How many hours?

[ncautoshop]

So after a long story I won't bore you with we have our current financial information in hand for the last 6 months. Previous information is so incorrect its not even useful.

 

There's a very disturbing trend that may break me if I don't handle things correctly, hence why I'm asking the most experienced folks I know.

 

Our labor sales are low low low. We hadn't been charging for diag, just a base rate of one hour, likewise we had been using the labor guide and not billing a second more regardless of condition bit its still to low to be resolved with these fixes. Many weeks I could sell more labor but shop space and the fact I'm the only true technician limits our ability to sell more when figured with slow weeks it really throws the daily labor sold to a disgusting 2 hours. With high expenses that's even more disheartening because we're surviving on the cogs profits. No chance for real profit in the big picture. Some weeks we could sell 4 a day but it concerns me that we would loose our quality and workflow procedures that I've worked so hard to implement. Between answering the phone and doing the paperwork.

 

 

Currently I need 3.7 hours a day at $65 to cover codb. I see the options below as viable solutions.

 

1: wait 6 months and re-evaluate the data with the implemented changes before price increase or drastic changes.

 

2: increase labor from 65 to 75 or 80 per hour at the end of the month and re-evaluate in 6 months.

 

3: try and increase sales with advertising and push much harder and work more hours (major concern here is customer satisfaction and quality control)

 

4: throw in the towel and go work elsewhere.

 

5: make dramatic cuts in expenses and eliminate some key business needs and bring them back after long term liabilities have been reduced.

 

From my experience reacting to negative situations often results in over reacting I've considered raising prices, focusing on selling what hours I could and trying to be more efficient and let profit from cogs carry us until we have better data and we're more financially stable. I've got my helper calling shops and pricing labor and odd jobs to give me an idea of the market around us and I'll post with this later.

Thanks in advance for the advice. Don't worry about me being offended. I'd rather hear I'm up the creek, near the dam and no paddle in sight if that's the case. For years everyone told me what I wanted to hear including my accountant.

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[CARMandP]

I have been changing my labor rate by $.50 an hr a month for about the last year. It puts the labor price up slow enough that most people wouldn't notice it. Your labor price needs to be based on what you have to offer not so much by your competition. I started by pricing my competition but decided I needed to know what it costs me and then price the labor around that. I really don't care much what my competition charges because I am offering things that my competition can't/wont.

 

We also almost always charge at least 1/2 hr for diag time. You must get something for that time invested, especially if they decide they don't want to fix it. You also need to be able to pay for that scan equipment, updates, ect.

 

We also price labor on the bump. 1.2 hrs is 1.5 We do everything in 1/2 hr labor increments. Makes it easier to price as well and also gives you the bump when the labor is an odd time.

[phynny]

I don't understand what you're doing during a day. If you are working an 8 hour day you should be charging 6-10 hours, if not, you are working for free.

[ncautoshop]

  On 9/19/2013 at 12:54 AM, phynny said:

I don't understand what you're doing during a day.  If you are working an 8 hour day you should be charging 6-10 hours, if not, you are working for free.

You're exactly right. But between slow times and previous lack of correct billing its effected the long term numbers. Could I be more productive? Absolutely! But if there's not 8 hours of book time available to sell a day to do I can't bill it? I'm looking at direct mail to increase car count, maybe that's what I need to do.

 

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[nmikmik]

  On 9/19/2013 at 1:29 AM, ncautoshop said:

You're exactly right. But between slow times and previous lack of correct billing its effected the long term numbers. Could I be more productive? Absolutely! But if there's not 8 hours of book time available to sell a day to do I can't bill it? I'm looking at direct mail to increase car count, maybe that's what I need to do.

 

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Sorry to hear this because raising the car count without increasing ARO is the most painful way of forcing yourself out of business.

On top of that, direct mail is considered to be the lowest rate of return type of marketing. Are you a one man shop?

[ncautoshop]

  On 9/19/2013 at 2:35 AM, nmikmik said:

Sorry to hear this because raising the car count without increasing ARO is the most painful way of forcing yourself out of business.

On top of that, direct mail is considered to be the lowest rate of return type  of marketing. Are you a one man shop?

Just me and a helper. We're still doing okay on aro but its the parts tend to be higher than labor. We've just started working on upping the hours per to and selling more work through inspections. We've also recently updates our pricing matrix. However we don't advertise. Never had. Its pretty tough to be efficient, answer the phone do the work and pickup and deliver the cars with two people.

 

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[xrac]

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[nmikmik]

no doubt,

do you have any kind of email list ?

Do a car clinic on a weekend and offer your clients to invite someone they feel would benefit.

If you make a point of making a friend rather than making a sale, the sales will come themselves.

If you try selling and upselling you will become just like any other rat hole place, I am sure you got those around. Try offering some kind of incentive (does not have to be monetary) for giving you reviews on social media sites, that would be the biggest bang for your buck marketing.

[nmikmik]

  On 9/19/2013 at 3:07 AM, xrac said:

I would not pick up and deliver cars with only two people working.

whatever Xrac says, it's a fine line between been providing high level of customer service and been so helpful they feel you are desperate.

Only you (and us) may know how desperate you are, the rest you must fake it till you make it

Shuttle service in your case is probably the most you should do, but there is a possibility you have already somewhat spoiled them

[ncautoshop]

Thanks for the advice guys. I'll be working on it.

