AndersonAuto

We just surveyed April's repair orders, and found we do an oil change on 67.7% of our RO's. That seems about right for the way I market my business. I have the cheapest full synthetic oil change around, and market the crap out of it. I do a full synthetic oil change cheaper than Jiffy Lube will do a regular oil change, then I discount it further with a coupon. I do full synthetic so cheap, I don't even offer dino oil any more. I hear all the time that only cheapskates will come to my shop with that sort of marketing, and will bleed me dry. If that's so, how do I have a $513 ARO at 60% GP? Our customers (and yours too) see an oil change as a commodity. As far as they know, an oil change is an oil change. It's a lot like gasoline to them. Sure, there are some people who will only put a specific name brand gasoline in their car, but that's not most people. If two gas stations sat side by side, and one had gas priced at 25% more, which one would do a better business? Which gas station would sell more Coke and Potato chips? Be the service center that sells the commodity for less than the guys down the street, sell more Coke and Potato Chips (and brake jobs) as a result.

Picking a labor rate based on what everyone else is doing makes no sense at all. Obviously you want to know what the competition is doing, and if the math says you have to be way above them or way below, why is it that way? But the bottom line is that your expenses are not their expenses, and you have to make what you have to make to stay in business, and be profitable enough to be around to serve your customers next year.

About 15 years ago I was in dire straights. I was dangerously close to having to lock the doors and going home. I calculated my break even point, and what my labor rate would have to be to survive. Not make money, just to stop losing money. I raised my labor rate $15.75 in one day. Not one single customer complained. Not one. The only complaint I got was from my advisor, which ended quickly when I gave him the choice between selling the new labor rate, or going home forever. The bottom line is that no customer is going to complain. Charge what you have to charge to make your business successful, and stop worrying about raising the rate a few bucks to do it.

The Drew Tech box is not a subscription, but a per use fee. They gave me the box for free, and if I decide I don't like it, then I simply send it back. The main reason for getting it was that while I can program just about anything with my PassThru Pro, it's a big time consumer. Seems like every time we flash a vehicle, there's some sort of update that needs to be done, consuming lots of tech time doing it. Then there's the matter of us not doing enough flash jobs for any of them to get good at it. While we're a big shop, we still only do 4-5 flash jobs a month. Now spread those 4-5 jobs among 6 techs, and all the different makes and models, and there's no way for a tech to really get good at any of them. So they burn a lot of time updating software before it will allow them to flash the car, then they have to remember how to actually get the flash software from that particular manufacturer, then remember our user name and password to that manufacturers web site. Seems like every manufacturer has different rules for user names and passwords, so none of them are the same and most make you change it regularly. Then start flashing the vehicle. In all, my techs were spending a couple hours jumping through all the hoops to get a simple flash done. Then there's the economics of it aside from my tech's time. I have a new WiTech that I bought 1 year ago. I have to purchase an annual license just to own the WiTech, then I have to purchase a subscription for the flash software. In all, a couple grand a year, plus the tool which was not cheap. I flash maybe 10 chryslers a year. There's absolutely no ROI in it. The Drew Tech box doesn't do chrysler yet, but when it does, and assuming it does them well, you can bet I won't renew my WiTech license.

Not a fantastic day today. I was supposed to be working on my boat, but we had a problem child. Ford E-350 we put a transmission in, the supplier said we had to install the latest flash on the PCM. We recently started using the Drewtech remote programming service and it's been pretty seemless so far. Not today. The truck has a few aftermarket items installed and Drewtech thinks one of them (gps tracking unit or magnet operated antitheft system) may be interfering with the CAN bus. Anyway, after screwing with it all day long, they bricked the computer. Ford dealer says 7-10 days. Ordered a reman, wasn't even close to the right part. Found another reman that will be here in the morning. May or may not be the right one. This is my most profitable fleet customer's box van. I need this thing to go down the road and soon.

A good friend of mine uses TV ads as his main driver for new customers. After seeing that more of his customers were women than men, he decided to move his commercials to "female friendly" shows. HGTV and the like. He saw an immediate drop in his results. After some digging, he found that in married couples, the wife decides how much they're going to spend on car repair, but the husband decides where to take it. This was true in his market, no matter which spouse takes the car to the shop. This is a generalization of course, and isn't true in all cases, but it was enough to make him move his commercials back to the previous shows.

