bstewart

I've been thinking about multiple labour rates for a while, but I wasn't sure if this was viable. (note the numbers are subjective and generalized) - You've got a lube kid doing oil changes, topping up fluids and washing cars etc. He's paid $15/hr - You've got an apprentice tech learning, doing basic & intermediate repairs, preventative maintenance and is building his tool inventory. He's paid $24/hr - You've got a journeyman tech doing high level diagnosis, complicated repairs, and has the most tools and training. He's paid $30/hr I was thinking why is there only a single labour rate in most shops, whether posted or unposted? I understand that most shops bill out their LOF and brake repairs as such, not based on hours but a flat fee for the job, but why not standardize it and have multiple labour rates? Even in states who are forced to post their labour rates, posting your top level rate and having standardized lower rates could benefit? Using the industry standard 70% margin on labour, you would get the following labour rates: Lube kid: $15 / .3 = $50/hr Apprentices: $24/ .3 = $80/hr Journeymen: $30 / .3 = $100/hr I've been reading a lot of online articles and blogs about this and finally came across the following: http://www.autosphere.ca/carcarebusiness/2013/03/28/5-average-shop-labour-rates-now-required/ The critical quote: "The better shops now have in place the following labour rates: 1. Maintenance 2. Diagnostic 3. Reflash 4. Fluid 5. Tire Install. Some shops even have a couple of others due to the type of services they can provide." I was wondering if anyone does this? If so, how did you set yours up? Do you post multiple rates or are they generally internal? Maintenance would probably be something like $80/hr in this case, since your top techs generally aren't required. Industry standard for diagnostics would be $180-200/hr, since it's the most complicated, requires the most training and tools, and also to maintain a proper profit/hr for that bay since there are no associated part sales. Reflashing I'm not entirely sure but I would think it would be around $125-150/hr for the same reasons as diagnostics, but not being as complicated and take less time. Fluids would be around $50/hr Tires $80 General repair would fall under the $100/hr rate Car wash would be around $50/hr, while having a dedicated detail specialist would command higher rates, but mainly sell packages unrelated to actual time (which is what shops should be doing more of anyways haha) Anything I'm missing? Anything you folks would like to add or comment on?

Right on! This is exactly the type of thing I was looking for! I'm glad you like it, and I've already found out that Scott is quick to respond.

Agreed. This place sounds so bad, that I'd be looking to pay for basically the inventory + 10-25% of what he thinks his equipment is worth (because it's probably all over 10 years old and obsolete, he more then likely thinks it's worth what he paid for it). No cash flow = no business value. Database/customer list & location isn't worth anything, it falls under goodwill in a business sale. Just like Rambiss found out in his other thread, be prepared for both techs to jump ship if you try to change anything, and be prepared to have a very difficult time replacing them as well.

Well said! The last sentence is 100% true in my opinion, I've heard it many times before. http://www.motor.com/article.asp?article_ID=369 This is the most interesting article I've read to date about charging for diagnostics. I'm not sure whether it's viable or not, and I'd like to hear what you have to say (preferrably from shop owners who already charge for diag, I'd rather not hear from naysayers who refuse to charge for it)

Well said, Scott. As I was playing around with the demo, I was rather impressed with the appointment page, it seems to work well. I like the idea of anyone in the company being able to check the schedule before coming to work. Is there any data stored on the server unencrypted? For example, if a credit card was put in as a note on a customer's account. If godaddy was ever hacked, would the credit card be visible in a text file, or is everything encrypted on the server side? Do you do all the programming yourself? That's impressive if you do. I'll probably be sending you an email with a bunch of questions and some suggestions, but I have to say, great job. Many of the software packages I've seen truly do have less features, and a lot are WAY overpriced for what you get. As a future shop owner hopeful, I could definitely see myself using this software to get things going, and maybe continuing to use it with a few extra features added in the future! Ps. Not sure if you thought I'm in Edmonton Kentucky, I'm actually in Edmonton Alberta Canada. Not exactly close to Maryland haha.

