By Joe Marconi, an Elite Worldwide Blog -  

My roots in the automotive industry go back to the 1970s working in a small 2-bay auto repair shop. As a young technician, my goal was to attain the status of master-level. That meant that I was expected to repair or service nearly anything that rolled into my work bay. However, “anything” really only meant vehicles made by General Motors, Ford, and Chrysler. The Big Three, as they were once known, dominated the roadways in those days. With a limited number of vehicle brands to learn, it didn’t take long to become proficient in all areas of automotive repair, from engine mechanical, drivetrain, electrical, steering, suspension, and all other systems. That was back then.

Let’s fast forward to today. Unless you specialize in certain areas and/or on specific vehicle brands, it is becoming increasingly more difficult to be proficient in a wide range of vehicle models and vehicle systems. The training, technical information, and equipment that is required today to be an all-around master-level technician is too overwhelming.

In this blog, I will explore a few ideas and push the envelope with a few controversial concepts. My goal is to help advance the automotive aftermarket and to improve the perception the typical consumer has of our industry. Everyone employed in the automotive industry should feel proud of the work they do.

The Reality of Modern-Day Automotive Repairs and Service

Is it reasonable these days to expect a technician to solve a complicated check engine light problem on Lexus, then jump to an electrical fault on a Volvo, and then analyze a transmission issue on a Dodge diesel pickup truck? Is it also reasonable to expect that technician to remain highly productive bouncing from problem to problem on different vehicle brands? The belief that the average technician can attain master-level status on a wide variety of vehicle brands and in all areas of auto repair has become unrealistic. We need to define different criteria.

Should There Be a Change to ASE Certifications?

We also need to consider the standards set by ASE (Automotive Service Excellence). Achieving ASE Master Level status requires passing a series of tests in a particular area of expertise. Most technicians consider ASE certifications to be a badge of honor, an achievement of accreditation. There is nothing wrong with this. However, in this modern world of sophisticated automotive technology among a vast array of vehicle brands and systems, does passing a series of tests accurately determine someone’s skill level and proficiency? There is no doubt that the ASE does a great job of creating standards for our industry, and their dedication to our industry cannot be ignored. However, I believe that the topic of what determines a Master Level Technician is something that the ASE needs to take a hard look at.

A Shift in Our Mindset is Needed

About eight years ago, I hired a technician that emigrated from Greece., we’ll call him Pete. When I reviewed his employment application, he noted that he was an Undercar Specialist. In his home country, Greece, he was trained in brakes, steering, suspension, wheel alignment, driveline issues, axles, tires, and wheel balance. I hired him, at first, as a B-level technician. What I found out in a short time was something I never considered before. Pete was so competent in his areas of expertise that I eventually promoted him to A-level technician and paid him accordingly. By focusing on certain vehicle systems, he was able to become highly proficient in those areas; to the point where he was the go-to tech in my shop for any undercar problem. Pete’s work was top-notch, with virtually no comebacks and the highest quality. The question is, why shouldn’t Pete be awarded the recognition of Master Level in his field of expertise?

Here’s another thing to consider. We often complain about finding competent technicians. Techs that can handle everything we throw at them. Again, is this realistic? That may have been a reasonable expectation in 1985, but is it today? We need to shift our mindset and help young technicians choose their area of expertise, based on their strengths and preferences. This will build a larger pool of qualified technicians. This strategy would also open up more jobs for more people to enter our industry.

With the proliferation of technology, diesel, hybrids, and electrical vehicles, doesn’t it make sense to have many areas of master-level status? Perhaps we need to take a page from the medical field. In the medical field, you have surgeons, cardiologists, gastroenterologists, pediatricians, obstetricians, gynecologists, dentists, and more designations. They are all specialists in their particular field, and they are all called Doctors.

The Economic Reality

I want to address the economic impact of running an auto repair shop these days. There isn’t a shop owner today who is not financially affected by the evolution of the modern automobile. The associated rising costs for tools, equipment, training, and information systems are heading into uncharted territories. Can the average repair shop afford to keep current on all makes and models? Buying expensive equipment, for example, has become a challenge. Shop owners often struggle, asking, “Why buy an expensive piece of equipment, only to be used once or twice a year? Where’s the return on investment?”

With respect to being profitable, again I go back to what I stated earlier, can an auto repair shop be productive in all areas and on all makes and models? High levels of production are needed to generate profit. However high levels of production rely on creating processes on a predictable set of operations. What this means is that when a repair shop narrows its focus on what they do best, and on the vehicle brands they train on, those shops become more productive. They also become more profitable than those shops trying to be all things to all people.

My Proposed Solution

The automotive aftermarket industry must adopt a new way of thinking. Just like the medical field, technicians should be able to, and encouraged, to specialize. This would allow someone to achieve master-level status technician in a specific area of automotive repair. Just as in the example above with my technician, Pete, we would have highly skilled technicians proficient in different areas. We would have under-car specialists, transmission specialists, drivability specialists, EV/Hybrid specialists, engine specialists, and other designations. And they would all be considered Master Level Technicians in their field of expertise. Productivity and efficiency would improve, more jobs would be made available, and more people would have pride in what they do, and in the industry they work in.

Conclusion

At Elite Worldwide, we are committed to helping our clients stay on the cutting edge of business strategies. We are also firmly committed to elevating the auto industry, raising the bar for all auto repair shops, and for those working in the automotive aftermarket. From our Top Shop Coaching programs, Pro Service peer groups, and our service advisor Master’s Program, Elite has the business solutions to help you take your company right to the top!

With spring upon us and the weather warming, it’s the perfect time of year to do some good spring cleaning. However, it’s not just our homes that can benefit – our finances can benefit from intentional tidying up and decluttering as well. This can lead to increased efficiency, better cash flow, and improved overall financial health for our businesses if done right and done consistently. In this blog post, we’re sharing 5 essential steps to spring clean your finances each and every year.

5 Steps to Spring Clean Your Finances

When spring cleaning your business finances, it’s important to do this in a step-by-step approach so you know exactly where you’re at, what you can improve on, and what action steps you need to take. Follow these 5 steps to declutter and improve your business finances this spring.

STEP #1: ANALYZE EXPENSES

Start by going through your expenses with a fine-tooth comb to identify any unnecessary or redundant costs that could be cut down. This could be subscriptions to services, softwares, or programs you no longer use, excessive spending on office supplies, or high fees from vendors or suppliers. By identifying areas where you can reduce expenses, you can free up more funds to invest in more profitable areas of your business.

STEP #2: NEGOTIATE BETTER TERMS

After identifying areas for potential cost savings, don’t be afraid to reach out to vendors or suppliers for better terms. Negotiating lower prices, longer payment terms, or bulk discounts is a great way to cut back on expenses and ensure you’re getting the best possible deal. Building strong relationships with your vendors and suppliers can also lead to perks such as exclusive deals or priority service, so be sure to keep those relationships and communication strong.