I run almost every part through my matrix. Doesn't matter where it comes from. The exceptions are engines, transmissions, and the like. I haven't found any good reason to discount dealer parts. I rarely tell customers where a part comes from. Rarely meaning almost never. Like NEVER. I get things from "my supplier". I give twice the warranty the dealer gives me, and the dealer doesn't cover labor on any of it. Why on earth would I make less on their part?

I had a great April. Car count was down (382 last year vs 353 this year) but since I increased my ARO by $110 over last April, we came out ahead by $27K. Also my GP % was up almost 4%, so my GP Dollars are up $21K. Car count is up YTD by 80 RO's. ARO is up. Sales are up. GP is way up. ELR is up. And my guys are absolutely destroying May. I had a very weak January, down 23K from '16, and 40K off our target. Finally made up for that, and then some. Life is good.

I despise Yelp. I don't have a perfect track record on Google, but it's pretty good. A 4.7 rating out of 58 reviews. Yelp on the other hand I get a 1 star rating for 5 reviews. This happens because good reviews don't get posted. The good reviews are deemed unreliable, even though the user may be a long time Yelper with many reviews, so Yelp hides them from public view. I know from the experience of a few friends that if you are a paid advertiser the good reviews tend to be "reliable" and therefore get posted, while bad reviews don't. One friend of mine used to advertise on Yelp and actively encouraged customers to leave a review, and when he stopped paying Yelp he had almost all of his good reviews magically disappear, but all the bad reviews stayed. I know of at least 20 good Yelp reviews I've had. Only 5 bad reviews show on Yelp, and a couple of the reviewers I can't even find in my database. I even had a few good reviews that Yelp was showing which have recently disappeared. Crooked bastards.

We did this also as part of a big growth phase. It was definitely not without challenges. I currently have 6 techs and 3 advisors. The schedule works on a 3 week rotation, so we have 3 "teams" of 2 techs and 1 advisor. They're not really teams, just guys who are on the same schedule. The biggest challenge I had when going to this model was that I had more hours to cover than work to do. I had to hire more people than I needed just to cover the hours. For the first year I didn't have the 3rd advisor, but I needed the hours to be covered, so I worked 6 days a week until I could justify the 3rd advisor. I also ran with holes in the schedule out in the shop as well. As I added techs, I filled in the holes, but there was a lot of months where I had only one tech in the shop certain days of the week. Of course I made sure the times I had one tech also coincided with having one advisor. The other big challenge that took a long time to get over was the fact that jobs have to be shifted from one tech to another or one advisor to another. I didn't really come up with a solid policy on this, the guys pretty much figured it out on their own. It's been a few years since I've had a lot of problem with this, but at first it was very difficult. Techs didn't want to jump into a half done job, and advisors would forget about monitoring a job that wasn't theirs. Now they're all just used to it. Techs know to pass off a job before they get started on it if it's going to need to be finished while they're off, and the advisors know to pass off a vehicle to the other advisor who's still going to be there the next day. It's all better now, but it was tough.

I'm open 7-7 six days a week. The main driver in that decision was to make things more convenient to my customers. Techs work 7:30 - 6:30 and Advisors work bell to bell. We run a rotating schedule so everyone works a 4 day work week, and I'm able to have a full staff every day I'm open. Because of the way the schedule rotates, everyone gets a 5 day weekend every 3 weeks. Back when I opened my shop I said I'd never be open Saturday because when I was a tech it was a wasted day. Nothing but oil changes. But the way I do Saturdays is different than the way most independent shops do Saturday. Most shops are open half day with half staff, and do almost exclusively oil changes all day. Not profitable for anyone, and techs especially hate it. By being open all day, and having a full staff, Saturday isn't much different than any other day. We're able to get some real work done, so it's worthwhile for the techs and advisors to be there. We have slightly higher car count, and slightly lower average RO, with revenue being just like any other day.

This becomes more true every year. Cars get better, and last longer. Here's a great illustration. 1959 Bel air vs 2009 Malibu. When cars were built "right" vs "that new plastic junk".

I'm in a group with RLO. John Wafler is our facilitator and I'm very happy with how things have gone for me.

For me, refrigerant is a high profit margin item. Most cars don't hold that much of it, and I sell it by the ounce. I can't remember the last time someone complained about the price of refrigerant because in the overall scheme of things, it's an insignificant part of their A/C repair bill. We track how much refrigerant comes out of the car, and how much goes back in, and charge the customer for the difference at $1.96 an ounce.

