AndersonAuto

Retirement planning is important, but what many shop owners fail to do is plan for the sale of their business. If selling the biz is a big part of the retirement plan, as is mine, then you need to make sure the biz is making maximum net profit without YOU. This means growing and structuring the business so it functions with minimal input from you. Currently, I'm the shuttle driver and coach for the guy I just put in as GM. Soon to be just shuttle driver. Replaceable with zero impact on the business = a sellable business.

Convenience store coffee, 1 scoop Casein Protein (creamy vanilla flavor), 1 scoop Whey Protein (vanilla ice cream flavor), about a 1/2 cup heavy cream. Tastes fantastic. Not hungry until lunch.

I've been through enough coaching sales pitches and had a couple of coaches. That doesn't make me an expert, but I've noticed some patterns. One of the things I've noticed in the sales pitches I've been through is the shops they hold up as an example of their "Management Success". One recurring theme I saw was the length of time in the program. Without fail, these shops had been in the program less than a year. The salesman of course pitched that as a positive, of course owing to their program working so quickly. The example shops that I talked to of course were thrilled with the program. But then I started asking specific questions. How long in the program? What was your car count before you started? What's your car count now? What was your average RO before/now? Labor rate before/now? Parts GP before/now? and on and on through a list of key metrics. Then you see a pattern emerge. Without fail the shops who were held up as a success were in the program on average 6 months. The had a very high car count before they started with the program, and were still enjoying a high car count, but it was down slightly from before. These shops all previously had the cheapest labor rate in town, and had been coached to increase their labor rate dramatically. They were also coached to pad the labor hours, some shops a little, some shops a lot. The parts GP had been taken from a very low percentage, usually parts store "list" or less, (some shops were selling parts at cost) and were now getting a reasonable GP of 45-55%. The shop was now enjoying high car count, and a very good average RO with a good GP%. Success! I'm not saying that these shops didn't need to make dramatic changes. Nor am I saying that these changes were wrong. What I'm saying is that the shop's current clientele were going to these shops because they were the cheapest in town by a long shot. Suddenly they were no longer the cheapest in town. A high percentage of these shops go out of business. I personally know 2 shops that spent a large fortune (they have you put it on credit cards up front) and subsequently went out of business because their client base left them plus they were now having to pay off a 30K credit card bill. I know another 2 shop owners who went through the program, and years later (20 for one shop, 15 for the other) they are both mediocre shops. I personally know zero long term successes with this model. This is not to say there are none, but this model is 0 for 4 in my personal sphere. My personal coaching experience is different. 1st coach I hired was a system based on the E-myth book, and modified slightly to apply to the automotive business. This was my wife's idea for me to do. Everything was done over the phone with no delving into the numbers of the business. It was good stuff, but like many technicians I didn't relate well to the touchy-feely approach. Maybe it would have been good for a business in the stages where I am now, but at the time I really just wanted a step by step plan (repair procedure?) to get me from A to B. Money spent, no real effect on my business in no small part because it wasn't my idea and I never bought in. 2nd coach was much more effective. He visited the shop to do a two day evaluation including looking over repair orders, reviewing GP percentages, interviewing staff, and reviewing the facility. After that it was strictly phone coaching like every other coach. As time went on it was obvious that their approach focused almost entirely on the sales process, including inspections from the technician and the advisor selling process. They also wanted me to start a direct mail campaign, but they strongly encouraged me to use their "proprietary" mailers. The mailers were expensive (about 3 times the going rate) and I didn't have the resources to do a proper mailer campaign with any kind of consistency. We NEVER talked about expense control. In the end I got my money's worth from them as my sales were up, my GP was up, but it was done in a way that didn't chase off customers. I still like those guys and speak well of them. They did do a lot for my business and I'm were I am today as a result of their coaching. I hope that in the 6+ years since I left them they're doing more on the expense side and the books in general. But even if they aren't the sales benefits are still great. 3rd coach actually isn't a "coach" but rather a 20 group. This is the whole enchilada. Low cost to the business. Great marketing ideas, and where to get it done cheaply. Great sales coaching from other group members, and also where to send your sales staff for the most bang for the buck on sales training. Continuous review of the books, including GP performance, expenses, salaries, all of it. Plus, you're forced to learn how your own books work and what all the numbers mean. Maybe it's been so good for me because I was ready when I got there. No question that my previous experience with my 2nd coach played a big part in getting me ready for a good 20 group experience. The other members of the group are also a huge factor. If you join a 20 group and are dissatisfied with the results you're getting, move to another group within that coaching company, or to another company's groups. If you still don't see dramatic improvement in your business, it's you.

