Joe Marconi

On 11/30/2021 at 6:58 PM, Stevo said:

Customers are going to go through a harsh reality very soon. The auto repair industry has been sadly underpaid for many years now. The technological advances in vehicles are out of control, and to find a guy that is willing to fix these things while kneeling on a dirty wet shop floor, test evap systems while having salty snow fall down their neck, be strong as a bull to change tires, and as smart as a rocket scientist to diag that intermittent gas pedal position sensor along with a mosquito stuck on the hot wire of a MAF is near impossible. Not to mention the 100 grand++ investment in tools. 

A stat I read 18 years ago stated that for every new technician coming into the field, 42 were retiring. The local trade schools are dropping the automotive curriculum due to lack of interest. Lots of better good paying jobs out there.

I'm at 90 right now, but I mainly charge by the job. The problem around me is the renegades charging 50 bucks an hour to do a crappy job. 

Kinda like how the tow-in customer has complete faith in what the wrecker driver told him was wrong with his car, but looks at you sideways when you tell them what's really wrong.

I wish us all luck in this. If only we could get everyone on board, even the renegades. Thankfully, the renegades are on their way out as they are being buried by technology, but I'm tired of waiting.

Stevo: Words of wisdom. Right on point. I applaud your insight and honesty. With more people like you, we will move our industry in the right direction. 

The renegades, as you put in, are a big issue. What we need to do is to ignore them and charge what we need to charge, If more shop owners did this, we will move the needle.

Thanks again for the great words of wisdom. 

This is all great news.  Labor rates around the country are increasing.  A much-needed increase. 

For many shops, business during the winter can slow up due to a number of reasons.  What I have found that works is to schedule a flood of service reminders and past recommendations to go out during the months of Jan and Feb.  Maintaining touch with your existing customers is a great way to keep your shop top of mind, and it may just bring in a little extra work too.

Any winter marketing tips to share? 

1 hour ago, dfrisby said:

I read an article awhile back that was predicting these arrangements based on the theory that all the 2021 vehicles would be released after sitting in parking lots for months waiting for a chip needed to get on the lot at about the same time 2022 vehicles would be hitting the lots.  The theory was that the dealerships would be overloaded with warranty work on cars that had been sitting in fields for months or longer.  I think the supply chain has prevented this issue from hitting up to this point.  Will be interesting to see how that all plays out.  I believe it may have been a thread I read in this forum, but I don't have the time right now to search for it.

 

Great points. I do know that dealerships are overwhelmed with warranty work, particularly big jobs.  And with the shortage of techs and dealer obligations, dealers have to move the warranty work to the front of the line in many cases. 

There is a large repair shop in the mid Atlantic states (they want to remain anonymous) that just formed an alliance with a local new car dealer to service their used cars.  I will change some of the details; a request from the shop owner. But, the story brings up a few interesting facts. And, the big news is: This shop is profiting from this relationship!

The shop owner was approached by the GM of the dealer to service some of the used cars they have been taken in on trade and want to sell.  The dealer techs are not trained and not familiar with the different car lines, being a Chrysler-only dealership. Due to the shortage of cars these days, the dealer is taking in on trade, all makes and models and wants to sell the used cars. And we all know profitable used cars are. 

The repair shop performs a multipoint, which they get paid for,  and then they do many of the services and repairs, which includes tires, brakes, wheel alignments, oil changes, air and cabin filters, wipers and other simple services. Most of the cars are newer cars, and the work can be done by a GS tech.

I don't know the pricing, sorry.  But, I am interested to see where this goes.  

Imagine, a new car dealer asking an independent repair shop to service and repair their used car fleet???

One of the lessons from COVID is for repair shops to have a strong cash reserve.  Shop owners need to budget their money each week, and allocate money to different bank accounts, such as payroll, operating expenses, taxes, etc.

Another account I would recommend is to have a Cash Reserve account, where money is allocating each week, and not touched unless their is a emergency, such as an economic downturn and or if an economic emergency occurs in your area or with your company. 

While no one could have predicted the affects from COVID 19, I think we can all agree that being cash strong is a viable strategy.

You should have anywhere from 3 to 6 months of covered expenses in a separate bank account.  I know, I know....it's a lot of money. Start slow and build each week. Anything set aside is better than nothing. 

Of course, to have a reserve means that you need to have the profit to put away. Right?  Well, another reason to know your numbers, revisit your pricing and make sure your labor rate is enough to support your payroll, operating expenses and have enough left over to set aside money for the unexpected.

Trust me, you'll be glad you did. 

I am not hear to debate the reasons why gas prices are so high these days.  I was in California last week and many gas prices at many stations were well over $5.00, some inching toward 6 bucks. 

Could we use this to our advantage?  Perhaps promoting ways for our customers to squeeze every mile out of every gallon through gas saving tips, preventive maintenance, etc.?

Like to hear from everyone. 

