Taking Over Dad's Business, first steps?

[Big_K]

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.

 

[mccannable]

Sounds like you have a lot of potential there. I'm sure the changes will be questioned by the emploees so make sure to keep them in mind and let them know your goals.

[Joe Marconi]

It appears you have a great opportunity, but have issues that you already recognize. That is good, very good.

 

I have been in business for 33 years and in the auto industry since Jr, High School, working with my father. The best advice I can give you is to listen to your instincts. You are saying all the right things and your concerns are valid. You need procedures, policies and organization. This will not happen overnight. Create a written plan; yes a written plan, on what you need to do to get the shop operating with efficiency. Work on the plan, one baby step at a time.

 

Your observation of how your father ran the business is right on point. Years back we all ran our shops as your father did, it's the only way we knew. But, moving forward, you need to be more business-minded.

 

You father is passing on the business to you, and that should make you and your father proud. The key to success will be in you becoming more of a business man; learning leadership skills, the numbers of the business, business management and team building.

 

I hope this helps. Please keep posting and we will keep helping.

 

Good luck!

[phynny]

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.

[Sean]

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.

[mmotley]

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?

[Sean]

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 February 11, 2014 by Sean

[ATSAutomotive]

You forgot to calculate the loaded cost of a tech. He doesn't just cost you $25 an hour. There's taxes, uniforms, health insurance, paid time off, vacation, etc.....