Transmission Repair

I agree with that. We used YouTube videos of 2-3 minutes to show people what's up. After I Email or text them the final bid, over half would either text or Email me back the "When" question which opened up for the assumptive sale. I didn't sell that way on small-ticket repairs. I think most people feel the "how much" and "when" questions are all they need to know. In the '90s and early 2000s, we were in a different market area where there was a lot of nitpicking the final estimate/invoice. I can't help but think that a lot of that was attributed to there not being any YouTube around, but also because it was a low income area. Location selection is very important, which I didn't realize until I was in my 50s.

Being in the transmission business, virtually all of our business is a transactional business, rarely repeat business unless it's a warranty claim. I was rarely asked about our individual prices. People would only look at the bottom line, with tax. When we raised our labor prices, nobody knew or asked about it.

I did mental gymnastics for 7 months before I finally pulled the trigger to sell. The biggest part for me was the old adage, "Live rich, retire poor." Knowing I was going to retire on a fixed income was the scariest part for me. Luckily my wife, who is an accountant by trade, kept impeccable books. When you show your books (cash flow) to a prospective buyer, don't forget the "add backs". Those are expenses that would not be there if you weren't there. Those numbers flow directly down to the bottom line of cash flow. For example... Your income (including "hidden" but verifiable income) Any vehicle expenses Insurances and any other things you can think of. My add backs added slightly over $200K/yr. to the cash flow that my bottom line that I didn't previously show. A great thing to remember when selling your business. Another thing, to get an idea of what businesses like yours is going for, go to https://www.bizbuysell.com/ and take a look. Prices are all over the map because those are asking prices. In my case, the average Aamco franchise asking price was about $100K. I felt very lucky getting $330K for my business. Stay well, stay safe. Larry 🙂

I agree with you Joe. However some younger, less experienced shop owners think that way. I know I did. I used to be ignorant to job costing. What you speak of is really a mindset. Due to the way our transmission shop sold work, less than 5% would have a price objection. It's sort of a different business world when it comes to transmission repair. Before I learned about job costing and profitability, I sold all transmissions for the same price, $387.05, in the late 70s and early 80s because that's what my ex-boss did. When I started doing job costing, there were some transmissions that I was actually LOOSING MONEY on. Slowly, I started charging labor plus parts based on my costs, then a whole new world opened up to me. Imagine that; by simply doing what G/R shops have been doing forever, I finally started turning a profit. I was young and ignorant about business before that. Just today I read a news story about Amazon charging their sellers an additional inflation & fuel surcharge of 5% to the already high 15% commission on sales. That means Amazon charges sellers 20% of their gross revenue. Amazon's New 5% Surcharge I'm sure sellers' prices will soon reflect the price increase, it's inevitable. In my industry, late model transmission prices have gone through the roof. But when coupled with the 30% rise in used car prices, many are simply being forced into paying $4k-$5K and more for a transmission because that's the least costly of all alternatives. I think we should all revisit our pricing structure before inflation and fuel costs pushes us out of business.

This is a 2-part article out of GEARS Magazine, a transmission trade publication from June 2015. It's written by a retired multi-transmission shop owner by the name of Thom Tschetter. He still writes for the magazine. He used to own 10 transmission shops in the greater Seattle area before he retired. I think it's sound advice. The title for the article is When Enough Is Enough. The article revolves around 3 crucial questions regarding retirement... Have I had enough? Do I have enough? Will I have enough to do? Here are links to the article: When Enough Is Enough; part 1 When Enough Is Enough; part 2

Thank you. After 30 years of service, my dad retired as vice-president of the 3rd largest steel company in the U.S. back in the 1980s. He was wholly dependent of his company pension and S.S. for retirement. The pension fund ran out of money in the 1990s, went bankrupt, and a pension fund insurance policy took over. The sad part was when he got a letter from the insurance company stating they were now going to fund his monthly pension payment. Sounded good at first, till he received another letter telling him his pension payments were going to get cut by 50%. OUCH! That took place when the whole country was in the process of dumping pension plans because they simply aren't sustainable. It's a pyramid/Ponzi scheme that eventually fails. Nowadays, we have to make our own retirement. I'm retired, and the best advice I can give any shop owner is they need to buy the shop real estate. Shop owners won't make enough on the sale of their business to fully retire, but they will with the sale of the shop real estate. That's what I did.