I use Mudlick. There are others that do an equally good job. I've been mailing with them long enough and with enough volume that I get a really good deal. It went up recently, so I think I'm paying 0.35 each. But don't quote me on that.

Yup, best way to go broke is to put the (former tech) owner at front counter. I don't write service for exactly that reason.

Everyone hates cheap oil changes. You have to change your mindset about the LOF. It's not a Lube Oil and Filter. It's a Labor Opportunity for the Future. It's only purpose is to get the car in the bay so my techs can inspect the car for other work.

The mailer program is simple. Good looking full color stand alone oversize postcard. Cheap oil change coupon which is the main driver, a progressive savings coupon (buy more, save more), and something seasonal. I send 15,000 a month to the same addresses, and I don't exclude anyone. Some guys want to exclude existing customers, I don't. I've been mailing the same addresses every single month without fail for 4 1/2 years. Get a good mailer company, set it up to happen automatically, and don't monkey with it.

I know this topic is old, but since it got pushed to the top, I'll chime in. There are a couple of people here who want you to hand it all over to an accountant or outside bookkeeper and "let them do what they're good at" and "quit wasting your valuable time" on such tasks. I couldn't disagree more. Do you want to own a business or do you want to own your job? There's a big difference, and an intimate knowledge of your business financials is the first step in moving from owning a job to owning a business. Step 1. Take accounting 101 at the local community college. You absolutely must know basic double entry accounting. Without this knowledge, how on earth do you even know if the person doing your books is doing a good job? Step 2. Buy Quickbooks and get the chart of accounts properly set up. Your financial system is there to help you MANAGE THE BUSINESS. It's NOT to simply to keep track of how much tax you need to pay. The chart of accounts is the heart of your financial system, and it MUST be set up properly. The problem is that most people rely on an accountant or bookkeeper to set up the chart of accounts instead of someone who knows how an auto repair shop needs to run. The accountant will set up your chart of accounts to make it easy for THEM to do your taxes, they will NOT set it up so you can manage your business because they don't know how to manage your business. Step 3. Do your own books. You can literally do this in 15 minutes a day if you set up your systems correctly. It will be slow and difficult at first, but from that point on you'll be in tune with how your business is operating. You'll be able to spot a problem when it happens, not 6 weeks (if at all) from when it happened. Most people I know who use an accountant for their books end up tossing the envelope with the P&L in a drawer unopened because they have no idea what it means. They only know how little they made during the year because the accountant announces "Good News, you don't owe any taxes". I don't like paying taxes any more than the next guy, but I'd rather pay taxes on 300K than get a refund on 30K.

No worries, it's right there in my post. I pay her $20 an hour, and she has flexible hours. She pretty much comes and goes as she pleases, and as long as her work gets done that's just fine with me. Generally she works from open until about 3 in the afternoon.

I'm fortunate to have enough biz to have a full time bookkeeper/admin. Life would suck without her here. She takes care of my Quickbooks, HR, tracks my marketing, does my tech time management spreadsheets, pays the sales tax on time, does payroll, and generally keeps my guys in line. All for only $20 an hour. I can pull a P&L or balance sheet and know it's always up-to-the-minute up to date. When I had an outside bookkeeper/cpa, he would pick up receipts and the check registers once a month, then return a P&L the following month when he picked up the next batch. My P&L was always 6 weeks behind, and honestly I didn't understand it back then anyway. If I did understand it, it was 6 WEEKS OLD. What am I going to do to fix a problem that was half a quarter ago? Even before I could afford to hire Terri I started doing the books myself, and it was the best thing I ever did. There's no better way to understand where your profitability is going, either in gross profit or expenses, than being able to see it in real time. Besides, if you don't understand your books (P&L and balance sheet), you don't understand your business. Terri and I go over all of the numbers line by line once a month to make sure everything is on track, and it helps provide the checks and balances we need. Of all my employees, Terri has the greatest ability to steal from me. I trust her implicitly, but as the old saying goes, trust, but verify. All of that being said, I still use a CPA for my taxes. Once a year, Terri, my CPA, and myself get together and work through any issues to make the tax prep smooth and easy.

It's easy to know if your labor rate is right. Simply take the flag hour wage of your highest paid tech and divide by .3. My techs make 31 an hour so the minimum correct labor rate is $103. We use coupons to attract new customers, so my rate is higher to compensate for the discounts. If you're getting 55% on parts (part cost divided by .45) and your labor rate gets you 70% margin on labor, then don't worry about P/L mix. A 4.5 HPRO tells me you're not likely giving away much labor. It's probably due to selling lots of high dollar parts, which is a good thing at 55%.

