Joe Marconi

Labor drives the business and needs to be tracked. Each tech should produce enough labor hours so that the business remains profitable. There are a lot of benchmark numbers, but it depends on the mix of the type of jobs you do. If a shop does mostly major repairs, the labor hours should be high. I have two facilities, a traditional repair shop and a quick maintenance shop. For my repair shop my labor production goal is 100% or better, in the quick maintenance shop, we look for 75%. That's because we do many small jobs such as state inspections, tires, tire repairs, LOF's, etc. Many of which are While-U-Wait. But with this model, we can upsell any major repairs and shift it over to our repair shop. My Labor to Parts ratio is: Gross Labor Sales 45% of total sales, Gross Part Sales 55% of total sales. Many experts will tell you that the mix of parts and labor needs to be 50/50, and some may tell you that labor sales should be more than your parts sales. I am not in total agreement with that. With my Total Car Care concept, I sell a lot of related products: additives, wipers, accessories, mirrors, bumper covers, filters, etc. This tends to inflate part sales. I have no problem with that, since I am also a believer in total profit per car. You can earn much needed profits with sales of related products. In other words, a customer is in your shop for a check engine light and you happen to notice he also needs a set of wipers, a headlight and an air filter. Those additional items, may not add to you labor column, but will add dollars to your bottom line profit. Hope this helped.

A couple arrives to your service counter, husband and wife. The man begins to speak and starts to explain why they are bringing their car in for service. You begin your questioning process and direct all your attention to the man. The entire dialogue is between you and the husband. You never speak with the women or even turn to look at her. What you don’t know is that the car the husband is referring to is his wife’s. I don’t want to get into all the reasons why some men feel they must take the lead with car repair, but the lesson here is not to assume that the women is not involved in the decision making process when it comes to authorizing work. In fact, simply including the wife during the initial write-up will increase your chances of making future sales. Ask questions such as, “Who is the primary driver of this car”? Addressing both the husband and wife equally will send the right signals that you respect both the wife and husband as equals. It will go a long way at establishing a firm relationship with the couple. What you don’t want is for the wife to walk away feeling alienated, which may cause feelings of mistrust.

No, do you anything about it?

No, I have not. I think the engineers underestimated battery life. I just read in Tire Business Magazine that TPMS sensor batteries can last up to 10 years.

Cancer is a subject we all know too well. My mother was a real tough lady, but even she could not fight that evil scourge and fell victim at the age of 47. I am happy to see that Bo has such a good chance for survival. As far as the cancer in our industry, if there was one thing I could change and one thing only, it would be to raise the level of business awareness in our industry. I know most of us are techs, and we got into business because we were good at fixing cars. But the lack of business skills is too often hurting too many hard working shop owners. We need to collectively work toward changing that cancer you speak of. Once we took possession of the keys to the shop, we crossed over to a different world, the world of business. Like it or not, guys like you and me are mechanics by trade, business owners by choice. Gonzo, I hope all our members read your heartfelt story and learn a valuable lesson on life and business.

As TPMS sensors age, we are seeing more and more issues with seized sensors, that need to be replaced. The issue becomes explaining to the customer. The dissimiliar metals that are used in the core and stem are corroding, leading to the seizing after time. Also, people are putting the wrong caps on some sensors and that's an issue too when the cap seize. We have adopted a strick policy for some time now that when ever we service tires, tire repair or tire replacement we inform the customer PRIOR that the vehicle has TPMS, and that sometimes sensor or sensor may need to be replaced. We have brochures to help with the explanation. We also try to explain the relearn process and the re-program process. Not a lot of fun for us to be honest, it's takes time to do explain all this. This helps a lot, although we still get the occasional customer that says: "You touched it, you broke it, you buy it".

You have just described my worst fears....

