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Taking Over Dad's Business, first steps?


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Hello everyone, I am 28 years old. I have been around the industry since I can remember. I watched my dad run the business for the past 25 years.

 

He is turning 65 and wants to retire. There is a lot that needs to be changed in this business. I am a little bit overwhelmed where to start...many of my suggestions have fallen on deaf ears since he would always say "you can do it." Well that opportunity is coming...

 

I will be around here a lot, and also tapping on as many sources as I can as I transition...

 

A few questions and concerns:

 

Our Master Technician

He ran the place for the majority of the time as the owner/operator, smog technician and lead diagnoser with two or three head technicians. In the past 8 years he hired a very capable head technician whose pay is flat rate and has steadily gone up. I have always said to put in a more robust payment plan in order to keep him involved in all aspects of the shop, rather than having him rake in hours on easy brake jobs. Well he always wants more pay, and recently one of our heavyline guys quit due to "bad chemistry" quoting him. Well our master technician was logging 45-50 hours because of it and now wants a 33% pay raise. I am not sure how that is realistic and said let him walk. While Dad is contemplating that he is "still worth it." He is an excellent diagnoser, probably one of the best in the city, always finds work...but I seriously doubt he will walk into another business and get what he is getting paid now, let alone after his raise. Finding a replacement will not be easy, since the craigslist prospects have been mediocre at best. Is paying a technician $100k take home unheard of, it seems preposterous to me.

 

 

Procedures, lack thereof

For the most part, he ran this place by sheer grit and a very agile mind, once he got too busy he couldn't keep it all under control. The place is chaos as soon as we get busy. Where do I start? The office is a mess, the lot is a mess, the curb appeal is minimal, the office is towards the very rear of the lot which I always thought was a bad thing. Customers park in the front, walk past most of the work areas...often times disrupting technicians. Where does one start? A full revamp, or chip away at everything slowly?

 

I know I have a lot of work on my hands, but I think the tough part will be changing things. The place makes money, but I think there is a lot of room for improvement and also without going through the chaos. I understand hard work, but making things easier and more efficient is my goal.

 

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Where are you located?

 

I agree with Joe, make a plan and write it down. As for the techs pay, that completely depends on the numbers. If your hourly rate is 100/hr and from hat it takes 20 to just run the business you can't pay him 80/hr or he's making you nothing.

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  • 2 weeks later...

Lots of good ideas you have that will be implemented. I agree with others that it's important to keep your employees in the loop about the changes you are making and why. Also as a rule of thumb 70% gross profit on labor is what you should be shooting for. I.e if your employee is being paid $25/he then you need to charge @ $84 an hour to get the gross profit of 70%. 25 / .3 = 84.

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Lots of good ideas you have that will be implemented. I agree with others that it's important to keep your employees in the loop about the changes you are making and why. Also as a rule of thumb 70% gross profit on labor is what you should be shooting for. I.e if your employee is being paid $25/he then you need to charge @ $84 an hour to get the gross profit of 70%. 25 / .3 = 84.

Not disagreeing, just curious. Where did you get that figure from? Also, is there a rule of thumb given for parts from the same source?

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I found those numbers reading online and maybe goal would be more realistic then rule of thumb. It looks like parts would be 40 %.

Here is the article:

http://m.autodealermonthly.com/article/104533/service-and-parts-profitability

 

Another great article:

http://www.shopownermag.com/Item/114380/knowing_your_numbers_helps_boost_shop_profitability.aspx

Edited by Sean
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  • Have you checked out Joe's Latest Blog?

         5 comments
      I recently spoke with a friend of mine who owns a large general repair shop in the Midwest. His father founded the business in 1975. He was telling me that although he’s busy, he’s also very frustrated. When I probed him more about his frustrations, he said that it’s hard to find qualified technicians. My friend employs four technicians and is looking to hire two more. I then asked him, “How long does a technician last working for you.” He looked puzzled and replied, “I never really thought about that, but I can tell that except for one tech, most technicians don’t last working for me longer than a few years.”
      Judging from personal experience as a shop owner and from what I know about the auto repair industry, I can tell you that other than a few exceptions, the turnover rate for technicians in our industry is too high. This makes me think, do we have a technician shortage or a retention problem? Have we done the best we can over the decades to provide great pay plans, benefits packages, great work environments, and the right culture to ensure that the techs we have stay with us?
      Finding and hiring qualified automotive technicians is not a new phenomenon. This problem has been around for as long as I can remember. While we do need to attract people to our industry and provide the necessary training and mentorship, we also need to focus on retention. Having a revolving door and needing to hire techs every few years or so costs your company money. Big money! And that revolving door may be a sign of an even bigger issue: poor leadership, and poor employee management skills.
      Here’s one more thing to consider, for the most part, technicians don’t leave one job to start a new career, they leave one shop as a technician to become a technician at another shop. The reasons why they leave can be debated, but there is one fact that we cannot deny, people don’t quit the company they work for, they usually leave because of the boss or manager they work for.
      Put yourselves in the shoes of your employees. Do you have a workplace that communicates, “We appreciate you and want you to stay!”
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