administration of your company to make these changes. Some of the best money I have ever spent was in making the changes that improve the efficiency and training for my company.

You may not make money on all the work that you could take in. By knowing your cost and tracking them; you know when to say “no” to those sales on which you don’t make money. Give that work to the competition.

You should know your cost for the products you purchase in advance. By using purchase orders, this valuable tool can give you the controls needed in this area.

The atmosphere you present to customers, employees and vendors are important also. How organized is your company, and what impression do you send to all these people. An organized company sends the right message.

You need to include your employees as a part of the process for change and improvement. They can help you to achieve your goals; you just need to help them achieve theirs.

There is a specific reason that I interviewed someone from a different industry than engine rebuilding. It was to get across the message that although all businesses have their challenges, they are typically the same or at least present similar challenges. We may believe that our industry is more competitive or complicated than most, but the bottom line is that you can be profitable in any business if you have a formula for succeeding in that business.