AndersonAuto

A bit of a clickbait title, but not inaccurate. The shop is doing amazing, and I haven't been here but a few hours here and there since last June. Prior to that I had been the shuttle driver and not much else. I sold the shop to my manager, something that has been in the works for over 3 years. Spending the next couple days at the shop getting a few things settled (vendor accounts, recurring payments, etc) before the final handover on Saturday. I'm retired now at 55, and I won't have to work another day. My wife and I are moving onto our boat and we're going to sail around the world a few times. The moral of the story is that you CAN get there. You don't have to be particularly bright, I'm certainly not. You don't even have to be an amazing manager. There are thousands of shop owners who are better managers than I am. You do have to work hard. Way harder than the average guy, and a lot of guys work pretty hard. You do have to be smart about your business. Don't spend money you don't have yet. Cash in the bank fixes a world of sins, make sure you have plenty. You do have to take calculated risks. Business ownership is not for the meek. You'll have to take risks that the average guy would never dream of. Be fearless, but DO THE MATH before you jump. You do have to fully understand your financials. If you can't read a P&L and be able to see there's a problem that needs further investigation, you better learn how. Same with your KPI's. You do have to do great marketing, and lots of it. There are guys out there who claim they don't need to do any marketing and are swamped. Maybe there are, but I'm not one of them. Odds are you aren't either. Get busy marketing. And you do have to get good business coaching and listen to what they say. You could be stupid like me and wait 12 years before you finally get a business coach and start making money, but why would you want to do that? Get one now. If they don't pay for themselves many times over, odds are you didn't do the work to go with the advice. John

I've been listening to an interesting book that I think a lot of us can benefit from. "Profit First" by Mike Michalowicz. It takes the "pay yourself first" principles that a lot of personal finance gurus talk about, but few of us do, an applies it to doing business. We all need to understand that our businesses exist to produce a profit for the owner, not to fix cars. If we want to fix cars, we can fix cars working for someone else. I'm fortunate enough to have my business to a place where I'm actually getting a decent profit, although it's not quite as much as I want. Probably a result of being lucky more than being good. I have never quite reached the elusive 20% net plus my W2 pay. I intend to change that this year by removing my profit first, then figuring out how to run the business on what remains. If we think about it, we figure out how to run our businesses on less money all the time. Every lean month we have, we figure out how to get the bills paid with what we have. What if "what we have" is simply what's left after we remove the profit? I bet we could all figure out how to make it work, and would finally realize the benefit of being business owners.

180 room is actually part of Joe's KC BBQ. It's their side room for groups. I-35 and 119th Street.

I should be able to be there. This is my neck of the woods, so no real excuse not to meet some of you guys.

That makes sense, but yes, out of context it looks like you just snapped a pic at random.

I wish I had the magic answer to this question. I do have a few suggestions though. Top talent is going to be interviewing you as much as you are them, and they're going to start at your Web site. My Web site is in process of being updated, so don't go by my example. First thing that jumps out at me is the family photo. Change it. Nothing wrong with a family photo, but not that family photo. You're dirty and unshaven, and you sat the family down on a curb outside the shop and snapped a pic with a cell phone. Pay someone to take a picture that you would frame and hang in your home. Also ditch the pic of the old jeep Comanche. Those things sucked when they were new. No one with the euro experience you're advertising for wants to see that. Then I would make an employment tab at the top. On it you should include a mini application, and show pics of the shop full of the kind of vehicles you say the prospective tech needs experience on, with pics of scanners and other high tech equipment being used on them. Look at stock photos of guys using scanners etc and try to emulate the look and feel. And make sure the shop is sparkling clean and jam packed with cars to work on. The goal is to portray a clean environment where a guy can knock out some serious hours. They certainly don't want to crawl around on the floor working on 80's vintage jeep pickups.

5 of my techs make between $30 and $34 per flat rate hour. My 3 master techs are at the top of the range. My apprentice tech is making $18 on the clock.