STEP #3: UPDATE BUDGETS AND FORECASTS

After analyzing your expenses, you’ll have a clearer picture of your current financial status and areas in which you can cut back and improve. Now, it’s time to update your budgets and forecasts for the rest of the year. Review your revenue projections and compare them to your expenses to ensure they’re in alignment for a profitable year. Adjust your budget as needed to account for any changes in your business, the market, etc. It’s a good idea to revisit your budget and forecast regularly to stay on track and make informed decisions throughout the year. This can help prevent you from reaching the end of the year and falling short of your goals.

STEP #4: PREPARE FOR EMERGENCIES

No one likes to think about worst-case scenarios, but it’s so important to be prepared for emergencies as a business owner. Review your insurance coverage to ensure it covers your needs. Consider adding or updating policies as you see fit. Establish an emergency fund for your business to cover unexpected expenses or disruptions to your business operations. The last thing you want is to be unable to pay your bills or your employees should something go awry. Having a financial safety net in place gives you peace of mind knowing that you can weather any financial storms that come your way.

STEP #5: IMPROVE INVOICING AND COLLECTIONS PROCESSES

Lastly, having efficient invoicing and collections processes is essential for maintaining a healthy cash flow and keeping things running smoothly. Review your current invoicing and collections processes to identify any inefficiencies or areas holding you back. Consider implementing software solutions like Wave that streamline invoicing, automate reminders for overdue payments, and provide insights into customer payment behavior. Improving your invoicing and collections processes can reduce the time it takes to get paid and minimize the risk of late or unpaid invoices.

This is the perfect time of year to spring clean your finances and ensure your business is set up for success and efficiency in the months ahead. Take a good look at where you’re at income and expense-wise, update your budgets and forecasts accordingly, prioritize planning for emergencies, and look for ways to make invoicing and collections more streamlined. By following these steps, you’ll be in good financial health and ready to grow for the rest of the year.

Tax season is just around the corner, and for many, this time of year can be both daunting and overwhelming. However, with the proper planning and organization, you can take on tax season with confidence! This blog post will serve as your comprehensive guide to tax season preparation, outlining the key steps you need to take to ensure a smooth and stress-free tax season!
 

How To Prepare For Tax Season

Preparing for tax season seems like a year-long process at times. From tracking mileage to organizing receipts, there’s always something tax-related to do. However, when the calendar turns over to a new year, it’s time to really start thinking about tax season preparation and the steps you need to take to get ready for filing day. Read on for your complete guide to tax preparation and everything you need to know!
 

STAY INFORMED ABOUT TAX LAW CHANGES

Tax laws are ever-changing and it is your responsibility to stay informed on these changes, as they can make a significant difference. Familiarize yourself with any updates or changes to tax laws that may affect your filing status or eligibility for credits. You can also reach out to your tax preparer or accountant for more information on these changes and the potential impacts on your taxes.
 

GATHER AND ORGANIZE KEY DOCUMENTS

This is one of the most daunting parts of the tax season preparation process – gathering all of the key documents needed. This includes tax forms such as W-2’s, 1099s, and other forms. You’ll also want to gather and organize receipts, mileage records, social security documents, bank statements, income statements, expense records, payroll records, tax deduction records, profit and loss statements, balance sheets, financial statements, and any other relevant or requested paperwork.
 

Take some time to review all of your financial documents and categorize them by income and expenses to make it easier to identify potential deductions or tax credits. You can use an accounting software like Quickbooks Online to make this process simple.
 

Having all of the documents you need to properly file your taxes in one organized place will save you a lot of time and prevent last-minute searches.
 

EXPLORE DEDUCTIONS AND CREDITS

With all of your documents and records organized and in one place, you can explore and identify potential deductions and credits that are available to you.

Some common deductions and credits include:

• Mortgage interest.
• Student loan interest.
• Medical expenses.
• Startup costs.
• Business expenses.
• Depreciation.
• Child Tax Credit.
• Education Credits.

These deductions and credits can save you significant amounts of money, so do your due diligence and explore all of your options.
 

CONSIDER PROFESSIONAL HELP

While some individuals prefer to handle and file their taxes themselves, it is beneficial to seek out professional help. Tax professionals can provide advice and expertise, help ensure that you have everything you need, it’s all accurate, you are maximizing your savings, and overall, help you navigate tax season with a little more ease and peace of mind. 
 

PLAN FOR RETIREMENT CONTRIBUTIONS

If you’re looking for more ways to positively reduce your tax liability (while planning for the future!), you can contribute to retirement accounts, such as 401(k)s or IRAs. Evaluate your contributions and look for ways to maximize them in order to take advantage of potential tax benefits, thus, reducing your tax bill.
 

REVIEW BEFORE SUBMISSION

Just like when you were in school getting ready to turn in a big test, it’s key to thoroughly review your tax return before submitting it. Check to make sure that all information is entered correctly, you’ve chosen the correct filing status, and all deductions and credits are accounted for.
 

REFLECT AND PLAN FOR NEXT YEAR

While you may be begging for a break from taxes once you’ve filed, this is a great time to reflect and plan for next year. Consider ways to make your life easier when it comes to next year’s tax season preparation as well as ways that you can maximize your tax savings. You may look at adjusting your withholdings, organizing your financial documents throughout the year using Quickbooks Online, tracking mileage using a software like TripLog, or managing your receipts online using Hubdoc or Dext. It’s never too early to stay proactive with your tax planning.
 

By following these steps and guidelines for tax season preparation, you can stay on top of things, take advantage of resources and opportunities to save, and get through tax season with less stress and more confidence. 

Understanding and navigating the tax implications and responsibilities of business income is crucial for every business owner, especially those operating as an S-Corp. A very common question that often arises is whether or not S-Corp distributions and draws are taxable. In this blog post, we’ll answer this question and explore the key considerations of S-Corp taxation.

What Are the Benefits of an S-Corp?

First, it’s important to understand the benefits of operating a business as an S-Corp. S-Corps provide a unique level of flexibility with money, as there is a single-level of taxation on income generated by the corporation. This differs from C-Corps, in which profits are taxed at both the corporate and individual levels. 

In an S-Corp, income “passes through” to the shareholders, meaning it is subject to tax on the shareholder’s individual income tax return, not the business’s. 

Are S-Corp Distributions and Draws Taxable?

Now, let’s answer the burning question of, are you going to be taxed on distributions and draws from an S-Corp? The short answer is… no! 

Generally, you are not taxed on distributions and draws, which is one of the most significant benefits that an S-Corp offers. 

However, the key to all of this is to pay yourself a fair and reasonable wage as an S-Corp shareholder. The IRS requires you to compensate yourself adequately, and once you have paid yourself a fair and reasonable wage, you are free to distribute or take the remaining profits out in draws. 

