Any thoughts on ATI Workshops?

[b1qwkbird]

I am in serious need of some help on the business side of running my shop. I have been a master technician for 18 years and can rebuild and diagnose most anything on most cars with my eyes closed. However that has NOT prepared me for the business side of running a shop. I am sure most of you have been where I am, I am not really able to pay myself at all, the shop related bills are piling up, the personal bills are piling up and I am overwhelmed. I have 1 technician currently and I am doing all the diagnostics and keeping up with any work that he cannot get done. I am here 55-65 hours a week (just figured that up the other day) and really don't have much to show for it other than a nice shop at a killer location.

 

I spent a couple years at a terrible location which started the downward spiral and when the lease ran out there I was thrilled to get into my current location. I went from about 20 cars driving by a day to 65,000 driving by a day. I got great signage, cleaned up the shop (the previous tenant left it a MESS) and built a nice waiting area. I just started my lease in July and got up and running about mid-August. Considering I have only been here and working about 2 1/2 months, business isn't necessarily bad, but I would expect better with the large drive by number.

 

So far I have sent out flyers through the post office every door direct mail which got a decent response, I got 3 customers so far from that and sent out 1400 flyers. I also sent out coupons in the Valpak which I have seen 2 of those customers so far. Both of these responses have been in the last couple of weeks. Every customer that comes in loves our family atmosphere and complete honesty. We provide a 33 point inspection with pricing and ask for the sale without being too pushy.

 

I have 2 older children, a 5 month old and a wife to support. At this point I am questioning the intelligence of continuing down this road but I still believe that after the hard times and trials there will be a light at the end of the tunnel. I know I underestimated the difficulty of being a shop owner and have grown very much throughout this process. I am very interested in getting help from some programs that will help me push past this and become profitable. If anyone has any advice or preferences I am interested in hearing them. Thank you in advance for your knowledge.

[mspecperformance]

Hate to hear about this stuff because I've been down that road and still on it.

 

Any education you can get about the business of running a shop is VALUABLE. I know there are a few on this forum that are ATI clients and have had great success. I have not been to their 1 day classes but I have heard they are pretty good especially if you have not had any of this type of information at all.

 

From my experience I've taken WorldPac 1-3 day classes and for the money they are great. I am also currently in RLO training's Guerilla Shop Management course which is a 12 week web based class setting that meets 2 days a week for 2 hours at each class. This is really great for the cost of the class. Lots of great info and they provide you with a course binder which had tons of info. I would say the biggest problem with any class is how much you are motivated to implement new things to change your business. That's why I've also chosen to become an Elite Management client. Just started with them so I don't have too much to advise on however I will say everyone in their organization has been 110% AWESOME. I haven't felt this good handing over my money to a company since... ever LOL. I could go on and on as to why I chose to work with Elite over ATI, Management Success, RLO etc but I don't want to sound salesy. Good luck and if you have any questions feel free to PM. I am in no way an expert and I am still learning myself just to be clear

[xrac]

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[b1qwkbird]

I was looking into Elite and now knowing that Joe is affiliated adds a little more to the push towards them. I have never heard of a score chapter but will definitely check them out. Thanks. I feel like traffic is key right now. Thanks to both of you for your advice. It has helped me get a direction which is a great start.

[b1qwkbird]

Was just looking at SCORE. Wow, there is a world of help right there! Amazing.

[Tires Too]

We are with ATI and I have to say it was the best thing we did for our business. Worldpac does offer some great classes, but it is not as in depth as either ATI or Elite would be. Elite has some excellent training available on their web site for very short money. I did purchase some hiring and sales training packages from Elite which I like very much. I don't think you can go wrong with either one of those companies training packages. Both ATI and Elite are significant investments of time and money, but can help you to drive your business to the next level. ATI does 1 day classes that will help you to start to look at the business differently and I would recommend you checking out that 1 day class. They will try to sell you into their program, so be aware of that going in. If you are working 55-65 hours per week and are not making any money, then you need to raise your prices.

[b1qwkbird]

I have thought about raising the prices as well. I have started getting my wife and her friends to call around and get prices. So far I have found that I am about $25-$35 too low on my labor rate compared to other independents around me. I am at $75 an hour and they are finding $100-115 to be the norm which is really surprising to me. I thought those kind of prices were pretty much dealer only. But I can see how it would take that to cover all the overhead costs for sure.