Great questions. Determining monthly costs can be difficult, but essential to projecting sales, breakeven, return on investment and calculating the amount of techs needed to support the company. I think I would like to give you an overview, and then you can reply back to the post to break down the items further. I will give a list of standard expenses (at the end of post), but what you need to talk is to speak with all the right reps for all companies and utilities you will be dealing with. Prices are different for different parts of the country. A shop in Los Angeles or NYC will pay appreciably more for insurance, for example. So, speak with the electric company, call uniform companies, insurance agents, etc. You will need an accountant, and he or she will let you know what payroll cost will be per employee, tax liabilities, etc. You will have to allow for all these payroll expense when determining your cost of doing business analysis. As far as projecting sales, that could be difficult too, because it depends on car counts, productivity, tech expertise, shop layout, the type of work you plan on doing, among other factors. My original shop, before I expanded, was a 6 bay facility. I expected averaged monthly gross sales of $110,000 to $140,000 per month from that facility, and at times we would hit $150,000. When I expanded to 10 bays and now 11 bays, those number increased accordingly. However, you need to remember that my business was started in 1980. It takes time to build up to that. So I expect each bay to gross 4K min per week. Now, that does not mean I have a tech for each bay. With eleven bays, I have 6 techs and a working foreman. The extra bays are for cars waiting for parts, waiting for authorization, etc. Let me stop here, and let you review all this first. And, you can relpy back, hopefully other shop owners can join in also, to give you different percpectives. Here’s a basic list of fixed and variable expenses: Rent/Mortgage Property/School Tax Manager payroll Technician payroll Service advisor payroll Training/meetings Utilities: phone, electric, heating, water General Maintenance Computer updates & vehicle information systems Supplies Security system Maintenance/Support Staff Personnel Payroll Payroll Expense-FICA, Med,Disibility,UI Property/Liability Insurance Workers comp, Projected Auto insurance Health/Medical insurance (company pay) Other Insurance Equipment Purchase Payments/align, etc Small Tool / supply expense Uniforms Building/equipment repairs Public relations/warranty expense Waste removal/environmental management On-going advertising/marketing Rubbish removal Professional fees-Accountant, Attorney, Finance Advisor Meals, misc Auto/Truck Expenses Office/General supplies ROI /Corp fees Contingency Other, misc. & one-time expenses

That is great news! How do you account the increase? Did you do anything different?

Wow, now that was a line up! I remember those classic years in the late 60's and 70's!

First of all, you are not nuts. One of keys to success is to realize two things: What is your passion? And what are you really, really good at? Those are first ingredients to opening up a business and to being happy. You have a great background in cars, which will help you. The fact that you are putting together a business plan is excellent. Your business model must be put down on paper. Many techs, who have turned into shop owners, have had tough times making the transition from tech to shop owner (myself included). I was a great tech, but a poor business man. When I finally woke up, I used my background as a tech, combined with a new set of business skills, to propel my business and grow. I realized that my skills in business were important to my overall success. So study business and learn, learn, learn. As far as which way to go, either total car care or specialize, you will need to do a demographics study to see what will fit into your market and business model. But, never try to be everything to everyone one. For example: You can’t be a discount store and plan on building a business marketing to Mercedes, BMW, Jaguar, Land Rover and Bentley. As far as being scary….it is. If it were easy, everyone would be doing it. But, don’t let the fear of failure hold you back. Minimize the risk through a well thought out plan. Please, don’t be a stranger on ASO, we are here to help. And check out all the great information on this site. Also, check out my blog. My earlier blogs feature the steps taken when I built and opened another facility. If you are a premium member, there are downloads that you will you find very helpfull. I intend to add a lot more business downloads in the coming months. Good luck, glad to have to you aboard!

I will work on that...

April is National Car Care Month If you are looking for a great way to promote your shop and to promote the concept of total car care and preventive maintenance, you should consider holding a Car Care Event. I can tell you from personal experience, that you will get a bounce in sales for months following the event. This is an excellent way to feature your shop and what you have to offer to your community. The key is to promote the event weeks prior. For more information, please go to http://www.carcareindustry.com/

You are probably right, Frank. I just hate to dilute my culture and my brand. But, things are different today and people are so frustrated with economic conditions that they are looking for ways to save. In the past, I would not even concern myself, but maybe I need to find a way to beat them at their own game. We hold consumer clinics throughout the year, I am thinking of holding a seminar; "Save Money! Simple Car Maintenance You Can Perform Yourself" The basis behind the class would be to highlight the need for preventive maintenance, and to promote the fact that there are a lot of things the average person cannot do themselves. I would offer, at the class, discounted items and services and make my shop the go-to place for that segment of the motoring public. I don't want to draw a line in the sand. That may have worked in 1989, but not today. Your thoughts????

That's really great Frank. It has to mean that you are doing a lot of things right! Keep the momentum going!