Avoiding Payroll Tax Pitfalls

Keep in mind that as your profits increase, it’s not recommended to increase your payroll. Why? This leads to higher payroll taxes! However, S-Corp distributions are not subject to these payroll taxes, making this a better option for business owners looking to maximize their income without taking on additional tax burdens. 

Distinguishing Distributions from Profit

Distributions are essentially the sharing of profits among shareholders. The benefit is, you don’t pay taxes on the distribution itself, just on the profit that it represents. This is key to remember when understanding the tax implications of S-Corp income. 

Before taking out distributions as an S-Corp, you must have actual profits to distribute. Therefore, business owners must track and manage their profits effectively in order to benefit from distributions come tax time. 

Avoiding Tax Issues

When taking out S-Corp draws, ensure that you are taking out actual profits, not loan money, such as that from the SBA. This can have significant tax implications that can lead to complications and hassles down the road. 

Overall, S-Corp distributions and draws are not taxable. This makes S-Corps a great choice for small business owners looking to maximize their profits and save on taxes. Just make sure you stay up-to-date on the IRS guidelines, pay yourself a fair wage first, and ensure your distributions and draws are based on profits. This can help you make informed and smart financial decisions that benefits both you and your business long-term. 

With a new year upon us, this is a time for businesses to reflect on their financial strategies and make resolutions for the year ahead that contribute to the long-term success of their organization. By adopting sound financial practices, businesses can better navigate challenges, improve their efficiency and workflows, and pave a path towards sustained growth. In this blog post, we’ll explore 10 financial resolutions that are essential for every business to make in order to have a profitable, prosperous year ahead.

10 Essential Financial Resolutions For Businesses 

#1: REGULAR FINANCIAL REVIEW

Commit to regular (monthly or quarterly) reviews of financial statements. This includes income statements, balance sheets, and cash flow statements. Doing so will help you better understand the financial health of your business while providing you valuable insights into revenue trends, expenses, and overall financial stability. 

#2: INVEST IN TECHNOLOGY UPGRADES

Invest in modern technology such as automotive diagnostic software, customer relationship management (CRM) systems, or accounting software to streamline your operations, save time, and increase efficiency.

Consider tools like Tekmetric, Nifti CRM, and Quickbooks Online to enhance various aspects of your business. 

#3: SET ASIDE EMERGENCY FUNDS

Financial stability largely depends on your ability to prepare for unforeseen circumstances and challenges. Therefore, make it one of your financial resolutions this year to build an emergency fund to cover unexpected expenses or economic downturns. This financial safety net can help your business stay afloat during tough times. 

#4: BENCHMARKING AND GOAL SETTING

Regularly benchmark your business against industry standards and set realistic financial goals. Use these benchmarks and goals as a roadmap to guide you in making sound business decisions and tracking progress.

#5: FOCUS ON CUSTOMER LOYALTY AND RETENTION

Acquiring new customers is essential for business growth, but retaining existing customers is equally, if not more important to the longevity of your business. Plus, retaining existing customers is often more cost-effective. Develop strategies to enhance customer loyalty, such as implementing a rewards program, providing exceptional customer service, or offering regular maintenance packages.

#6: OPTIMIZE INVENTORY MANAGEMENT

Optimizing inventory is another key financial resolution for businesses. Aim to efficiently manage inventory to ensure that parts and supplies are available when needed, without tying up too much capital in stock. Consider implementing an inventory management system to track stock levels and optimize ordering.

#7: TAX PLANNING AND COMPLIANCE

Staying up-to-date on tax laws and regulations is key for your business’s financial health, especially come tax time. Work with a tax professional to develop efficient tax planning strategies and ensure compliance, thus, avoiding penalties and maximizing deductions.

#8: DEBT MANAGEMENT

Strategize to manage and reduce debt in the new year by prioritizing high-interest debts and looking for opportunities to refinance or consolidate loans for better terms. This can help cut down on loan payments and improve your cash flow and profitability. 

#9: REDUCE UNNECESSARY EXPENSES

Reducing unnecessary expenses is a smart financial resolution in both your personal life and your business. Identify and eliminate unnecessary expenditures by regularly auditing expenses and finding areas where costs can be reduced without impacting the quality of your work or customer service.

#10: EXPAND MARKETING EFFORTS

Invest in marketing efforts to attract new customers and retain existing ones. This can include digital marketing, social media presence, local advertising, or community engagement initiatives. Tailor the marketing strategy to target the local market effectively.

By making these 10 financial resolutions, your business will be well on its way to a prosperous, profitable, and streamlined future. 

With the new year quickly approaching, it can be tempting to start planning for your future goals and projects. However, it’s important to do a thorough year-end financial review before shifting your focus to the new year. This not only helps you understand the growth you’ve made and areas of learning that you can improve on, but it allows you to celebrate your accomplishments from the past year. In this blog post, we’re breaking down how to do a year-end financial review so you can plan strategically, identify opportunities for growth, and improve your financial management and health moving forward.

How to Do a Year-End Financial Review 

Follow these simple steps and answer these guiding questions to conduct a thorough year in review for your business finances.

SET THE STAGE: WHAT WERE THE FINANCIAL GOALS?

To begin this process, revisit the financial goals of the business that were set at the beginning of the year. It’s important to look at factors such as revenue targets, profit margins, and expense management. These goals serve as the benchmarks that you measure your financial performance against, so reflect on how specific, measurable, and attainable these goals were.

EVALUATE GOAL ACHIEVEMENT: DID WE MEET THOSE GOALS?

After reflecting on the financial goals from the past year, analyze how well you performed financially against those goals. Did your business and team meet or exceed the revenue targets? Were expense controls put in place and made effective? Were there any shortfalls? If so, what reasons can you identify for those shortfalls? Celebrate the successes and growth that contributed to meeting or exceeding any financial goals.

CELEBRATE SUCCESS: WHAT WENT WELL?

It’s important to celebrate the financial successes and wins of the year with your entire company. Point out successful product launches, increased sales, or cost-cutting measures that proved effective for your company. Recognize the key players that made these goals a reality and provide insights into the strengths of your team’s financial strategies and operations.

LEARN FROM CHALLENGES: WHAT COULD HAVE BEEN IMPROVED?

Just as it’s important to celebrate your successes, it’s also important to acknowledge the challenges and areas that could have been improved. This may be budget oversights, unexpected expenses, or inefficient financial processes. By accepting and evaluating these challenges, you can make sound decisions for the future based on experience and use this as information to eliminate potential issues in the future.

REFLECT ON YOUR HONEST FEELINGS

Finally, put the numbers aside and reflect on your honest feelings about the past year. 

