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Exit Strategy, Retirement, Selling Your Repair Shop

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Ready for retirement? Do you have a plan? Selling your auto repair business? What is your exit strategy? Building a plan for retirement.

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  1. What the hell did I just do?

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  2. Selling your shop.

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  3. owner burnout

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    • Scott, A lot of insight in your post, as usual. I think the one thing that worries me is, when a junk yard will give someone a different warranty than they will give you.¬† We've seen it happen, we call up and get a 30 day warranty.¬† Customer or another shop calls up 1-2 days later and gets the same price (sometimes even cheaper with the same sales rep) with a better warranty offered to them. The law is assuming that all business is conducted above board and with standards... when this industry is far from that, especially with second hand parts.¬† Sh*tty scenarios that constantly have us adjusting and sometimes making harsh decisions just to protect ourselves. It's really just a sad state of affairs that we have to be the adults to protect other adults from themselves.¬† ¬† I recently had a scenario where someone brought me a 1997 F Super Duty to have the brakes checked.¬† The driver that dropped it off, noted several other concerns that made him feel unsafe.¬† The standard procedure here is, new customer.... full inspection from bumper to bumper. Which we did and uncovered several unsafe items in addition to the other items that the owner had mentioned.¬† His total estimate was around $6,000 for a really neglected vehicle.¬† He wasn't interested in fixing anything, he wanted to have working brakes, so I should just "put pads and rotors on the truck and lower my price significantly." This guy flipped his lid and insisted he was right and I had to do what he wanted to do, because he would assume all liability anyway.¬† I tried to get him to understand that it doesn't work like that... and this is a guy who owns a business in town. He eventually found a butcher to do things his way and made sure to reach out and throw it in my face that he got what he wanted at this other shop and I was just trying to rip him off.¬† This individual went as far as threatening me with bad reviews because we charged him for our full inspection and estimate.¬† He has since pretty much told anyone he can in town that I was trying to rip him off, essentially trying to tarnish the reputation I have spent over a decade to build. Our technician has 2 hours and 8 minutes of time into his inspection, he left that disaster of a vehicle on my property for nearly 4 days (it filled our entire warehouse with smoke when trying to start it) and it took us well over 2 hours to find correct parts, part numbers and sources for these parts.¬† An estimate that he brings to the butcher... which orders all of the parts that we told him were for the vehicle... and looks like a hero for doing what the owner wanted. But I've gotten used to being the bad guy.¬† My business.¬† My insurance policy.¬† My rules. The moral here?¬† I got paid for my time.¬† Probably not enough to deal with the aggravation this guy caused... But we provided an exemplary service and we got paid for it. ¬† Ricardo
    • This is such a double edged sword.¬† I can definitely see it's value after some of the discussions we have here. But I just don't see it as a fit for what we do here and how we do it.¬† My guys give 100% nearly every day and changing the dynamic would change the culture we've worked so hard to build. I also feel like there is incentive to oversell and see how much they "can get away with" in an effort to make money.¬† Which is the complete opposite of what we do here.¬† We explicitly don't sell and if you I catch you selling something someone doesn't need or worse yet, selling someone on undue fear... It's grounds for dismissal. I got my guys to do exactly what I need them to, just by talking to them.¬† They are appreciative of the respect we all have for each other and the team approach to what we do.¬† It makes it challenging to find people to fit into our mold when hiring, but I don't know anyone who easily hires employees.
    • Ricardo, The part I shared from that article was just to shed some light on the role law has on dictating warranties, and the fact that you can't just write a disclaimer on the invoice and think you have no liability. I'm sure if we dig¬†through Maryland's consumer laws, we will find a more in depth explanation, that is if we don't fall asleep first.¬†¬†An implied warranty is essentially what a consumer can reasonably expect (yes, pretty vague, and I'm sure is different for everyone). There is a pretty good description here:¬†https://consumer.findlaw.com/consumer-transactions/what-is-an-implied-warranty-.html With your regard to the what if on the junk yard motor, from what I have read, you just have to pass along the same warranty the provider of the part offers. So regardless of new, used, rebuilt, or other, you just have to extent the same to your customer. You can't use any disclaimer to change that. This of course is Maryland law, which is where I am located. My understanding is that the same would apply to a customer supplied part. So if you bought a used engine from a salvage yard with a 3 month warranty, you would have to provide the same 3 month warranty to the customer if they bought it themselves at the the same salvage yard.