[mspecperformance]

Charging full value for your work is also another piece of the puzzle. What shop management software do you use and what labor guide?

[flacvabeach]

Raising our labor rate is the first thing most of think of to improve cash flow, and it is important to get it right, but The real reward is in taking home more of what you are bringing in. That is done to a large degree by increasing margins and shop productivity. Very few of us have the skills and talent to be experts at sales, advertising, shop management, human resources, logistics, purchasing, contract administration, safety, accounting and a thousand other hats we are expected wear. You need help, I need help and for us, ATI has provided that help. I'm sure other services provide the same type of support but ATI is the one we chose seven years ago. initially, their re-engineering program kept us from going under and when we completed it, I thought I had it all whipped and decided I could put the money to better use. My numbers were mediocre, but I was out of danger. Less than a year later, I went back, realizing I still had a lot to learn. I now consider it a necessary component of my daily business life. The coaching is invaluable. The goals for performance are tough but, as we have proven, achievable. I was going to say I would gladly compare my numbers to any similar shop, but we actually do that on a daily basis in our ATI 20 group. Bottom line, don't go it alone. Get some help somewhere.

[Joe Marconi]

As everyone must have noticed by now, I remain neutral on this subject. Yes, I do a lot of work for Elite, in the form of business coaching, consulting, working with other coaches and also performing seminars. I am also cofounder of AutoShopOwner.com, so for obvious reasons I need to separate the two.

 

With that said, anyone can send me a private email for more information on Elite and what I do. But, I will not promote or be proactive about it.

 

I hope everyone understands my position.

 

Joe Marconi

[Tires Too]

First Landing - Very well said!

 

Even though I am an ATI member, I will promote Elite for Joe. Every interaction I've had with Elite has been just that - Elite.

 

As first Landing said "Bottom line, don't go it alone. Get some help somewhere."

 

If you have questions about ATI, I would be happy to talk with you on the phone.

Russ

[b1qwkbird]

I really appreciate everyone's advice and thoughts on this.

 

I use Bay-Master for shop management software and have my parts matrix set up the same as a local Franchise shop that I happen to be good friends with the shop manager. It basically doubles everything except very low or high items which get marked up more and less respectively.

 

I use Alldata as a labor guide. In the past I have compared it to Mitchell and found that though they were different usually they evened out, with one being higher on some jobs and lower on others.

 

I currently have one tech and I run as a back up tech in case he is swamped. He is also off on Saturdays and comes in 1 hour later and leaves one hour earlier than I do (unless he has a job to finish up). I am also the only service writer and handle all estimates and customer service issues. I have debated hiring another tech (I have 6 bays with 2 lifts currently) and a service writer but I am worried about getting in over my head with payroll. Does anyone have any advice as to where this money would come from? Of course with this much help I would be out hitting the streets getting fleet accounts and handing out doughnuts, coffee and flyers to local businesses. Right now it seems like every time I step out to do this the shop gets overwhelmed with walk in customers, and lets just say my tech is not the most personable person in the world. He's not an a$% or anything he is just a bit awkward socially. Not a good first impression for a new walk in customer at all.

[mspecperformance]

I'm struggling to understand why you are making no money and working 55-65 hours weekly? What is your labor rate? Daily/Monthly car count? Average Repair Order? Is your problem truly car count or is it you are not selling enough labor hours per car? Is your rent insanely high? high amount of debt?

[xrac]

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[b1qwkbird]

Our daily car count is very low and fluctuates wildly. We have some days when we get no new work and just work on our long term projects and other days when it is non-stop from open til close. Of course with only one helper and me that is still usually only 3-4 cars if they are straightforward repairs. We usually end up with bigger tickets such as 6-8 hours. We are not top of mind for people looking for maintenance but I am trying to change that image.

 

The 55-65 hours is not billable hours it is just how long I am here weekly. As far as billable for example my tech turned out 26.7 hours last week. I know the number is low but he got everything done that there was to do. Our labor rate is $75 and he makes a flat rate of $25. Our average RO is a pretty consistent 5-600 on what does come in.