• Where did you feel like you made the most growth? 
• What challenged you to grow in positive ways? 
• What caused you stress or overwhelm? 
• What brought you the most joy and pride? 
• How do you feel about your business currently and what are you excited for in the future? 
• What do you want to continue in the new year and what do you need to let go to allow for other focuses?

Answer these questions honestly as you wrap up your year-end financial review. It may also be beneficial to have each team member do this to learn how everyone is feeling in terms of the company and financial goals as a whole.

Overall, conducting a comprehensive year-end financial review is a powerful tool for reflecting on the past, celebrating successes, learning from challenges, and making sound financial decisions for the future based on experience and data. This is about both the numbers and the feelings of you and your team. With this year in review complete, you’ll feel more confident moving into the new year with clarity!

As the financial year draws to a close, it becomes important to have a well-organized and accurate year-end process. This ensures that you can close out the year and transition into the new fiscal year smoothly by giving attention to the key financial aspects that impact your bottom line and business as a whole. In this blog post, we’re breaking down the 7 essential steps to take to ensure a smooth financial year-end as well as sharing a Free Year-End Checklist that you can use in your own end of year review and planning.  

7 Steps to Ensure a Smooth Financial Year-End

STEP 1: RECONCILE ALL BANK AND CREDIT CARD ACCOUNTS

The first step is to reconcile all bank and credit card accounts, as this is the foundation of a smooth financial year-end. Make sure that your records match the statements provided by the financial institutions that you work with so there are no discrepancies. By reconciling all accounts first, you can uncover potential errors and fix them quickly, maintaining the accuracy of your financial records.

STEP 2: IDENTIFY AND RECTIFY DUPLICATE TRANSACTIONS

If you’ve ever had duplicate transactions, you know just how much havoc they can wreak on your financial statements. This can also paint an unclear picture of your overall financial health. Thoroughly review your records to identify any duplicate transactions and rectify them quickly if you find them. Utilizing accounting software features can help you do this quickly and effectively, ensuring your financial data is accurate and reliable.

STEP 3: GENERATE INCOME STATEMENT FOR THE YEAR

A business’s Income Statement, also known as the Profit and Loss (P&L) Statement, summarizes the revenue, expenses, and profits or losses that a business experiences over a specific period of time. Generating a comprehensive Income Statement for the entire fiscal year provides a clear overview of your financial performance, which is a valuable tool for making decisions for the future.

STEP 4: COMPILE BALANCE SHEET FOR THE YEAR

A Balance Sheet is a snapshot of your company’s financial position at a specific point in time which consists of 3 main sections: assets, liabilities, and equity. It’s important to compile and review a Balance Sheet at the financial year-end to help you get a clear understanding of the overall financial health and position of your business.

STEP 5: EVALUATE ASSETS

Once you’ve compiled your Balance Sheet, assess the value of your assets, including both tangible and intangible assets. Make sure they are accurately valued and organized into the proper categories. When evaluating assets, don’t forget to consider the depreciation of fixed assets and any changes in the market value of investments.

STEP 6: REVIEW LIABILITIES

At the financial year-end, it’s also key to review any liabilities you’re responsible for, including short-term and long-term obligations. This includes loans, outstanding bills, and accrued expenses. Ensure all liabilities are recorded accurately and present a true representation of your outstanding financial obligations.

STEP 7: EXAMINE EQUITY

The final step in ensuring a smooth financial year-end is to examine your equity in-depth. Equity represents the ownership interest in a business. By reviewing and analyzing equity accounts, you can take note of any changes in capital, dividends, or retained earnings. This is key for understanding the financial contributions of the business’s stakeholders. 

In order to have a smooth financial year-end and a solid start to the new fiscal year, it requires a systematic approach, careful consideration, and attention to detail on various elements of your overall financial picture. By following these steps, you’ll be able to get a clear picture of where you’re at, where you’ve been, and plan for where you’re going.

If you’d like more support as you close out the financial year, you can grab our Free Year-End Checklist to get your bookkeeping organized for 2023 and end the year with confidence and clarity.

Can you believe that another year is drawing close to the end? It really does seem like the older you get, the faster time goes! As we enter into the Thanksgiving season, we wanted to take some time to reflect on our achievements, the achievements of our clients, and express sincere gratitude for all of those who have made this year’s success possible. Read on for some of our thankful reflections as we celebrate financial wins from this year.

Celebrating A Year of Financial Growth

We’ve had the privilege of witnessing several auto shops see significant financial improvements over the course of this year. On average, clients who have been working with us for at least 1 year have seen an average revenue increase of 10.7%. That’s amazing! These financial wins are a testament to their hard work, dedication, and commitment to excellence. Our clients’ successes are our victories, so it is incredible to be able to celebrate these wins together. 

How Our Clients Are Seeing Success

So, what exactly have our successful clients been doing to see these improvements in their business finances? Let’s take a closer look at the strategies and systems that have helped drive their financial growth. 

PARTS MATRICES

Effective parts matrices are key for accurate pricing and inventory management. Our clients are taking advantage of this tool to optimize their pricing strategies, which directly impacts positive revenue growth. 

TRACKING LABOR EFFICIENCIES

An auto shop’s bottom line is greatly impacted by its labor department, which is why tracking labor efficiencies is helping our clients increase profitability and identify areas for improvement. 

IMPLEMENTING NEW PAY STRUCTURES

Our successful clients are also implementing new pay structures that work for the culture of their business, whether that is flat rate, hourly, salary, or a combo. 

INVESTING IN TRAINING PROGRAMS

Investing in training programs for both techs and service advisors is key to the growth and development of their teams. These training programs have helped them elevate their skills and knowledge of their staff while increasing customer satisfaction and repeat customers. 

HIRING BUSINESS COACHES

Many of our clients have also invested in industry-specific business coaches to help guide their companies towards success. Their guidance, insights, and external perspective has been a game-changer for their businesses. 

TRACKING KEY KPIS

Lastly, many of our clients who are celebrating financial wins this year attribute their success to the tracking of key KPIs. Tracking and analyzing these KPIs has helped them make data-driven decisions for their businesses and adjust as necessary in the areas that needed more attention. 

Thankful Reflections From Three Rivers Bookkeeping

To all the auto shops that we have the privilege of working with each and every day, we want to thank you and express our sincerest gratitude to you. Our primary goal is to see each of our clients grow and thrive. This year has been full of many financial wins, and we are honored to celebrate them alongside you. Your success is our success, and we are so thankful for the trust you have shown us. 

Effectively managing your products and services list is essential for auto shops. Not only does this simplify and streamline your invoicing process, but it also ensures that your financial records are accurate and organized. In this blog post, we’re breaking down a simple and practical approach to setting up a products and services list for auto shops that maximizes your overall efficiency.

The Common Pitfall of Auto Shop Products and Services Lists

In our work with auto shops, we often see a common pitfall in their products and services lists. The mistake they make is creating an overly extensive and long products and services list. This happens when auto shop owners add a new product or service to their list each time they make a sale. This leads to a confusing list that’s a million miles long. However, you can avoid this pitfall by streamlining your products and services and using descriptions effectively. 

