mspecperformance

I went last year which I believe was the first RW Conference they held. It was GREAT. I can't say enough good things about it. Well worth it for the networking alone. Really well run conference and I am sure they will have an even better conference this year. Mainly because I think a lot of industry people were hesitant on how it would all turn out and it is a little more expensive than most other conventions and such.

E-Myth by Gerber is essential.

My Current fav is Be Obsessed or Be Average by Grant Cardone

When you take in all fees, discounts etc what is your all in discount rate on a monthly basis? What type of volume do you do?

 

We have a company who charges all in 1.44%.....everything...

Thats very low! Would it be ok if I msged you for a referral to your merchant provider?

ok where and how did you guys learn this?

I would say the majority of successful shop owners either have a business coach from one of the industry's consulting companies OR as wheelingauto pointed out 20 groups which are peer learning groups lead by a facilitator or facilitators.

 

 

To set a margin is one thing, to actually achieve it is another. I belonged to 20 groups for many years and I can tell you there are many who mean well but never get there.

Again I agree however the OP needs to start at step 1. Jumping to Step 2 and beyond will not help him if he doesn't understand the foundation of starting off with the right margins.

Just a thought guys. I know I've seen shops where the operation runs amazingly efficient in terms of scheduling. The schedule is laid out where blocks of technician time is blocked off based on the in shop work as well as in coming appointments. Personally I have never gotten it to work well for me. We have a lot of inefficiencies with appointments mainly due to people breaking them. Customers generally do not respect appointments with auto shops as much as they do with doctors and dentists. I have tried every which way to make folks showing up for appointments as accurate as possible. The other problem is when vehicle inspections turn into big tickets with lots of hours. The third problem is blocking out time based on their efficiency %s but depending on the mix of work they might be extremely efficient or less efficient which will can throw a schedule into chaos.

How do you guys finding the use of a scheduler?

UGh.....typing too fast and not re reading....ELR.

 

Effective Labor Rate. You say you charge $80 per hour. Lets say you have 4 techs each working 8 hours a day and they were 100% efficient. 8x4=32 32x80=$2560 = 100% elr

 

Lets say you collected $2200 in same scenario. 2200 divided by 32 = 68.75 divided by 80 = .85% elr.

 

This is the basic scenario, it can be more complicated with a lot of other factors but this is a start.

Definitely right. First things first though to set labor rates and parts margins that will get you at or over your target margins. Measurement of ELR would be the next step.

Thanks guys, that is helpful for sure. My margins have been hovering at 50%. I just signed on a master tech- I promised him $25/hr and my shop rate is $75. I promised him $28/hr in 2 months when I raise the shop rate to $80. My other 2 techs will be paid $20. That $28 is more than 30%, you guys think it's ok?

Your overall GP should be around 60%. Parts 50%, Labor 70%. 1:1 ratio.

At those figures you are you are at 67% GP on labor ($25/hr for tech and $75 for labor rate). at $28/80 you would be at 65%.

You might be getting confused as to the difference between Parts Mark Up and Gross Profit Margin.

https://www.entrepreneur.com/article/275856

Most industry standards you want to get 50% GP or better. In simple terms if you buy a part for $100 you want to sell that part for $200 to get a 50% GP. The purpose of using a matrix is to get more GP on lesser dollar parts and charge to get a less GP on big ticket items such as engines and transmissions so that in the end you will average out to 50% GP or better.

I would seriously put this as your top priority because it's the easiest thing to fix and you'll see dramatic results from it. Besides all that I know you have posted you are opening a second location. This is beyond a fundamental principle you should implement before going beyond 1 store.

successful is not the word I would use to be grossing 360k for M-Sat 8AM-7PM...

If you look at the margins from a percentage aspect then margins are lower in the bodyshop. I realize you don't pay bills with percentages, you pay with dollars. The dollars are higher because the average ticket value is much higher. I have both a mechanic shop and a collision shop. I would choose my mechanic shop over the collision shop any day. I have been in the collision business for about 30 years, the last 16 as an owner. I've had my mechanic shop for 12 years. We repair on average about 70 vehicles per month with an average ticket value of $2400 in the bodyshop. our mechanic shop averages about 420 cars per month with an ARO of $257 (That number includes state inspections for $7 each which impacts ARO. We run our KPI's with inspections and without for tracking).

