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Joe Marconi

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Everything posted by Joe Marconi

  1. Joe Marconi
    Let's face it, the days of the 3,000-mile oil change are long gone. And so is the $24.95 oil change price too. Today, we are lucky if customers schedule an oil change service. Many of them wait until the OIL LIGHT comes on. How many of your customers come in with NO, TO LITTLE OIL, in the engine???? For years the new car dealer salespeople, the carmakers, and the owners manual have brainwashed the average consumer that nothing is needed in terms of maintenance. With low viscosity oils, low tension rings, and extended oil service intervals, we see a ton of engine-related issues. I am not a proponent of the extended oil change service over 6,000 miles, no matter what you drive. Tell most consumers that 10k is ok, and you are lucky to see them at 20K! Isn't it time to change our strategy? Start promoting Maintenance services? Educated customers? And charge appropriately for this maintenance service?
  2. Joe Marconi
    Not only is this a hard concept for some, but many accountants also don't get it. But you are right, the Cost of Labor must go in the Cost of Sales (also known as Cost of Goods) section of the Profit & Loss Statement. The main reason is that this is how we price out jobs on a daily basis: We factor in the Cost of the Part, and the Cost of our Technician. Great points Larry!
  3. Joe Marconi
    60% overall gross profit (parts and labor) is a realistic and needed number to attain. For a general repair that usually means a labor margin of 70% and a part margin of 50%. Even in this age with the Rock Autos, Amazon, and eBay, a shop must achieve its needed part profit. While there are differences around the country, it's becoming more uniform in terms of overhead expenses. Sit down, and crunch your numbers. Review all your expenses. Understand what it takes to be in business. Your expenses should be around 40% of sales revenue. BUT, here is the difference: Once you know the Cost of Doing Business, you then add an ROI, a return on your investment. That's right, profit. Typically, general repair shops target a goal of 20% net profit. There are other factors involved, but these are the core numbers of a general repair shop: 60% overall GP, keeping expenses at 40%, and a goal of 20% net profit.
  4. Joe Marconi
    One of the things I battled with when I had my shop was offering financing to my customers for large repairs. I felt that some customers who needed help with financing would only add to their debt and those that could manage their money and wanted to spread out the payments. To be honest, I did not push financing. I focused on a clientele that knew had to manage their own money. Do you use financing options to help sell work? Pros and cons?
  5. Joe Marconi
    Words of wisdom James. Let me add that the shop is stronger when the employees work as a unified team that can act without the owner there all the time. Leadership is important, but culture holds the team together. By the way, I bet there are a lot of members that can relate to the sleepless night you mention, myself included.
  6. Joe Marconi
    Great information for all! And, for a transmission business, this it is critical that calls get tracked and conversions from leads to appointments.
  7. Joe Marconi
    That's what I heard too. The shop has to pay $1200 to sign up, and then give COSTCO members a 15% discount. I really don't know about this. How does the shop know that the COSTCO members fit the profile for the shop? Happy Easter!
  8. Joe Marconi
    Is Anyone signed up for the COSTCO Auto Repair Program? Or know of a shop that is? COSTCO members get a 15% discount at participating shops. That is a huge number! Here is a link to the COSTCO program: Costco members save 15% on parts, service & accessories | Costco Auto Program
  9. Joe Marconi
    When I had my shop, we did track lost leads, but we had to define what a lead was. For me, it had to be a customer asking a question about an issue or auto-related topic and the ability of the person on the phone to convert that into an appointment. While we did record calls, we left it up to the service advisors answering the phones to log a lost lead. (Each advisor had a daily log sheet). This wasn't the most accurate, since, without verification, we were not always sure what took place. However, I relied on the right people and the right culture to get as much information as possible. Now, not everyone calling is a potential customer either. A call asking about bodywork, or installing his own brake parts is not a lost lead, if not converted to an appointment. Open and honest discussions with the personnel are crucial in an effective lost leads process.
  10. Joe Marconi
    Larry, you bring up a good point; the older we get the less sensitive we are to people's reactions to our prices. And a big part of that is what you state with regard to your P/L. When the shop owners truly understand what it takes to turn a profit, setting margins and pricing becomes a normal function of the business.