How to Streamline Your Products and Services List

Instead of creating a new product or service for each transaction in your auto shop, consider setting up a small handful of products and services and use the description to enter specific part numbers or details on the service provided. 

For example, set up a “Parts Service” item which is linked to the “Parts Income” on the chart of accounts. Then, each time a parts sale is made on an invoice, put the part number in the description with the correct price. 

Here are a few key categories that we recommend you include on your products and services list. 

LABOR

This category covers all labor charges for various types of automotive work, such as diagnostic labor, repair labor, or maintenance labor. 

PARTS

This is the category where it’s important to create a “Parts Service” item linked to the “Parts Income” account on your chart of accounts to avoid a long and confusing parts and services list. Whenever a part is sold, enter the part number and details in the description along with the current price. 

DISCOUNTS/REFUNDS

This category can be used to track any discounts or refunds that are offered to customers. This is important to track separately in order to make adjustments as needed. 

SUBLET

If your auto shop occasionally subcontracts out work to other service providers, this is the category you’ll use to record the costs of these sublet services. 

TIRE

Having a specific tire category for tire sales, installation, and other related services is a great way to keep these invoices separate. 

By having a streamlined products and services list, you can ensure your list is easy to navigate, which saves you time and reduces the risk of errors. You’ll also make financial reporting more accurate by using descriptions and properly documenting each transaction. Plus, it will make invoicing and filing receipts more efficient and give you financial clarity to help you make informed business decisions. 

As an auto shop owner, one of the most important aspects of managing your business and ensuring it is profitable is effectively organizing and analyzing financial statements in order to make sound decisions for your shop and employees. As an accountant for auto shop owners, I often see financial statement issues arise that cause frustration, overwhelm, and discrepancies in a shop’s finances. In this blog post, I’m breaking down 6 of the most common issues with auto shop financial statements and offering quick tips on how to fix them.

Financial Statement Issues In Auto Shops

Not Understanding Your Financials

The first issue I see with financial statements is auto shop owners simply not understanding their financial statements. They don’t know what they’re looking at, what the numbers mean, or how to navigate QuickBooks. This can make it really hard to make sound financial decisions if you don’t know how to use them to increase profits and make sound financial decisions. 

Solution: 

The solution to this issue is to set your financial statements up in a way that you can easily access, organize, and understand them. We recommend using QuickBooks for all of your financial statements, as this makes it easy to organize and analyze them. 

Shop Management Software Doesn’t Match QuickBooks

The next common financial statement issue is having discrepancies between your Shop Management System (SMS) and your accounting software, such as QuickBooks. This can lead to a lot of confusion and inaccurate financial reporting. Your SMS may offer one figure, but what QuickBooks shows is the most accurate financial recording. 

Solution: 

The solution to this issue is to make being consistent in your financial reporting a priority. Calculate and record your financial data in the same way each month, at the same time of the month. Err on the side of being conservative with your figures to ensure your shop remains profitable and your financial statements reflect the actual performance of your shop as accurately as possible. 

Parts and Labor Income Are Not Split Out

Failing to keep parts and labor income separate in your financial statements is another big issue, which makes it difficult to see where your actual revenue is coming from. With labor, there are so many factors to consider, such as employee wages, paid time off, benefits, etc, so it’s important to keep these aspects separate. 

Solution: 

The solution for this financial statement issue is to organize your income into separate categories for parts and labor. This will give you clarity in your finances and make it easier to analyze how profitable each aspect of your business is. This will help you make more informed decisions for your business. 

Parts and Labor Cost Of Goods Sold Are Not Split Out

Similar to the last problem, if you fail to split out parts and labor costs of goods sold, you can create discrepancies in your gross profit margin. This is a key indicator of the overall financial health of your business, so it’s important that it is as accurate as possible. It’s important to note that technician pay should be classified as a labor cost of goods sold for the most accurate financial reporting.

Solution: 

When setting up your accounting software, make sure to create a clear separation between parts and labor costs of goods sold. This will help you see the profitability of each side of your auto shop, allowing you to lean into the revenue streams that bring in the most money for your shop. Be sure to classify technician pay as a labor cost of goods sold. 

Not Tracking Warranty Work

Warranty work is where a lot of financial statement issues arise. When you are looking at your financial statements, you must account for warranty work, otherwise, your income will look skewed as well as your expenses. 

Solution: 

To ensure warranty work is classified and tracked properly, create a simple system to track this work and any transactions related to warranties. This will keep your financial statements accurate. 

Misclassifying Transactions

The last common financial statement issue in auto shops is misclassifying transactions. When you set up your QuickBooks, do so in a way that allows you to easily classify each transaction properly right away. This is an issue with a simple fix, but it can drastically skew your financial statements. 

Solution: 

After setting your QuickBooks up in a way that works for you to keep everything properly classified, make sure to regularly review your transactions to verify they’re accurately classified. This will help you catch any outliers or misrepresentations before it becomes a huge issue.

All in all, by knowing what financial statement issues to look out for in your auto shop business, you can ensure you are set up for success and have your QuickBooks laid out in a way that works for you, that makes it easy for you to manage and understand. 

As a business owner, hiring the right people to work for you and serve your customers is a critical aspect of running a successful company. As you look to grow your team, there are two different categories of workers to be aware of: employees and contractors. Both of these types of workers serve essential roles, but it's vital to understand the differences between employees and contractors, as there are different legal compliances, tax obligations, and nuances to both. In this blog post, we’re diving into the key differences between employees vs contractors so you can make the best, most informed hiring decisions for your business.  

Key Differences Between Employees and Contractors

Definition and Role Clarity

The most fundamental difference between employees and contractors is their relationship with your business. Employees are individuals who work under your direct control and management, performing tasks assigned by you that are integral to your daily operations. On the other hand, contractors are external workers or individuals who are hired to complete specific projects or provide specialized services, working independently and autonomously from the business.

Work Schedule and Degree of Control

The degree of control that a business has over its workers is another defining aspect between employees vs contractors. Employee-employer relationships typically involve a higher degree of control and direction from the employer. As an employer, you dictate an employee's work schedule, the tasks they perform, and how they accomplish them. Contractors differ because they generally have more independence and control over how they complete their assignments, when they work, and where they work.  

Ownership of Tools

The ownership of necessary tools needed to complete a job is another distinguishing factor between an employee vs contractor. An employee will be supplied with the necessary items, tools, and softwares necessary to complete their job. A contractor must supply their own tools and softwares, as they are likely used for more than one client. 