¬†¬† It sounds like you and I have come to the same conclusion though, and that is we are ultimately responsible for any work we do on a customer's car. If we use our supplied parts, or we use their supplied parts. And while the laws are a bit vague, as you say, I don't think that really matters much any more, because if there is a problem, it will always come back to the fact that you and I are the professionals. Customer's are allowed to be ignorant, but we aren't. It reminds me of NTSB airplane crash investigations. I don't fly anymore, but I used to. One of the guys¬†I work with is also big into aviation and we used to fly together a lot. We joke around about this quite often, and that is the fact that the NTSB almost always sites pilot error when a small plane crashes. Wing falls off, "pilot error" engine grenades "pilot error"¬†¬†bird strikes "pilot error". As I say it is pretty comical at times. My point is that it we will always shoulder the responsibility. We very rarely install a part without doing the diagnostic work first. But when a customer has a stalling, not starting, or some other¬†serious issue, and we cannot find the cause because we are unable to reproduce. then we don't object to trying something if the customer wants. That is as¬†long as they fully understand that is essentially a guess, and a way to eliminate a possibility. Scott ¬†¬†¬† ¬† ¬†
    • My techs are flat rate. My Service Writer is hourly plus a commission. With Warranty work, it depends on the situation. If it's something that returns because of a tech, then that tech ends up doing the warranty work without time added. If it's a parts failure, I end up paying the tech twice to do the work.¬† If I have a different tech do the job for some reason.... then I pay them the hours whether it's a parts failure, or a tech failure.¬† Not getting paid to do the job a second time is the motivation part of doing it right the first time. If there is any question of blame, my tech get's paid. Using this method has kept my techs accountable for their quality of work at the same time as paying flat rate keeps them accountable for their efficiency.¬† I tried once going to a straight hourly pay structure and found quickly that a tech would rather make $28 an hour sweeping the floor and polishing the wrenches than fixing cars quickly and efficiently.¬† Billable hours dropped almost immediately and without me micro managing their time, I just couldn't get the production needed to stay in business.¬† I also tried an hourly with a smaller commission, and still found that a couple of the techs that could survive on just the hourly would be here 40 hours a week and only book 12 to 16 hours.¬† Went back to straight flat rate, and my shop might not be the cleanest in town, and the techs tools might not be blindingly shiny when their drawers are opened, but the production that keeps the shop profitable and open is there.¬†
    • Our employees have all been on a flat hourly rate. How do you deal with the techs on hourly plus incentive? I am interested in hearing opinions on this topic. I always thought that the base hourly rate with incentive somehow worked in would always increase workflow / productivity. The only issue that I see is how do you deal with warranty work?
    • We are up 26% year to date in gross sales, which is great after 3 years being fairly flat. The number on my books I find surprising is we are up 81% Net Income. We eliminated a salary service writer that wasn't pulling his weight. My wife filled in part time there, and I put in a few more hours keeping up with the work orders. and after a year we replaced that service writer with one that is on hourly plus a commission. I'll never have an employee on salary again, and there will always be at least a portion of their pay based on our sales. Amazing the difference a pay structure with incentives does for employees. ¬†
    • Update. My call today went really well. It was my input while exploring that sent the text message and now I know how to keep it from happening.¬† The inspections are still going well. Have a phone call Wednesday with the rep and we'll see how that goes. Seems like it should generate the extra business to be worth it and I haven't had any customers having negative reactions to the text messaging besides the one that was confusing because of me.¬† I lose a few minutes in the morning responding to some of the texts coming back to us, but those responses have also added more work to the schedule.
    • We also provide full digital inspections, mandatory with ever service performed.¬† If it is not done, the technician or service advisor must physically bypass it. ¬† Forcing everyone to really inspect vehicles consistently. ¬† If you're interested in an organized approach to processing vehicles and customers, we would be happy to help you get setup and give you several month of free use. ¬† You can learn more @ www.completeautoreports.com ¬†


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