I currently employ a mechanic and friend who has been with me for about 20 years. He was formerly a transmission rebuilder, but we have switched to mostly reman units and have no need for a rebuilder. His pay has remained the same despite his value declining. I am currently paying him roughly $100,000 a year. The problem i'm having is that his skill set is not near that pay level anymore. He does light diagnostic and basic managerial work, but I am not confident enough for him to run the shop for more than an hour. With the current state of the industry our numbers have gone down a bit over the last two years. While still being profitable, I can't help but think about the extra income that would be available by terminating this employee, I just dont know how to do it. Any advice on how to do this? I like him as a person and have known him a very long time, but I feel his is paid about twice as much as he is worth. Any help wouldbe greatly appreciated.
By Joe Marconi
With Mother Google literally tied to our hands, through our cell phones; are part margins becoming more difficult to achieve? Traditionally, shops use a 50% part margin, which they deserve. But, we live in a world today where part prices are so transparent that maybe we need to rethink this.
Consider this: What if we concede on prices? Hold to a suggested list…BUT…raise our labor rate to offset the loss in overall profit. In other words, keep your parts prices at a margin the consumer will not question, but raise your labor to make up the part profit?
This is being discussed around the country and there are shops that have implemented this strategy. We can’t give up our overall gross profit, so is this a viable option?
I don't really know what heading to put this under, but I see this as a marketing advantage. I am the first shop in my area to have a no-charge loaner car program, but now I am one of two. So it's really a marketing advantage, so here I am, posting under Advertising and Promotions.
I am in the process of replacing my loaner car. I would like real world advice from my fellow techs and shop owners. We all have our preferences and we all see certain vehicles in our shops more than others. Shop A might see very few imports while Shop B might see a mix. So Shop B could have more insight into what imports have problems and what those problems might be than Shop A.
Okay, now the conditions I have for my loaner, I have wanted a minivan since I put my first loaner into service. I have had a very few customers decline the use of the loaner because they needed more than 5 passenger seating. I have had customers decline the loaner car because their driveway was uphill and we are in Northern Lower Michigan where snow is a consideration, so I have wanted AWD too. My first loaner was a Mercury Sable, replaced by an immaculately maintained Honda CRV so I at least got the AWD I wanted, even though it was not a important while I have had it as it was when I had the Sable.
I know that anything I have will be a compromise for my customers at times. Even if I had a car, a truck, a minivan and a full-sized van, all with AWD, chances are the specific one the customer would want would be out, so compromise it will be. That and I am too small to float the expense of too many loaner cars. So what I am asking is, within the following parameters, what would each of you recommend for a reliable, low cost of ownership vehicle? What would you put into your fleet if you were working within my parameters?
I want to spend about $10,000 No new vehicle leases NO, and I mean NO European brand/influenced models AWD would be preferable but not required Easy to understand operation of such things as lights, windows, ignition, etc. My current CR-V has window switches on the dashboard instead of the door, the ignition has that funny turn-off, stop, push in and turn to lock and the rear hatch has to have the glass released then the door opens like a door. All of this confuses some customers.
My average loaner car usage is between 6,000-8500 miles a year so a higher mileage specimen would not be out of the question. Thank you for all for your time and suggestions.
By Joe Marconi
There’s an old Japanese proverb that says, “The footsteps of the farmer are his best fertilizer.” In translation, this means that the closer you are to your crops and animals, the easier it is to observe and respond to their needs. Business owners, just as farmers, have a sixth sense about what’s happening within their company. And, for the most part, business owners are the driving force behind the success of their companies. And it’s not always because of any particular training. Many times, the mere fact that the buck stops with you gives you the mental fortitude to push forward and find solutions to daily problems. Your gut evolves into a very valuable management and survival tool.
The majority of business owners created their business with a dream and the passion to make a difference in their lives and in the automotive industry. They clearly understand the sacrifices that are needed to get a new business off the ground, and also the years of dedication it takes to reach a point where the business becomes financially stable. But, running a business takes its toll on even the toughest person, and time away from business becomes equally important. So, the question becomes, can you build your business to the point where your presence still remains when you’re away?
Before I go on, I want you to consider something—and that’s your future. I know that many of you have a young company and plan on working for decades to come. But life goes by quickly and it can also throw you a curveball. Please take my advice with this; if you’re a business owner and you are not planning for your future, you are making a big mistake. I know too many shop owners that were forced to walk away from their businesses after decades of work with nothing more than memories. Their dreams turned into nightmares due to lack of planning. Sit down and write out what your future looks like. You will probably need help with this, but you need to think about a continuity plan and an exit strategy.
OK, I got that out of the way; now back to the article. Here’s the bottom line. Taking time off and having your business run smoothly without you there should be one of your key goals. But the truth is, many shop owners can’t let go. They find it hard to take any time off, let alone leaving their baby in the hands of a manager or another key person. They even feel guilty when they’re away. And there are others who realize that in order to have a fulfilling life, the only way to continue the business is to step aside and stay away.
I don’t know what type of person you are. But what I do know with certainty after nearly 40 years in business is that, for the sake of your health and for the well-being of your family, you need to create a business that allows you the freedom to take time off. And that starts with hiring and keeping the right people; people that share your culture and work ethic. Free time away from the business also requires that you understand your numbers, can generate a consistent profit and establish strategies to continually grow the business.
Achieving your goal of taking more time off is more dependent on what you create than the actual work you do. Create a culture where people come to work because they want to. Create a management style that allows you to reach out to your employees and help them achieve the things they want out of life. Create a work environment where the people you employ feel they are part of a unified vision where everyone will enjoy the fruits of their labor. Lastly, create strong relationships with all your employees from the very first day they are hired. Building this culture will help to ensure that your employees will perform the same each day, whether you are there or not.
I know for many it will be hard to let go. After all, your business is your baby, right? You founded it; you worked hard for years and dedicated your life to it. But, every baby grows up and becomes an adult. And adults should become self-sufficient. If you build the right team with the right culture, you will gain the confidence that the people you employ can do an amazing job in your absence.
This story was originally published by Joe Marconi in Ratchet+Wrench on September 5th, 2019
View full article
By Joe Marconi
I can't tell you how frustrating it is to give a price on a radiator to a customer at the service counter, while he's on his phone searching for the part!
Here's what I do when I get a customer that tell me he can get the part cheaper....I agree with him!
I let him know that he can get the part cheaper, just like he can buy a steak and potatoes cheaper at the super market too. But he'll pay more for the steak and potatoes at a restaurant.
And then in a calm manner, I review all the benefits of me suppling the part, the warranty and the fact that if the part is wrong or defective or fails in the future, he will have no recourse and will have to pay to have done all again.
For most, it works. For many it's all about price.
Now Most IMPORTANT IS THIS: The reason why you don't mind spending more for a steak at a restaurant is because of the experience. So, make sure the customer experience clearly demonstrates the value of why people need to do business with you. When Value goes up, price becomes less of an issue.
Hope this helps. Let's hear from you on this frustrating topic!