Charlie

All five of our shops are feeling the slowdown which came on at the start of October. Frankly, I welcome the drop in car count; it causes us to focus on the fundamentals in order to stay busy, think of it as a chance to sharpen the saw. When times are flush (April through September) we tend to get sloppy, we limit the number of waiters, and sometimes fail to follow through with our 'No Process.' I have always felt car count changes with the outside temperature, more so than Back to School, the Holidays, or Election cycles. When it's hot in Virginia, cars break and AC repairs become the priority. When it's cold, cars break and stressed electrical systems surface. My advice to anyone who may be worried about the drop in CC, is to return to the basics, listen to your recorded phone calls, engage with the community and soon we will have a cold blast that makes the phone ring. Take this time to get your team to be their best.

Good post, Joe. I would suggest a follow-up post covering the next step, the phase beyond empathy. What does the shop owner do next, how can they provide aid in various examples while not breaking the membrane between a business leader and team member. I feel many business owners naturally have empathetic responses, but also a healthy fear of "what's next" and for good reason. Mastering the next phase is where Culture is built.

I might also add, to attract the best; sometimes we need to clean house. When I consider my past, I can remember several periods where I had a talented technician, maybe even a leader, who was just toxic. You know the type, the one with all the wrong body language while you hold your morning huddle? Out of weakness, I allowed those rotten apples to hang on the branch way too long; after all, they were producing hours, right? A-players only work for A-players. When we allow Buzzards within our flock, we will never be able to soar with Eagles. Sorry about all the idioms 😎

That's an interesting approach; I like it. In general repair, we all strive for a 60% GP, which I believe is what you are stating. I have found that P&L statements can be very misleading; the proof lives in the balance sheet and the cash flow statement. I remember when my P&L looked great, but I never had enough cash to pay taxes on April 15th; where did it go? Going back to Joe's point: "The first step in achieving your required gross and net profit is understanding your numbers and establishing the correct labor and part margins. The next step is to find your business's inefficiencies that impact high production levels." Net profit is what we are after; it is what we need in order to grow our business. To have a great business, one that is sustainable, we are constantly refining our process and looking for intelligent opportunities.

Joe, I appreciate the fact that you are not just looking at the Labor Rate but also the operation as a whole. I believe we are all trying to reach a desired net profit, and how we get there involves hundreds of touchpoints. I would say that raising your labor rate is not the solution to low (or no) profitability; raising that rate is only part of the equation. Over the past few years, I have seen a dangerous level of arrogance creeping into our industry, a genuine threat. To achieve the actual profit we want/deserve, we must think like a CEO of a complex business. We must measure metrics throughout the process, looking for areas to cut costs and improve efficiencies. We must also listen to all recorded phone calls and perfect our technique rather than only adding more fuel. Here's a good analogy: How would a NASCAR team fare if, to win the Cup, they were hell-bent on more horsepower as the solution rather than suspension improvements, better aerodynamics, and improved traction? I know NASCAR governs everything, so my example is terrible, but we all get the point. Don't we?

Morning, Joe Our shops are affiliated with Technet, there are two primary reasons behind the why. 1. is the ability to offer a Nationwide Warranty, and 2. is financial. We maximize our rebates using early pay, online ordering and threshold spending. While I know our prices may not be the lowest, the rebates amount to 8% of total purchases, that is a significant amount. We are also using their equipment buyback program, over a 5 year period (if our spending remains above the threshold) we will have recouped $88,000 in equipment expense. This was negotiated using our financing, which was a preferable interest rate. While we are affiliated with Technet, we choose not to promote our affiliation in any way. We do not allow any signage, and promotions or posters, and no handouts. My brand is just that, and I see no advantage to share our efforts with any third party. It may be a personal gripe, but I dislike the name - Technet. That name only confuses the consumer, and we certainly want to avoid that. I am grateful for the affiliation, however I manage the relationship by my terms.

3 to 6 months of operating expenses, set aside in a stagnant account is hard to fathom to a small business owner who is trying to grow. I speak from experience, for the first 24 years, I leveraged everything to grow. I work well in stressful situations, and can find my way through the tough times. It seemed for years, the numbers in my checkbook balance were red. I accepted every risk in order to grow to three locations, purchasing the Real Estate along the way. The trick was always having good revenue, strong revenue can conceal a multitude of sins. For the first 24 years I operated with no cash in the bank (to speak of) while making payments on the prior years taxes. I was bold and lucky, some would say stupid.... I was very fortunate. Then, in 2019 I read Profit First, and it changed my world. The economic stresses of running this company have nearly vanished. We just purchased our fifth location, taxes are all paid with next years in the bank. The numbers in our Operating Account are now all black. When my bankers ask for the performance report, they almost can't believe it. Shifting how that revenue is handled, and changing my mindset has given our company strength and predictability. For anyone looking to sell their business, or to transfer operations to the next generation (that's all of us), having strong, predictable financials will change the multiplier, in many cases it doubles it. I suppose you could say, having strong, predictable financials is the best investment you will make. Was it necessary to operate the way I did for the first 24 years, in order to get where I am? I can't say for sure, but what I will say, is if I was to do it all over again, I would begin with the Profit First philosophy. Many of us start from nothing, with nothing, and we only know what we know. The lucky ones survive, and along the way, become enlightened, stimulating positive change. I only hope that for the next operator, it doesn't take 24 years to figure it out.