AutoZone is due to open up soon right around the corner from my shop, within walking distance. Lucky me, right? Right up the road, again within walking distance from my shop, is an advanced. So there will essentially be an AutoZone and an Advance Auto right next door to each other, and right in my back yard. The funny thing is that there are two Advanced Auto stores in my town and neither are making any impact with the local parts store, CARQUEST, that services the local repair shops. So who are these stores catering to? I can’t believe that there are that many Do it Yourselfers in the area. But I could be wrong. One thing for sure, it will be interesting to see AutoZone and Advanced go to battle with each other.

As usual from Gonzo.... Pricless!

I am a firm believer in offering value to my customers. I am not here to promote any particular company, however, in this very competitive market; shop owners need a way to bring more value to their customers. In particular, a program such as the BG Lifetime Protection Plan is one benefit that can protect your customer’s vehicle for life for major components. This has great value to the motoring public. There are many other products that are available to us. I think it would be beneficial to all if we could share some of the programs and products we offer to our customers that help grow our business.

We all know that shop owners go through many challenges each and every day. We purposely moved this forum to the top in order to make sure that every member knows that ASO is here to help with all business and shop issues. So, if you get frustrated and need to reach out, just log onto AutoShopOwner.com. Also, if you know of other shop owners that are not familiar with ASO, let them know. Remember, if you have a question, issue or just want to vent, ASO is just a click away…

I have been considering adding a few loaner cars to my business. We do have a shuttle service for our customers, but there are many times that customers need the use of a car when their car is in for repairs or major services. We also have an discount agreement with the local Enterprise Rental Agency. I would like to hear from other shops, the pros and cons and opionions of loaner cars.

Gonzo, the second I read the title, I went running for the meds. What a story. All too familiar for shop owners. I just love when someone says, “Hey, I just spent a lot of money at other shops and they could not fix it, so don’t charge me a lot to fix it correctly”. Do they realize what they are saying? Funny and sad at the same time, I think many shop owners will pop a fuse reading this one!

Give Your Customers Options Let them maintain control over their money Recently I was at an affair with a few people I met for the first time. As usual, once they found out what I did for a living, the auto-related questions directed toward me flowed faster than the wine was flowing. After doing my best to diagnose their Check Engine Lights and Steering Problems while trying to eat my rib eye steak and mashed potatoes I turn to them and asked, “So, what bothers you most about getting your car repaired or serviced”? After a few blank stares, one gentleman said, “You guys never give us options”. He went on to say that recently he brought his car to his local mechanic with a brake problem. The shop owner called and said, “You need front brakes, calipers, and rotors…and you’re looking at $700 bucks”. He authorized the job, but would rather have had a little discussion on what happened and if there were any options. Now, we all know that each of us has done our homework before we call the customer, and we are confident that the repair or service we are quoting is in the best interest of the customer. But maybe, just maybe, the customer does not recognize this. Maybe we can take a moment to explain to the customer that we sourced out the best parts at the best price. Maybe, when possible, you can give the customer options. Maybe offer two levels of service.

