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Auto shop owners are always looking for ways to improve production levels. They focus their attention on their technicians and require certain expectations of performance in billable labor hours. While technicians must know what is expected of them, they have a limited amount of control over production levels. When all factors are considered, the only thing a well-trained technician has control over is his or her actual efficiency.
As a review, technician efficiency is the amount of labor time it takes a technician to complete a job compared to the labor time being billed to the customer. Productivity is the time the technician is billing labor hours compared to the time the technician is physically at the shop. The reality is that a technician can be very efficient, but not productive if the technician has a lot of downtime waiting for parts, waiting too long between jobs, or poor workflow systems.
But let’s go deeper into what affects production in the typical auto repair shop. As a business coach, one of the biggest reasons for low shop production is not charging the correct labor time. Labor for extensive jobs is often not being billed accurately. Rust, seized bolts, and wrong published labor times are just a few reasons for lost labor dollars.
Another common problem is not understanding how to bill for jobs that require extensive diagnostic testing, and complicated procedures to arrive at the root cause for an onboard computer problem, electrical issue, or drivability issue. These jobs usually take time to analyze, using sophisticated tools, and by the shop’s top technician. Typically, these jobs are billed at a standard menu labor charge, instead of at a higher labor rate. This results in less billed labor hours than the actual labor time spent. The amount of lost labor hours here can cripple a shop’s overall profit.
Many shop owners do a great job at calculating their labor rate but may not understand what their true effective labor is, which is their labor sales divided by the total labor hours sold. In many cases, I have seen a shop that has a shop labor rate of over $150.00 per hour, but the actual effective labor rate is around $100. Not good.
Lastly, technician production can suffer when the service advisors are too busy or not motivated to build relationships with customers, which results in a low sales closing ratio. And let’s not forget that to be productive, a shop needs to have the right systems, the right tools and equipment, an extensive information system, and of course, great leadership.
The bottom line is this; many factors need to be considered when looking to increase production levels. While it does start with the technician, it doesn’t end there. Consider all the factors above when looking for ways to improve your shop’s labor production.
By Changing The Industry
Episode 141 - Embracing Change in the Automotive Repair Industry With Matt Ruffman
By Transmission Repair
Matt’s Mailbag: Hiring Bonuses, Flat Rate Pay and Building a Network of Friends [E110] - Diagnosing the Aftermarket A to ZBy carmcapriotto
Join Matt Fanslow as he answers some questions from his listeners in his 'mailbag.' Matt discusses the hiring bonus dilemma, compensation and profit sharing, the power of training, the flat rate pay system, book recommendations and how to create a network of industry peers.
Have a question for Matt to answer? Email him at: [email protected]
Hiring Bonuses for New Techs (00:02:27) Discussion on the fairness and impact of hiring bonuses for new technicians and how it affects existing employees. Broken System of Compensation (00:04:58) Exploration of the different ways technicians are compensated and how it can lead to resentment and difficulties in hiring new technicians. Ethical Profit and Long-Term Benefits (00:07:31) Explanation of how Matt's shop rewards employees based on ethical profit and how hiring bonuses can benefit both the shop and existing employees in the long term. The Mismanagement of Compensation (00:09:59) Discussion about the mismanagement of compensation in the aftermarket automotive industry and the potential impact on employees. Concerns about Flat Rate Pay (00:13:33) Addressing concerns about transitioning to a flat rate pay system and the potential negative impact on technicians' income and job satisfaction. Recommended Books for Auto Repair (00:19:49) Discussion on the importance of reading books on auto repair Building a Network in the Automotive Industry (00:26:06) Advice on how to build a network of connections in the automotive industry, including attending trade shows and utilizing social media. The importance of networking (00:29:42) The value of building relationships and networking in the automotive industry.
Thanks to our Partner, NAPA Autotech napaautotech.com
Email Matt: [email protected]
Diagnosing the Aftermarket A - Z YouTube Channel HERE
Aftermarket Radio Network: https://aftermarketradionetwork.com/
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The Weekly Blitz is brought to you by our friends over at Shop Marketing Pros. If you want to take your shop to the next level, you need great marketing. Shop Marketing Pros does top-tier marketing for top-tier shops.
Click here to learn more about Top Tier Marketing by Shop Marketing Pros and schedule a demo:https://shopmarketingpros.com/chris/
Check out their podcast here: https://autorepairmarketing.captivate.fm/
If you would like to join their private facebook group go here: https://www.facebook.com/groups/autorepairmarketingmastermind
In this podcast episode, Coach Chris Cotton provides advice to a San Diego auto repair shop owner looking to grow their business. The shop owner currently makes around $200,000 a year, mostly from custom jobs, and wants to increase profitability without working seven days a week. Coach Cotton suggests using a cloud-based SMS system for tracking numbers, advertising as a larger shop to attract more customers, and following California's hourly pay laws. He also advises focusing on oil services, brake, steering, and suspension work for consistent revenue, and charging separately for parts and labor. The shop owner admits to lacking proper income statements and running their business in an unstructured manner.
The shop owner's challenges (00:02:17) The shop owner discusses their challenges in scaling their business, working long hours, and the need for more employees.
The issue with custom work (00:05:15) Coach Chris explains the common misconception of making money from custom work and advises focusing on regular retail customers.
