Joe Marconi

Another amazing podcast, a must listen to! As always!

Great advice for all!

Your comments truly resonate with me, and I feel the same way. Shop owners have a moral obligation to be profitable. Shop owners need to feel good about themselves, pay their employees well, earn a profit for future growth, and take care of their families. Too many shop owners are caught up in the day to day. They need to reach out for help, get a coach, get management training. Know the numbers, build more profit. They will sleep better at night too!

I think we would all be better if they adopted your strategy!

Great perspective, and great article too!

Five Proven Tips to Improve Your Bottom Line By Joe Marconi, an Elite Blog - A recent Small Business Administration (SBA) report revealed that one of the main reasons for small business failure is due to a lack of financial knowledge. Another survey, also conducted by the SBA, found that 83% of failed business owners stated that their failure was due to cash flow problems. While there are many facets to operating a successful auto repair business, one thing that is common to all is that it needs to be profitable. The fact is that too many auto repair shops struggle financially. The sad news is that most of them actually have a booming business that is clouded by their financial woes. The typical auto repair shop has consistent car counts, a calendar booked out for at least a few days, and in many cases, booked a week or more. Where so many auto shop owners fall short is understanding their financials, more specifically, not focusing enough on generating consistent profit and improving cash flow. In this blog, I will outline five proven tips to help you increase your bottom-line profit and improve cash flow. Becoming financially stable also improves your personal life and the lives of those you employ. Understand Your Financial Reports. Establish Your Financial Goals There are three main accounting reports that you should have a basic knowledge of: The profit and loss statement, the cash flow statement, and the balance sheet. Most auto repair shops either have an in-house bookkeeper or an accountant to generate these reports. It doesn’t matter who updates and runs these reports, as long as they are reviewed by you, the shop owner, periodically. Have regular meetings with either your bookkeeper or accountant and become familiar with your financial reports. You do not have to understand these reports as well as your bookkeeper or your accountant does. However, the more knowledgeable you are about your financial reports, the better financial decisions you will make, which will make a difference to your bottom line. Performing an in-depth analysis of your financial reports will give you valuable information on the financial strengths and weaknesses of your company. This information is crucial when establishing your financial goals. Having financial goals is essential to your company’s future. Share your goals with your entire team and brainstorm collectively to find ways to achieve them. Focus on Gross Profit, Not Total Sales When shop owners get together they typically share their year-over-year sales increases. While total sales revenue is important, it doesn’t tell the entire story. And it may not reflect the true financial health of your company. If you had a choice, would you rather have a 1.5-million-dollar business that produces a net profit of $50,000, or a one-million-dollar business that nets a profit of $175,000? The answer is obvious. Why? Your bottom line net profit is what truly matters, not the total sales number. To have a healthy net profit requires that you have a healthy bottom line. Gross profit is the amount of money left over from your total sales after paying your technicians and paying all the costs of sales items for all work performed. The higher the gross profit, the higher the net profit. Gross profit is important because it pays for all other operating expenses and loans. After paying all your operating expenses, what’s left over is your net profit. Depending on your business model, typically, auto repair shops look to attain a net profit of 10% to 25%. Improving your bottom line requires that you properly establish your labor and part profit margins. While there are benchmarks for the average auto repair business, the margins you set for your company may be different. With that said, we usually want to see 40% to 55% part profit, and a 70%-plus labor margin. A good number to shoot for is a 60% overall gross profit for parts and labor. One more thing to