gandgautorepair

On 9/20/2017 at 10:41 AM, Truett said:

Yes I think I will have to start Recruiting. I know it is an Uphill battle to get the moral back but if they want a job it may have to be this way or will not be in business for much longer.

You can start a new tech at a new pay plan. If the new guy doesn't get poisoned by the old guys then he should be more productive. The old guys can see the writing on the wall and get on board or you keep recruiting.

I think what you have proposed is too complicated and it won't really get you where you want to go. It might help to move you're current people a little bit, but would not work at all for a new hire...in my opinion.

My techs are flat rate with a bonus based on productivity levels. It's not perfect, but seems to work ok and everyone knows what they need to shoot for. We currently don't track efficiency, but I'm open to ideas.

Thanks very much for the comments. I come from 29 yrs in dealership management so I'm very familiar with rotating schedules. Anderson, you have a very good plan, thanks for taking the time to explain what you do. I'm torn with the idea of extended hours. So far, I tell people the truth that I chose opening a repair shop over opening a used car lot because the repair shop would not be open evenings and weekends. However, with all of the challenges that we will face in the future I want to do my best to position the shop to be successful long term. We already go out of our way to accommodate our customers, does this also mean extending our hours? So far, I have a good staff, with very little turn over, and I want to keep that. Good to hear that some of you have made being open on Sat profitable.

If the customer had the $300, we would have done the wheel bearing. That was the most immediate, and most safety related repair, and it gained a new customer. If he needed financing to do anything at all, and got turned down, not much there. Hard to second guess the situation not being there.

16 minutes ago, 3PuttFever said:

Just had a car in here from a new customer. Complaint was grinding noise. We assume brakes and look the car over. He's got high mileage, two broken springs and blown struts, a bad RF wheel bearing. Manager asks me what to do. He's thinking we just lead with the wheel bearing. I tell him to let the customer know all that it needs because that's what we're here for and broken springs may result in other issues that if we don't tell him and something happens how is that not on us? I follow MAP standard of communication - a broken or failed part is a 'required' fix and other worn parts are a 'suggested' fix. On this case - the RF wheel bearing and two springs/struts are a required fix and the other two springs/struts are suggested since both broken springs were on the driver side. Customer declined all repairs. My Manager is upset we let the wheel bearing walk out the door. We didn't let him walk out the door unless we purposely omit the other issues on the car to simply get a $275 wheel bearing ticket. The customer applied for financing, was declined, and didn't do anything with us. My Manager thinks someone else will get the bearing work and we lost a sale. I like he's fighting for the business but if a customer has multiple things that need attention now and they pass with us because they can only afford one thing so be it. I can live with that rejection knowing I did what was right. Customer may go to another shop, ask for a bearing R&R, and that shop may take his money and then mention the things I hope they find. Any thoughts on how we could have done better? A little off topic but in the vein of inspecting cars and presenting findings...

If they tried financing approval for just the wheel bearing, as well as the whole job, and the guy didn't get approved, and he didn't have money to fix it, no sale was lost since no sale was there. Really though, this guy is not your customer...has no money to fix or maintain his car. If trying to get a single job creates a pattern of the advisor not being thorough on his process, many more jobs will be lost, not just a single wheel bearing on a cheap customer.

We are currently not open on Saturdays, but I'm thinking about it. I wonder how many of you are open on Sat and how it works for you, what your thoughts are. I've always appreciated the model of having a business that was closed evenings and weekends, and it's nice for the employees. However, we're trying to maintain a higher level of gross sales with more employees and I'm trying to keep an open mind. I went from 2 techs and a lube tech and one service advisor with a CRM, to 3 techs plus lube tech and two service advisors on May 1st. We've done well for the summer, but I'm nervous about keeping everyone busy through the slower season. Also, going forward with the challenges we'll face in coming years I'm wondering if being open on Sat will give us an advantage. Welcome any input.

Thanks everyone. Very good stuff here.