Tax Implications

There are vastly different tax implications when hiring employees vs contractors, and understanding these is crucial. When you hire an employee, you are responsible for withholding and remitting income taxes and Social Security from their wages. Hiring contractors is different in the tax sense because they are considered self-employed and are responsible for their own taxes. As the employer, you don’t withhold taxes for contractors, but instead, they summarize their earnings on a Form 1099 at the end of the year. 

Employment Benefits

As a business owner hiring employees, you may be required to provide employee benefits, such as health insurance, retirement plans, paid time off, and other benefits, depending on your company policies and legal requirements. Since contractors are self-employed, they do not receive these benefits from your business.

Long-Term Commitment and Dependence 

Hiring an employee for your business implies there is a more long-term commitment with the expectation of ongoing work. Employees are likely dependent upon the business for their income and benefits. With contractors, these commitments may be more short-term and have a defined scope and timeline. Of course, contractor contracts can be renewed or terminated depending on the business’s needs or the contractor’s desires. Contractors likely have a roster of clients, so they are less reliant on one single client or business for their income. 

Ensuring Legal Compliance

Classifying employees vs contractors correctly is critical for legal compliance. Misclassifying employees as contractors and vice versa can lead to an array of legal issues and expensive penalties. Stay up-to-date on the specific worker criteria set out by the IRS, Department of Labor, or other state authorities in order to ensure you are differentiating the two and classifying your workers properly. 

Knowing the differences between employees and contractors is vital for managing your team effectively and ensuring compliance with tax and labor laws. As you expand your business and hire new team members, take the time to assess the nature of the work and the relationship with the individual to make the appropriate classification. Understanding these differences is key for making informed financial decisions. 

It’s been 3 years since the onset of the global Covid-19 pandemic, and we are still feeling the side effects when it comes to accounting, taxes, and tax refunds. In both 2020 and 2021, the IRS issued notices under the Tax Code, giving them the authority to postpone deadlines and due dates related to filing tax returns due to the federally declared disaster. However, these notices did not pertain to the IRS lookback period for refund claims filed after April 15th. Therefore, many taxpayers who file yearly after April 15th will not be able to claim a refund as it falls outside of the lookback period. 

Now, in 2023, a new notice has been issued by the IRS, extending the lookback period for refund claims. 

Here is a rundown of everything you need to know about this IRS extension. 

What is a Lookback Period

First off, it’s important to understand exactly what the IRS lookback period for refund claims is. 

In general, a taxpayer must claim a refund on their taxes within 3 years from the date the related tax return was filed or 2 years from the date that the tax regarding the claim was paid. This IRS lookback rule allows taxpayers to request a refund in amounts paid within the lookback period. 

The Extended IRS Lookback Period

Since the IRS failed to extend the lookback period in 2020 and 2021, many taxpayers who filed after April 15th have been left unhappy and without an option to request refund claims on those payments. 

In an effort to remedy this problem, the IRS has issued a new notice regarding the lookback period, Notice 2023-21. This notice disregards the time periods from April 15, 2020 to July 15, 2020 (2019 tax returns) as well as from April 15, 2021 to May 17, 2021 (2020 tax returns), when determining the start of the lookback period. 

This notice comes in an effort to realign the lookback periods with the formerly postponed due dates for filing tax returns due to the pandemic.  

What Does the Extended IRS Lookback Period Mean for Taxpayers?

While the IRS’s extended lookback period is a positive move for taxpayers, it does not fully fix the problem created 3 years ago. This should be taken as an opportunity to look deeper into tax law and how we can create a permanent solution and prevent this type of misalignment in the event that future disaster filing postponements are made. 

People are already weary of the IRS, filing taxes, and making refund claims, and this situation definitely does not help their confidence. It is our hope that necessary changes are made to ensure that all taxpayers have the opportunity to claim credits or refunds moving forward without being denied. 

All in all, taxes and dealing with the IRS and lookback periods can be stressful, but the best way to ensure your tax filing and refund claim experience is as positive as possible is to keep your bookkeeping and financials up to date and organized so you always have what you need and can file on time. 

If you need help getting your bookkeeping and finances organized and ready for tax season, I’m happy to help with our bookkeeping and financial services. Feel free to browse our services and book a free consultation call with us today!

Have you ever walked into a room and stopped because you couldn’t remember what you were trying to do?

Forgetting is easy. Especially when it’s something that we don’t actively engage with on a regular basis.

When it comes to the reasons for what we do and the decisions we make as a business, remembering the “why” behind our actions is important. 

How It Started

ThreeRivers Bookkeeping started because I wanted to help small automotive businesses overcome a challenge I observed while working with them. I started my career working with mechanics and automotive specialists in a related industry, but I realized that my passion was for helping those small businesses in a different way.

Managing Bookkeeping’s Challenges

Bookkeeping is boring and tedious. Keeping everything properly organized takes so much time, effort, and specialized knowledge that everyday business owners can’t easily handle it. And errors in bookkeeping, which are quite common, can financially ruin businesses. Errors can make it harder to budget correctly. But worse is the damage caused by errors that impact taxes. 

My goal in creating Three Rivers Bookkeeping was to help remove bookkeeping as an obstacle for small businesses. Even as I am coming up with new services (coming soon), my goal is to help businesses eliminate obstacles and run their businesses more efficiently and effectively. 

Build Wealth Through Business

How much money do you want to make? 

In other words, what do you want to do outside of business?

This is a question we ask our clients when we start working with them. What you want to do with your time, will require a specific amount of money. And in order to make the amount of money you want, your business will need to make a certain amount of money as well. 

While there are many people who work on books and do bookkeeping, the key difference between them and Three Rivers is our desire to help our clients build wealth through their businesses. 

Taxes are annoying. They cost your business a lot of money to pay. And then you have to spend a lot of time gathering all the proper documentation. And don’t forget to keep it organized. 

That’s where I have a couple of tricks that I recommend for my clients that I would like to share with you.

Use a Receipt Manager

A receipt management system will allow you to collect and organize your receipts digitally. You won’t have to worry about losing the receipts or not being able to access them when you need them.

There are two types of receipt management softwares that I recommend depending on your situation and business needs. While both of these apps have a recurring membership structure, with your financial security at stake, it’s better to get something good that you have to pay for.

Dext

Dext’s primary focus is the ability to snap pictures of your financial documents and receipts while allowing you to split and itemize those receipts. It also has more features that are available at higher tiers of memberships.

HubDoc

Hubdoc does most of the same things as Dext but can’t itemize receipts. It is less expensive and has a different approach to organization.

Whichever of these two you choose, I recommend starting with a free trial and seeing which one is the right fit for your business.

Track Mileage Digitally

Tracking and calculating mileage can be tricky. But you don’t have to do it manually. And with a good software you won’t have to stress about it at all. 

TripLog

TripLog has a few key features which make tracking mileage easier. The most important feature is their compliance with tax codes. After that, they offer tools that can track your trips automatically, and help you classify your trips easily. 

