Joe Marconi

Let me add another thought to this conversation.  Every expense, in some way, must be passed on to the customer.  As business owners, we need to factor in all costs of doing business; every can of rust penetrate, every shop rag we use, every wire tie, every nut, bolt, washer, etc. This is how a business operates.

Some states allow a Shop Supplies fee to offset the miscellaneous fees that aren't normally billed on the customer's invoice. Be careful with Shop Supplies and hazmat charges, in some states you can recoup what you spend, but you cannot make a profit on it. 

The bottom line here is truly the bottom line.  Shop owners need to sit down and look at all costs. And then adjust their part and labor margins to ensure that a reasonable net profit is attained. 

Profit is not a dirty word. Profit ensures that shops are providing the very best service and repairs by reinvesting in the best tools and equipment, afford ongoing training, and remain in business to continue to serve their community. Also, profit provides a decent wage for their employees and themselves.

Sorry to go on about this, but it came to mind, and thought it fit into this conversation.  

21 minutes ago, xrac said:

Business was good last year and had been strong so far this year. 
 

 

That's what I am hearing from most of the shops around the country.  In spite of the gas prices and rising expenses, shops, in general, are doing good.   

6 hours ago, xrac said:

Joe, my issue is I don't have enough bays!

Just now, Joe Marconi said:

6 hours ago, xrac said:

Joe, my issue is I don't have enough bays!

That is an issue! Is business better this year than last year? 

3 hours ago, Transmission Repair said:

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.

Thanks!  We are all here to help each other! The power of Auto Shop Owner! 

41 minutes ago, xrac said:

Would you believe that yesterday someone I consider to be an A technician that I tried hard to hire a year ago came in looking for a job.  Unfortunately, I don't think I can afford to add him currently.  He is probably a better technician than three of my current guys but they are all good, hard working guys who are gaining experience everyday. 

Wow, tough position to be in.  Are you sure you can't find a place for him?  It is so hard to find superstars.  

The EV push is real.  Every carmaker is transitioning to EV production, with more and more models scheduled to come out in the coming years. While this will change the auto repair industry,  there is one thing that EVs will bring to the auto repair shops: Opportunity in the way of tire sales and all the related services and repairs.

I know many shops will be resistant to this change, especially those traditionally involved with heavy repairs, such as engine and transmission work. But change is not always a bad thing, and as shop owners, you need to find ways to adapt and thrive.  

Will tire sales become part of your future? Are you selling tires now?  What other changes do we need to be aware of? 

9 minutes ago, DUFRESNES said:

Our problem is we have been paying for broken plastic or rock chips then from lifting the car now the rock chip grows. parts on cars that are 20 + years .  Someone had the solution.  If the part breaks coming off, then the customer pays.  If the part breaks going on then we pay.  Wonder how this effects SW pay?  As owner I get to pay for all of it

I understand the problem.  We cannot be responsible for everything, especially things that are not under our control.  A few things: How often does this happen?  Can some of these things be picked up during the initial multipoint inspection (such as chips in the windshield?) and do you know the overall cost you spend per year on these things?  

For example, if your shop pays out $1000 on things you feel you cannot ask the customer to pay for, could you add the $1000 to your cost of doing business?  In other words, if you service 1000 cars per year, could you build into your pricing another $1.00 per car to offset this?  

Work on identifying what you can control and then find a way to help pay for it. Boy, I hope this helps. 

I am not sure about your question on the SW pay? 

With so much talk these days about the technician shortage, I thought it would be a great idea to share a few recruiting tips that have helped. 

What tip can you share that you have had great success with? 

23 hours ago, Transmission Repair said:

 

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.

You did really well with the sale, and a 27% net is amazing too! 

Selling a transmission business, like other specialized businesses, has challenges that general repairs shops don't. I remember back in the 70s there were muffler shops, radiator shops, speed shops, tune-up shops, electrical shops, brake shops, tire-only shops, wheel alignment & front end shops, and more. Due to the amount of repair work back then, all of these businesses enjoyed a piece of the pie and flourished.  Before cars hit 100k (if they lasted that long) it was nearly certain that they would need transmission and/or engine work.  Now, it's rare that a specialized business can survive without expanding its services and repair base. 

I do agree that when it's time to sell, a general repair shop has distinct advantages, especially if you own the land.  And one thing is for sure: Start now to show a consistent net profit and year-over-year sales increases. From my experience, buyers look at sales, BUT it's the cash/net profit that is crucial in making a deal. 

3 hours ago, Charlie said:

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. 

Charlie, amazing post my friend!  Words of Wisdom for sure. The book Profit First should be required reading for any business owner. In fact, for everyone. Thank you for sharing a little of your story. I am sure that many of the shop owners reading it can relate. Myself included!

23 hours ago, JimO said:

Congratulations on retirement from your own business and entering a new chapter of your life that will no doubt have less time commitment and much fewer headaches. Most of us that have been in this business for the long term would probably have a hard time to stop work altogether. I think of myself as an old work horse, my years of experience allows me to  comfortably do my job every day but put me out to pasture with no challenge, no problems to solve and I think I would lack purpose. My father instilled a work ethic that was very strong and has served me well over the years.

As to thoughts of future topics or content - Profitability is required to grow and we are living through changes that affect profitability dramatically. The cost of doing business has increased so much over the years that you could be put in the position of having worked all year but failed to make a profit. No matter where you go prices for goods and services have increased. I know that there are price fixing laws to restrict the discussion of setting prices but if there was a way to legally have discussions or surveys concerning prices it would be beneficial. I am talking about repetitious jobs that some shops post on menu boards like charge a battery, mount a tire, balance a tire, repair a tire, put on a spare tire, cut a drum, cut a rotor, flush a cooling system, etc... We all need to realize the cost of doing business today and what it takes to keep the doors open. Most of us are too busy to notice these changes and that can quickly get you in trouble financially. 