As co-founder of AutoShopOwner.com, I want to take a moment to thank all of our members and their contributions to this community. Together, we have made AutoShopOwner.com the premium online business resource for automotive shop owners. We all know the wealth of knowledge among us and together we are a force unmatched by any other profession. I’m proud to be part such an elite group! So, what does 2012 and beyond look like? Well, I don’t have any secret telepathic ability, but I can share with you my thoughts and ideas based on years of experience in this industry and by following recent trends. Let’s get the bad stuff out of the way first. Many shops around the country are experiencing a drop in sales, profits, and car counts. Many factors, including high unemployment, the housing crisis, rising costs of goods, and the ever increasing cost of doing business, all contribute to a challenging future for us. A few years back we banked on the fact that low new-car sales would result in a boom for the aftermarket. However, due to the economy and poor consumer confidence, this did not come true for many areas around the country. In 2010, underperformed maintenance in the U.S grew to $62 billion, compared to $54 billion in 2009. This means that many consumers are either neglecting or putting off necessary repairs and services. The longer they put off these services, the more difficult is becomes to sell these services as the car ages to a point where the car owner no longer sees value in maintaining his or her car. We all know how postponing or neglecting maintenance poses a risk to not only the car owner’s safety, but the safety of others on the road. But economic conditions sometimes outweigh common sense. A recent Consumer Reports poll showed that 40% of those polled are knowingly postponing maintenance and repairs on their primary vehicle. Lower income households and those in the age group 18 to 35, were more likely to delay needed repairs and preventive maintenance. We will likely see this trend continue as we slowly recover from the recent recession. The economy has forced consumers to become more value conscious, with an emphasis on insuring that the price they pay for anything these days is a good choice. Value does not always mean lowest price however, it means that consumers want to make sure that their money is being spent wisely and that their buying decision will bring them the biggest bang for the buck. In other words, the consumer wants to walk away knowing they got their money’s worth and more. Another issue we need to confront; every sector of the auto repair and service industry is frantically racing to obtain a piece of the maintenance and repairs that generally were performed by traditional independent repair shops. New car dealers, muffler shops, brake shops, transmission shops, tire stores and quick lubes are all moving toward the concept of total car care. Even many body shops are offering their customers basic repairs. This spells out a very competitive market, especially as the quality of cars continues to become more problem free, combined with the continued decline of many profit-generating services such as fuel filters, plug wires, and timing belts. Not to mention, extended oil service intervals that presents its own set of issues. Technology and electronics will be the driving force to meet the new gas mileage standards and emissions levels, which will bring an ever increasing demand for you and your technicians. Investing in training and equipment will become a key component to your future business survival. Had enough of the bad stuff? I know I did, so let’s move on to the good stuff. By the way, there’s always been bad stuff, since the dawn of time. No one ever promised us an easy road, and we will always be confronted with challenges, it’s what makes the strong only stronger. So let’s not focus on the bad, let’s focus on the positive. Most of you reading this are still around, which proves your resilience and your ability to adapt to the dramatic changes our industry has had to endure over the past few years. We have survived and thrived in uncertain times. Not because of hard times, but in spite of it. Let’s take a look at a few promising facts. New car sales have lagged in recent years and although sales are better; it may never attain the sales of pre-recession era. This means that as the economy recovers and consumer confidence improves, there will be a flood of cars that will need repairs and maintenance as these cars reach post factory warranty age. The average age of the typical car in the country will remain over ten years and achieving 200,000 miles and beyond will become the norm, all great news for the aftermarket shops. Embrace technology, it is your friend. You will have to gear up with new tools and equipment along with more training, but this will mean more and more people will need your services. Saturday afternoon tune ups in the driveway are a thing of the past. In addition, technology will open the door for more hi-tech services and repairs. Training will become easier to come by and better as more and more companies offer online courses in addition to live training. New car dealerships have gone through a period of attrition, losing thousands of stores across the nation. This is good news for the independent shop. Although new car dealers are direct competitors, they no longer have the sheer numbers they once had and our ability to service multiple car lines in our local community, convenience, and our understanding of customer service will continue to be our competitive advantage. In time, this will prove to be a huge benefit for the aftermarket. Want more good news? A report from a research firm, The NPD Group, recently stated that most consumers want to keep their cars longer, are favorable toward car care maintenance, and they are more interested in maintaining their cars than replacing them. Now here’s the best news for shop owners. The NDP Group has also reported that the consumer shift away from new car dealerships will continue when it comes to having their cars and light trucks serviced. According to Consumer Reports, car owners still put their faith in the independent repair shop. 83 percent of those polled said they had complete confidence in their independent repair shop when it came to getting the right maintenance and repair at the right price. Another Consumer Reports survey indicated more than half of those polled had complete trust in their shop. Independent repair shops are, and have been, the preferred choice of the motoring public. We all know it’s been a rough ride the past few years, but we’re still alive and kicking. Looking back on my own 31 plus years in business, I can tell you it’s been tough and rewarding. The future does look promising for those shop owners who find ways to adapt and plan accordingly. To succeed in the coming years will depend on the shop owner’s ability to be an effective leader, accept change and have the passion to commit to excellence. Offering world class customer service and community involvement must also be part of your business plan. Don’t get caught up in the way things were, that’s a waste of time. Things are different now, and in ten years they will be different than the way things are today. Find ways to make your shop stand out. Understand what makes you different in your community and use that as your competitive advantage. Don’t go head to head with the local new car dealer or major chain store. That can be damaging. Know your strengths and the strengths of the people in your company. Remain true to yourself and capitalize on what you do best and focus on the reasons why YOUR customers keep coming to YOU year after year. One thing I can say with certainty; AutoShopOwner.com will remain committed to helping and supporting its member shop owners. We at ASO know that to remain strong in the coming years will take solid business decisions. Together we are forming a powerful coalition, one that will be an essential ingredient for our future success. The goal of AutoShopOwner.com is to be part of your future success, in 2012 and beyond! View full article