My top tech has $1250 a wk guarantee, plus $32 an hr for every hr over 45 hrs. He's only missed going over 45 hrs twice in the last 1.5 yrs he's been here. He's woth every penny he gets. I had to do the guarantee to get him, and very glad I did. All 4 of my techs have a different pay plan based on who they are, their skill level, and what it took to hire them. Sometimes you just have to have an open mind about how to pay.

I agree that we can't attract people into this business if we don't pay enough, and we can't pay enough unless we charge enough. Our labor rates need to compare to plumbers and electricians and other professions in our area. Also, I've seen that many shop owners who work in their shop don't have a good view of their actual profitability, since a good part of their profit comes from their own labor. GP and net profit should be calculated as if the owner was paying someone else to do that work, then see how profitable they are and raise prices accordingly.

I struggled for 6 yrs getting this shop going. I finally figured out how to solve my lack of profitability problem...charge more! I also told every tool truck driver and every parts rep and anyone who would listen that I paid the highest tech wage in town. All 3 of my A techs came to me looking for a job. I consider myself very fortunate, but I also kept putting it out there. 

Good point. One of the things we did to build car count was go to cheap oil changes, which dropped our ARO. We've worked hard to get ARO and GP up to where it should be, and we're finally having a very good year in GP and net. From 2013 to YTD 2017 we grew an average of 33.5% per yr in gross sales, 35% in car count, and 27.5% in hours billed. And at the same time raised our labor rate from $89 to $126.57.

I started my shop from scratch 7 yrs ago with me and a partner. I bought him out in 2013. I now have 8 employees plus me, and I don't work in the shop. I'm only saying this stuff to encourage others to not be afraid to raise your rates. When my partner left I was afraid to raise the labor rate, and I worked my ass off and didn't make any money. Then I was challenged to raise the rate and I did, then raised it again, and again, and again, in both big jumps and small jumps. Nothing happened, and we kept growing. If I can encourage some of you to just raise the rate then we're all better off. Friendly service and marketing matter, price is very minor.

We've used MyShopManager for a year or more and really like it. Up until recently I answered all the texts myself using my cell phone, anywhere I was even on trips. Pretty simple to do since each text response comes as an email. I now have trained my CR person to do it and made them responsible. I use a combination of texts, emails, and direct mail as follow up, all to our existing customers, and it works well. The text responses after the RO closes is a great way to interact with your customers. The price is very reasonable to me, compared with other things we spend marketing money on.

One thing I especially like is the system of contacts to get a first time customer to make a 2nd and 3rd visit. Works very well.

We're in the central valley of CA, so more of a midwest economy than SoCal and the bay area. We have among the lowest home prices in CA. We are the highest, the shop across the street from us has a $90 labor rate, a couple of my friends who own shops are at $98. I just decided I need to charge what we're worth regardless of what anyone else did. In the last few years we went from $89 to $126.57, and we've grown 30+% per year for the last 4 yrs. I'm pretty convinced that labor rate is a state of mind. If we're going to attract the type of techs we'll need in the future, we better make it an attractive, relatively high paying job, and to do that we need to charge enough for what we do. I learned that nothing bad happens by raising the labor rate. We had a strategy, we kept initial test time lower so we don't have to discuss a higher rate, and we avoid quoting rate...way too many ways to nicely and credibly side step the issue...and if we must quote a rate we quote our average rate (effective rate). We also price frequent services, like oil changes, brake jobs, trans service, etc, at competitive prices...what we call comparables. And, we focus on the customer having a great experience. I know every one of you could raise your labor rate $10 tomorrow and nothing would happen.

We already give $20 cash to the customer for the referral and $20 discount to the 1st time referred customer, and it works very well for us. We use the $20 bill certificate that looks like a $20 bill and has my picture on it. My graphics designer did it and it's very high quality. We currently get a lot of new customers regularly and the shop is growing consistently. If/when this drops off for us, I would definitely consider upping the program to $100 in service. 

To the comment above, we don't decrease our quality. Quality work and reputation is a totally different function than marketing to get new customers. 