 

Our rent is pretty high at 4000 but that is pretty much at the low end of the spectrum for this area in a visible location. My old location was 2500 and it was absolutely impossible to find without GPS (sometimes hard to find even then). I also have 2 more bays here.

 

I did have to take on a significant amount of debt to get moved here, which really doesn't help matters.

[b1qwkbird]

We don't charge for shop supplies Frank. I agree with hiring another guy and raising the rate for sure. Now that you mentioned it I am probably leaving a lot on the table by not charging for shop supplies. It all adds up for sure.

[xrac]

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[b1qwkbird]

I agree. That is one thing I am looking into. I feel like almost every car there is some small part that we replace and don't charge for during the process of a repair or something takes considerably longer than expected due to a botched repair or some other damage beyond our control. I usually take the hit on these things but I am starting to see how everything piles up and leads to a disaster.

Edited October 29, 2014 by b1qwkbird

[mspecperformance]

From your shop name I am assuming you are geared towards performance work? Forum/enthuisiast business?

[b1qwkbird]

Glad you brought that up. I haven't changed the name in here yet but I am now using Davis Performance LLC only as the legal name. All of my signage and my dba is Davis Auto Repair and performance (with the performance in smaller letters.) I really only kept the performance name in the dba since I had a lot of time and materials invested when the shop name was Davis Performance. This way it still shows up in an internet search for davis performance. However with the new name I am targeting the general repair population and letting them know that performance is not all that we do. I really play down the performance part, not even using it when talking to most customers or answering the phone. My original target customer was the muscle car crowd, and while a shop full of muscle is cool, it is also a pain to get parts for readily and usually they have multiple layers of hidden problems that are uncovered which makes the customer frustrated when I have to call them back multiple times for what started as a simple repair.

[mspecperformance]

I was about to get to that. Yeah that has been my experience as well. We have since moved on from the Performance world and focus mostly on the service and repair side.

[xrac]

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[mspecperformance]

I take a look at some other shops in my area and they have a lot of fancy toys to play with and their facebook pages would tell you they are doing SUPER well. Being in this business and understanding how hard it is to make industry KPIs, Gross Profit Margins, Net Profit Margins while trying to keep up with employee benefits, insurance, tax etc I cannot imagine they are anywhere near the target numbers a successful shop should be hitting. I've tried LOL

[b1qwkbird]

It is a losing proposition all around. I can't beat the prices that Summit, Jegs, etc sell parts at. Add the fact that Summit has a store 30 minutes away. If I do get the performance parts and mark them up properly then either the customer doesn't say anything at the time but feels ripped off and doesn't come back (I have found this out doing my follow-up phone calls and letters) or they don't do the work at all when I tell them that if they bring their own parts and tie up my bay (when they didn't order something I need) they will get charged for stopping my production and I will be providing whatever parts are needed at my mark-up. It is not a winning combination at all.

[xrac]

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[flacvabeach]

I met a shop owner in Northern Virginia, a very affluent suburb of Washington DC whose rent for a 5-bay service station is 12.000 a month.

[328ijunkie]

Hey! Coming from the atlanta area, youre not charging enough in many respects. How productive is your tech? 25/hr seems like alot, depending on how good he is. Most dealer techs dont make that. We have charged 75/hr for labor before and are now up to 95/hr. BMW dealers charge ~140 so were still in expensive. Having an extremely low labor rate also brings in a lot of 'hagglers' or customers you dont want at the end of the day. You need to gear more towards people that 'want' to fix their cars, not 'have' to. Although youre more general service across all marks it may be advantageous to narrow your scope to differentiate yourself, IE Japanese cars, american, european, etc. We do strictly BMWs and with that there is somewhat of a BMW community that 'chats' alot more about the specific shops they like to frequent and getting in that 'list' can be a marketing plus all by itself.

[xrac]

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[b1qwkbird]

Both of you make very good points. I also have another general question. On the Bay-master program there is an option of printing or not printing the labor rate on the invoices below the amount of hours charged. I currently have it set up to print the labor rate, should I turn this option off so that people don't get hung up on the actual number?

 

I was thinking about this the other day but ended up undecided and left it alone. However I have had the opportunity to see invoices from a couple other shops locally and none of them print the labor rate.

