By Joe Marconi
Got your attention? Please read on...
In case you were hibernating the last year and half, you had to notice all the increases around you. From food, gas, utilities, taxes, insurance, etc., etc., etc. Not to mention all the training and tool investment we must make from now on, to remain in the business.
I have been preaching this for decades: As an industry we don't charge enough, especially when it comes to labor.
While there are ways to increase labor dollars, for example: becoming more productive, making sure that we charge for complex testing and driveability; Base labor rates have to factor in as the most important KPI in your business.
Do the math, get help from a coach if you need help calculating your labor rate.
A real Down and Dirty calculation: If you have one tech and you pay this tech $35 per hour ($42 loaded), then this tech has to bill $140 of labor for every hour worked. ASSUMING THIS TECH IS 100% PRODUCTTIVE.
DISCLAIMNER: THIS IS A REAL DOWN AND DIRTY QUICK CALCULATION, SEEK ADVICE IF YOU WANT A MORE ACCURATE REQUIRED LABOR RATE.
By Joe Marconi
Nick is on the front lines of customer service each day. He is a talented service advisor, with a passion for helping others. Nick and I often debate what’s more important to the customer: price or value? He’ll often tell me, “I know you preach value, Joe, but people care about price, too. In the end, price is a major concern.” I always respond, “Nick, it’s not all about price, it’s really about value. Build a strong relationship, reach the customer emotionally, have them believe in you and they will trust you. And when that happens, price will not be the focus.”
Here’s the reality. I would be lying to you if I told you that price has absolutely no bearing on a person’s decision to buy from you or not. However, are consumers only interested in price? I know that sometimes it may appear that way, but the bottom line is this: being competitive and profitable is a fine line we walk each day. When the perception of value diminishes, price then becomes the focal point. Nick, who debates me on the philosophy of value, learned a valuable lesson recently, which made him a believer that there is most definitely a difference between value and price.
About a month ago, a first-time customer called us to ask if we could take a look at her son’s tire, which was losing air pressure. Nick took the call and said, “Sure, we would be happy to help you.” He took down all the needed information and let her know that he would follow up with a phone call as soon as her son arrived.
When the son arrived, Nick wrote up the car and dispatched it to a technician and then called the mother to let her know that her son had arrived. He also let her know that he would call her as soon as he knew something about the tire.
About ten minutes later, the tech informed Nick that the tire was damaged from riding with too little air pressure and that the tire would have to be replaced. He also said that the other three tires looked new and that it would not be a problem replacing the one tire.
Nick prepared an estimate for the tire and called the customer. Nick explained why the tire needed to be replaced and let her know that we could have the tire installed and have him on his way in about an hour or so. Nick then gave her the price for the job. The mother replied with, “Ok, give me five minutes and I will call you right back.”
Fifteen minutes later the mother called, and said, “Nick, I found another shop that will install that same tire for $50.00 less than you can do it for. So, can you put air in the tire so I can have my son drive it to the other shop?” Nick thought for a second and responded, “putting air in the tire and having your son drive his car to the other shop is not safe. Here’s what I will do. I will have my technician put the spare on the car. He’ll also check the tire pressure in the other three tires. Afterall, we want to make sure that your son is safe.” The mother thanked Nick and hung up the phone.
A few minutes later, the mother called again, asked for Nick and said this, “You know Nick, you were so nice to me from the very beginning when I first spoke to you and right up to now, and you put my son’s safety first. You also didn’t try to force me into buying your tire. Please install the tire at your price.” Nick, now on cloud nine, hung up the phone and told the tech to finish up the job.
Nick learned a valuable lesson that day. He learned that he didn’t sell a tire—he sold something much greater. He sold an emotional feeling. He reached the customer on an emotional level and the price of the job became less important. Does this work with everyone? Of course not. But, if you want to make more sales and build the right clientele, sell value, sell relationships and sell a positive emotional feeling.
Later that day, Nick told me what happened. I could tell that he was proud of how he handled the situation. And he should be. I just listened as he told me the entire story and relived the moment. After he had finished, I calmly asked him, “So Nick, is it really all about price?” Nick just smiled.
