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rpllib

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rpllib last won the day on September 22 2019

rpllib had the most liked content!

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About rpllib

  • Rank
    Occasional Poster

Business Information

  • Business Name
    Midas of Kalkaska
  • Business Address
    202 Elm Street, Kalkaska, Michigan, 49646
  • Type of Business
    Auto Repair
  • Your Current Position
    Shop Owner
  • Automotive Franchise
    Midas
  • Website
  • Banner Program
    None
  • Participate in Training
    Yes
  • Your Mission Statement
    Our purpose at Midas of Kalkaska is to build trust and create lifelong partnerships with our customers, our community , our employees and our vendor partners. Through these positive relationships built on the core values of trust, fairness and honesty, we will provide value and safety to our customers, support to our communities, security for our employees and vendors, and a reasonable profit for our efforts.

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  1. John Nicely done! Many take away's from your success. If can happen for many more shop owners. Plan often and plan early. I have been know to say "if I had concentrated more on how I wanted to leave my business, i might have taken better care of it along the way" That said, we are also closing an LOI with our manager this year, and fully expect that to culminate in a sale. Between proceeds and ongoing lease, the funds will provide for us nicely for the rest of our lives. We accomplished this in a 500 square mile county with two traffic stop lights in the county. I truly believe this can happen for more auto repair shop owners. We did it by following a formula similar to what you lay out above. Thank You for your willingness to share your experience over the years, and best possible wishes for your next stage in life. . . Randy
  2. Yesterday I had a conversation with an investigator for the sales tax division in my state. I ask her the following questions: If I stop charging a mark up on parts and roll all the charges into my labor rate, would I be flagged for an audit by the sale tax division, because my overall sales would remain the same but the sales tax that I report would be cut in half. She did not think so and she had been asked the question before by other owners. Labor is not taxable in Michigan. I then asked her "what if" I stopped charging markup on parts and started charging a "shop rate" (in lieu of a markup on parts), and that "shop rate" was a variable of (and based on) the cost of the parts used on the invoice. She wasn't so sure how that would be received by sales tax division, by she would ask a compliance officer and report back to me. Personally, I would rather just have a shop rate that covers all controllable costs to the customer. Unfortunately in Michigan we are mandated to have parts & labor charges, plus billed hours, clearly called out on our estimates. It is unlikely, in my opinion, that the BAR would allow a "shop rate" other than as an additional charge on top of parts and labor, which is no less confusing to the consumer than our current scenario of marking up parts. I am currently in the middle of a friendly audit by the BAR and I will ask the compliance officer his thoughts on this. Maybe the first thing we need to agree on is that our true charge to any and every customer(consumer), by every and any automotive service facility, is typically: "Our normal charge for the job minus our cost on the parts " We control all other charges on the job, except parts cost. Regardless of what quality of part we use, there will be a parts charge and we did not set that cost. This whole mess became much clearer to me, when I figured out that the price we charge a customer that wants to supply their own parts, is as follows: Our charge when a customer wants to supply their own parts is whatever our normal everyday charge for the job is, less our cost on the parts required. Once we agree that is exactly what we charge our very best customers, in every shop model, we will be one step closer to a solution, Imo.
  3. I started looking at exit plans almost a decade ago. I approached my 15 year manager with a 15/20 year "manage to own" plan. It was better structured then some, but still woefully lacking in key ingredients. It did not speak to his needs, only mine. After all, if i am going to give him the "business" (no real estate), why should i have to worry about his needs? Right? Not right... He declined and made it clear that he was not interested in ownership. I did not give up and brought a much stronger plan back, a few years later, designed to use with potential candidates from outside my organization. That offer culminated in a 10 year plan that allowed a candidate the ability to own the business and the real estate with a 10 year commitment. It basically involved paying the rent(we own the real estate outright), minimal salaries for myself/my wife, and health insurance for myself and my wife. It also involved strict guidelines for financial viability of the business and a 30% "bank letter of credit" as collateral. That one peaked some interest, but in the end, we could find no one with enough confidence in the location and/or their ability. Unlike Larry, we have 2000 cars a day driving by our shop. The main highway one block away(which we do not face) has 10,000 cars a day. The county has 2 traffic stop lights and several caution lights. We have a 10k sq ft building which includes 8 service bays, a two bay quicklube and two tire bays. We are general generalists. We work on most things that don't eat us. We have done 1.3-1.4 million in sales for the last several years. We have generated an average of 180k in discretionary cash flow a year, for the last 4 years. A few years ago I had multiple good fortune opportunities. First i hired a 30 year old as a quick lube manager, who is hungry and anxious to be a business owner. Second, I meet a gentleman whose passion is assisting small business owners in transitioning their business to the next generation, usually by working with individuals from within the organization. We will be signing a legal Letter of Intent" on a several year plan shortly after the new year, 2020. I am seldom impressed. I am exceptionally impressed by the process and the documentation that Bob Ward from Perpetual Business ( https://www.wardden.com/#/home ). The letter of intent is exceptionally well done, his preparation of the mindsets of the buyer and the seller has been key to the success of this transaction, and he is sincerely consumed by the success of the transactions he works on, for the life of the agreement. This post is not about being a testimonial for Bob. It is a testimonial for the possibility of exit opportunities for profitable automotive service shop owners. Like everything with our business's, it doesn't happen by itself . It starts with you.