WOW, that's some powerful software. Nice!

Theta, I would caution you that you are entering into dangerous territory. You really want your rent at 7% in order to have strong net profits. If you own the property in a separate corporation, renting it at +/- 7% gross should deliver you a good cash flow to that property management corporation. If your shop was 8,000 sq ft at $40 per square you are looking at a monthly rent cost to the repair shop of $26,666. If that represents 15% of your gross then you need to consistently knock down $175,000 per month in gross revenue. In a down month, or God forbid a pandemic, that rent can become 35% of gross revenue and you are running in the red. We really don't want to forecast our businesses based on perfect situations, such as full parking lots and a full staff that shows up every day. Business is expected to be fluid and we must have the flexibility to ebb and flow.

First, I would caution you that I do not believe your people qualify to be paid salary, to read the rules which were revised last year CLICK HERE. This rule change exists because of situations just like yours (no offense). Here is what you are risking by skirting the rules. let's say you have a disgruntled employee who goes to the labor board and they determine that you were paying your people on a salary yet they did not qualify AND they were working more than 40 hours per week. The DOL goes back three years, determines the employees average rate of pay per hour and charges you with a fine and you now have to pay all employees time and a half for all overtime they worked. All of our shops operate differently, and sometimes convenience is really important but it can be abused. Another thing to consider is that we are are always training our customers what to expect, by being too convenient it is possible that your customers are abusing your graciousness and expecting too much from you and your people, possibly jeopardizing your most valuable asset; your employees. Only you can determine what is best for you. Protect yourself from being sued or atleast research the risk so you aren't surprised if it happens.

Have you ever searched various services or products from your PC, tablet and phone trying to figure out what happens when your customers do the same? I'm guessing we all have and came to the same conclusion: it's a moving target. As shop owners we are all thinking "How do people in need of my services find me online"? Once we know the answer to this question we know where to go to get found, but that answer doesn't seem to be clear. Google search is still the #1 lead generator but the playing field has changed, here is the best article I have ever seen which clearly describes what Google is (and was) doing. If you struggle like me to understand, this will clear up a little confusion. To read it, CLICK HERE. Scorpion Internet Marketing are the experts my company has recently teamed up with for web development and marketing.

We've been in business since 1995, steady growth year over year by doing what we know works. I also am aware it can be a mistake to do the same thing, over and over, just because it works without being open to change. Late last year my son joined the company as General Manager. He graduated from Virginia Military Institute with a degree in economics in 2014 then worked for the Target Corporation to develop his own style of leadership. When he joined American Pride Automotive he immediately looked for ways to implement meaningful change. After reading an article in Ratchet & Wrench he came to me toi discuss selling annual service packages to customers. Has anyone had any success selling such packages? If so, what is the incentive to the customer? I learned many years ago that two things motivate a sale, price or terms. We don't want to erode our margin but some say this idea has merit, hopefully we can learn a lesson or two from you other shop owners.

Funny you mention this. We sold used cars for the past 15 years but closed down that division (after much deliberation) in November 2017 for that very reason. Advertising these days is tied directly to several online companies: Autotrader, Cars.com, CarGurus, Craigslist and Ebay to name a few. Each of these companies earn revenue exclusively from the dealers yet to the public they pit the dealers against each other and make them compete on price. Then you have CarFax that again charges the dealer and is free to the consumer. They have trained the consumer to search for 1 owner, low mileage, accident free cars with extensive service records. What about the other 85% of inventory that costs the dealer daily. In a nutshell there are easily a dozen companies dipping into the flow of revenue and the poor dealer at the end is left with little to no profit. New car dealers today suffer the same consequence. Each new car dealer has 4 profit centers: New car sales, Used car sales, Warranty/recall work and service. What I have learned is that 70% of a new car dealers profit comes from general service and they can only hope to break even on new car sales. This is why you see dealer group consolidation and expansive service facilities. And ultimately this is why WE are not each others competition, our #1 competitor is the new car dealer.