And they offer good packages for either large businesses or individuals.

In Conclusion

There are plenty of other softwares that can help you avoid wasting time with tracking and organizing your documents for tax season. And using them will not only help you feel less stressed when it comes time to visit your tax preparer. They will make your daily management of your business easier too.

Don’t miss out on using tech to set your business up for success.

I’m not going to sugarcoat things. Times are hard.

And they aren’t going to get any easier. 

One of the problems that makes hard times worse is fear. 

• Fear of the future 

• Fear of financial issues

• Fear of a collapsed economy

We could spend all day writing out lists of the things we are afraid of, but we don’t have time to be that thorough. There are however a few key fears when it comes to your business finances that I believe need to be faced and addressed.

Losing Savings

When your money reserves start to dip, it’s easy to feel the pressure.

Pressure turns into stress which turns into sleepless nights and uncomfortable discussions about money. 

Inflation is probably the biggest drain you will face in your finances. But that doesn’t mean your situation is hopeless. 

You can slow or stop the losses by eliminating redundant purchases and waste. Unused subscriptions for things such as streaming services are one of the largest sources of wasted money (and they’re easy to find and fix).

Losing Work

As business owners, spending money is less scary when you have enough work coming in to pay the bills.

When work slows down, what you need is a strategy to boost your sales.

Sometimes you need to start or increase your marketing. Other times you may need to seek help from a business coach to help you find where your business is not reaching its potential. Slow downs are unavoidable, but there are ways to handle them.

Losing Investments

The stock market is not fun to watch. 

Your money is riding a roller coaster, but you still feel your heart drop when the market turns down. The good news is that investing is a long-term game. 

If you miss the best days on the market, you will miss out on a lot of money. That’s not to say that every strategy works for every person. And you should seek out a financial advisor to help you make the best decisions. But just because the market is down today, doesn’t mean that the market will be down forever.

Living Boldly

Once you have recognized and faced your fears, you can start to address the solutions. Most companies that fail to grow or even survive, fail because they can’t or won’t face their fears. You can’t solve a problem you aren’t willing to look at. 

Sometimes you need help to get through the challenge of facing your fears, but in the end it will be worth it. If you don’t know how to address your financial fears in your business, I would be happy to speak with you and give you some direction.

I don’t have a crystal ball. And I can’t predict the future.

But there are some things I do know about what is coming in 2023 based on the current direction of our economy. And none of it looks pretty.

Continued Inflation

Inflation has been at an all time high for the past year and it’s not going to suddenly go down.

Thanks to government spending and the printing of money to pay for that spending, inflation has spiked. And normal inflation which comes from increasing costs of goods and services is still a factor. 

All that to say, inflation is going to continue to impact the economy and business finances well into 2023.

Less Disposable Income

With inflation and increased cost of living comes a decrease in disposable income. A factor we are beginning to see, even now, is the reduction of unnecessary spending in low income households.

While it starts by affecting low income households, it will begin to affect middle class households very soon. Many local businesses depend on people being willing and able to spend money on non-essential items.

More IRS Involvement

Last year saw the largest increase to the IRS in decades. The number of agents that have been added is a sign of increased focus on small businesses and increased audits.

Expect to pay more in taxes or to be stuck dealing with surprise audits as the government attempts to crack down on errors in filing and those who evade payment. 

Preparation is Essential

Local businesses fail first. 

When the economy suffers, the mom and pop style stores will bear the brunt of the problems as they don’t have the resources to spread out the losses. 

Survival requires preparation. You have to start making decisions now if you don’t want to get caught off guard by increased financial hardships.That’s where a review of your current financial situation can be extremely helpful. 

If you want to be prepared, I would be happy to sit down with you and discuss some solutions. Just set up a no-obligation appointment to get started!

Shrinking Repair Outlet Population

"Vehicle maintenance is becoming less convenient for Americans. There are fewer outlets repairing cars and light trucks, despite the increasing population and complexity of cars and light trucks on U.S. roads. The number of repair (DIFM) outlets fell by nearly 14,000 over the past five years (2016 to 2021), and future annual reductions are likely."

"Nevertheless, not all types of repair outlets suffered losses. Repair Specialists, Foreign Specialists, and Dealers have grown in number, while the four other major types of DIFM outlets have endured thinning ranks. See the all-new 2023 Lang Aftermarket Annual for a ten-year history of the changing number of all major types of auto repair outlets across the U.S."

Whether you only occasionally buy tires for your business or find yourself constantly needing to replace one, two or an entire set, there is a way to start saving money immediately.

Champtires has 30,000+ tires in stock at any given time - in nearly every brand, size and tread depth - at the lowest prices. Free shipping to the continental U.S. is included on every order. Auto businesses can join an exclusive program to save even more.

Why Buy Used Tires?

While Champtires does sell new tires, high quality used tires are our specialty. Buying used tires is:

• Safe. When bought from a reputable tire shop, like Champtires. We’ve been in business since 2009, and every tire that enters our warehouse is inspected and air tested.
• Environmentally friendly. Instead of the used tires ending up in a landfill, you will be reusing a premium, recycled product.
• Much more affordable. Even if you just need to replace one tire, the cost of rubber has increased dramatically and has caused the price of new tires to skyrocket. 

Why Trust Champtires?

Since 2009, Champtires has specialized in selling new and high-quality used tires to drivers across the U.S. Every tire that enters our warehouse is inspected and tested, and we offer a 14-day satisfaction guarantee.

How To Save Even More on Every Order

Auto businesses are invited to sign up as a Champtires business partner. This gives you a 10% discount on each order placed through Champtires.com and access to other promotions. 

Learn more about the B2B Program.

Shop our inventory.

By Bob Cooper

We all know that these incredibly challenging times are impacting businesses and people all around the world. To help maximize your shop's sales and profits in the face of these difficulties, here are 3 simple and cost-free tips that you and your service advisors can start implementing today. 

1. Pick up the phone and call your customers. However, this is not a sales call and shouldn't involve discussion about the customer's vehicle. Rather, this is a chance for you to check in on your customers and their families, let them know you are thinking about them, and offer to help in any way you can. By giving them a call and speaking from your heart, you are showing your customer that you not only care about their well-being, but that your company truly values people over profit. 

2. Set up call forwarding during your commute to and from work. By having incoming calls forwarded to your cell phone rather than to the shop's voicemail during your drive to and from the shop, you are essentially extending your hours and allowing more customers to reach you if they are in need. There may only be a couple of calls that come in during these times, but it can make a world of difference for those calling customers. 

3.  Adjust your 2020 sales and car count goals so that they are broken down to daily targets, and track these daily goals in a descending manner. Instead of feeling discouraged if your shop is far from reaching a monthly or weekly goal, having daily sales and car count goals will allow you and your advisors to look at each morning as a brand new opportunity to accomplish the goals for the day. 