I don't disagree, you could do it all yourself, and I used to. After moving into my new building and working hard to expand the shop, I found that I lacked the time to manage it. Now that things are running smooth for me, I do have the time, but not the desire. So I pay Kukui to do it for me. As far as the tracking goes, you have to go into it knowing that there will be overlap. I don't know about counting old customers as new, and I suspect that may be due to the way Kukui and your shop management system interface with each other, but I don't look at the new vs old all that much. I know for a fact that people who get my mailer are going to be driven to my website. The mailer will get credit, and Kukui will get credit, and I don't care. What I care about is whether people are being driven to my shop. Some people would say that I should care very much if dollars spent by the customer gets counted by both my mailer tracking and my website tracking. It's true that if you want to know the exact ROI on each of these, you'll have to assign the dollars to one or the other, or split it. What I want to know is, are people seeing my mailers and my web site, and are they influencing people to come to my shop and spend money? Since people are calling both the tracking number on my mailer and the tracking number on my web site, and they're using the mailer coupons, and to a lesser degree the coupon on my web site, I know for a fact that both are working. The combination of a relentless mailer campaign and a good web site have allowed me to take my shop from 700K in 2010 to 2 Million last year. I do some marketing to my existing customer base, but it's small potatoes compared to the revenue generated by the mailers and web site.

I had a great conversation with Todd Westerlund yesterday. He's working hard to improve some of the problems that he's been having of late. I think a lot of it may be some growing pains that anyone who's been through a rapid expansion knows about. That doesn't relieve him of the responsibility for some of our experiences, but it does give me great hope that things are on the upswing. We also talked about some of his future plans for expansion into better shop management for our shops. I'm sure it will be a couple years for him to implement some of the things we talked about, but it could turn into some really great things for us as shop owners.

Thanks Todd. We'll chat, and I'm sure all will be well. Congrats on the partnership with NAPA. Hopefully that will be a good thing for your company.

In about 2002 I was in a pretty tough spot. I was losing money hand over fist. We had taken over a larger space on Sept 1, 2001 and ten days later the world fell apart. Then to boost new car sales, the dealers were doing no down payment, 0% financing, if you could fog a mirror you qualify. People were literally trading in their car if I told them it needed a set of tires. It was unbelievable. I finally took a few minutes and calculated my break even point. I made a nice little graph with my fixed and variable expenses. The long and the short of it was that I needed a substantial labor rate increase to be able to survive. Not to make a profit, just to stop losing money. I raised my labor rate $15.25 in one day. I only had one complaint, from my service advisor. Not one customer said a single word. Not a new customer, and not a long time customer. From that day on, I have never feared increasing my labor rate, and I certainly never felt guilty about it. A couple years after that big jump, and another rate increase or two in the mean time, I had a lady just beat me up until I would give her my labor rate (we try not to talk about labor rate, only the bottom line job cost). She was mortified to find that my labor rate was higher than the Chrysler dealer a mile away from me. Two weeks later that Chrysler dealer went out of business. I wonder what her warranty was worth on the work they did for her? BTW, the service manager from that Chrysler dealer has been writing service for me since a couple months after they closed.

I've been using Kukui for about 4 years. I love all the back end info I get from them. I don't know of any other source for the kind of data they provide. I can know just about exactly what my ROI on the website and other online advertising I do. Which is not to say that you can't get the same results from any other web site or SEO or pay per click program, but how do you know what's working and what's not? I just had my daughter sign up with Kukui for her new shop, and I will say that her design experience wasn't as amazing as I had expected. Also, the monthly marketing updates they do were not great. I had begun to just ignore the phone meeting request. A couple weeks ago I requested a new rep for myself and my daughter, and he seems to be doing a better job. He's been more responsive to her requests for changes to tweak her website. I got an online survey from them in which I skewered them for my daughter's experience, and the fact that it seemed their entire staff had been replaced with valley girls over the last couple years. By chance, I had received a facebook friend request from Kukui's CEO just days before my survey. I got a follow up call from Kaitlyn at Kukui that did result in my new rep, but I wasn't super excited about her attitude when I discussed my daughter's experience with them, and my recent experience with the seemingly airheaded valley girls. During the call, Kaitlyn tried to tone down the valley girl uptalk, but she was clearly annoyed that I had brought it up. Afterward I decided I would have a chat with Todd, the CEO. I sent him a message on Facebook messenger. I know he saw the message, but it went ignored. No call, no response. Bottom line is that it's still a good service, and still worth the money. But I'm not as excited about them as I once was.