How new is the equipment, and does he have receipts for what he paid for it when he bought it? This will really help you figure out what it's worth. Here's a link for how to calculate depreciation on a piece of equipment: http://www.ehow.com/how_7624348_calculate-depreciation-equipment.html

Here's several ways to calculate the value of an auto repair shop: 25-30% of annual sales + inventory 2 times SDE* + inventory * Sellers Discretionary Earnings, also known as Sellers Discretionary Cash Flow, SDCF. 1.5 to 2 times EBIT (earnings before interest, tax) 2 to 2.5 times EBITDA (earnings before interest, tax, depreciation, amortization) 2 to 5 times monthly net revenue 1 to 3 times owners annual cash flow 3 times monthly gross + inventory 2 times hard assets + owners salary 33% of annual gross revenue As you can see, most of these are based on the owner's cash flow and tangible assets such as inventory. The EBIT and EBITDA ones are probably more for larger shops with higher then 1mil in sales. For the SDE one, google how to calculate SDE, it's somewhat complicated, but very realistic for small businesses, because most of the value is directly related to the owner, rather then the assets. This is probably one of the most important formulas in the list. I'd calculate every one of these on the guy's business, see what adds up and what doesn't. You might find that his offer is low and you're getting a deal, or maybe way out to lunch and you need to renegotiate or walk away.

Copied from their FAQ: How can you offer SMOTGO for free? What is the catch? Do you plan to commercialize in the future and charge monthly? SMOTGO is a free service and we intend for it to always be that way. Currently it is privately funded by a shop that uses it 5 days a week. Eventually we hope to find sponsors, advertisers, and possibly some joint ventures. It is our goal to find companies that can bring value to our users and to not have any of this interfere with the use of the site. How secure is the server/site, and who will have access to my client's private information, should I choose to use SMOTGO? Let's start with securtiy. The reality is that once information is on a computer, it is never 100% secure. If you pay attention to the news, companies are getting hacked everyday. Big companies, security companies, banks, etc. Just saw in the news today that a credit card processer lost 45 million when someone gained access to their data. I'm guessing that these company spend hundreds of millions of dollars to secure their information. So there is always a risk and we can make no guarantees about the security of your information. Even information on your personal computer is at risk. Having said that, we do take measures to keep the information secure. The server is currently located in a Godaddy data center. We use an encrypted SSL conection, firewall, security updates, ect. If you are not comfortable with the risks, you should not use SMOTGO. As far as privacy goes, we will not knowingly allow personal information to be used for anything unless authorized by you. That includes your personal/shop info and your customers. We may use your email address to contact you as needed. As far as access to the information, anyone working on the SMOTGO program may be able to view the data. We use this program to run our shop. We designed it and we trust it with our customer's info and your info will be treated no differently. We will use some of the repair information to evaluate things. We may look for pattern failures, trending repairs or labor charges by things like year make and model to improve the program and offer more information to you the user. We may use it to make suggestion if we notice certain parts are being sold together. These are features that are just ideas at this point. You also have the option of not entering the customer's info. All that is required is a last name and a tag to create an invoice. So it seems that their backing company has elected to remain anonymous. As for customer data, it appears the same as any other cloud-based software, and does not seem to be used for any malicious purposes such as bulk spam to your customers or anything like that.

Does anyone have any experience with SMOTGO - Shop Management on the Go? It's 100% free web- and cloud-based shop management software that seems to have a lot of features included. There is a robust series of videos on their website demonstrating everything it does. As far as I can tell, the biggest thing it doesn't do is integrate with parts suppliers or labor guides. However, if you're willing to do the legwork, the price is right on this software. It might be a better alternative to using Quickbooks premium as a low-cost solution for a struggling or new shop? As a future shop owner (hopefully), I've toyed around with it a bit, not enough to make any decisions, I've just played on the demo account a bit to see what it looks and feels like. It might be a good way to get things off the ground and making money, then being able to afford one of the more expensive shop management software suites within the first year or two, instead of a huge investment before making any profits? I was hoping that someone actually uses it in their current business and has an opinion to voice. www.smotgo.com www.smotgoinfo.com

If he has a second shop, then how would a non-compete agreement work? He'd be automatically competing. Even with a non-solicitation agreement, I'd be worried that many of the "good" (A and B customers) would go to his other shop anyways, even without him making first contact after the sale.