The strength of your company relies on many factors, and one of the most important is having a great set of systems and procedures in place. Systems and procedures bring consistency to your customer service, and to your repairs.  While I am not a fan of creating a company with employee clones, having everyone in your company on the same page, sharing common goals is crucial for overall success.

In terms of selling your company, having systems and procedures in place is an advantage when potential buyers are interested in your company. 

Please remember, it doesn't matter where you are in your business career, you are never too young to start planning for your exit strategy.  And, perhaps equally important is that by preparing your business for sale will actually help build a stronger and more profitable business.

Stayed tuned for more tips on Creating Your Exit Plan.

The time, effort and concern of the quality is not good for all repair shops.  And new car dealers are struggling too. I am also concerned over the long-term affect of the the cars on the roads, as repair shops and dealership use alternative parts, just to get cars back on the road. 

I am happy hear that labor rates across the country are increasing.  A much-needed raise that shops deserve and need. 

We are in NY, and also seeing a lot of part shortage issues. It takes time to hunt down parts, and sometimes the part is not available, or on back order. This is an issue. The time it takes to find the part hurts production, which hurts profits and more importantly: Morale and the customer experience. 

9 hours ago, Gary Childs said:

We went from $90.00 per hour to $110.00 6 months ago and not one customer said a thing. I'm thinking of going to $125.00 soon, the dealers around here are $135.00 and up, chain stores I'm told are around $125.00 already too. 

We see more and more shops around the country raising their labor rates. Good for you Gary. 

Please, let's be civil, not combative over this.  Everyone is entitled to their own voice and their own opinion.  There are many formulas to use, plus every shop has different overhead and different expenses and different levels of payroll. To simply put a formula to a post does not help anyone.

This is my opinion, it does not have to be yours.  My only objective, as someone in the business for over 45 years, is to elevate shops around the country.  We work hard, very hard.  Our employees work hard too.  We have a tough time attracting people to our industry. My hope is that through controversial discussions such as this, we can all doing a little to help raise the bar. 

That's all. 

Thanks for your comments, always appreciated.

I respectfully need to challenge you.  Calling around other shops to base your labor rate is not advisable. The majority of shops have not done the math, and do not know the true cost of labor and all associated costs.  Basing your labor rate by shops that have not done the math will hurt you, and your profits. 

Selling houses, and selling labor is different.  With that said, there are differences in different parts of the country.  Tech pay in New York and California is different than other parts of the country.  All that I am saying is to do the math for your shop. I think shops will be surprised where they need to be. 

Let's consider this.  Goods are priced by the manufacturers, (such as auto parts) the same no matter where it's sold.  So, why is that we need to lower the labor because of where we are geographically, and not the part? 

Last week I spoke to the owner of a car dealership in my town.  He told me that he lost three techs in the last 6 months.  Two went to work for the town, the other, not sure. 

We live in a different world today.  The automotive business is a profession, not just a trade anymore. We need to take a hard look at what we do each day, and work together to raise the image and professionalism across the entire industry.

AND, we need to be able to offer great wages, with benefits and a career path.  AND YES, this will take money!

Personally, I am shocked by the fact that there are shop owners that are not even at the $100.00 labor rate. Why?  Please tell me on this forum, why.  

I have heard of all the excuses: You don't know my area. You don't know my customers. You don't know my competition. I don't want to loose customers. My customers won't pay. 

I ma going to shock many of you when I say this: When you do the math, you may be surprised that your shop needs to be in the $175.00 to $200.00 labor rate range. 

Your thoughts?  And please don't ask me to do the math on this post. Every shop is different, and every shop owner needs to sit down and do the math individually. 

All valid points.  

This is my belief, and if we set aside the Chimney guy for now, across the board we are all too cheap.  If we factor in all the associated expenses for what it takes to repair and service these "computers on wheels" these days, and also factor in a decent wage for our employees, we need to consider labor rates well north of $150.00.....and for some hi-end shops, their labor needs to be near $200.00 or better.  As a business coach, I have done the math for many shops, and numbers don't lie. 

Now, I know that seems out of reach for many people.   And, it's the other shops around us that may hold us back.  BUT, the reality is this.  We can continue to accept low labor rates for all the reasons in the world, or we can separate ourselves from the rest and begin charging what we are worth. 

Getting back to the Chimney company: He charges for a service.  If it took him 2 hours, it would still be the same price.  There is something to be said for that.  In other words, he did the math and knows what he needs to be profitable, for best case scenario job, and a worse case scenario. 

There is no easy answer to this issue.  But, the good news is we are discussing it. 

Ok, please read this and have an open mind. 

I just had my fireplace chimney cleaned, along with my oil burner flue pipe. The entire service took 55 minutes (let's round up to one hour). The labor charge.....ready.....$325.00.   This is how it was itemized on my invoice- $175 to clean the chimney, $150 to clean the flue pipe. 

How many of us get $325.00 per hour? 

I have been using this company for a number of years now, they are reliable and do a great job.  AND, they charge what the job is worth, not by the hour.  How do I know this? I asked! 