I guarantee that I'm going to do everything in my power to keep the bays full and the work flowing. I also offer the official Department of Labor guarantee, which is that if you don't flag enough hours to equal at least minimum wage for the hours you were present in my shop, I will pay you minimum wage. I also guarantee that if I ever pay you minimum wage, you're fired.

Back when my shop was young I offered a guarantee of 30 hours. What I found was that a tech with a 30 hour guarantee will produce between 28 and 32 hours consistently. They will also blame the shop for their lack of productivity. Then they want to strut around like some sort of hero if they flag over 40 hours once every few months, feeling like that's clear evidence that the problem isn't with them. So I backed the guarantee down to 20 hours. Guess what happened? The techs (I had two at the time) became even less productive and more disgruntled.

Most fun you can have at 8mph with your clothes on. Stinkpots..... can't imagine what you were thinking. A week long trip from Florida to the Bahamas, including running the generator so we can have the AC running at night, costs about $200 in fuel. Can you even make it to the fuel dock and back for $200? It doesn't matter what you want. Your wife wants a cat.

I have other things to do, like sail around the world. The last thing I want to worry about is having to go over a P&L with my manager from some tiny island in the South Pacific with little to no internet. Or worse yet, having a key employee leave and have to fly back to fix the shop and replace those key people. I'll gladly trade the additional net I might receive from being an absentee owner for the freedom to sail away without having to worry about whether the shop is doing well enough to continue funding my adventure. This of course doesn't mean I'll let my shop go for under market value, and I do have a plan in place to make it happen.

I've had that happen a few times over the years. They probably did you a favor. It's always infuriating, but you're probably much better off without someone like that working for you.

Honestly, I'm surprised that when looking at shops in the $2M revenue range that you're finding such inconsistencies in the books. The shop owners I know with businesses at that level run pretty clean (as far as I know) operations. How much spread are you finding between annual net they claim vs what's on the books?

Of that I have no doubt. What size shops have you been looking at? Bays? Revenue?

I'm just the opposite. The better we're doing the more I think about selling. I've got things to do that are not running an auto shop. It all depends on how you define reasonable. If reasonable is a low price, which is what I suspect you mean, then you won't find a well run shop for reasonable money very often. If reasonable means a good return on your money, there are shops to be had. If you can put down $200K on a $1,000,000 purchase price for a shop that will give you $200K back in your pocket every year, a million bucks is pretty reasonable. Even if you deduct an 800K loan at 5.5% for 20 years, you're still looking at $135K annual return on a $200K cash investment. But the reality is that a shop doing a $200K net is only worth at best $700K, so your 20% down is now $140K and your net after the loan payment is now $153K. Where else are you going to get 109% annual return on investment? This assumes of course that the $200K net is a real number, doesn't include paying yourself a salary for management, and that you have the ability to sustain it.

Of course I understand the implications of working on his car. But if you read my earlier post, I didn't know he was in the shop at all until he had already picked up his car.

I don't disagree, but my guys were unaware of, or didn't remember me telling them about, his review from 7 weeks ago. I only knew he came back in because I saw his name pop up on the caller ID when he called with a question after picking up his car. When his name came up I mumbled something along the lines of "what does that M-Fer want?" My manager gave me a confused look and told me he just spent almost three grand today.

How's this for a nice one star review? This was posted to my shop facebook page 7 weeks ago. Carlos: Anderson automotive over charge knowing people will pay since they have no other choice an need their cars running asap. AUTO CLINIC in Olathe ks does everything better making sure the customers are dealt with respect and compassion!! My response: Carlos, I'm sorry you feel this way. I was a bit confused by your review, so I looked up the records of your last visit, and listened to the phone calls associated with it. You asked about having your brakes looked at, and also a transmission flush. You called back a couple of days later and asked about just the transmission flush labor, with you supplying the fluid. You were given a price for the flush labor and flush chemicals, which you obviously agreed to as you brought your car in a couple days later. We flushed the transmission with your fluid and changed the engine oil as you requested for exactly the price you were quoted over the phone before you came into the shop. Since a transmission flush isn't the sort of service needed to get a car back on the road, and the price you were quoted and price you paid were exactly the same, I'm sure you can understand my confusion. And then today he's in my shop spending $2700 on his Volkswagen.

