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Rick Schwartz is co-founder and CEO of Schwartz Advisors LLC, a mergers and acquisition advisor and management consulting firm to the automotive and heavy-duty transportation industry. Prior to forming Schwartz Advisors, Rick's career included senior executive leadership positions in sales, marketing, and finance.

At Schwartz Advisors, Rick has advised private equity firms, aftermarket management teams and boards of directors on growth strategy, M&A strategy and due diligence projects. Rick oversees operations of Schwartz Advisors buy-side, sell-side and strategic planning consulting practices.

Rick is a former member of the Auto Care Association Board of Directors, and he received the prestigious Northwood University Automotive Aftermarket Management Education Award. Prior to starting Schwartz Advisors, Rick held various senior-level positions at Nestle, Macy’s and The Upper Deck Company. Rick received an MBA from the University of Southern California Marshall School of Business and a BA in International Relations from USC. Listen to Rick's previous episodes HERE.

Jason Rainey is the Vice President of NAPA AutoCare; a program of more than 17,000 independently owned automotive repair facilities that have chosen to partner with NAPA. He currently sits on the Automotive Service Excellence (ASE) Board as well as the Automotive Maintenance & Repair Association Board where he works to keep the best interest of independent repair facilities in mind.

Before taking the reins of the industry's leading banner program, Jason spent 13 years in the NAPA Product Department. He worked with vendors on managing, sourcing and marketing in the Tool & Equipment, Batteries/Electrical, Brakes and Under Car categories on behalf of NAPA AUTO PARTS. Jason came to NAPA Headquarters after a successful career in Grand Rapids, Michigan where he worked in several NAPA Store and Distribution Center roles as well as working as a Territory Sales Manager and a Tool & Equipment District Manager. Prior to Jason joining NAPA he served in the United States Marine Corps. Listen to Jason's previous episodes HERE.

Greg Bunch is the owner of Aspen Auto Clinic, a five-location automotive and service business in Colorado. Greg started his passion for cars at 15 when he began rebuilding a 1966 Volkswagen Bug.  Greg has moved from a Volkswagen mechanic to ASE Master Technician, to Management, to starting his shop 18 years ago in his garage, to an award-winning multi-location business.

Greg is currently a board member for the STEM-based charter school call “Automotive Institute of Science & Technology” and on the Advisory board of Ratchet and Wrench Magazine. Greg is also a board member of the Autocare organization and a certified instructor for the  Worldpac Training Institute and Carquest Technical Institute.  Greg’s unwavering passion for the industry has also led him to form a company called Transformers Institute, a coaching and training company dedicated to transforming the automotive industry.

Listen to Greg’s previous episodes HERE.

Key Talking Points:

  • Investors are looking for a good investment return
  • Looking for efficiencies in buying multiple shops
  • There is big M & A (Mergers and Acquisitions)in the entire industry and continue to look at repair and service
  • There is capital available
  • 280M VIO (Vehicles In Operation) is attractive to investors
  • There is a lot of M & A in collision
  • Repair and Service shop is touching the consumer and is attractive  
  • A study by 2020 56% of mom and pop shop owners wanted to be out of their businessMaking less money each year
  • Keeping employees
  • They are tired
  • Too much change needs to happen
  • Locations can be a challenge
  • They never built a brand
  • If you are looking to get out and sell to a consolidator:Location is key
  • The owner cannot be the centerpiece of the business
  • Will your customer accept a new owner
  • Run your business well so you have options
  • Quality of staff
  • If you own the real estate that can be attractive to both parties
  • Distribution has been consolidating and they see shop consolidation as opportunities for the top shop operatorsThere will be dedicated bays for specific repairs  
  • Jason Rainey sees an opportunity for NAPA as their CarCare’s are growing and becoming stronger operators
  • Don’t be worried that you will have to look for or find a venture capital investor. Many local shop owners are looking to expandBring your systems and procedures to another market
  • Share costs
  • The opportunities to grow and add branches are going to be enormous going forward
  • Niche specialty shops are owned by master technicians from that brand (think Mercedes, BMW, Volvo, Euro)If the owner keeps up his aftermarket business acumen he/she can see a multi-store future as a specialist
  • Threats when a service professional is looking to sellThemselves, the owner is doing it all. They are the hub of the wheel and they have not delegated responsibilities
  • If the buyer does not know what they want in a transaction. Why are you buying, how will this business/location help your business? Can you fix everything that is wrong? Integration costs and time must be considered
  • Always talk about why you would not do the deal first.Some fixer-uppers may not be your best deal
  • Some businesses look to buy businesses that need fixing. That is their specialty.
  • Jason sees distributions role is to help their customers who want to grow stronger and ready
  • Attend training on how to grow stores. You may discover you are not ready. Having one successful shop does not mean you can duplicate itGreg has a class he teaches
  • How do buyers value the business?Financial performance first.
  • Offering a multiple of EBITDA or Cash Flow
  • Some businesses are sold on asset value from the balance sheet
  • What is the strategic value of the business to the buyer? Is the buyer getting something that he/she doesn’t have
  • Selling?How will your business succeed after you?
  • The owner needs to be out of the day to day operation
  • Will your team stay
  • Reputations
  • Reviews
  • Profitability
  • Multiples can be 3 times EBITDA
  • Start to fix your business
  • It is going to be a buyers market
  • Once the business gets fixed the owner may not want to sell because they are making more money than ever
  • You may have an internal candidate
  • Build your relationship with your parts supplier. Stop splitting your business to too many suppliers  Find a parts partner that can help in branding, systems, marketing, even financing, training etc
  • Strengths in partnerships with suppliers along with stronger service professionals
  • Single store operatorsMust get bigger. Greg calls them Garage-Marshals
  • May run out of bandwidth
  • The big consolidators are looking for independents to grow to five or six shops. They would rather buy more than one shop at a time
  • Consider expanding your learning outside the industry93% of shops are owned by technicians that started their business. They need to expand their horizons in the business
  • Investment needed to run a top shopSoftware to improve efficiency, equipment, subscriptions
  • Recruiting and retention of your people
  • The experience of your client needs to be exceptional It starts at the curb
  • Wifi, Keurig, Water, Clean, Comfortable, Amenities and environment and a look for your avatar
  • You website that reflects your place, your commitment, your reviews, your value proposition
  • ConsiderationsADAS
  • Hybrids
  • EVs

