AndersonAuto

I listened to Pre-suasion first. Should have done Influence first.

Best way I've found to jump start business? Bring your own car into the shop, and tear it apart so it's stranded on the rack and tying up a bay. The shop will instantly fill and you'll be in desperate need of that rack. Every friggin' time.

My favorite story about me learning how the way you ask a question dramatically influences the outcome. I was a young Marine hanging out in bars on the weekend hoping to find a young lady who would like to spend a little time together. What I tried many times with almost no success. Chat up a girl, and deliver this stunning line: "Would you like to go out on a date with me sometime?" She had to wash her hair or something equally urgent for the foreseeable future. Then, without realizing it, I stumbled upon the difference between asking a yes question and a no question. First, the setup. Me: "You know, you're a lot of fun. I really like hanging out with you!" Her: "Thanks!" Me: "We should go out sometime, shouldn't we?" Her: "Yeah, we should!" 100% of the time. I was very fortunate to have recognized what I did differently to cause the outcome. It was then that I realized that everyone needs sales training in their life.

You should write out your entire business plan and philosophy on what to own, and how to best own it, employment, finding great managers. All of it. I'm not kidding. I'd buy a copy, and not cheap either.

Zurich is good. I'm currently with Federated, who are equally good. Your garage keepers liability is going to be based on your sales or expected sales, and the value of the vehicles under your control. My garage keepers runs me about $850 a month, but yours should be considerably lower on a new shop with lower sales.

I had a soft January. I was 30K down from January '16, but January '16 was an exceptional January. Since then we've recovered and we're up 26K over last year, and my GP% is up 6% as well. Overall car count is up 7% YTD. This month feels soft, but the first part of April always does. We're up 16% month to date over last year, but I need more to continue making up for January and hit my 11% increase over last year by the end of the year. On cheap oil change marketing I might add. 😀

Influence by Robert Cialindi. It's about the psychology of why we do or buy certain things and not others, and the triggers that cause us to do it. Listened to it in January. About to do it again because there's just so much great stuff in there.

What's your loaner car policy, and do you have a written loaner agreement for the customer you'd like to share? I used to do loaner cars, but I never had a strong policy or written agreement for the customer to sign. As a result I ended up with a number of customers who thought it was OK to take a loaner out for a coupon oil change, and bring it back out of gas. After the second time my Cadillac came back needing a new front clip, I'd had enough and bought a shuttle car. Now if someone really needs a loaner, I'm happy to drive them to enterprise or hertz and get them a great rate that I've negotiated with them. I know they can be done successfully, but in the chaos of rapid growth, it was something I never did correctly.

Great designs overall. I'm not a fan of the cursive font. It would be hard to read from the road at any kind of speed. I like Alex's pick and Harry's pick. Alex's pick certainly conveys the message better than most, Harry's pick is just clean and easy on the eyes. I'd want to scale a few of those up and see what they look like from the road. How eye catching is it when driving by and not thinking about auto repair? I think I might also experiment with other colors. The colors you picked are easy on the eyes, but may blend into the background a little too much. I'd want a bold color that stands out. It seems that most of the time logo designers think about how it's going to look on letterhead, but where it really has to look good is on the single most expensive piece of advertising you'll buy. The sign by the road.

I'm interested in knowing if he sued you under CA law, or if it was under a DOL rule. Which law exactly? I'd like to read it.

You're absolutely right, the bottom line is the bottom line no matter if your labor is COGS or an expense. For that matter, you can expense your parts purchases too, the bottom line won't change. I just have a hard time imagining how doing so makes management of the business easier. Maybe it's just a matter of no one explaining it to me in a way that makes more sense to expense than COGS. I used to struggle with discounts as well. I listened to all the management experts who told me I'd get nothing but the wrong customer who will leave you at the drop of a hat. I've found that I get the same great customers I've always had, and no more bottom feeders than I've always had. The shops that are a black eye to the industry will always be a black eye. We have a chain in KC that was started by a guy who was some sort of management for Midas. He's all about discounts, all the time. People hate his shops mostly for doing crappy work, but also because of what he advertises for a discount. If I advertise a $29.95 oil change, there's an excellent chance that you're getting out of here for $29.95 plus tax. But if I advertise a $59.95 brake job like he does, there's an almost 0% chance of getting out of there for $60. Good customers know that $60 is an unrealistically low price for a quality brake job and won't go to his shop. Bottom feeders salivate at the sight of such an ad, then are pissed when they're hit with an estimate for $700 brake job.