  4. Well said on all points Traffic patterns are woefully underestimated in their importance, Imo. They become glaringly clear once you spend 50k (and more) on direct mail and then do a "sales by carrier route" evaluation. Once you overlay "carrier route spends" on a radius map, a lot of what is obvious is common sense. Are there geographical or road/highway barriers between your location and those "high value" neighborhoods? Is work, shopping, medical, ect. primarily in a different direction from those neighborhoods, that puts your store outside their normal travel routes? If they don't have another reason to stop in your area, then you will likely be a second choice. Only time and consistently delivering a higher value service overcomes this to any degree, but normal traffic patterns is still more important, Imo. I do not believe we can buy any report that demonstrates the likelihood of traffic passing your store actually being inclined to pull in. If there was, I would love to hear about it. I believe our original poster for this thread has gotten a clearer picture of our industry. As I have seen time and time again, their old job starts to look a whole lot easier then what we do everyday Thank You
  5. This is still great advice. I am not planning on telling my techs that we have discovered that we get zero free calls a month. Can you tell me what program you are affiliated with that gets you 2 free calls and $37 after that. We are at 155 a month, no free calls and 39 per call. Thank You Randy
  6. Might be worth reviewing this two resources: https://www.industryessentials.net/copy-of-results best $30 bucks i have spent in a while https://www.dol.gov/whd/overtime2019/index.htm more to consider, if you believe your staff can meet the "Duties Test" for "exempt from overtime" salary positions
  7. ABS My world is somewhat different then others in this industry and on this forum. What you are describing is a very common event in the franchise automotive service world. The typical new automotive service franchisee has spent most of their career in the corporate world, in some capacity. They, much like you seem, are highly intelligent and analytical and believe they are strong leaders in their perspective fields, and likely so, in what ever that world was. I get to work with these folks(new franchisee's) a few times a year. A few beliefs/lessons (my beliefs) come immediately to mind: About a third of new franchisee's are out of business or sold at a substantial loss, in the first three-five years. This come from the SBA numbers combined with my experience. The next third wonder what the hell they got their selves into, but fight on, in sometimes very difficult circumstances. Personal fortitude and courage, along with how many "wins" they get (mostly stuff only minimally within their control, i.e. "Good Fortune") verses losses , will likely determine their ultimate fate. A third do quite well, mostly because the did their due diligence early on, made the right choices from a business/market perspective and had the right skill set to be successful. Others here have made mention of the difficulty of finding qualified staff. I suggest you consider this from a different angle. I suggest you consider that you simply WILL NOT be able to find qualified staff in any timely fashion(especially as a new "untested" business). This is your Due Diligence #1 step. I realize that their may be time constraints on a purchase, so I would not delay this step. Post ads, use head hunters, job boards, ect and see what kind of response you receive for the area you are in. Blind ads are out their all the time, so you don't actually have to be in business to run ads. I suggest actually scheduling and performing interviews. Even with established business's, no shows for interviews and for "day 1" are increasing greatly. In the franchise side of this industry(probably most of the industry), finding and retaining qualified staff is single greatest threat to growth and CAGR. I am personally aware of shops performing at 1/2 their "simple" potential, primarily because they can't find staff to do the work and the franchisee's are not qualified or desire to do the work of "auto repair". On average, specialty shops are much more profitable then generalists. Some specialty services, like diesel, come with monster companies as competitors, with very deep pockets and extensive resources to sweep the cream of the crop right off the top of the new candidate pool, before you ever get a chance to seek them out. Less than a third of all service shops are actually profitable, with less then 10-20% (10% or less?) actually having annual adjusted cash flow in the 20-30% range. Suggestions: Actually try to find qualified help and seek out someone that can assist you in determining "qualified". Do not underestimate how much you will depend on others, for the success of your automotive service business. Review Carm Capriotto's Remarkable Results podcast episode list and start listening. You will find qualified help there. I have also attached an excel sheet I use to evaluate the raw market potential of automotive service markets. There are a couple hundred markets evaluated in their. Many are shops that have been written up in industry journals for one reason or another. Others are their because they became of interest to me for any number of reasons. The store in the very last column is "New Shop NJ". It looked like a market similar to what you described, but of course it is not the parcel you are considering, but maybe similar. I populate the sheet from data pulled from a website called Easi Demographics, using their Easi Site Analysis feature. This is strictly a hobby, so please don't use it to make business decisions. The raw market score is based on primarily, housing density, household income and household education levels. The formulas are all their to assist in dissecting the score. You have also received many great thoughts from experienced industry professionals. I would advise giving some weight to those suggestions/advice. shopdemographicsmisc2.xlsx
  8. This is truly great advice!!! Thank You for sharing. We have wasted our free calls for far to long, which means we have wasted hundreds of training opportunities. We are introducing a new practice in our store where we will be using our free calls every month and encourging techs and service writers to use the paid service whenever they feel it prudent. $37 is incredibly cheap for technical assistance. Thank you for the insight. This should be a post under it's own heading. Randy
  9. I suspect there is no less than 100 different automotive service coaching organizations in existence today. Only a handful are referenced in the following information. You will probably have more than one during your time in this industry. A good start to learn specific information would be any industry or trade groups in your area. This link may help with that: https://www.automotivemanagementnetwork.com/automotive-service-association/ Below are a couple resources designed to help you make a good decision when it comes to hiring a "good fit", that may be helpful: https://www.ratchetandwrench.com/articles/3211-coach
  10. rpllib