consider when calculating your gross profit requirement: Your operating expenses need to be in line too. Keeping your expenses in line by cutting excess and waste will lower your operating expenses and increase your net profit. If you are not sure how to calculate your margins properly or need help with maintaining your expenses, speak to your accountant, or seek help from a qualified business coach. Improve Quality and Total Shop Production During the Great Depression of the 1930s, Chrysler gained market share and financial stability by improving production. While other car companies were looking for ways to cut costs, Chrysler made a bold decision to focus on building more affordable cars and improving overall efficiencies. Their strategy was to produce more cars with the same labor costs. This ultimately resulted in increased sales and profits. It also propelled Chrysler to become known as one of the “Big Three” automakers, along with General Motors and Ford. Improving workflow production in your auto repair shop by utilizing the same direct labor cost will result in increased sales and profits. Essentially, improving productivity by using your current workforce means more work is done in a given period. Shop owners, take a long hard look at your overall workflow processes. Track all the steps your technicians are taking throughout the day. Are there wasted steps that can be eliminated? Are there bottlenecks in the service advisor process? Are your service advisors properly trained in the art of sales, and in delivering exceptional customer service? Improving your total shop production and quality will result in increased profits. One last word on the topic of production; look at your shop layout. Are tools, equipment, and information systems easily accessed? And let’s not forget how continuous training for all employees is a key component in delivering consistently high levels of quality and productivity. Build More Profitable Estimates Years ago, we used to say that technicians have control over their efficiency. This may have been true to some extent, but today there are too many variables. Let me give you an example. Your service advisor wants to sell exhaust manifolds on a Chevy pickup truck. The published labor time in her business systems calls for 1.7 hours per side. However, all the studs are rusted away which will require drilling and installing new studs, which is probably a 6-hour job, or more. If the wrong labor time is sold, there will be no way the technician can complete this job in the labor time sold to the customer. Sometimes you need to close the book, and openly discuss with your technicians the true labor time based on experience and the individual scenario. There are too many published labor times that are not correct. Increasing billed labor hours is perhaps one of the best ways to improve your bottom line. Control Account Receivables and Inventory Controlling your account receivables will not affect your gross or net profit. However, it will impact cash flow. Essentially, high account receivables reduce the amount of cash on hand. Available cash and profit are not the same. Your shop can generate a net profit of $25,000 for the month, but if your account receivables are $35,000, you will have a $10,000 shortfall of cash for that month. Most auto repair shops these days do not have an extensive inventory. Exceptions are repair shops that stock tires and shops located in extremely rural areas. Even if your inventory is low, pay attention to it. Limit your inventory to only those items that move fast. Having old stock sitting on a shelf reduces your available cash. Another important task is to ensure that your inventory pricing is up to date. Charging out-of-date prices are losses that go under the financial radar and will hurt your bottom line. Conclusion Most shop owners have their vision of a successfully-run business. This vision includes providing a healthy work environment for their employees, providing training and equipment, and having a clean and customer-friendly facility. Additionally, shop owners want to provide a benefits and pay package that attracts and retains the best employees. And of course, the owner must be able to earn a respectable wage too. All this requires profit. At Elite, we understand what auto shop owners desire from their businesses. We not only provide the business tools, one-on-one coaching, service advisor training, and peer groups that we know will help take your company to the next level, but we accomplish this in the most honest and ethical way. View full article