It's possible that I can be a bit opinionated. 😀 At the same time, it's exasperating to see so many shop owners say that you can't possibly make any money with cheap oil changes, and that you'll only attract the "wrong" customers. I've turned cheap oil changes into a thriving business with a great bottom line. The last 5 years have been fantastic compared to the previous 15 years of working much harder for much less. Since I've seen a lot of data from other shops, I know that my customers are as loyal and spend as much as shops that refuse to use cheap oil changes as a marketing tool. Cheap oil changes are nothing but a tool to get people to notice you. I think it's a mistake to see it as anything other than that. I'd love to see the Bosch trainer's reasoning for taking technician labor out of COGS. If you're not paying on flat rate, I can see it, but it makes way more sense to me to include flat rate techs in COGS. Every management system I've seen also calculates labor as COGS by default when looking at sales summaries.

I actually had my numbers confused when I said I don't pull in 50 a month. 70ish is normal. I was thinking of the numbers from my mailers, which is about 35-40 per month. Most of the rest are from internet / website marketing, and a few more from other sources like referral etc. Sorry about that. A customer is considered lost when I don't see them for 13 months.

I agree that cars need much less maintenance per mile driven, but we all drive a lot more miles than we used to. My dad scrapped his 10 year old car back in 1979 with 129,000 miles on it, and he was happy with how the car had done for him. I remember him saying that "the old girl doesn't owe me a dime". Now that's the average car we see in the shop, and people would be pissed if it was ready for the scrapper at that mileage. People keep their cars longer, and drive them further, giving us more opportunity to service that car later in it's life. You certainly don't sell mufflers on 3 year old cars anymore, but those cars still have a lot of life left in them at 150,000 miles, and a lot of maintenance that will need to be done to keep them on the road. The key is identifying the repair needs, which is where the oil change comes in.

I think you have a golden opportunity here. You have a bunch of people who've been in your shop, know you, and like you. They have another shop now, but after seeing data from a bunch of other shops, I know that every shop loses a lot more customers than it thinks it does. For instance, last month I lost 87 customers, and gained 73. A net loss for me. That means for every tire only customer you have, they're a customer at a shop that's very likely to lose them in the next year or two. All you have to do is pick them up as a repair customer as well as a tire customer. I'd be in front of them every month, literally for years. Then on the day they happen to be mad at their current shop, guess who's mailer they have in their hand?

My thought on the area being oversaturated with repair shops is, where are your 50 new customers a month coming from? How can an area have too many repair bays for the population, yet you pull 50 NEW customers a month? Don't they already have a shop? I feel like I do pretty well getting new customers, and I don't pull that many in a town of 130,000. Yet at the same time, my revenue and profits are growing. Something doesn't add up.

Ideally, if someone needed to order a part there would be three people involved. One person needs the part. The second person orders the part. The third person pays for the part. The person paying for the part doesn't pay for the part until they can see that the person who needed the part got the part, and checks the paperwork from the second person to make sure there was a legitimate reason to have the part. I don't know anyone who has reached this level of separation, but at my shop we're close, every single part that gets ordered must be input into the shop management system. Even shop supplies that the advisors order from a part store. That data is imported to QB every day by the bookkeeper. If the bookkeeper gets a part bill that doesn't have a corresponding entry into the management system, she raises hell. Same is true with returns. RO Writer has a great built in return system. Any part that needs to be returned gets returned through ROW. A part return slip is printed and ROW keeps track of what parts have been returned. We put the return slip in a bin for each vendor, and require that the drivers check their bin and return any parts immediately. The driver signs our return slip, in addition to filling out the one he does for the parts store. When we get the credit slip, the advisors pull out the stack of return slips and match them to the credits, the mark them as being credited in ROW. The bookkeeper of course sees all of this when she imports the data, and everything better match or there's hell to pay. She really hates it when she has to fix errors in her books. The bookkeeper has the greatest opportunity to steal from me. She and I go through all the books monthly, and of course I just have a glance at the bank account every few days. Still, she could clean me out and be gone to Mexico before I knew what happened. Good thing I trust her.