As Larry Kudlow says, "The cavalry is coming." talking about the November elections. I'm an open minded voter who votes for the best person for the job. However, somehow, I end up voting Republican 90% of the time. Here's the GOOD NEWS... There are currently 31 House Democrats who are not going to run for office come the mid-term elections in November. Most are retiring, but not all. I think that will be a lot better for our country. Give a 30-second listen to this: Biden’s sinking popularity points to GOP sweep in fall I find it odd how we can elect a new president (Trump's full of it, the vote wasn't "stolen") to office and everything go to hell in a handbasket so quickly and affect our industry so much. I still stay in close contact with a couple of local transmission shops and they both tell me business is down. The two shops and myself are in the Salt Lake City market area.

Joe, I fully agree with you. However, how a shop charges for those items is up to the discretion of the owner or manager. I, personally, never have line items that aren't either parts and labor because I don't like explaining "extra charges". I chose to charge for those things by factoring it into the labor we charge. As I've posted before, we charge by the job, not by the hour. 90%+ of our jobs are repetitive canned jobs. However, when calculating the labor on a new type of transmission or one we don't have canned yet, we use $125/hr. to calculate the price of the job. We went to $125/hr. "behind the scenes", so to speak. On the rare occasion somebody would ask our hourly shop labor rate, I would respond with "We don't charge by the hour, we charge by the job." You have to remember I sold our business in 2015 and I set that labor rate way back in 2013, 9 years ago at the time of this writing. At the time, I knew we were the highest in our market area for hourly labor charges, but virtually nobody knew it. Think about it, no consumer knows the price of any transmission work. You can't price transmission parts at Auto Zone, only complete units. Nobody walks in with their own parts or rebuild kit. I feel our situation was rather unique in comparison to the majority of the industry. We intentionally located in a very affluent area of the Salt Lake Valley where there were virtually no price objections. I doubt that most shops could do what we did.

Jim, Because we are a transmission-only repair shop 90% of our work is repetitive... very repetitive. There's even stuff that I can almost predict to break. Like Joe says, I factor stuff that breaks and shop supplies into every canned job; even Brakleen (we use hexane). Occasionally, we see a new transmission or one we don't have a lot of experience on and the standard factoring is automatically factored in. I pride myself on my estimates being dead-on accurate. That's mainly because we don't give written estimates until an RDI. (Remove, Disassemble, & Inspect) If we find something after the estimate, we eat it. Once we have the transmission out and apart, it's really hard to miss something. Actually, in our shop, the word "Estimate" is a misnomer.

How often have you been met with the sales objection of "I'll just buy another car?" when trying to close a big ticket repair? Being a transmission-only repair shop, we heard this sales objection quite often. It used to be anyone could buy a fairly decent used vehicle for $5K-$10K and never look back. Everything automotive-related costs a lot more now. Used vehicles, new vehicles, and yes... transmission repair. Today, it's not uncommon for a transmission to run $5K or more. 5, 6, 7, 8, 9, & 10 speed transmissions are what modern vehicles are equipped with. The average price for a good used vehicle today is $20K or more. According to JD Power, used vehicle prices have increased in price more than new vehicles, or more, as illustrated in the chart below. This chart shows the AVERAGE change in selling price of both new and used vehicles. My wife and I purchased a brand new fully loaded RAV4 Hybrid last year. We paid slightly over $50K. A few years ago, that same vehicle was only $40K. Whether new or used, people are faced with sticker shock when they go actively looking for another vehicle. When any shop is faced with the sales objection of "I'll just buy another car.", we need to bring our customer into the modern real world reality that the sales tax alone on another vehicle is often just as much or higher than the price of the big-ticket repair we're trying close on. 1:35 https://youtu.be/3vlFp-3wGzE

As I've posted before, it's my belief is that the sale of an automotive business isn't enough to fully retire long-term. However, I just watched a documentary put out by Detroit Public Television titled When I'm 65 that is a good retirement history lesson as well as good information for Millennials and Gen X'ers. Its content is a little too late for baby boomers. If I had to give one piece of advice to a younger shop owner (I'm currently 67) it would be to buy your shop's real estate. If it's a good location with ample traffic count, the later sale of your shop could fully fund your retirement as it did me. With that being said, here's the link to the retirement documentary, When I'm 65.