We don't pickup and deliver that many but we definitely haven't spoiled them lol.

We do have contact information and we may consider a clinic next year, but for this year I'm considering just some basic follow up. Y'all say direct mail offers poor returns what are my other options? I'll start with contacting current customers...that's almost free!

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[Jeff]

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[mspecperformance]

First thing you need to do to keep your head above water is to increase your labor rate/labor hours per job as well as charge properly for parts.

 

Secondly, any type of customer service you are doing extra such as pick up and drop off is definitely a nice touch but you have to make sure you are doing this in a professional manner as well as charging enough on the jobs to compensate your extra time. I don't personally think anyone will think you are "desperate" unless you have really bottom of the barrel customers.

 

Try asking for referrals. I used to think this was a desperate move as well however you have to think you are a small business, you provide a good service, you are honest and there is a need for a business like yours. You are also just a man with a family that is trying to make a living and most people get that. Try it out and see what happens.

[xrac]

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[ncautoshop]

  On 9/19/2013 at 12:40 PM, Jeff said:

I am a one man shop with a part time helper. I do it all...answer phones...order parts....perform repairs...billing...book keeping...! I am at the shop from 7:30 am till 5:30 pm or later. Then go home, get a bit of rest, and link into the shop computer and do paper work till 9-10-11 pm. It is tough. The one thing I can tell ya is DON'T FREAK OUT ON THE NUMBERS!! It only takes one bad week to kill your averages.

I need 2.5 cars per day at ARO to break even. I don't do a lot of pick ups and returns..takes up to much time. Facebook has been working well as well as some internet promo sites. When I get slammed I bring in my son. Great mechanic but hates it, electrician by trade. I pay him well put the extra in the bank and keep on going.

I would slowly raise your labor rate and push harder for referrals from your current customers. And make it worth it for them to promote you. Follow up with a free LOF, pair of movie tickets, gift card to restaurant, etc. These people will be your best advertising!

You are on the right track in keeping up with the numbers but now what will you do with them?

if you don't mind me asking what is you average week in regards to hours sold? Thanks again for all the great advice!

 

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[Jeff]

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Edited September 19, 2013 by Jeff

[ncautoshop]

  On 9/19/2013 at 3:20 PM, Jeff said:

Avg hours per RO is nearly 1.8. Avg ticket runs 280. Avg week is 15-20 hours billed labor. I pulled these numbers over the last 90 days. They may be a bit misleading as we were very slow at the beginning of the year. And that is my point. Looking at these numbers back in Jan and Feb I was ready to jump off a bridge. And as I have stated before...I have jumped but always land right back here!

Thanks for the info. We're about the same. I've got slow month as far as car count with aro of 798.00 and car count of 1.23 a day, July was 3 a day with aro of 490.20.

None of this is really a clear picture of financial health for the simple fact tires and some jobs are still billed via QuickBooks for various reasons. I can say that p&l has show a profit all the way through. Not much of one but there is a profit. And that includes me being paid.

 

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[mmotley]

What does ARO stand for?

[mmotley]

  On 9/19/2013 at 2:35 AM, nmikmik said:

Sorry to hear this because raising the car count without increasing ARO is the most painful way of forcing yourself out of business.

On top of that, direct mail is considered to be the lowest rate of return type of marketing. Are you a one man shop?

Would you take time to explain this?

 

  On 9/19/2013 at 3:16 AM, nmikmik said:

no doubt,

do you have any kind of email list ?

Do a car clinic on a weekend and offer your clients to invite someone they feel would benefit.

If you make a point of making a friend rather than making a sale, the sales will come themselves.

If you try selling and upselling you will become just like any other rat hole place, I am sure you got those around. Try offering some kind of incentive (does not have to be monetary) for giving you reviews on social media sites, that would be the biggest bang for your buck marketing.

You said direct mail is the lowest rate of return type of marketing. You would substitute a car clinic & email blast in place of mail outs? Anything else, or are those 2 means of advertising enough to substitute direct mail?

[ncautoshop]

  On 9/21/2013 at 4:41 PM, mmotley said:

What does ARO stand for?

Average repair order. A low aro and high car count (from my point of view ) can destroy the quality of your service and work you to death. A low car count with a high aro can mean quality repairs and profit with a very happy customer if handled correctly. This method results in less comebacks (we all have comebacks, I actually had a simple mistake cost me a grand this week lol) and happier customers.

 

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[nmikmik]

mmotley,

"You said direct mail is the lowest rate of return type of marketing."

 

I probably should have said "lowest rate of response" type of marketing. It can be very effective on the long run, but is very costly per acquired and retained customer. It also requires a lot of knowledge and finesse to make it work right.

"You would substitute a car clinic & email blast in place of mail outs? Anything else, or are those 2 means of advertising enough to substitute direct mail?"

I can't and won't speak in such general terms as far the marketing goes. Although for the best bang for my buck, yes I would. If you are set on the direct mail, I'd call it your brand recognition rather than immediate "drum up some business" tool.

You (and any one of us) would need to experiment, monitor and adjust based on the results. I know it sounds boring, but no "gut feeling" IMO can tell you what you need to do in your business.

There is multitude of variables in each business making it fairly unique and "comb all the same" approach is close to impossible. Franchises try to apply general rules to each location, but i bet there is still plenty of differences between each shop.