This story was originally published by Joe Marconi in Ratchet+Wrench on May 5th, 2020
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How To Make Your Business Better and More Productive Than What it is Today? – Bob Greenwood [RR 612]By carmcapriotto
Bob Greenwood, AMAM (Accredited Master Automotive Manager) is President and C.E.O. of Automotive Aftermarket E-Learning Centre Ltd. (AAEC). AAEC is a company focused on providing Business Management Resources and Development for the Independent Sector of the aftermarket industry. AAEC content and technology is recognized as part of the curriculum of the Fixed Operations Diploma and the Aftermarket Degree courses taken at the Automotive Business School of Canada at Georgian College located in Barrie Ontario Canada. This school is the leader and only college in Canada that offers an automotive business education. AAEC is also recognized by the Automotive Management Institute (AMI), located in North Richland Hills, Texas USA, allowing 80 credits for successful completion of the AAEC E-Learning portion of the site towards the 120 credits required to obtain the reputable Accredited Automotive Manager (AAM) designation.
Bob has over 40 years of Business Management experience within the Independent sector of the automotive aftermarket industry in North America, consulting Independent retail shops on all facets of their business operations. His 18 years of running his own local consulting and accounting firm in Ottawa, Ontario Canada created some of the most productive and financially successful entrepreneurs within the Independent sector today.
Bob is one of 150 Worldwide AMI approved instructors. He has created Business Management development courses for aftermarket shop employers/managers, Jobbers and Jobber Sales representatives which are recognized as being the most comprehensive, industry-specific courses of their kind in North America. His courses address the creation of measurable bottom-line profitability and not just developing activity to keep busy, by covering the very detailed nuts and bolts issues that are required to be clearly understood by every level of the industry if an independent shop is going to financially prosper and enjoy a professional future. Bob’s previous episodes are HERE.
Link to Automotive Aftermarket E-Learning Centre Ltd. (AAEC) HERE.
[email protected] - email for the full list1-800-267-5497 to discuss any questions Classic Episodes
Episode 571- Bob Greenwood with Chris Cloutier: Industry terminology, time to change it Episode 387- Bob Greenwood Eric Ziegler Key Talking Points:
We need to better understand our target clients. Who are they? Why do they buy? What do they really want? What is our internal gameplan as a company to build a long-lasting trustworthy relationship?
Building client base business vs customer base business- clients have relationships and trust with the business. Building relationships takes time, you can’t do it while understaffed. One service advisor for every 2 licensed technicians. Educating the client takes full conversations- manage their vehicle based on how they use it and expectations of vehicle.
There's a need to improve focus and productivity, we need to create a culture of commitment and accountability and we must deal more effectively with non-performance. Do we believe in accountability as an important part of the business culture?
Business culture- what do you stand for? Team concept in business that everyone wants to be a part of, everyone's opinion counts including feedback. Employees are working on their career instead of working their ‘job’ because they want to be a part of the business. Committed and accountable to each other.
Accountable- what are we doing on behalf of the clients and how do we measure that? Measure it in billed hours per repair order. Are we producing the right billed hours as a team daily, weekly monthly?
We need more clarity and consistency from the top- is management fully accountable to the business?
Leader of the discussion for team- clarity, and consistency in message, explain it properly, have a discussion on how you see it and how the team sees it. Daily discussion 5-8 minutes keeps the team engaged
We need to create true two-way communication throughout our organization
Owners often use generalities instead of specifics when engaging with the team. Don’t be afraid of discussing numbers- only confidential numbers are on your balance sheet. Let your team understand how income works and how they each affect it. Educate your team on the business in every aspect
Ask about your employees- mutual respect and care about their life outside of the business
Our industry is changing quickly- redefine and reinvent some aspects of the business. Are there specific courses we must take to clarify our industry and business knowledge?
Education is everything- technical, business, front counter, etc. Has to be ongoing. Technician minimum 100 hours a year of training, management 6-8 days a year of training. You need to plan out courses/training for the year ahead of time.
Thanks to Bob Greenwood for his contribution to the aftermarket’s premier podcast. Link to the ‘BOOKS‘ page highlighting all books discussed in the podcast library HERE. Leaders are readers. Find every podcast episode HERE. Every episode segmented by Series HERE. Key Word Search HERE. Be socially involved and in touch with the show:
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This episode is brought to you by AAPEX, the Automotive Aftermarket Products Expo. AAPEX represents the $740 billion global automotive aftermarket industry and has everything you need to stay ahead of the curve. The Virtual AAPEX Experience 2020 is in the record books. Virtual AAPEX lived up to presenting leading-technical and business management training from some of the industry’s best and brightest. Now set your sights on the homecoming in Las Vegas in 2021. Mark your calendar now … November 2-4, 2021, AAPEX // Now more than ever.