Isn’t It Time We Rethink What a Master Level Technician Is? By Joe Marconi, an Elite Worldwide Blog - My roots in the automotive industry go back to the 1970s working in a small 2-bay auto repair shop. As a young technician, my goal was to attain the status of master-level. That meant that I was expected to repair or service nearly anything that rolled into my work bay. However, “anything” really only meant vehicles made by General Motors, Ford, and Chrysler. The Big Three, as they were once known, dominated the roadways in those days. With a limited number of vehicle brands to learn, it didn’t take long to become proficient in all areas of automotive repair, from engine mechanical, drivetrain, electrical, steering, suspension, and all other systems. That was back then. Let’s fast forward to today. Unless you specialize in certain areas and/or on specific vehicle brands, it is becoming increasingly more difficult to be proficient in a wide range of vehicle models and vehicle systems. The training, technical information, and equipment that is required today to be an all-around master-level technician is too overwhelming. In this blog, I will explore a few ideas and push the envelope with a few controversial concepts. My goal is to help advance the automotive aftermarket and to improve the perception the typical consumer has of our industry. Everyone employed in the automotive industry should feel proud of the work they do. The Reality of Modern-Day Automotive Repairs and Service Is it reasonable these days to expect a technician to solve a complicated check engine light problem on Lexus, then jump to an electrical fault on a Volvo, and then analyze a transmission issue on a Dodge diesel pickup truck? Is it also reasonable to expect that technician to remain highly productive bouncing from problem to problem on different vehicle brands? The belief that the average technician can attain master-level status on a wide variety of vehicle brands and in all areas of auto repair has become unrealistic. We need to define different criteria. Should There Be a Change to ASE Certifications? We also need to consider the standards set by ASE (Automotive Service Excellence). Achieving ASE Master Level status requires passing a series of tests in a particular area of expertise. Most technicians consider ASE certifications to be a badge of honor, an achievement of accreditation. There is nothing wrong with this. However, in this modern world of sophisticated automotive technology among a vast array of vehicle brands and systems, does passing a series of tests accurately determine someone’s skill level and proficiency? There is no doubt that the ASE does a great job of creating standards for our industry, and their dedication to our industry cannot be ignored. However, I believe that the topic of what determines a Master Level Technician is something that the ASE needs to take a hard look at. A Shift in Our Mindset is Needed About eight years ago, I hired a technician that emigrated from Greece., we’ll call him Pete. When I reviewed his employment application, he noted that he was an Undercar Specialist. In his home country, Greece, he was trained in brakes, steering, suspension, wheel alignment, driveline issues, axles, tires, and wheel balance. I hired him, at first, as a B-level technician. What I found out in a short time was something I never considered before. Pete was so competent in his areas of expertise that I eventually promoted him to A-level technician and paid him accordingly. By focusing on certain vehicle systems, he was able to become highly proficient in those areas; to the point where he was the go-to tech in my shop for any undercar problem. Pete’s work was top-notch, with virtually no comebacks and the highest quality. The question is, why shouldn’t Pete be awarded the recognition of Master Level in his field of expertise? Here’s another thing to consider. We often complain about finding competent technicians. Techs that can handle everything we throw at them. Again, is this realistic? That may have been a reasonable expectation in 1985, but is it today? We need to shift our mindset and help young technicians choose their area of expertise, based on their strengths and preferences. This will build a larger pool of qualified technicians. This strategy would also open up more jobs for more people to enter our industry. With the proliferation of technology, diesel, hybrids, and electrical vehicles, doesn’t it make sense to have many areas of master-level status? Perhaps we need to take a page from the medical field. In the medical field, you have surgeons, cardiologists, gastroenterologists, pediatricians, obstetricians, gynecologists, dentists, and more designations. They are all specialists in their particular field, and they are all called Doctors. The Economic Reality I want to address the economic impact of running an auto repair shop these days. There isn’t a shop owner today who is not financially affected by the evolution of the modern automobile. The associated rising costs for tools, equipment, training, and information systems are heading into uncharted territories. Can the average repair shop afford to keep current on all makes and models? Buying expensive equipment, for example, has become a challenge. Shop owners often struggle, asking, “Why buy an expensive piece of equipment, only to be used once or twice a year? Where’s the return on investment?” With respect to being profitable, again I go back to what I stated earlier, can an auto repair shop be productive in all areas and on all makes and models? High levels of production are needed to generate profit. However high levels of production rely on creating processes on a predictable set of operations. What this means is that when a repair shop narrows its focus on what they do best, and on the vehicle brands they train on, those shops become more productive. They also become more profitable than those shops trying to be all things to all people. My Proposed Solution The automotive aftermarket industry must adopt a new way of thinking. Just like the medical field, technicians should be able to, and encouraged, to specialize. This would allow someone to achieve master-level status technician in a specific area of automotive repair. Just as in the example above with my technician, Pete, we would have highly skilled technicians proficient in different areas. We would have under-car specialists, transmission specialists, drivability specialists, EV/Hybrid specialists, engine specialists, and other designations. And they would all be considered Master Level Technicians in their field of expertise. Productivity and efficiency would improve, more jobs would be made available, and more people would have pride in what they do, and in the industry they work in. Conclusion At Elite Worldwide, we are committed to helping our clients stay on the cutting edge of business strategies. We are also firmly committed to elevating the auto industry, raising the bar for all auto repair shops, and for those working in the automotive aftermarket. From our Top Shop Coaching programs, Pro Service peer groups, and our service advisor Master’s Program, Elite has the business solutions to help you take your company right to the top! View full article