Assessing the shop's financials (00:07:28) Coach Chris questions the shop owner's income statement, advertising budget, and advises tracking numbers and moving to a cloud-based SMS system.
The shop owner's financial situation (00:09:23) Discussion on expenses, rent, employee pay, and the potential legal consequences of not following labor laws.
The importance of proper advertising and marketing (00:12:15) Emphasis on the value of effective advertising and the difference between low-cost and high-quality marketing strategies.
Challenges with pricing, warranty, and business operations (00:15:13) Exploration of pricing strategies, the need for clear warranties, and the shop owner's lack of financial and operational management.
Oil services and alignment machines (00:17:55) Discussion about the importance of oil services and the misconception of alignment machines bringing in a lot of business.
Charging for parts and labor (00:20:42) Conversation about the necessity of marking up parts and the importance of charging for both parts and labor to run a profitable auto repair business.
Coaching package and growth potential (00:22:42) Discussion about the coaching package and the potential for the shop to double its revenue next year through improved processes, procedures, and technician work.
Shop owner wants to scale their auto repair business and improve profitability
Current revenue and net income of the shop owner
Coach Chris advises against custom jobs and suggests focusing on regular retail work
Importance of tracking profits regularly and using a cloud-based SMS system
Advertising strategies on Facebook, Instagram, and Google
Concerns about employee payment and legal issues in California
Suggestions for raising labor rates and providing clear warranties
Lack of proper income statements and structured business practices
Disappointment with the performance of the alignment machine
Focus on oil services, brake, steering, and suspension work for consistent revenue
Coach Chris Cotton, 00:12:15, "If we don't have a legitimate business, we don't have anything at all."
Connect with Chris:
#autofixautoshopcoaching #autofixbeautofixing #autoshopprofits #autoshopprofit #autoshopprofitsfirst #autoshopleadership #autoshopmanagement #autorepairshopcoaching #autorepairshopconsulting #autorepairshoptraining #autorepairshop #autorepair #serviceadvisor #serviceadvisorefficiency #autorepairshopmarketing #theweeklyblitz #autofix
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The EV/Hybrid training you've been searching for. Carolyn Coquillette, the President and CEO of Earthling Training and Earthling Automotive, and Jack Rosebro, the Head of Training at Earthling Automotive discuss their insights on the growing market of EVs, their unique approach to EV training, and how they adapted to the challenges of the COVID-19 pandemic. Carolyn Coquillette, the President and CEO of Earthling Training and Earthling Automotive. Listen to Carolyn’s other episodes HERE. Jack Rosebro, the Head of Training at Earthling Automotive. [email protected] Show Notes:
Earthling Automotive Training The Dream of Being an EV Training Specialist (00:02:53) Carolyn and Jack discuss the watershed moment that led them to focus on EV training and the similarities to their previous experience with hybrid vehicles. Small Class Sizes and Effective Learning (00:08:41) The importance of small class sizes for effective learning and how it was influenced by their experience training through COVID-19. Utilizing technology in training (00:09:49) Enhancing the learning experience in the classroom. The immersive learning experience (00:11:10) The decision to have individual students work independently rather than in paired groups, allowing for a more immersive learning experience. The importance of basic electrical knowledge (00:18:16) Discussion on the significance of understanding basic electrical concepts in automotive diagnostics. Assessing technicians' background knowledge (00:19:18) The process of assessing technicians' electrical knowledge before enrolling them in specific classes. Tracking progress and improvement (00:23:32) The use of case studies and comprehensive notes to track technicians' progress and ensure effective training. Training in the Deep End (00:25:46) Discussion on the importance of hands-on training and the limitations of slide presentations. Investing in Community Colleges (00:28:05) Highlighting the value of community colleges in providing hands-on training and the need to support and invest in them. Facing the Unknown (00:31:12) Encouraging instructors to embrace new technologies, such as EVs, and challenge themselves to continue learning and adapting their teaching methods. The Paradigm Shift in the Automotive Industry (00:33:53) Discussion about attracting people with a computer science mindset to the automotive profession and the need for a paradigm shift in what a car is. The Profound Impact of EV Training (00:35:04) A story about a student who realized that everything is different when working on Teslas and how it can change a person's perspective forever. Thanks to our Partners Shop-Ware and Delphi Technologies Shop-Ware: More Time. More Profit. Shop-Ware Shop Management https://getshopware.com/ Delphi Technologies: Keeping current on the latest vehicle systems and how to repair them is a must for today’s technicians. http://DelphiAftermarket.com Connect with the Podcast -Follow on Facebook: https://www.facebook.com/RemarkableResultsRadioPodcast/ -Follow on LinkedIn: https://www.linkedin.com/in/carmcapriotto/ -Follow on Instagram: https://www.instagram.com/remarkableresultsradiopodcast/ -Follow on Twitter: https://twitter.com/RResultsBiz -Join our Insider List: https://remarkableresults.biz/insider -All books mentioned on our podcasts: https://remarkableresults.biz/books -Our Classroom page for personal or team learning: https://remarkableresults.biz/classroom -Buy Me a Coffee: https://www.buymeacoffee.com/carm -The Aftermarket Radio Network: https://aftermarketradionetwork.com -Special episode collections: https://remarkableresults.biz/collections
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