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Hi, Natalie here. You have a great selection of tools on hand that will cover every job a customer will bring into your shop. Whether it’s Mac Tools, Snap-on, OTC, or Wright, the right tool for the job is priceless.
The tools we’re talking about in this post are for finances, but the same strategy holds true. If you’re planning to do your own bookkeeping, the right tool for your financial job is also priceless. They can take what may appear to be a daunting challenge and save you a ton of time. You’ll be back to running your shop before you know it.
Stick around until the end and I’ll outline what’s in my bookkeeping toolbox. Here is an overview with some suggestions on how to choose great financial tools
Here are the top 10 categories:
1. Accounting Software
QuickBooks has been the go-to software for accounting for decades. There are online tools that may be a better option for you. The most popular choice is Xero and the numbers of small business owners that are using Xero is increasing. Compare several and pick the one that is both robust and flexible.
According to the 2015 edition of the Business News Daily’s Buyer’s Guide here are the features you should look for:
Client/Vendor Contact Management
Billing and Recurring Payments Automation
Quote and Estimate Creation
Integration with Programs Such as Point-Of-Sale Software, Credit Card
Processing, and Google Apps
2. Budgeting Tools
Creating a budget is the cornerstone of your shop’s financial success. Staying on task within your budget is equally as important. If your accounting software has this feature, you may already have the proper tool to create that budget. If your preference is a tool dedicated to this task, a recommendation is PlanGuru.
3. Payroll Management System
Payroll management can occupy so much of your time and mistakes are easy to make. Look for tools that streamline the payroll process and cut costly errors. A tool that integrates with your other tools is another feature to look for. Some tools like SurePayroll can calculate and pay payroll taxes. Simple. A couple of other tool suggestions are ZenPayroll and ADP. These combine payroll and HR functions in one.
4. Agile Billing
Speed and flexibility in your billing process means quicker cash flow back to you. With a tools like FreshBooks or Bill.com the billing process will be quicker and give your customers an easy experience. Improving the billing process will serve you and your customers better and shorten delays in receiving payments.
5. Financial Dashboard
The dashboard gives you a quick look at your shop’s financial health. See at a glance if your shop is thriving or surviving. Tools such as LivePlan or InDinero give you clear visuals and show you if you’re starting to go off course. Then you can take the actions to keep moving towards your financial destination.
6. Cash Flow Analysis
Your accounting software should have cash flow statement capability. As with the budgeting tools there are specialty tools for cash flow tracking. A couple of suggestions are Float or a simple spreadsheet. These give you patterns from the past to offer a forecast of your shop’s financial future.
7. Inventory Management
This is all about efficiency and tracking. From the purchase of parts and consumables to generating sales reports and low inventory alerts, this is a very valuable tool. A couple of cloud-based options are SOS Inventory and Scout’s top Shelf.
8. Expense Tracking
Those tiny expenses can quickly add up and may be hard to track. Using an expense report tool such as Expensify or Xpenditure makes this much easier. Track those meals, gas, and incidental expenses by scanning receipts and typing in cash expenses. Some tools have the capability to link to mobile devices helping to track these instantly..
9. Business Credit Card
A business credit card, when used properly has several benefits
Improve your shop’s credit history
Earn higher credit limits
Receive rewards and discounts
Manage employee cards (ease of tracking expenses)
Boosts employee morale due to convenience and trust
10. E-commerce Solutions
Imagine your customer paying for their oil change before the service is completed. They need a couple of quarts of oil to tie them over. It’s easy to buy them online from their trusted repair shop.
Many businesses have seen an increases in cash flow since the beginning of the pandemic by using E-commerce solutions. These are powerful and create revenue streams that you may not have thought of.
11. Three Rivers Bookkeeping
With my 5-years of experience, these are the tools I use:
Accounting software – QuickBooks
Payroll Management System – ADP
Agile Billing – bill.com
Financial Dashboard – LivePlan
I’m passionate about books and service to my clients. If you’d like to have a conversation about tools and why I selected the one’s above, contact me. I can also outline the services I provide and why adding me to your team may make perfect sense to you.
Saving you time and headaches is the value I bring to you, the Auto Repair Shop Owner.
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By Joe Marconi
Today is Veterans Day. An important day when Americans honor and show appreciation for all who have served in the United States military—in wartime or peacetime, living, or deceased.
Thank you to all the Veteran for your duty, service, and commitment to preserving our nation’s liberties and freedoms.