Watch the video of this panel discussion: http://bit.ly/2XmWRxF

 

Resources:

  • Thanks to Rick Swhwartz, Jason Rainey, and Greg Bunch for their contribution to the aftermarket’s premier podcast.
  • Link to the ‘BOOKS‘ page highlighting all books discussed in the podcast library HERE. Leaders are readers.
  • Love what we do, buy a cup of coffee HERE.

Be socially involved and in touch with the show:

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Listen for free on Apple Podcasts, Google Podcasts, Spreaker, iHeart Radio, Spotify, Podchaser and many more. Mobile Listening APP's HERE

Join the Ecosystem - Subscribe to the INSIDER NEWSLETTER HERE.

Buy Carm a Cup of Coffee 

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. With 2,500 exhibiting companies, you’ll see the latest products, parts, and technologies for your business. As a result, the event also offers advanced training for shop owners, technicians, warehouse distributors (WDs) and auto parts retailers, as well as networking opportunities to grow your business. AAPEX 2020 will take place Tuesday, Nov. 3 through Thursday, Nov. 5, at the Sands Expo in Las Vegas. Therefore, more than 48,000 targeted buyers are expected to attend, and approximately 162,000 automotive aftermarket professionals. They will be from 135 countries which are projected to be in Las Vegas during AAPEX 2020. For information, visit aapexshow.com

Click to go to the Podcast on Remarkable Results Radio

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  • Have you checked out Joe's Latest Blog?