Money Isn’t The Motivator We Think It Is By Joe Marconi, an Elite Worldwide Blog - We often hear that most people are money-motivated. However, when it comes to employee motivation, there’s much more than just financial incentives. According to Gallup, a management consulting company, when people are looking for employment, money may be at the top of their list of considerations, but once hired, no amount of money can motivate someone if they are not happy in their workplace. Additionally, Gallup’s study revealed that money does not create employee motivation and that there is no direct link between salary and workplace happiness. Understanding employee motivation is crucial for any manager looking to improve productivity and maintain a happy, high-performing workforce. Without understanding what truly motivates employees, high levels of productivity and profits will not be achieved. People are motivated by different reasons. It’s the job of the manager or shop owner to build strong relationships with their employees to find out what truly motivates them. One of the best ways to find out is to simply ask them. You may be surprised by what they say. Now with that said, let’s address when money is important. Everyone needs to cover the basic needs of life. People need to pay the rent or mortgage, put food on the table, and take care of their families. If someone worries each week that their base pay will not cover their financial needs, they will work from a position of fear. This will eventually cause them to shut down, produce less, and start to look over the fence for greener grass. Another area when money becomes a factor is when an employee feels that they are not getting the respect they believe they deserve. For example, you hire a top-level, experienced service advisor and pay that person a higher wage than your current top-performing service advisor. No matter what arrangements you make with the new hire, your current service advisor will find out the pay wage for the new hire, and that will not go well. In some cases, this may cause your current service advisor to quit. Aside from a few exceptions, money is not a prime motivator. In this blog, I will outline five powerful ways to motivate the people in your company, which will also help you create the right culture, ensure long-term success, and help prevent your employees from looking over the fence for greener grass. Satisfy The Basic Needs of Life and Career As I mentioned earlier, when an employee worries each week about not earning enough to cover his basic financial needs, he works in a state of fear. In this state, people cannot function. The stress and worry consume them. When people realize that their basic needs will be fulfilled, they become more engaged with their work, will produce more, and are more inclined to grow and advance in your company. As a shop owner or manager, you need to sit down with your employees. Find out about their goals, both in their career and in their personal life. Another obligation for shop owners is to create pay plans that offer competitive wages, great benefits, and a career path where they feel secure with their future with you. Financial and emotional security is important, not only for the employee but for the employee’s family too. Create a Culture of Mutual Respect Everyone craves respect. This is an area that is lacking in so many workplaces. While employees may be at different experience levels and in different positions, everyone wants to know that what they do gets the attention and respect of leadership. As a shop owner, create an environment of shared and mutual respect. Look to those in your company who have leadership qualities and mentor them so that they can mentor others. When your employees share in their talents and efforts as a team, combined with mutual respect for one another, you have created one powerful motivator. Have Your Employees Compete Against Themselves In the workplace, employees are at many different skill levels. For example, a typical repair shop may have two technicians with over 20 years of experience and one tech with under 5 years of experience. It makes no sense to have the younger tech compete against the more experienced techs. When you do this, you create winners and losers. What you want are all winners. Encouraging self-competition is a powerful way to enhance employee motivation by allowing them to see personal progress and achievement. If you do that, each of them can win. Measure each employee’s production, whether it’s billable hours, sales, gross profit, or other metric. Find a baseline for each employee. Establish a minimum level of acceptable performance, the goals for their position, and the individual goals for each person. Provide the training, support, and a pathway for them to improve and succeed. When people see themselves improving, by measuring their metrics against themselves, they also see themselves winning. They become more engaged, which motivates them to work harder and want to continue to improve. Remember, create a shop filled with winners. MBWA – Management By Walking Around MBWA is a strategy that was written about in a book published in the early 1980s, by Tom Peters, called In Search of Excellence. The strategy is simple but powerful. It requires that managers get out of their offices each day and spend time walking the shop floor. Engage in conversation with your employees. But here’s the key component that makes this strategy so powerful; engage in conversation that helps you to find out more about them, their hobbies, their family, and what they like to do in their time off. In other words, don’t just make the conversation about business, make it personal, about them. When you find out what’s important to your employees, you will also find how to increase employee motivation. Imagine this scenario: Through your MBWA you find that your superstar service advisor enjoys taking her kids to dinner and a movie, and you surprise her with tickets and a gift card for the entire family for a night out. Tell me that’s not a powerful motivator! Praise and Recognition Praise and recognition are perhaps the greatest motivators of all. There’s not a person on this planet who does not want to be recognized and praised for a job well done. Look for reasons to praise your employees. Let the little mistakes slide. If you want your employees to grow and improve, then praise and recognize the behavior you want to see repeated. For example, you speak to an employee about coming in late. If that employee comes in on time for the next three days, praise and recognize that! After all, it’s the behavior you are looking for, right? What happens all too often is nothing is said when the employee comes in on time for a few days but is handed a heavy reprimand when the employee once again arrives late two weeks later. If you only point out when people don’t perform the way they should, that is what you will get; an endless occurrence of people not performing up to expectations. There’s a phrase from the book The One Minute Manager, but Ken Blanchard, “Find people doing things right!” Conclusion At Elite, one of our core values is to never put money ahead of people. We believe true employee motivation comes from fostering a culture where individuals feel valued and respected, rather than relying solely on monetary rewards. When a company focuses on building the right culture and prioritizing employee well-being, great things happen, and success becomes inevitable. This concept is woven into the fabric of what we preach, teach, and coach. Whether it’s our service advisor Master’s Program, our Top Shop Coaching Programs, or our Pro Service peer groups, we will never abandon what has made Elite the company it will always be… a company that will never put money ahead of people. View full article

