Joe Marconi

Great question. Most shops attain a much lower profit margin on tires. I have seen anyway from 15 to 25% on average. For this reason, most shops do not include tires in their overall part margin. Many shop management systems, such as Mitchell1 have two matrix's, one to markup parts, and another to markup tires. Labor is another story. If your target is a 60% GP overall, you need to set your sights on a 70% GP on labor and an overall GP on parts at around 50%. It's attainable, but it also depends on your tire sales mix. And if you do a lot of tires, you most likely have Tire techs which are paid at a lower rate than Master Techs, which means your labor spread will be better. As you can see, there are a lot of variables here.

You make excellent and valid points. I think what upsets a lot of shop owners is the marketing strategy and advertising that undermines the professional. For example, I listen to a sports radio station on my way home at night. And on that station, three different auto parts stores advertise to the DIY market, which is ok. What's not ok is the message that they can help and save money, so why spend your money at the repair shop. There will always be the DIYer, I agree. There will always be the Home Depot market too, where home owners tackle home improvement. I think the issue is more about pride and our image than anything. I hope I am making sense here?

As shop owners, our focus is on business, for the most part. There is nothing wrong with this mindset, but it may push employees away from you. Whether you like it or not, people are more concerned about their own lives and what’s important to them. When speaking to your employees, find ways to engage in conversation that has nothing to do with business. Find out about their interests, and what’s going on in their lives. Simply asking, “How was your weekend? Do anything special?” can work wonders to motivate people. When speaking with employees, be more concerned about them, not you. This will send a message that you care about them as a person. In turn, they will care more about your business.

Welcome to AutoShopOwner.com. You are among the best minds in the auto repair/service business. Looking forward to your contributions on the forums.

Thanks for being so open with us Gonzo. It's a testament to your character. This was a life-defining moment for you and you got a second chance. I truly believe you will come out of this better than you were before. The industry needs people like you, so I personally look forward to many more of your tips, articles and laughs. Deal?

It is getting harder and harder to find quality employees the traditional ways. Shop owners need to find who the top talent is in their industry and get to know them. Create a network of people. In other words, always recruit. Build a pipeline list of people. When the time comes when you need someone, reach out to the these people. This is what large companies do, and it's similar to professional sports teams.

I am not talking about walking and working in the bays or on the service counter. I am referring to walking through the back room, the inventory shelves, the closet areas and all the nooks and crannies. The other day, I did my monthly walk through and looked behind the tire balancer to find box after box of overstocked wheel weights. Hidden out of sight, but not hidden on my statement. I quickly gathered the overstock and called the vendor. My process is that all stock inventory items must be authorized by the manager. The manager has his stocking level sheets and will make sure we do not overstock any item. When I asked the vendor how this stock got past the manager, his reply was, “The manager was not there that day.” So, I responded, “And no longer are you.” The point is that we need to keep track of inventory and have systems in place to check all costs that can go under the radar. I like to trust my vendors, but as President Reagan once said, “Trust, but verify.”

Thanks Gonzo posting this article. Most of all, thank God you are able to speak about your situation. I have been preaching for years the need to slow down and smell the roses. We are not machines, and working as one will eventually catch up with us. I have heard too many horror stories about shop owners who pushed themselves to exhaustion. Business should enrich your life, not overtake it. Thanks Gonzo...a lesson for us all!

The summer so far has been very good. A lot of activity and good, profitable work.

A picture is worth a thousand words! Great to see you smiling Gonzo!

We work very similar. The point here is to ensure we get our labor. We all worry about part margins, which is totally understandable, but the biggest bang for the buck is labor profit.

You make a good point about labor. I am not suggesting that we charge whatever labor you want, but our labor is where our money is made, and we need to make sure that we are labor profitable.

To all the fathers out there, Happy Father's Day. Enjoy the day, your family, your friends and life! Joe

Nice to see Gonzo up and about!

Well, step one is over. Now the recovery. Let's continue to pray for a speedy recovery.

Gonzo, my thoughts and prayers are with you. But you are one tough Marine! There's a lot of fight in you. Get well soon.

No wonder nothing gets done in the country when the government gets involved!

Great question! The strategy of using a discounted Oil change to draw in customers does work for many. For others, it does not. Different shops have different business models. Not to over-simplify this, but take Starbucks. They would never lead with a cheap cup of coffee. They know their customer base and know what they will spend. There are shops that may not want to fill their bays with discounted Oil Changes; it would hurt production. In addition, it depends on your marketing strategy, demographics and what type of business you are running. Another example: if you target hi-end luxury cars, there may not be any need to promote a discounted oil change. Again, great discussion.

Right on target! I applaud you! All the shops should take this attitude. I have stood up to insurance companies and extended warranty companies for years. I will never sell myself short.

All time classic Gonzo! Proud to read it and proud to be an American. Since I read this article a few years back, I can no longer look at the car KIA anymore without stopping and thinking what KIA stands for. I have shared this with my crew, and when they too realized what KIA stands for, they stood in silence. Thanks Gonzo.

Sometimes in business, there are a lot of gray areas. Auto repair is not an exact science, and we can't always pick from a menu like a cashier at a McDonalds. The other day a customer came in complaining of a driveline noise. We have a standard charge for the test package to determine the problem. Half-way thru the testing the Service Advisor stopped the tech. It dawned on him that the car was a year old with 13,000 miles on it. We advised the customer seek warranty and did not charge her. Now, if the customer requested us to complete the testing after we informed her about her dealer warranty, I would have charged, Whether she did the repair with us or not. In business you must look at your overall gross profit and net profit; are your making enough? If not, the holes in your business are probably not those little gray areas.

My question is, Why would the customer decline the repair and not have the bulb working? It's a state inspection, and now the car fails? It's a socket and bulb, not 4 tires and brakes? Have you had prior history with the customer? How was job sold?

Tracking expenses and keeping expenses in line is key to the bottom line profit. Remember, gross profit pays expenses and what's left over is net profit...the bottom line. To truly understand what your budget should be takes an understanding of the Profit/Loss statement. But, I hesitate to go into detail, only because there are so many key performance numbers to consider, (labor profit, part profit, sublet profit, etc.) and also you need to look at your debt; which is not on your P/L, but on your balance sheet. I am not here to pitch what I do for Elite, and never have, so don't think I am trying to sell anything....but I spend an entire day teaching all this at Fly with the Eagles Course. I only tell you this, because it may be difficult to explain in a post. One very good thing, you are asking the right questions! And you absolutely should have a written budget. Speak to your accountant too.

We reached out to Friends of Karen and the Putnam Resource Center. They chose the families. The Event started at 1pm and ended around 6pm. All the families were there, and they brought friends too. They were patient and enjoyed the day. In addition to food, we had games for the kids.