         0 comments
      The Technician Shortage Is Our Fault, And It's Time We Own It
      Nearly every day, I hear shop owners complain: "There's a technician shortage. We can't find qualified people. There's no one out there." If that's true, then who's to blame?
      The industry? The schools? The government? I don't know how you feel, but who promised us an endless supply of qualified technicians?
      Another common complaint is that young people do not want to work in the trades. Well, if that were true, then why are other trades such as HVAC, electrical, and plumbing growing? What are they doing that the automotive industry is not? 
      Here's the reality we need to face: We do have a problem, but we shouldn't look for someone or any entity to rescue us. Not the government. Not the trade schools. Not the recruiting companies. No one owes us a workforce. If we want great people in our industry, it's up to us. At some point, we need to own up to the truth: Building a pipeline of qualified technicians is our responsibility.
      In this blog article, I will break down the key reasons we are in this situation today and what we, as an industry, can do to solve the technician shortage. Are you ready to look in the mirror?
      Have We Pushed Technicians Away?
      Let's take a look at flat-rate pay. True flat rate, which pays a technician only for the hours they produce, is a controversial pay plan that emphasizes high production levels and creates a competitive work environment that, if not properly controlled, can lead to increased mistakes and a decline in morale and team spirit. Additionally, the stress and physical demands placed on technicians as they age are not favorable to long-term employee retention. What do we do with technicians as they grow older into their fifties and begin to slow down? 
      I have heard all the arguments and pros and cons of flat-rate pay, and I am not going to judge any pay plan. Let the facts speak for themselves. True flat rate has changed in most areas around the country and has evolved into a pay plan that gives technicians some pay guarantee.
      Many shop owners have learned that team morale, along with the opportunity to earn income, is important to technicians and to the company's long-term success. But let me ask you: how many technicians have left or been pushed out over the years because of the old flat-rate pay system?
      Another issue is the workplace environment. I remember being grateful to be hired as a young technician at a local repair shop. While very thankful, the work environment was not ideal. The shop owner kept the bay doors open year-round (I am from New York) unless it rained or snowed. He felt that if the bay doors were closed, customers might think we were closed for business. We had no heat and no hot water. Many of the jobs were done outside, year-round,  in all types of weather. The starting pay was minimum wage, with no benefits, sick days, or vacation pay. 
      Now, again, I need to point out that I was truly grateful for the opportunity this shop owner gave me. I learned a lot working there, and the experience was pivotal in my career. But looking back, I wonder how many people were discouraged by these working conditions?
      While the physical demands of the repair workplace are daunting, perhaps even more critical is the culture. Too many of my generation shop owners preached the mindset of "my way or the highway." We were the business owners, after all. We started our companies, took all the risks, and provided jobs. Why shouldn't we be the ones to set the ground rules our way?   
      Many of us found over the years that the "my way or the highway" mentality was a sure way to isolate employees and make them more likely to look over the fence for greener grass. In other words, it led many technicians to seek employment elsewhere, where they felt they could be appreciated and recognized for their hard work. The issue, however, was that there wasn't much green grass around. Disappointment after disappointment, bouncing from repair to repair shop, eventually led to despair. So, I ask you: were workplace conditions a contributing factor in today's technician shortage?
      Another factor that we are all well aware of is the complexity of the modern automobile. When I started, the work was mostly physical, and you were required to master essentially three vehicle models: General Motors, Ford, and Chrysler. Let's fast-forward to today. The evolution of automotive technology, along with the extensive training and tools required, has outpaced the typical technician's pay compensation, with no clear career path. Again, leading to frustration and insecurity about the future.
      Here is the bottom line: people don't leave their job; they leave their experience. We must do a better job. 
      The News Isn't all Bad; Your Next Steps to Fix the Technician Shortage
      To fix the technician shortage, it will take a combined effort from everyone in the automotive industry, particularly automotive shop owners. Shop owners are in the perfect position to make the greatest impact, not only on their businesses but also on the future automotive workforce.
      First, shop owners must become better leaders and understand that their ultimate success is directly dependent on the people they assemble around them. Any shop owner who mistakenly believes they can build an empire solely on their abilities is destined for serious disappointment. Business owners who think like this will eventually plateau. Without the collective contributions from a team of qualified people, your business will stall; it will not continue to grow.
      Create a workplace that attracts top talent: a clean, professional, well-equipped facility designed to support productivity, teamwork, and a career, not just a job. Build a great reputation in your community by getting involved locally. Become the auto repair shop that people take notice of as "the" place to work.
      Next, shop owners must become more financially knowledgeable. Knowing your numbers and what you need to achieve for a strong bottom-line profit is essential to paying technicians the money they need and deserve. Profit will also allow you to compete with other trade industries by providing a benefits package that has real take-home value and security.
      When it comes to culture, this is where the rubber hits the road. People crave recognition, praise, and a sense of purpose. Despite what you hear, people are not just money-motivated. Once people feel secure in their financial situation, retaining and motivating technicians can only be achieved by connecting with them on an emotional level. You cannot show enough appreciation. Give out praise for a job well done as if your business depended on it, because it does.
      As technicians age, we need to have a place for them. Expecting a 58-year-old to perform like a 35-year-old is unrealistic. We need to be more focused on career pathing. Provide training, skill development, and coaching to develop leaders and mentors within our older workforce. While their bodies may have slowed, the knowledge they have gained is priceless. 
      Our future is dependent on young people entering our industry. We need to give more young people opportunities. Every shop owner across the country should consider hiring an apprentice, then build an apprentice training plan and career path for them. If every shop did this, we could solve the technician shortage within five years. Get involved with the trade schools and high schools in your area. Look into the NAPA Apprenticeship Program. Don't sit on your hands with this one. Do it today.
      Lastly, don't get left behind. Commit to ongoing training for all your employees. Keep up to date with tools and equipment tailored to your business model. Don't try to be all things to all people and all vehicles. Identify your core profile customer and the vehicles they drive, and become an expert on those vehicles and the services you offer.
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