Wow, I applaud you for taking ownership of the problem. If want a change in our life and business, WE must be ready to accept responsibility! Great job!

I have through many horror stories too. As an industry, we need to stick together on issues like this, but sadly, we often don't.

Many shops these days are complaining that business is slowing down. While I am not against advertising, let's consider the following before you throw money at the problem: Are your service advisors doing all they can to provide an amazing customer experience? Are multipoint inspections being done properly? Are your service advisor proactive with making sales and trained properly to handle objections? And are you booking the next appointments for deferred work, future maintenance work and other future services? What else can we do to maintain sales, BEFORE we spend more money on advertising?

Makes a lot of sense! Agree!

With the internet, social media, etc.. today is much different than years back. While we need a balanced approached to marketing, what people say about us and how they use technology to find our more becomes the norm. Essentially word of mouth is still powerful.

Way back in the 1980s and 1990s, a general auto repair shop was possible. But back then the dominant cars on the roads were GM, Ford And Chrysler, with a sprinkle of Japanese cars. Today, is it possible to be a general repair shop, and work on all makes, all models?

Labor dollars is becoming the main driver of profit. Years back it was parts and labor, a 50/50 split. Not so anymore. Our labor needs to be our main profit center. The problem is it's not that easy at times due to so many variable we encounter on a daily basis.

We all know that word of mouth is one of the best forms of advertising. But there are some auto shop owners that say that due to Google and social media, it's not as effective as it once was. I still say that building strong relationships with your ideal customers is the best marketing strategy. Your thoughts?

Perhaps one of the most frustrating things in business is dealing with aftermarket warranty companies. Whenever a customer showed me their warranty papers, I could feel my blood pressure raise. Most of these companies want to dictate to us how much we can charge, sometimes the parts we can use, and want to be in control of the entire process. How do you deal with the aftermarket warranty companies? Or should you???

More and more shops are hiring or taking one their techs and make them the shop foreman. What are the pros and cons of having a shop foreman?

As a business coach, I get to talk to a lot of shop owners, and many are complaining that while sales are down, their car counts are still high. Here are a few things why this is happening: Complacency: For the past few years, customers just said yes, now they are a lot more conservative with spending. Inflation: While inflation has eased, we are still left withe higher prices in so many areas- food, entertainment, housing etc. This affects the consumer purchasing power. Not Understanding your business model: Too many shops are trying to be everything to everyone, and this leads to doing many unprofitable jobs. Focus on your business model, focus on your ideal customer. There are many more reasons for a decrease in sales. What are your thoughts?

Makes sense, and agree.

I am in total agreement. You know, way back in ancient times...the early 1980s, I only accepted cash and checks. As the price of repairs and services began to increase dramatically, it became unreasonable to expect customers to only pay in cash or check. We are on the same page.

Many auto repair shops are adding a fee to the final invoice for customers using credit cards. I get it, but don't agree. For me it's simple. First, do your best to negotiate the best deal from your credit card provider service. Next, take that fee and add it to your cost of doing business. To me, I consider this fee an expenses, just like all other expenses: office supplies, utility bill, insurance, taxes, training, travel expenses, maintenance, etc. etc. From your total average monthly expenses, you will be able to determine your breakeven, and from there, set your net profit goal. In other words, forget about the charging the customer a fee, just build into your overall prices. You will accomplish the same thing, and not bring attention to the customer that small fee that may be a big deal.