I currently employ a mechanic and friend who has been with me for about 20 years. He was formerly a transmission rebuilder, but we have switched to mostly reman units and have no need for a rebuilder. His pay has remained the same despite his value declining. I am currently paying him roughly $100,000 a year. The problem i'm having is that his skill set is not near that pay level anymore. He does light diagnostic and basic managerial work, but I am not confident enough for him to run the shop for more than an hour. With the current state of the industry our numbers have gone down a bit over the last two years. While still being profitable, I can't help but think about the extra income that would be available by terminating this employee, I just dont know how to do it. Any advice on how to do this? I like him as a person and have known him a very long time, but I feel his is paid about twice as much as he is worth. Any help wouldbe greatly appreciated.
By Joe Marconi
Shop owners, you have a little less than two months before the end of the year. And that means it's time to start thinkning about your Tax Planning for 2019. Don't procrastinate on this. Meet with accountant. Review the year, review profit. Consider things such as major equipmenet purchases and other major investments you made in 2019. Look at bottom line profit and determine if you set aside enough cash to pay your taxes come April 15, 2020.
One thing, Cash is King, So, before you purhase any major equipment before the end of the year, listen to your accoutant, not the Tool Sales-person. In many cases, it's better to pay some tax and hold on to cash for a rainy day.
A little planning now will save you big time in 2020, and also help you sleep better!
I'm looking at opening an auto repair shop with a partner who is the mechanic and possibly another mechanic. I will be the sole investor in the venture never before been in the auto rapair shop business. I will most likely manage the whole thing. I need lots of help.
How are mechanics paid?
How do I pay myself and recoup my investment?
Shop management software? Looked at MaxxTraxx, Alldatapro.
What types of insurance must I carry?
I've found a nice place with three bays to rent but will need to install lifts. Should I shop used or new?
Etc etc etc.
Thanks for any help you can offer.
By Joe Marconi
There’s an old Japanese proverb that says, “The footsteps of the farmer are his best fertilizer.” In translation, this means that the closer you are to your crops and animals, the easier it is to observe and respond to their needs. Business owners, just as farmers, have a sixth sense about what’s happening within their company. And, for the most part, business owners are the driving force behind the success of their companies. And it’s not always because of any particular training. Many times, the mere fact that the buck stops with you gives you the mental fortitude to push forward and find solutions to daily problems. Your gut evolves into a very valuable management and survival tool.
The majority of business owners created their business with a dream and the passion to make a difference in their lives and in the automotive industry. They clearly understand the sacrifices that are needed to get a new business off the ground, and also the years of dedication it takes to reach a point where the business becomes financially stable. But, running a business takes its toll on even the toughest person, and time away from business becomes equally important. So, the question becomes, can you build your business to the point where your presence still remains when you’re away?
Before I go on, I want you to consider something—and that’s your future. I know that many of you have a young company and plan on working for decades to come. But life goes by quickly and it can also throw you a curveball. Please take my advice with this; if you’re a business owner and you are not planning for your future, you are making a big mistake. I know too many shop owners that were forced to walk away from their businesses after decades of work with nothing more than memories. Their dreams turned into nightmares due to lack of planning. Sit down and write out what your future looks like. You will probably need help with this, but you need to think about a continuity plan and an exit strategy.
OK, I got that out of the way; now back to the article. Here’s the bottom line. Taking time off and having your business run smoothly without you there should be one of your key goals. But the truth is, many shop owners can’t let go. They find it hard to take any time off, let alone leaving their baby in the hands of a manager or another key person. They even feel guilty when they’re away. And there are others who realize that in order to have a fulfilling life, the only way to continue the business is to step aside and stay away.
I don’t know what type of person you are. But what I do know with certainty after nearly 40 years in business is that, for the sake of your health and for the well-being of your family, you need to create a business that allows you the freedom to take time off. And that starts with hiring and keeping the right people; people that share your culture and work ethic. Free time away from the business also requires that you understand your numbers, can generate a consistent profit and establish strategies to continually grow the business.
Achieving your goal of taking more time off is more dependent on what you create than the actual work you do. Create a culture where people come to work because they want to. Create a management style that allows you to reach out to your employees and help them achieve the things they want out of life. Create a work environment where the people you employ feel they are part of a unified vision where everyone will enjoy the fruits of their labor. Lastly, create strong relationships with all your employees from the very first day they are hired. Building this culture will help to ensure that your employees will perform the same each day, whether you are there or not.
I know for many it will be hard to let go. After all, your business is your baby, right? You founded it; you worked hard for years and dedicated your life to it. But, every baby grows up and becomes an adult. And adults should become self-sufficient. If you build the right team with the right culture, you will gain the confidence that the people you employ can do an amazing job in your absence.
This story was originally published by Joe Marconi in Ratchet+Wrench on September 5th, 2019
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Who likes tax deductible food? 🙋♂🙋♂ If you want to make sure you are deducting all of your business meals. Please read the entire article.