We need to have a serious change in how we bill out our repairs and services.  The Chimney service company has little training, no continuing training to consider, little tool investment, low skill required and no overhead expenses like we have.  Compare that with all the tools and equipment we need, our overhead, our payroll, our training and continuing training, our information systems, on and on and on. 

Why are we, as an industry, so far behind with what charge per hour?  

9 hours ago, Gerald Martin said:

I was there.  Joe was amazing, and so was the energy from the audience.  Kevin Vaught did a great job of co-presenting.  Joe, I hope our paths cross again soon!  -Gerald Martin

Thank you Gerald for your kind words, and also for the great contributions you made, sharing amazing ideas and your knowledge!  That's the power of Fly with the Eagles!  

Exit Strategy-Step 4- Hire & Retain Great People

Your personal talents and skills will only get you so far in business.  If you rely just on what you can achieve alone, you will eventually plateau and never achieve your potential in business.  The fact is that in order to achieve your personal success, you need great people around you.  Having a strong team promotes greatness, This is because of the exchange of great ideas and also due to the different strengths people bring to the organization. 

Look for superstar employees. You may have to pay them more, but they are worth it because of what they bring to your company, and great people create great companies.  

Now, your job does not end once you hire the superstars; this is when you job begins.  You must do all you can to retain them: Coach them, mentor them, let them spread their wings, and empower them to take ownership of their positions. 

You success is dependent on the success of others around you.  A business, built and run with superstar employees, will be more attractive to a potential buyer and add much needed profit to the bottom line, while you're in business. 

6 hours ago, Obsidian Motors said:

I've been told that this time of year is just slow and there's nothing to be done about it. Is low car count always to be blamed on the season? 

Every business as seasonal shifts, but that doesn't mean you can't help to smooth out the highs and lows.  The only thing that has helped for me during slow periods is to increase our service reminders during the slows months, based on historical data. For every shop it's different. For my shop, I bump up service reminders for Jan and Feb. That is my slowest time of the year.  So, I make sure that my service advisors talk to each customer in the fall and early winter about future work needed, at car delivery, and pre-book appointments for Jan and Feb.  By increasing our service reminders, and pre-booking appointments, it increases our potential for more sales.  

Every shop needs to have a plan.  Do nothing, expect nothing.  Hope this helps.

What are other shops doing to help pump up business during their slow times?  

I zoomed in....I found the part I ordered two weeks ago! 

Amazing what is happening these days. Let's hope and pray that this issue get resolved, or at least better, soon. 

Exit Strategy-Step 3: Establish Your Goals

 It's no secret that having clearly defined, written goals, sets you apart from other business people.  You will achieve greater success, have less stress and build greater wealth for you, and for your family.  

Start today; create your 5 year, 10 year, 20 year plan.  Be specific about what you want to accomplish. And commit to these goals each and every day.  Don't worry about life's obstacles and challenges that may throw you a curve ball. Having goals is far better than not having goals, and those goals can be adjusted along the way.

With regard to your retirement, give a lot of thought to your future, and what that looks like. And create a goal for that too. It may seem far in the future for many of you reading this, but trust me, time goes by fast and preparing now for the sale of your business or succession will pay off. 

Remember, build your business as if you are selling it tomorrow, and you be more successful while you own it, have more options in the future, and your business will be worth more when the right time arrives. 

Stay tuned for Step 4!  

Years back, customers brought their cars in to us 3 to 4 times a year for an oil change. About every 3 to 4,000 miles. That simple service gave us the perfect opportunity to inspect their car and sell needed services and repairs. It also sustained healthy car counts. Today, we see more and more customers ignoring the shop's windshield lube sticker, and willing to wait for that "Oil Maintenance" light to come on. Many times that could be over 10,000 miles on a Honda civic! This, plus the fact that car makers have been preaching to consumers that their cars need little to no maintenance, is a major contributing factor in lower car counts.  

If shops are not taking a proactive approach and adopt a culture of total car care, shops will find it very difficult to stay profitable in the coming years. It's crucial today to educate your customers, promote preventive maintenance, perform detailed multipoint inspections on every car, and make sure you get paid what you are worth. 

What tips to you have to be more proactive and maintain healthy car counts and a healthy business? 

Business is slowly getting back to normal. (Wow, I actually called something normal!). While car counts are down, ARO is way up.  One thing I have notices; many people have not gone back to the office for work and it seems that many will never work full time at an office again. How this affects business, only time will tell.  Otherwise, no complaints. 

Exit Strategy-Step 2

Have Clean and Accurate Financial Statements

The value of your business will be determined by your net profit, cash flow and a strong balance sheet.  Having clean and accurate numbers will be more attractive to a potential buyer, especially if your business shows growth over time. While you may value your loyal customer list, and your tools and equipment, it's the profitability of your business that will be used to determine how much someone will pay for your business.  

As an added benefit, having clean and accurate financials will also help you through tough economic times, and if you ever need a bank loan. 

Get your books in order and work hard on your business to show a profit.