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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.
Recorded Live at ASTE 2023 Maryann Croce and Maylan Newton highlight the importance of readiness for coaching, understanding motivations and goals, and the commitment required for positive change. The conversation also covers the significance of financial literacy, the challenges of understanding financials, and the role of coaches in helping individuals make better business decisions.
Maryann, Small Biz Vantage. Maryann’s previous episodes HERE. Maylan Newton, ESI- Educational Seminars Institute. Maylan’s previous Episodes HERE Show Notes
Assessing readiness for coaching (00:05:32) Discussion on the importance of asking why coaching, why now, and why the particular coach. Commitment required for coaching (00:06:58) Exploration of the need for clients to be willing to put in the work and effort required for coaching. The role of a coach (00:07:40) Insight into the role of a coach in pushing and motivating clients to take action and make positive changes. The importance of implementation (00:08:30) Discusses the importance of implementing coaching advice and making necessary changes to see results. Preparing a business for sale (00:09:12) Explains the process of preparing a business for sale, including the necessary steps and time commitment. Understanding financials and cash flow (00:11:04) Highlights the challenges of understanding financial statements, the importance of cash flow statements, and the role of a coach in helping business owners navigate financials. The importance of gross profit (00:17:00) Discussion on the significance of focusing on gross profit rather than gross sales and the impact it has on the financial success of a business. Assessing business readiness for coaching (00:19:08) Exploration of the assessment process and its role in identifying areas of improvement and determining the need for coaching. The need for standard operating procedures (00:23:36) Highlighting the lack of standard operating procedures in the automotive industry and the importance of implementing them for efficient business operations. The importance of understanding financial data (00:24:34) Discussion on the lack of understanding and confusion surrounding financial data. Challenges in raising hourly rates (00:25:46) Anecdote about raising hourly rates and the resistance from business owners, with a focus on the emotional attachment and excuses. The need for sustainable business practices (00:31:04) Highlighting the importance of not only profitability but also sustainability and enjoyment in running a business, with a focus on work-life balance and personal fulfillment. The reasons why people seek coaching (00:33:08) Exploration of the reasons why individuals in the automotive industry seek coaching, including unfulfilled dreams and lack of return on effort. The circumstances around firing a client (00:36:09) Conversation about the circumstances that may lead to firing a client, such as lack of value or repeated excuses, and the importance of decision-making in coaching relationships. The evolution and growth of individuals and businesses (00:39:26) How coaches can help individuals and businesses evolve and succeed, and the importance of creating a supportive environment. The importance of a 30,000 foot view in business (00:41:07) The conversation explores how coaches can provide a broader perspective of the business and help owners see the bigger picture. The need for regular assessment and adjustment of labor rates (00:43:38) The recommendation of conducting a yearly review of labor rates and the importance of factoring in inflation and expenses when determining the rates. Financial planning and the role of spouses (00:47:59) Exploration of the need for financial planning, including savings accounts and the role of spouses in supporting the business without being on the payroll. The importance of a good fit with a coach (00:49:50) Emphasis on the need for a good fit and compatibility with a coach for effective coaching and communication.
Thanks to our Partner, NAPA Auto Care
Learn more about NAPA Auto Care and the benefits of being part of the NAPA family by visiting https://www.napaonline.com/en/auto-care
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Re-Defining Value in Auto Repair: Why Pricing Right is a Win-Win-Win for All [E136] - Chris Cotton Weekly BlitzBy carmcapriotto
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 episode of the "Weekly Blitz" podcast, host Coach Chris Cotton discusses the concept of value in the auto repair business. He emphasizes that value goes beyond price, encompassing quality service, skilled labor, genuine parts, and transparency. Cotton debunks the myth that being the cheapest shop guarantees success, instead advocating for a balance between price, quality, and value. He also highlights the link between staff compensation and value, stating that a well-compensated team is more motivated and productive, enhancing the overall customer experience.
The concept of value and self-esteem [00:01:02] Discusses the importance of shop owners valuing themselves and their businesses in order to show value to customers and potential employees.
Defining value from a customer's perspective [00:02:14] Explains how customers perceive value as the total package of quality service, skilled labor, genuine parts, transparency, and other benefits.
The balance of price, quality, and value [00:03:20] Highlights the importance of striking the right balance between price and quality to provide real value to customers, debunking the myth that the cheapest prices are always the best.
Connect with Chris:
#autofixautoshopcoaching #autofixbeautofixing #autoshopprofits #autoshopprofit #autoshopprofitsfirst #autoshopleadership #autoshopmanagement #autorepairshopcoaching #autorepairshopconsulting #autorepairshoptraining #autorepairshop #autorepair #autoops #onlinebooking #serviceadvisor #serviceadvisorefficiency #autorepairshopmarketing #theweeklyblitz #autofix
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How Outreach & Conversation Can Transform Auto Professionals' Lives w/ Brett Kinsfather & Roy WragthBy Changing The Industry
How Outreach & Conversation Can Transform Auto Professionals' Lives w/ Brett Kinsfather & Roy Wragth
By Joe Marconi
By Changing The Industry
You Can't Understand What You're Missing #autotechnician #podcast