Hmmm. I have my cover photo selected and it stays put. I didn't know you could rotate them.

Here's what my plan would be going forward: Name change. Aggressive marketing campaign targeting everyone who's been in your shop in the last 3 years, but hit them with a "new customer" acquisition piece that touts repair instead of tires. Map where these customers come from, and hit all their neighbors too. Customer retention program like a loyalty rewards program. I disagree that your decline is a result of too many bays in the area. Those bays wouldn't have been built if there wasn't a market for them. You need to go get your piece of the market. Another thing I've learned through analyzing the numbers is that we lose a shocking number of customers every year. We see a lot of the same faces so mentally we think our customers are loyal, but then doing the data mining, we find out how many faces we forgot that we haven't seen. Especially one and done customers. We see them one time, how are we supposed to remember them a year later when they officially become a lost customer? Customers are not customers until we've seen them 4 times. My mistake in the past was to only send special offers to current customers who have spent more than $200 over the past 12 months, while the one time customers typically spent less than that. Now I include everyone.

Sitting behind Walmart is definitely better than my first location. I was also on a dead end, but in the back of an industrial park. If you're putting 50 new customers on the books each month, then maybe the best thing is to concentrate on customer retention. A rewards program maybe? With that many new customers a month, I suspect most of them are tires only customers. If true, what can you do to convert them to full service customers? If 70% of your biz is service work, what if your name became "Defer Tire & Auto Repair"? It's possible that a lot of the new customers you're putting on the books only think of you as a tire shop.

Do you have one line item in your books for salaries, or is it broken down into sub-accounts for each type employee? If you break each one out, then it's easier to manage by comparing labor cost to labor sales. This is of course assuming that you break out tire sales from your service work. If you're selling tires at an "installed" price, then expensing the tire guys is the best way because there's no direct correlation between the tire sale and the employee pay. Because service techs are billed to the customer per hour, there is a direct correlation between tech pay can the charge to the customer. In this case, COGS makes sense. This is not to say that you're doing it wrong. Either way you do it, the bottom line is exactly the same. It's just that I'm super lazy and would rather not have to do any digging to see whether my advisors are cutting labor charges to get the sale. Your management system will likely give you this info as well, but I've found that very often the management system doesn't agree 100% with my P&L. In the end, the P&L is the one that matters, so I want to make it as easy as I can.

I think it's going to boil down to a very aggressive marketing plan. I poked around on google earth in Streetsboro, and it's a tiny town with some pretty big businesses. Dealerships, Walmart, all those bigger buildings in the industrial park across from Walmart. They're all pulling employees and customers from somewhere. They can't all survive on 15,000 people. Plus, you're behind Walmart on a dead end road. Your traffic count past your building has to be non-existent. The dealerships etc. all have great frontage to high traffic count roads. The trick is going to be figuring out exactly where the dealerships and walmart customers come from, and hit them with very aggressive sustained marketing program. You'll need to give them a good reason to drive past the places that they see every day, and to your shop. Looking at your web site, you've got some pretty good offers that scroll through on your front page. The only thing I would suggest is that you pull the oil change and free rotate off the scrolling ads and put them as a permanent stand alone right in their face. I'd also change it from $10 off to whatever the price is, and make sure the price is very attractive. I love your mobile web site. Extremely simple. Easy to call you or get directions to you, which is the entire point of a mobile site. I might pull the "quote" button and make them call you. Unless you've been able to track this and see a very positive relationship to people actually coming in the door based on the online quote. I'd rather that my service advisor have a crack at getting the appointment than just letting the customer base the whole decision on a number. I'd replace the "quote" button with an "appointment" button. You've got a way to set an appointment on your main web site, but can't do it on the phone. I think I'd also put the oil change offer front and center on the mobile site as well. Also, if you move them to an appointment page on their phone, put a call button at the top of the appointment page in case they decide not to fill out the form. On your Google plus business page I'd change the main picture from the interior shop photo to the street view. Your customers don't care what the inside looks like, they want to know what building they're looking for. Now for the biggie. Your business hours suck. NTB down the street is open earlier than you, open much later than you, AND has great street visibility. If a customer needs tires, and doesn't have to take off work to get it done, they're going to NTB. I'm sure you can kick their ass on quality and service, but customers are increasingly driven by convenience. Changing my hours from 8-5:30 five days a week to 7-7 six days a week was good for a full 20% increase in revenue.