 

They are two very different business and it seams that its two very different set of employees. The customer transactions are much different as the collision transactions are more of an emotional transaction (someone wrecked into me, my spouse crashed it, my kids crashed it and they are all upset no matter the circumstance) and take much more time. I think some of our challenges have to do with space as we operate out of a total of 7500 Square feet for both businesses. I am currently building a brand new facility for the mechanic shop on a separate property so this should alleviate some of the daily chaos. My mechanic shop has 8 employees and the body shop has 13. I have a part time outside marketing person. My plan is to build another Mechanic shop and continue to leverage the customer database to promote both businesses. We will see many more mechanic shop customers several times per year. The average motorist only has a wreck once every 7 years so its tough to market to someone who only might need your service once every 7 years. Once we have them in our mechanic shop we become their trusted automotive person and they will typically listen to what we recommend. There is a great deal of steering of customers by the insurance carriers through carefully worded word-tracks that attempt to create doubt in the insured's mind if the shop they selected is not on their "approved" list. A shop just cannot be on every ones list. Once we let the customer know what word tracks are used they are more educated to stop the bs by carriers claim staff to steer them to a particular shop. We do participate in some of the networks.

 

It used to be a fun business with much better margins but there is so much insurer control and administrative work that it is not near as much fun. The main thing is that if you are small and you have an employee out it really hampers your production as you typically have an estimator, body tech, paint prepper, painter and detail/buffer person needed to complete one car. If anyone is out your production is severely hampered. If I have a mechanic out someone else can typically do the job and will step up. A painter isn't going to do bodywork unless it's very minor, A bodyman isn't going to paint a car. There used to be combo men that could do both both but typically they weren't that good at either and the finishes are much different today.

 

When it comes to parts procurement, it used to be we would order most parts from a dealer or another vendor so you didn't have to deal with a number of different vendors. Today we might have as much as 15 vendors per car. They general rule of thumb by most insurance carriers when it comes to choosing repair parts is Used parts first, then aftermarket, then alternative OE, then OE. OE parts are a last resort unless the car is in most cases current year model, There are a lot of junk aftermarket parts and most used parts come in damaged so there are numerous delays in the repair process. And every carrier is monitoring your cycle time and have contracted with rental car carriers to get constant updates from you. So you have a customer that you are updating, an insurance company, a rental car company all wanting status updates. Most husbands and wives don't communicate so we also ask who should we update with status. Email and text have helped tremendously as it allows us to keep the customer in the loop when requesting supplemental damage inspections form the carriers. Some are very slow to respond. Today it seems we spend much more time administratively on a claim than we spend actually repairing a car.

 

Both of my businesses have done well but I will tell you that 95% of my challenges are in the bodyshop. Part of the reason for separating the two is to have the ability to market the collision shop should I decide to exit that business. Most mechanic shop buyers want nothing to do with body shops and most bodyshop buyers want nothing to do with mechanic shops. I would be happy to share info with you by phone if you want to send me a private message.

Great info! I am purchasing a building for my second location that comes with a body shop + paint booth sectioned off from the mechanical side. I'd love to get your opinion on how i should proceed with the business if you have some time Mark.

Curious on how you guys feel about appeasing certain customers.

As a general policy we go through great lengths for our clients when they are unhappy in the form of free services and sometimes parts depending on the situation. We are very conscious of customer's expectations and putting ourselves in their shoes to make sure that at the end of the day they felt like they were taken care of.

One thing I do not stand for is customers being complete jerk offs to my staff. If you come into my business and treat people with no respect then all bets are off. Even at the cost of a bad review that's where I put my foot down.

It seems like you are in a position of "jack of all trades, master of none." You have 3 businesses going there from auto body, auto repair and car sales. There are a lot of guys who have done all successfully but everyone's path is different. To see the best results you definitely have to pick 1 and run with it. If auto repair is where you think the best opportunity is then awesome! If your issue is not having a qualified tech I would suggest to hit the ground hard on recruiting. Leverage any opportunity you have to look for a great tech. Once you have some candidates my suggest is to vet them thoroughly. Worse thing is to get into bed with a bad employee, trust me I know and most of the guys on here can attest to the pain you'll go through.

Absolutely right!

One thing that I have found difficulty with (my particular circumstance) is getting my Service Advisors to understand the benefit of getting future appointments. There seems to be a disconnect on business success / sales and future car count opportunities. They don't see it and it's hard to get them to buy into pre booking appointments. I have only met a handful (if 1 or 2 shops count as a handful) that have successfully converted their customer database in prebooking appts.

Hi Alan, hope you are doing well!