I've posted about this before, but here are more benefits of using QuickBooks Desktop Pro as your accounting software. I started “playing” Quickbooks Pro Desktop in 1999 while I was using a transmission shop-specific shop management program. I had heard of QB before and thought it was more for accountants than a shop owner. As I used it more and more I discovered so many customizable features, I likened it to more of a minefield of rabbit holes. On top of that, I was forced to learn accounting. I didn’t like it at first, but in the end, it turned out to be a blessing in disguise. Fast forward a few years and I had somehow managed to design my own estimates, repair orders, reports, and chart of accounts. I eventually abandoned my shop management program (and the monthly payments) for QB. Out of all the good things I could say about QB, the most important benefit was the ability to print a highly accurate profit & loss statement along with a balance sheet in real time. I didn’t have to wait days, weeks, or months for an accountant to supply these to me. The accountant’s P&L and balance sheet were effectively an obituary of how we were doing in the distant past, not an accurate reflection of up to the minute in real time. I could accurately measure how we were doing day to day, week to week, and month to month with a few mouse clicks. Unbeknownst to me, over the years QB had become the gold standard of small business accounting. Our CPA loved it and charged less than his other non-QB clients. Lastly, not only was I free of a monthly fee for shop management software, I was free from accountant fees. The only thing that cost was our CPA for the annual tax return. All in all, I felt like I was in more control.

Last year my wife and I purchased a fully loaded 2021 Toyota RAV4 Hybrid with all the bells and whistles. Just for a frame of reference, what started out as a base price of $37K ended up being slightly over $53K. Ouch. One of the first things I noticed was the power of the engine was proportionate to the 2.5L engine size. It seemed to have the power of a larger V-6 than the little 2.5L 4 cylinder. I was curious so I set out on a research quest. The first thing I learned was it was an Atkinson Cycle engine, not the Otto Cycle I've known all my life. What was weird was the intake stroke was shorter than the exhaust stroke. It turns out there's this mechanical linkage between the rod and the crank that allows for this. Here's the part that blew my mind: The Atkinson Cycle engine completes all 4 cycles (intake, compression, power, & exhaust) in just ONE revolution of the crankshaft, not two. It's as if it's a 2-stroke, but not. Although the crank only makes 1 revolution, the piston goes up and down twice. Here's an animation of the Atkinson engine... 2:11

Excellent post, Joe. Many shop owners don't consider factoring in certain costs to every job. For instance, shop supplies. Most shops I know have shop supplies as a separate line item in a R.O. In those cases, many shops track the shop supply account. I just factor it in to what we bill for labor. Many headaches can be solved by just what you suggest.

We are a transmission repair shop. We don't have a big issue about broken parts, nor have a sign. The biggest "broken parts problem" for us is oxygen sensors that throw a code AFTER the repair. This almost always happens on vehicle we have to drop the exhaust on. O2 sensors like light bulbs; if they get bumped, then POOF they're gone. If we don't drop the exhaust; no problem. I figured I couldn't make a sign for 100% of my customers for issues that happen to <10% of our customers. What to do? I came up with a video on the shop's YouTube channel that fully explains the situation. When I would tell customers they need oxygen sensors (whether they objected or not) I would send them a link to the video. Never had a problem since. Why High Mileage O2 Sensors Fail After Transmission Work