You're correct, this is the traditional method, and it's the reason I tell people not to allow their accountant to set up your chart of accounts. Most accountants don't know how an auto shop works, and their main goal is to make it easy to do your taxes, not make it easy to manage your business. Automotive shops charge for labor based on billable hours. If you're paying your technicians on flat rate, which I am, then they are a COGS. Even if they're hourly, you make assumptions about their average productivity and your expected margin per labor hour, so you can still make them COGS. For each billable hour you have a cost that represents a percentage of your charged labor. If you calculate your technician labor as a COGS, then it's very easy to see if your labor rate is correct. Just in the same way that you calculate what your part charge should be based on your desired parts margin, you can calculate what your labor rate should be based on your desired labor margin. If you have the tech labor lumped in with your SA and your lube dude under "Salaries" like an accountant would want, you can't manage properly from your P&L. I can pull a P&L and use my calculator for about 30 seconds to see if my labor being billed to the customer is consistent with my desired labor margin. I see that you're a tire dealer, so you probably don't bill out a lot of your tech wages on a billable hour basis, so expensing them would be appropriate.

You're calculating the GP correctly. GP = sales - direct cost (parts cost, labor cost, sublet cost). You never include tax in this equation because it's neither a profit center or an expense. It's a pass through. Your rent, insurance, utilities, SA cost, advertising, etc. etc. are all expenses. Your net profit is your GP dollars minus your expenses. When analyzing your business, you have two sides to look at. First, did you make enough money on the sale? Are the percentages that you're marking up your parts and your labor enough to cover your expenses plus give you a little in your pocket? Second, how much are your expenses as a percentage of your sales? Quickbooks will actually do this for you in your P&L report if you select "customize". Then you can look through your expenses as a percentage of sales, and see where you can trim and were you can't. For instance, most of us can't do anything about our rent expense. The only way to reduce your rent factor is to increase your sales. Other things like uniforms are usually up for negotiation. There are also two types of expenses. Fixed expenses and variable expenses. Fixed expenses never change, or change very little, based on sales. If you sell $10 or $10,000, your rent is your rent. Others are variable. For instance my advisors are on a commission pay plan. The more they sell the more they make, so my SA cost is a variable expense. There are ways to increase your GP without getting out of line on your sale price, like negotiating a better price structure with your parts suppliers. You can also get cheaper techs, but that usually comes with a significant quality cost. With this info in hand you can design a nice spreadsheet with your break even points and profitability in a nice graph to look at. One line on the graph will be expenses and the other will be GP. At zero sales your expense line will equal your fixed expenses, and your GP will be at zero. As sales increase, your expense line will increase by the variable expenses as a percentage of the sale, and the GP$ line will increase at a rate equal to your GP%. Where the lines cross, that's your break even sales. Any sales above that nets you the spread between expenses and GP.

Jay, you're a badass. Balls of steel and put your head down and get it done. Failure is never an option. Love it. Don't encourage the inspection process, require it. And require them to do the same level of inspection that your ace tech does. They'll be amazed that suddenly they're ALWAYS busy. And don't forget to have the advisor always prep the customer mentally for the inspection result. It starts when the customer hands him the keys. Say these exact words: "While your car is in the shop, I'll have my guys look it over and make sure everything is okay for you." You'll get a much higher closing ratio, and higher ARO for it.