Tracking these daily goals using a descending method helps your team focus on what they still have left to accomplish, and motivates them to reach the targeted numbers. For example, if your daily car count goal is 10 cars, and 7 cars have come in, a descending method of tracking will have your advisors saying, "We only have 3 cars left to meet our goal!" rather than, "We've had 7 cars come in so far." When I first began coaching, my average client saw a 15% increase in sales just by making this simple switch from an ascending to a descending method of tracking goals, so this tip is sure to help! 

For additional help increasing your shop’s sales, learn more about Elite’s Online Masters Service Advisor Sales Training, or give us a call at 800-204-3548. 

Get Ready to Spring Into Summer

What is your plan for summer? As the weather warms up, people begin thinking about summer activities. It may be a vacation road trip or weekends at the lake. In any case, the focus will return to the family car. There are a few things your shop can do to accommodate your clients, put their minds at ease, and give your shop a renewed sense of purpose.

1. Focus on your vehicle inspection program with particular attention on summer items.
   

• Wiper blades, washer bottle, & washer operation
  
• Check brakes, brake hydraulics, parking brake, and test brake fluid
  
• Cooling system hoses, test coolant condition, pressure test, inspect radiator and expansion tank, belts, idler, & tensioner
  
• Check tires: general condition, measure tread, set tire pressure, and check for jack, handle, and spare.
  
• Perform a charging system and battery test. Check battery connections for proper torque and clean as needed.
  
• Inspect tune up/fuel efficiency items. Check throttle body, inspect MAF sensor, air filter, and visually check wires, plugs, and distributor cap and rotor if equipped.
  
• Check all fluids and use a fluid comparison plate that puts their fluid next to new fluid. The optics of this comparison are awesome.
  
• Check steering and suspension.
  

The general idea with the inspection is to keep your client advised about the condition of their vehicle. It will create sales and improves your average repair order. But by far the most important thing this does is build trust, and that trust is priceless.

1. When the vehicle is picked up, review the unsold recommendations in detail. Explain the benefits of the recommended repairs and services. Show the fluid plate or pictures. Once those seeds are planted, schedule your client’s next appointment. This will improve your ARO and stabilize your car count.
   
2. Follow up with a call in a week or two to make sure they were satisfied with the service and that their vehicle is doing well. Offer a discount on the unsold service. Have an expiration date for the discount to insure some urgency. This will keep your shop top of mind.
   
3. Be sure to promote your nationwide warranty. Get with your banner program vendor for handouts and some points of purchase material. Give each client one when they cash out.
   
4. Another way to stay top of mind and show your clients some appreciation is to do a cook out. Close the shop and grill out some hot dogs and burgers. Get a DJ or do a radio station remote broadcast. Promote it weeks or months in advance. Promote it at the front counter, in your existing advertising, and on your website. Have raffles and door prizes. When planning the date, be sure it does not conflict with any other local event(s). Be sure to personally invite your very best clients. Give them the VIP treatment.
   

These are just a few ideas to show your clients your concern and appreciation all at once. Take this opportunity to make the best of your summer. Focused inspections are great for business and demonstrate your professionalism. Summer only comes once a year and we have to make hay when the sun shines. Grab the reins and make it happen. Here’s hoping everyone has the best summer ever !!

In my 25 years of automotive shop ownership I’ve lived through at least three recessions or economic downturns if that’s what you’d like to call them. They have some factors in common of which we should all be aware, the primary one being that eventually they come to an end. So there’s your silver lining; knowing that at some point the economy will normalize itself. The trick is to still be there to take advantage of the good times that will no doubt return.

First a couple of definitions: Recession – When your neighbor loses his job. Depression – When you lose yours.

Recessions scare people, and when they are in fear of losing their income or a sizeable portion of it they cut way back on their spending. They try not to sign up for long term commitments like buying new houses or cars. They try to make do with what they have and of course, that’s where we come in.

Most people don’t lose their jobs during this period, only a small percentage of them do. After awhile Joe Average figures out that his job is safe. While he was worrying and not buying anything an interesting phenomenon was taking place. He was paying down a considerable portion of his debt, mostly credit card. Now when he begins to once again feel secure he starts to spend money again as if he had it. When enough people do that the recession ends.

That’s the cycle. How does it affect you?

In the beginning stages, when Joe stops spending, he really stops. He doesn’t even want to part with the money to maintain what he has. So he will only want to come in to have a specific problem fixed and that will no doubt be one that is really bothering him.

This is when you need to turn into super-salesperson. You have to seize every opportunity for business from that customer and as many of his friends, neighbors and relatives as you can. You do this by conducting a complete bumper to bumper and top to bottom inspection of every vehicle that comes through the door. Then you not only make the necessary service recommendations but you show the customer in black and white dollars and cents how having you perform these services will save him money either in the short or long term.

You can’t be casual about making these sales. They are important both to the customer who wants the car to last at least till the recession ends and to you who needs to do business today. In other words, you need to become more aggressive in closing these sales. That doesn’t mean that you back people into a corner or tell them that if they don’t let you service the car it will break down on some lonely road at three o’clock in the morning. It means that you take the time to explain the down and the up sides of having the service performed.

Follow up to that initial inspection is critical. You can’t make a bunch of service recommendations, have the customer say he’ll think about them and then sit and hope that he’ll take it upon himself to come in. Part of your aggressive strategy is to start making follow up phone calls to offer appointments to people whose cars you’ve already diagnosed.

Following up with customers is probably the most difficult discipline. There may not be any instant gratification and you may have to make many calls before people respond well to you, but it’s something you have to do. We can’t afford the luxury of leaving it to chance.

So if you want to survive this recession and prosper once it’s over, here’s what you’ll probably want to do:

Keep advertising, but be careful with your money. Interview each customer to find out exactly how they heard about you. Then adjust your spending to focus dollars on what works. Try coupons for loss leaders that will get vehicles up on your lifts to give you the opportunity for the full inspections you want to perform. Now is not so much the time for institutional advertising. It’s a time to be specific. Make offers that will actually bring a response.

Advertise to your existing customers and accounts. There’s no reason not to send coupons and make special offers to your existing customers. Too many shop owners think they need to extend these specials only to new customers while they give no breaks to existing clientele.

Don’t discount repairs. They are your bread and butter, but do discount services that will bring in new customers and bring back existing ones.

Launch an outside sales campaign. Nothing makes you feel better during times like these than getting out and doing something about it. Go knock on company doors. Every company owns vehicles and has employees who own vehicles. If you aren’t fixing them someone else is. Many times they aren’t happy with their service provider but keep using him because they don’t realize there is another choice. Be the other choice. Get out and make them aware that you exist and can help them. Find out what the competition does for them and offer to do more, do it better, and faster.

When the recession ends keep on doing these things that helped you through it. Now you can make the profits you really deserve.