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There are many different website services, packages, and programs available when choosing the right company/webmaster for your auto repair business. You can sign up to a service that provides a robust website, SEO (Search Engine Optimization), analytics, marketing services, social network management, integrations, etc. You can also sign up for much simpler solutions which usually only include a website and some SEO. You can also try to use an online website builder to get yourself online with something very basic, which is better than nothing. So many different option and they all have their associated costs. In some cases there are initial startup costs as well. In most cases however, there are monthly costs associated with operating a business website. Please take a moment and share, if you would like, about your website costs and associated services. Please also take a moment to answer a few quick question in the attached poll. Thank you.
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By Bob Cooper If you speak with most shop owners they’ll tell you that they think their shop is worth x amount of money. Ask them how they came up with that number, and they’ll tell you it’s based on what they heard another shop sold for, or it’s predicated on their annual sales. But if you really want to know what your shop is worth, first of all, forget everything you’ve heard about “goodwill” and the fact that you have thousands of names in your database. That’s icing on the cake, but it’s not something a buyer can take to the bank. And although there is some value associated with some franchise names, there are two things that are most important to a buyer: the “tangible assets” and the “income history.”
Tangible assets are things like real estate, cash in the bank, secured receivables, inventory and equipment. To put it another way, these are the assets that buyers could turn into cash if they had to. When you’re establishing the value of your inventory and equipment, bear in mind that the actual appraised value may very well be far less than what you originally paid. So tangible assets are always number one.
In regard to “income history”, we all know that past performance is no guarantee of future performance, yet the substantiated income history of a company is what buyers can use to forecast earnings. And don’t forget: The amount of money the “company” made does not include any income you’ve drawn out of the company as a salary. The company’s income is the amount remaining after all expenses, including your salary, have been considered.
So imagine you’re looking to buy a shop, and let’s say the tangible assets are worth $400,000. In addition, let’s say the shop has a history of generating $100,000 in annual income after all expenses, and let’s say the owner has been drawing a salary of $80,000. So if you were to buy that shop, how much would you be willing to invest? Well, only you can answer that question, but I hope you take these 6 points into consideration:
1. If you were to liquidate after you purchased, how much could you sell the assets for? I call this the “street value” of assets.
2. How long has the company been in business, how long have the key employees been with the business, and what’s the probability that these key employees will stay on once you buy?
3. What is the probability of the company continuing to earn the same $100,000 in annual profits, and for how long?
4. In regard to the $80,000 salary the owner was taking, would you be willing to do what he or she does for the company for the same amount? Or will you be able to hire someone to do that job for the same or less?
5. If you were to invest the same amount of money in any other business or investment vehicle, would you receive a better return?
6. What are the terms of the purchase price? You may be better off to pay a higher price in return for a lower down payment, good financing rates and a non-compete.
So, how do you establish the value of your business? Not by the icing (goodwill and number of names in your database), but by looking at it through the eyes of both a banker and a buyer. Since 1990, Bob Cooper has been the president of Elite, a company that strives to help shop owners reach their goals and live happier lives, while elevating the industry at the same time. The company offers coaching and training from the industry’s top shop owners, service advisor training, peer groups, along with online and in-class sales, marketing and shop management courses. You can learn more about Elite by visiting www.EliteWorldwide.com, or calling 800-204-3548.
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This is an exclusive invitation to all AutoShopOwner members! You are invited to Elite's Employee Management Made Easy webinar on Tue, Feb 13, 2018 1:00 PM - 1:45 PM EST! Join Elite at this powerful course and you’ll see just how easy it is to improve employee morale, drive up productivity, and increase your profits. During this webinar you will learn… the key fundamentals of employee management proven tips on how you can improve employee morale how to deal with the most difficult employees
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When it comes to customer complaints, most shop owners are aware that there’s some economic price they’ll ultimately have to pay for the complaint, but will typically have no idea how much each complaint actually costs. This article will aim to bring some clarity to this long-disputed issue. When a customer complains, the first direct cost that you’re going to incur is the loss of your time. This is the time you spend listening to the customer, discussing the resolution, and following up with the customer to ensure that their complaint has been properly resolved. Let’s call this direct expense “customer communication time”. I realize that the amount of time will vary with each complaint, so let’s assign 25 minutes as a realistic number for your average complaint time. These 25 minutes are comprised of 5 minutes when the customer first calls you with a complaint, 15 minutes when they return for correction or resolution, and then an additional 5 minutes for follow up.
Now let’s look at the time spent on the internal communication that comes along with each complaint. This is the time that you spend with your technicians and service advisors discussing the cause, the resolution, and the prevention of future complaints. I feel that 15 minutes is a realistic number when it comes to this internal communication. We’ll also need to consider the same amount of time, at a minimum, of an employee’s time spent to help you resolve the issue. So, your internal communication will cost you at least 30 minutes with each complaint. Let’s shift gears and talk about the cost of customer attrition, and the marketing cost that will come along with each customer complaint. Let’s presume that you run a good business, and are able to properly address each concern to retain 80% of the customers who complain. In this scenario, you’ll still be losing 20% of those customers with complaints. In other words, out of every five complaints it’s safe to say you’ll lose one customer, so you should consider the marketing cost of each complaint to be 1/5th of the cost of generating a new customer. Lastly, you need to consider the “loss of productivity” that is associated with each customer complaint. Simply put, while your employees are discussing the complaint with you, they are unable to generate additional income for the company. Based on everything we have discussed, here is the math you can use to calculate the total cost of each complaint, which you and your employees may find to be quite surprising.
Note: The below cost of customer complaints calculation is predicated on a shop labor rate of $100 per hour, the shop producing $200 per hour per technician, and the cost of generating a new customer being set at $30.
25 minutes of customer communication (25min/60min X $100) $42
30 minutes of internal communication (30min/60min X $100) $50
Direct marketing cost to replace 1 of 5 ($30/5) $6
Loss of productivity (30 min) (30min/60min X $200) $100
If you think that $198 is a big number, please bear in mind we’re talking about the cost of customer complaints themselves, not the cost of additional repairs, services etc. that need to be performed to satisfy the customer. In addition to the $198, we haven’t taken into consideration the economic damage to your reputation, the damage to employee morale, and the loss of income that is associated with the loss of the customer and/or the direct cost of any repair. This considerable cost is one reason why the industry superstars invest in training, they go the extra mile to deliver extraordinary service, and they follow up with each and every customer to ensure that they met with the customer’s expectations. These top shop owners know that they are far better off investing a little more money in their people, than they are spending that money resolving customer complaints. So do absolutely everything that you can do to provide exemplary service, and ensure that each and every customer… is a satisfied customer. Since 1990, Bob Cooper has been the president of Elite, a company that strives to help shop owners reach their goals and live happier lives, while elevating the industry at the same time. The company offers coaching and training from the industry’s top shop owners, service advisor training, peer groups, along with sales, marketing and shop management courses. You can learn more about Elite by visiting www.EliteWorldwide.com.
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I want to take this time at Thanksgiving to say thank you to all AutoShopOwner members. We have a lot to be thankful for and ASO would not be the great sucess if it were not for all the amazing members and the contributions you make to the forums. From the very start of the ASO, the goal was to raise the level of the auto repair industry and to help each other through the day today operations of running a repair shop. We have done that a more! And there is more to come in the future! From my family to yours, Happy Thanksgiving! Joe Marconi
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