Reasonable valuation is subject to the books. It's not unreasonable to pay a couple million for a shop that nets the owner $500K per year, and can prove it. Such a shop would also require that a manager be in place that runs the operation vs having the owner an integral part of the day to day. On the other hand, a six bay shop that nets the owner $60K per year is worth about $100K all in. Maybe not even that much. These figures don't include real estate, which has little to do with the business valuation, unless the owner is his own landlord and is paying himself a higher or lower than market rate for rent. In that case you'll have to take the difference and add to or subtract from the net.

I agree with xrac, it depends. Like he said, most shop owners have no idea what the business is worth, and believe it's worth whatever their emotional attachment to it is. If I were looking at a shop to buy, these are the things I would look at: Why is the owner selling? Is he retiring? If he's not retirement age, then odds are he's just tired of working constantly for pennies. Sometimes both apply. What's the company net profit, and how clean are the books? If the owner tells you the net is much higher than the books say, don't believe him. The reality is that the net is either what the books say, or lower. If you can't decipher the health of a business by looking at the books, find someone with auto shop experience who knows how to read it, and pay them whatever it takes to find out. The value of a business is not in the equipment or the gross sales. The value is in the net profit, sustained over time. You'll want to multiply the net profit by a multiplier, anywhere from 1-4x net profit. There could be exceptions to the 1-4x rule, but the average is 1.6x net. The lower the net profit percentage, the lower the multiplier you use to determine value. Never pay for equipment and "blue sky". It's one or the other. Equipment for pennies on the dollar, or the business as an operating entity which includes the means to achieve the net profit. Never buy someone else's debt. All debt must be paid off either before the sale is made, or as part of the sale. Plus one million things I didn't think of. Alternatively, starting an auto shop business from scratch is hard. Really hard. But sometimes not as hard as overcoming a bad previous owner.

Isn't it fantastic when someone who knows little to nothing about our industry decides that shops are "cheating" our customers? And these software guys should be the ones who decide what a fair price is? I know for a fact that many auto repair shops undervalue their work and the owners barely scrape by. Are these companies who want to decide what I'm going to charge going to use starving shop owners as their data point for the "correct" price? I'm going to keep running a good business that's profitable enough to stick around to honor our warranty, and I'll let people like Vladimir run other shops out of business.

In my 20 group we were assigned the task of developing a system to get more Google reviews. It was crazy how intricate and involved some of the processes were. Some people literally had a full page process written, and when tried were very ineffective. My process was by far the simplest and most effective. 1. Teach your service advisors how to leave a review on both Android and Apple devices. 2. Go to the bank and withdraw $500 in $50 bills. 3. Slap that stack of cash on the front counter and tell your advisors that you'll gladly trade a $50 bill for a positive Google or Yelp review. Just print it off and come get your cash. 4. Give it a couple of days, then decide if you want to go get more cash and do it again. My advisors work four days a week on a rotating schedule, and I've had guys who were off for two days complain because they didn't have an opportunity to get in on the cash. Ten reviews in less than two days, and worth way more than the $500 it cost me. The only downside is that it's hard to get my advisors to actually ask for the review unless they are offered cash. I have asked, and they all agree that it's important and we need to do it, but actually doing it is a different matter. Cash made all the difference.

We do ask for reviews, but I've recently changed how it gets done. While we now do it via text as part of our CRM program with My Shop Manager, we used to do it at the front counter. Asking at the front counter is by far the cheapest and most reliable way to get it done. Your customers are happy and glad to be back in their car, why not ask for a review right there? Sending an email to ask for the review is extremely ineffective, and calling them a few days later to ask will only annoy them. Sending a text is effective, and doesn't seem to annoy anyone. But it's still not as effective as asking at the front counter. Every one of your customers is carrying a smartphone, put them to work for you!