    rpllib

  11. We also spent our share of years chasing money, and really sucking at collecting. We do not have a tow truck, although if i would have thought of it, I would have been more than willing to threaten a tow. It did eventually sink in that i am not a bank, so i should let the professionals handle deciding who to give out credit to. We started with Synchrony a couple decades or more ago with 90 days same as cash and now 6 months same as cash. I decided that the extra .5% for the discount rate was worth it and if they couldn't get approved, there was a good chance that I shouldn't approve them either. Historically we see a about a 50% approval rate with more being approved then not in the last year or so. We get access to the program as part of our certified service center program with Auto Value/Bumper to Bumper. We also have available the CFNA program through another program we are part of. The backend advantage besides getting paid, is that it makes future transactions much easier with the same customer. Today I have a call with a representative from West Creek Financial for a program that will approve 20-30% of those that Synchrony or CFNA won't approve. We are big believers in having financing programs available. We are also in a small rural community, not necessarily smaller than yours by population, but our percentage of households with 75k or more in household income is about 1/2 of yours and our percentage of households with at least one 4 year degree in the household is about 1/2 of yours as well( Holton). In any case, we are both in small rural communities. I find the visual of "number of traffic stoplights in the COUNTY" helps folks understand what my definition of rural is. We have two traffic stoplights in the county and three blinking caution lights. I suspect yours is similar(Jackson). I relate this information for the benefit of other readers. For some subjects relating to automotive service, it can be somewhat different, doing business in communities our size. I would encourage looking into having the ability of offering at least one of these type programs available in your store. I clearly remember the transition from in house financing to Synchrony and how much easier it was to let folks know that although we do not have in house financing, we do have an option for them. I am equally looking forward to having an option for those that tell you right up front that they won't get approved. I am hopeful that Westcreek is an answer for those folks.
  12. Today, I came across the following screencast that I made earlier this year for my staff and my suppliers. It seems like it fits into this conversation somewhere. Click on link to view https://1drv.ms/u/s!Ap7ibKYluQae7VhVMw958evEYhzW Randy
  13. I hope others learn to look forward to paying taxes before they spend an entire career wishing they had enough profits to worry about having to pay taxes. How many times have i heard "it's a write off". Most of those times I had no need for any more "write off's" "Cash reserve", what an incredible feeling. "75% of profits in the bank", Good. 25% to Uncle Sam, well that's good too. Pretty cheap for everything we have to be thankful for. None of it is possible without profit.
  14. Going on thirty eight years and still learning everyday. Thanks Joe, great tip


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