[328ijunkie]

We dont print on ours...

[mspecperformance]

Best thing to do is to not print your part numbers and not print labor rates on your invoices. The customer brought you their vehicle and you diagnosed/inspected and gave them an estimate. If you have built value into your estimate and the customer agrees to your price there is nothing more that needs to be said. By adding your labor rate and part numbers it opens the door for them to do further research after the repair and possibly get sour over seeing significantly lower prices. The fact of the matter is a part is a part and a labor rate is just a number. What they are buying from us is our expertise and our guarantee. It is in my humble opinion you should be able to put any price on that you want and as long as price is disclosed and agreed upon there shouldn't be any issues.

[xrac]

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[Joe Marconi]

On Wednesday I attended a meeting sponsored by Jasper Engines and Transmissions with a presentation by the CEO for independent shop owners. Upon registering Jasper asked for the labor rate at every shop and reported the results at the meeting. We are here in the hinder lands in the mostly rural Midwest/southeast. The shops represented were from Southern Indiana, Southern Illinois, and Western Kentucky. The reported labor rates ranged from $48-$109 per hour. The average was $78. If one had excluded the shops from the smaller towns I am sure the average would have been in the low to mid $80's. My point is that having been in your area recently helping my daughter I know that groceries, firewood, and HVAC repair are more expensive than in our town. However, your current labor rate is actualy lower than the average of the shops at our Jasper meeting. If I were in your shoes I would immediately raise my labor. If you want to do it in steps then I would immediately go to $78 with my ultimate goal of being at $85 or more within 12 months. You probably would be fine to immediately go to $80.

 

The issues with labor rates continues to plague the industry. Most of us do not get the labor dollars we desperately need.

 

But, there is also something we need to consider. Labor production in the independent repair shops on average is about 55-60%. So, even if you charge $100 per hour, your effective labor, which is the real dollar amount you are making per hour, may only be around $60 per hour.

 

In other businesses, if they work 3 hours, they multiply their labor rate by 3 and that's it. It's not always that way for us. A tech brings in a car that has 2 labor hours assigned to it. The tech then helps another tech bleed brakes, goes onto the tool truck, has a smoke break, helps push in a another car for another tech, and ends up taking three hours on the job.

 

So, to add my 2 cents here: Look at your production efficiency, your shop layout, how you bill the customer, charge for testing and Diag properly, and charge what you need to charge.

 

Thanks xrac for bring up this issue.

[xrac]

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[Andre R]

To start with, get your check book and write down all of your buisness expenses for the month and total them. Next write down your techs average pay for a week and multiply it by 4.3. Next figure out what you want/need for a pay weekly and multiply that by 4.3. Add it all up and thats what you owe on the first of the month when you turn the key in the door to open your shop.

 

Next add up your labor sales for the previous months that you have been in buisness, divide it by your labor rate and then divde that by the number of weeks it represents. That is how many hours you have produced per week on aveage.

 

Now multiply the number of hours by 4.3 . Divide your expenses by your hours and you have a starting point of where your labor rate should be.

 

Example; expenses are $9500.00 monthly

tech pay $750.00 x 4.3 = $3225.00

your pay $1000.00 x 4.3= $4300.00

 

total expenses $17025.00

 

using 15000.00 in labor sales a month x 12 months is 180000.00 your labor rate is 75.00 , thats 46 hours a week. 46x4.3 =197.8

 

17025.00 divded by 197.8 is 86.00

 

By this example your labor rate should be $86.00.

 

Now keep in mind your profit on parts and the fact that this labor rate would only have you breaking even with no profit for anything else. If you use your numbers it will give you a starting point for a labor rate that is based on your expenses and your production.

 

 

 

The numbers used are arbitrary and don't represent anything other than to be used in this example. The 4.3 is the average number of weeks in a month.

[xrac]

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[shumsauto]

Ati 1 day workshop is a sales presentation. And for the info they give you at the class, you can find it on YouTube. I like what repair shop coach are doing. Kind of pricey though.

[mspecperformance]

I think its still worth going if you have never been exposed to professional shop management education HOWEVER I would be very reluctant if you did not research before committing to any services. Not to say they may not be the right fit for you but don't dive into something with blind faith. My 2c.