I would suggest that you keep working on all makes as you are doing now. If anything you can start to weed out the trouble clients and be more selective. At the same time create a marketing and branding plan to target subarus. You can absolutely be a "specialist" and work on other makes especially when there are no other strict specialists in your area.

As you know we are Euro specialists however we are in the process of possibly opening another shop focued on general repair. I think that the general repair market has the advantage of being more flexible and scalable. What if for some reason people stop buying subarus? Then you would have to change the whole shop once again to service other makes. You already have a core group of great clients and I am sure there are a bunch that don't drive subarus. If I were you I would not alienate them and still try to attract like customers even if they don't drive subarus.

I would suggest that you get a firm grasp of what your financial are and what it's really going to take to make money. My guess is your labor rate is absolutely too low for your area. Even if you are getting a good margins now on labor (meaning your husband pays himself a low wage and your worker is paid a low wage vs what your labor rate is) it will soon climb as you grow and hire more techs that are going to demand a higher wage. Also gaining some knowledge as to why you are busy now. Is it a fluke? Do you have more business because another shop closed down? Have you done any particular marketing initiatives that are bearing fruit? Is it repeatable?

The best piece of advice I think that I can give you is to find a business coach. Someone from the industry not outside of it. There are tons of consulting companies out there and I can give you some recommendations if you are interested. You can learn a lot of stuff on your own by reading, research and networking but you will accelerate your business tremendously if you have some help.

opening a second shop after only 2 years from quitting your job, very bold! Good luck!

so temptingggg

 

 

Thanks for all the replies. Been thinking a lot about this, this is off topic but who made your website?

Also, was your shop featured on a shop magazine few months ago?

We use Kukui for our website, CRM and analytics. If you need anymore more info PM me.

We were not featured in a mag a few months ago but we may be in R+W soon.

http://www.autonews.com/article/20170124/RETAIL05/170129948/ford-will-offer-parts-for-non-ford-vehicles

Dealers after your customers? Yup.

Any large purchases I would suggest discussing with a CPA any tax strategies. If I were you I would want to hoard as much cash as possible. What you can buy as a lease or finance with a decent rate it might be better off for depreciation purposes.

You know, for some reason it has been much easier to run 1 or 3 or more locations than 2. I have no idea why yet, but i am thinking about it. I will share the answer once I figure it out.

I was recently at a meeting where one of the shop owners mentioned it was much easier to run run 6+ shops than 3. I think the idea is that at 6 you have an infrastructure and a corporate team at that level. When you get to 3 you start to formulate your corp team. At 2 things get tough if you have a store that is struggling or if you have staffing issues.

What is the point in wasting your time with a phone estimate? Are they sure they need said repair? Who told them? Did they self diagnose? If they did why don't they fix it themselves? If someone else diag'd why didn't they do the repair with them? How can they trust their diag was correct if they cant trust that person to do the work? What is it they are looking for? Best price? Best quality? How are they determining whether to use your services? Is it based solely on price? Is that they type of customer you want?

I can keep going but there goes the reason why we don't give random estimates. It is a colossal waste of time and if you really get down to the soup and nuts most of the people you are giving estimates to you probably wont see and if you are seeing them you are probably charging too little.

I'm almost embarrassed to reply to this. When my shop became moderately successful with lots of help from family and ATI, I had an opportunity to take over a failed shop - just the facility - no staff or equipment. They had even removed the air fittings when they left. It was a lease on a back street with no through traffic, but a nice five bay with office space. It took three years, a bunch of debt and hard work, but now that shop is neck and neck with shop one. I really had no plan going in, but that's how I roll and I don't recommend it. I am lucky to have a family who supports, no, puts up with my reckless approach and makes the most of it. Wait until the numbers at your first shop scream at you that it is time to expand.

would you have not made the same choice even knowing what you know now?

I would change over to flat rate. You would have to have the right system and more importantly the right people to work in an hourly environment. The problem I see with hourly is 2 fold...

1. Technicians have no desire to complete their jobs efficiently if there is no incentive. Even if there is an incentive it would have to be a pretty hefty one.

2. In the case that you do load up incentives to be efficient with their "fixing cars" work then you run the risk of giving them too low of a hourly wage for them to actually care to do any of the downtime tasks.

The idea of filling your shop with a crew of hard working, strong work ethic guys is a pipe dream. Is it possible? yeah for sure. I'd rather bank on a system contingent upon performance. Your job as an owner should be to get that car count up so there is no excuse for down time and yes that unto itself can be very difficult!