I've used 3 different shop management programs over the years, including Mitchell. Around 2000, I started using QuickBooks in lieu of my shop management program. For a couple of years, I ran both programs in parallel because I didn't know QB very well. I slowly learned that I could tailor QB to the way I ran our shop, not the other way around. I discovered that I could design my own estimates, repair orders, reports, chart of accounts, not to mention accounting. It was a revelation to me. I'm speaking of QuickBooks Pro Desktop, not the online version. To me, the online version is a very "lite" version of QB Desktop. The more I used it, the more I learned I could do with it. I've attached a sample estimate I designed. To be clear, we are a transmission specialty repair shop, not GR. No more monthly fees or having somebody holding your data hostage. While there IS A HUGE learning curve, but I found it's well worth it. QuickBooks is the gold standard when it comes to small business accounting. Although my wife is an accountant, we still had a CPA. We could simply email a copy or our books to the CPA and he loved it. Actually, he gave us a discounted price because we were less hassle. As far as I'm concerned, QB is the best shop software. For the first year, I paid a small fee for customer support. After that, I just took the ball and ran. Drew Clarke Estimate_Redacted.pdf

Just in... The Google My Business app is being replaced. Replaced with what, a new app? No, Google My Business is being replaced by Google Maps.

Let me give you the backstory if I haven't written this before. I had 2 shops before this one. In both instances, everything started off going great guns. But after a while, the bottom line kept shrinking. I kept thinking, "If I can just hang on a little longer, I can turn it around." Eventually, the bottom line kept going more to the negative more and more. In the end, I had nothing to sell but used equipment because I only leased the property. 😞 My 3rd and last shop was the highest grossing transmission shop in the state and 5th in the nation. One year, we had a staggering 27% bottom line. But like the previous 2 shops, that percentage started to shrink. I knew from previous experience, it was headed toward ZERO if tried to hang on. I decided to sell it and lease the property because I did own it. Unlike G/R shops, customer lists, goodwill, blue sky, "the business", etc. has little if any value. Transmission repair is only a once or twice in a lifetime event. Believe it or not, the most common "repeat business" is warranty work. Customers who have multiple transmission failures is very rare. Most experienced transmission shop operators fear a flood of warranty work on jobs they didn't do in the first place. The average Aamco on BizBuySell was going for $110K at the time of the sale of the shop. Mine sold for $337K with $11K/mo. lease payments. However, as Joe stated before, that was enough to only semi-retire. Full retirement only came when we sold the real estate for $2.3M.

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Me too. Before that, I was hooked up with Larry Kuperman was also in San Diego. He was an attorney that used to work for California's BAR enforcement. His training was more transmission-specific. I quickly learned sales is sales. It's not about a big ticket repair. I started selling online. I would shoot a quikey 3-minute video and upload the video to YouTube and Email it to the customer. Super sales too.. I wouldn't do it on small ticket repairs. Check out my YouTube video channel Some of my later videos' are family-related, but 2,000+ are big-ticket sales related. https://youtube.com/user/LarryBloodworth In hour heyday, the ARO was $3,500+ and over /$1.2M/yr. We only wrote 25 tickets a week, G/R does that in one day.

Bob Cooper was instrumental to opening my eyes. It's more about thinking than doing.

Thanks, pal!

I was born and raised in Houston. My ex-wife bitched and moaned how much I was "wasting" on such classes, seminars, etc. Needless to say, that's why she is my ex. My current wife, Lorraine, met on Match.com. Holy cow! She has 2 degrees, one in accounting and another one economics. My ex, needless to say, was a financial idiot. I love to be married to a home-grown LDS gal that knows her numbers! I moved to Utah 34 years ago and I haven't looked back since. Mellow people, low crime, very few crazy drivers. I live in a suburb of Salt Lake City, Draper. Check out these demographics... Demographics | Draper City, UT - Official Website AND, another thing... The state prison is about to move and freeing up over 600 acres for high-tech development. They are naming it "Silicone Slopes." The current prison is right across from me. Too wild IMHO. When I go to sell a job, if they don't have the money, they damned sure have the credit.

I didn't ever start making any real money until I started hiring and/or attending seminars about sales, business, and management. Till then, as Michael Gerber so famously said, I was working IN my business and not ON my business. It took me a while to understand that the technically-only automotive sites are technicians working IN their business. Many members were 1 or 2 man operations. I just flat picked the wrong audience. Oh, well... we all learn something new everyday.

It's comfortable for me, Joe. I was banned from 2 other technical automotive sites for talking too much business. 😞 I found a "home". Thanks for all you do!