I use discount oil change marketing, and it's been the single best thing I've ever done for my business. I've gone over what I've done and what numbers it has produced ad-nauseum in other threads. All I'll add is that if anyone wants specifics they can contact me. I'm an open book, and I'll share my numbers with anyone who asks. I hope that every one of you can have the sort of success that I've had, not that my way is the only way. There are others here who have had similar success using completely different methods, some have done even better. But it's definitely a way that can work, and work quite well if done correctly. Don't let anyone tell you it can't work, or you'll go broke attracting nothing but the wrong customers. That's simply not true.

I do a 5000 mile interval on my full synthetic, and yes, I make more money doing $29.95 coupon synthetic oil changes than I did on $19.95 coupon for a blend. I spend a boatload on marketing, to include the cheap oil change. ROI on that cheap oil change marketing is 680%, so to me it's just money in the bank.

I completely agree. The thing that seems to be most damaging to this plan is the number of people who can't (or most likely don't want to) see the value difference between a qualified tech and a guy who can barely speak the words "I'm a mechanic".

I agree with Joe, it's getting pretty convoluted these days. Fortunately Kansas has left these things alone, so far. Lawyers love to make work for lawyers.

We do 4.5% for shop supplies with a $51 cap, and don't have any complaints. I used to try charging for every item, but I found that techs will often forget to write down how many butt connectors or bolts they used. I also can't charge out oxy/acetylene gas etc. The small parts and fluids that were going out the door without being documented ended up being significant, and I found myself constantly having to monitor it. I had better things to do, so I implemented a shop supply charge. Now I have a shop supply sales line on my P&L, and a shop supply COGS line as a sub-account of parts COGS. Now I can simply look to see if my supplies charge is in line with what we're spending. At my current shop supply rate, I made 50% GP on shop supplies last year. Probably could have done slightly better if all those items were billed individually, but at what expense to productivity while my guys are tracking those items, and me tracking them tracking those items? I'll take the 50% GP and be happy about it.

I don't use the online version, and I know it's considerably different than the stand alone version, so your mileage may vary. I also use a payroll service that generates my GL entry for me and we simply import it, so again, what I tell you may not apply to your situation. I don't believe QB will allow you to simply change an expense account to a COGS account. You'll have to create a COGS account for technician labor (not all payroll goes into COGS, only technicians), then pick a date for how far you want to go backward, like the first of the year or first of the month. Now simply open each payroll entry and change the account for your technician pay to the new Tech Pay COGS account. If you don't have your tech pay separated already in your payroll GL entry, you'll have to calculate tech pay for each period and make a new entry in the payroll transaction for tech pay, and reduce the expensed payroll by that same amount. Of course, anything you do will screw up your bank account reconciliation, so you'll have to undo and redo those. It should be really fast because you're not changing any amounts coming or going from your checking account. You're only changing where that amount shows up on your P&L. Hope this helps, or at least gets you started.

I've been telling people this for years. It's stunning the number of jobs that require proper training and a test to get certification to do the job. It's really crazy that working on cars for a living isn't one of them. Unskilled people masquerading as qualified technicians devalues the worth of what real technicians do. That being said, it's a double edge sword. Inviting the government to come in and decide who can do the job an who can't leads to stupidity like the Cosmetology board inspections to make sure a spray bottle with water in it has a label that says "Water". There are very few things in life that the government can't make worse, and charge us a wheelbarrow full of money for the privilege.

Thanks. I scanned through it, and it looks like a pain to deal with. I'll have to read it more thoroughly later. If I get the jist of it, it looks like CA has mandated "rest and recovery" breaks, and now mandates how much you must pay for the mandated breaks. Looks like you'd have to recalculate break period wages every week.

Funny you say that. I was actually looking at selling the BMW. I got a dog that comes to work with me and she's not allowed in the nice car, so I drive my old beater Audi. The 650 has become a rapidly depreciating garage queen. Makes sense to just bump all RO's. Couldn't see how you were going to determine reliably who would get a loaner prior to bidding the job.

You've convinced me to give it another go. I have some larger expenses coming up, so I won't pull the trigger this year, but next year I'll start building the fleet. I preach to people all the time to make it easy to do business with you. This is definitely part of that philosophy. Do you add 10% across the board to cover the cost of the fleet, or is it only when you'll be putting someone in a loaner?

That's a lot of loaners. I'm impressed. Obviously it's working for you much better than it did for me. I never shy away from spending money if I can put a number on the ROI. I'm not sure how you do that with a loaner fleet. The expense side is easy enough, but how do you put a number on the additional sales attributed to the loaners? Edit. You just answered my question. Thanks!