  11. Joe Marconi
    Happy Easter and Passover!
  12. Joe Marconi
    Let's all remember, that a labor rate is an internal number we need to know in order to remain profitable after we pay our technicians. The consumer does not the ability to understand this number. For example: If a shop charges $175 labor to replace front pads and rotors on a Honda Civic, and that can be done in 45 minutes, that translates to about $233 per hour. HOWEVER, if your labor charge for an oil change service on that same Honda is $20.00 and that is done in 30 minutes, that equals $40 per hour. Sell the value of the job to your valued customers and receive value in return for your labor. My hope is that ALL shops across this great nation crunch their numbers and realize how labor is crucial to their success and to pay their employees!
  13. Joe Marconi
    Great topic discussion! For me, this hits home, since I recently sold my company. I knew it was time to pack in when I found myself getting too frustrated over everything, and I didn't have the desire or the passion anymore to work through the issues. In my younger years, I took on any challenged and worked through them. That changed and I knew it was time. But after 41 years in business, and 47 years in the auto business, it was a good run. Fortunately, I did a lot of the right things after a decade or so of struggling. So all is. My advice to ANYONE in business: build your personal wealth while in business, and it's never too young to plan for your exit. Life may throw you a curveball. Again: Great Discussion!
  14. Joe Marconi
    When a shop hires service personnel to answer the phones, one of the biggest concerns is handling the calls? And also, is the shop losing lost sales due to the wrong people on the phone, or due to proper phone training? How do you ensure the effectiveness of your service team on the phone?
  15. Joe Marconi
    I would tell my service advisors, "Build relationships with your best customers and won't have to sell. All you'll need to do is tell." You just proved that!!!! Thank you!
  16. Joe Marconi
    Agree. I think that what's so important to all shop owners is that they need to truly understand the cost of doing business. Early on as a business owner, I confused busy with being profitable. After failing, I realized that the KPIs of the business drive the business for the long term.
  17. Joe Marconi
    Great point! We, and everyone in our company, need to believe in the prices we charge. And also, everyone in the company needs to know the why. Great points!
  18. Joe Marconi
    Shop owners today understand the challenges of rising costs and inflation. Without addressing this issue and making the needed adjustment to your margins, the increase in your expenses will end up hurting your bottom line. Adjusting prices, up or down, is a function of being in business and, at times, unavoidable. Shop owners often fear that their customers may push back with any price increase. They ask themselves, “Will my customers understand? Will they shop other auto repair shops to compare my prices?” The truth is your true profile customers are not loyal to you because of the prices you charge for your services and repairs. Yes, you need to be competitive, but you also need to be profitable. Your best customers are loyal because of the value they receive from doing business with you. Those are the customers you need to focus on and spend most of your energy on. If you determine that you need to raise your prices, do it, but never apologize. Continue to build value in what you do. When value increases, price fades as an issue. However, when the customer does not see the value in your services and repairs, the customer will then focus more on the price.
  19. Joe Marconi
    I have not heard that. Where are you located?
  20. Joe Marconi
    From what I am seeing, $500 to $600 is the average. I recommend we get what we need, costs are still rising on everything, and we need to stay ahead of the increases, or we will not be able to catch up.
  21. Joe Marconi
    Agree. I am not in favor of "extra charges" on the invoice. I hope I did not mislead anyone. What I am saying is that when you look at expenses, whether is it a utility bill or a bundle of shop rags, every expense has to be calculated into your cost of doing business. Essentially, the labor margin and the part margin should provide enough gross profit to pay for all the shop's expenses. I hope this better explains my strategy.
  22. 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.
  23. Joe Marconi
    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.
  24. Joe Marconi
    That is an issue! Is business better this year than last year?
  25. Joe Marconi
    Thanks! We are all here to help each other! The power of Auto Shop Owner!

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