I find that the majority of shop owners share your work ethic, it's why shop owners are so resilient and never give up, even on the toughest problems.

Profitability is an important topic these days, and I totally agree with you.  While we can't price fix, we can share pricing on different jobs, perhaps in a survey or a post. Let me work on this.  I will also work on a few training modules to help shops calculate their labor rate and pricing structure. 

Thanks, JimO for the feedback! This is exactly what I am looking for! 

18 hours ago, DUFRESNES said:

Does anybody have a sign stating if parts coming off to make a repair are broken, the customer is responsible.  I don't want to make a new sign if someone already has one.  Such as bolts, plastic pieces and windshields that have rock chips and split.  I am not talking about abuse, just warn parts.

Your concern is valid. I never thought of a sign, however. We always had what I called, the Open Door policy. I would train my advisors to always tell the customer that the estimate I am giving you may change once we begin the repair process. If we encounter any seized bolts, or any other circumstance out of our control, we would discuss any additional charges.  I would be curious to see how other shops handle this. Hope this helps. 

One thing about signs, we need to be careful that they don't send a negative message. But, as I stated, this is a very valid point. 

Being cash strong is so important in business and in life.  Budgeting properly will keep you out of debt and help build financial security.

2 hours ago, Transmission Repair said:

Bob Cooper was instrumental to opening my eyes.

 

It's more about thinking than doing.

I was a client of Bob Cooper and Elite way back in the mid 1990s, learned a lot and he was also instrumental in my life.  To work for Elite now and help others is an honor.

5 minutes ago, Transmission Repair said:

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.

Wow, my situation was very similar. For the first 10 years in business I struggled financially. I had a great business, booked out for two weeks, but no profit. I started attending classes in finance, sales and marketing, and it changed my life. I too read the E Myth by Michael, and I know he was talking directly to me.

Once I did figure it out, things got better quickly.  I was a tech turned business owner. And it all worked out, but not without a lot of challenges, struggles and set backs. But in the end, no regrets. 

58 minutes ago, Transmission Repair said:

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!

Banned? Their loss, our gain! 

52 minutes ago, Transmission Repair said:

I have found so many good posts in this community.  I love the fact that is this site categorizes different subject matter.  Keep up the good work, Joe!

J. Larry Bloodworth /[email protected] / 801-885-2227

Thank you for the kind words. I appreciate your great contributions! That's what makes ASO a great resource! 

That is amazing! Fun to watch. His first ride on an EV vehicle! 

18 hours ago, weighit said:

Well congratulations on your kind of retirement. Have enjoyed all your input and thoughts over the years I have been here as a reader. I sold my stripping business and "quit" at 53 and got into a RV and full time traveled for 8 years till we bought another home after we sold everything to travel. All my friends and other business owners I worked with said your too young to retire when I let them know I was going to sell everything and travel., I said I never said retire, I QUIT....have a whole different attitude. That quit lasted a total of about 5 months and I started another business while still traveling. So I do understand you selling and "retiring' Kind of.... have a Blast and hope you enjoy the new life being "retired"!!

I totally understand the difference. I too have not really retired. In fact, I still work everyday. Not at the same pace, but still work.  Everyone has to make the choice that is best for them.  What I tell people is to make sure you enjoy life, your family and your friends.  

Thank you for being a loyal as an ASO member, and looking forward to enhancing Auto Shop Owner. 

By the way, I am enjoying this new chapter! Thank you again!

37 minutes ago, xrac said:

This is such a frustrating business not only do we have to deal with customers who may not understand anything but competitors who love to cut our throats.  This week I got a 1 star review because we were 3 times the price of some unnamed shop (or shade tree guy) on a repair.  Of course, we don't know what was done or not done or what quality parts were used or what skill the guy working on it had.  We had quoted pads, rotors, and calipers front and rear on a rust bucket with 200,000 miles that the owner wanted to pad slap.  Who knows someone else may have pads slapped it bad mouthing us all the way and the car may still have noise, pullsation, and a caliper still sticking and the owner is happy as a clam as he drove away with the radio turned up thinking it is fixed.  No consideration at all that we looked at it at no charge to him.  I also got a 3 star review from a phone shopper because she was able to take the car to the ghetto and save $60.  Is that enough rant for today?  Joe, be glad you are out of this rat race.    

Frank, I feel your pain, and what you posted is something I DO NOT miss.  I think everyone on Auto Shop Owner has been in your boat too. 

I know it's easy for me to say this, but here I go: Focus on all your good customers, those that DO value what you do and appreciate the things you do.  Do things for the right reasons, and the right people will notice. Don't bring yourself down their level, don't worry about those reviews. Reply to those reviews in a professional manner.  

You cannot be all things to all people. 

Take a breath and this too shall pass. 

I think it would work, but as you said, it would add the cost of the car.  I imagine the engineers already thought of it.  It is amazing how they came out the EV without an infrastructure to support it. I wonder how the world was when the first internal combustions engines came of age? 

Shop Owners! Come see me at the Elite Invitational this June.  You will network with other shop owners from around the country, obtain great information from the customer panels, and from the guest speakers.  And, I will be there making a presentation on "How to Identify the Perfect Customer for YOUR Shop"

Looking forward to seeing you there! Joe Marconi 

For more information and to register for the event, click the link below...