We're like Anderson, also explained in another thread. We charge a low oil change price, which includes digital MPI and battery test. We pay .4. My logic is that I want our customers coming to us, not going to the quick lube. We emphasize maintenance strongly as part of our marketing and branding. I've thought about raising our oil change prices, but the few extra GP dollars gained aren't worth it to me in the long run, I'd rather make sure I see our customers for all of their maintenance.

We started using Bolt On in Feb and we are glad we went to it. A few thousand to set up, but worth it. Our ARO went up $50+ because of the more consistent inspection process. It was not easy to implement, we had a very consistent work flow process before and the digital demands a total reworking of the work flow process. It was a challenge, but worth it.

I'm in Bakersfield CA and our rate is $126.57, $110 for first time customers, $96.50 for initial testing time, $189.86 is they bring their own parts. We are definitely the highest in town, by a long shot, and we pay our techs probably the highest in town. I actually want to pay the highest in town and I want everyone to know it.

We've struggled with parts margins and overall GP% and I wonder how you all hit your GP goals with such low labor rates. Not being sarcastic, I really wonder. I'd like to know what labor and overall GP percentage you're hitting with those labor rates.

For you to get 70% GP on your master tech, the way I figure it, take the 28x1.25 for payroll tax etc, then figure 70% based on that which comes out to a labor rate of $116.67. You can go lower than that because your other techs are a lower rate so it will average out, but your labor rate definitely needs to be higher. Don't be afraid to raise your rate, nothing will happen. I was afraid to raise mine for too long, then I raised it $10, nothing happened, so a few months later I raised it another $10, nothing happened. In an 18 month period I went from 89 to 125 and still grew by 30% each year. Don't be afraid.

The service advisor in a busy shop already has too much on their plate, and it's a challenge to stay focused on the important, productive tasks. To me, you're adding more stuff to distract from what will actually make you money and develop loyal customers, like consistent inspections and routine maintenance. You're creating more things to have to discuss with the customers. You'd see much more ROI if you spent that $10k on Google Adwords or a retention and follow up system like Myshopmanager.com. JMHO

We signed up for Synchrony through CarQuest Technet. It works fine for us. Not a big volume, but it does work for a few customers, and it allows us to say we have that option and use it occasionally.

We get decent response from Yelp, even when we didn't pay. I had to gradually accept that Yelp is here to stay, they promote themselves well, and people do use it. I finally gave in a few months ago to one of their lower priced packages...we'll see. We focus a lot on internet advertising, so I decided to add paying for Yelp as part of that. No definitive answer yet on whether it is worth it or not.

BTW, comment to a post above, Facebook isn't free. If you don't boost on Facebook it has very little value. Only 3-5% of people who like your page see a post that is not boosted. Also, if you want to advertise to your market area through Facebook, which we do very effectively, you must use paid ads. Also, while finding your shop on Google through searches is effective if you come up at or close to the top on organic searches, to really be effective takes pay-per-click, which isn't free. Pay-per-click costs vary quite a bit based on market area, so it isn't worth it for everyone, but it is very effective for us.

So, for us, since we pay for Google, and we pay for Facebook, it sort of made sense for us to try paying for Yelp as well. We'll see.

We just went to two advisors a couple months ago. I made my current SA the service manager/operations manager, and I let them work out the work flow. They've tried different things, but I'm leaving it up to them. BTW, my ARO went up immediately since there is now time to slow the process down. I'm playing with the parts person idea, trying to use my previous asst SA as parts/admin. Still working it all out.

I've had good response from EDDM mailers, which is Every Door Direct Mail through the post office. It sends a piece to every house on the mail routes that you choose. We do our own piece, and get it to the post office ourselves, but there are companies that do it for you, like Mudlick Mail. James Dees is also a very good resource for this, he has an extremely low price, and I know a couple shop owners who use him, his contact number is 503-209-0851. I also have great success with myshopmanager.com. Besides our normal follow up that we use them for, there are a couple of things we do through them to bump up business when we need it. One is a called a slow day text, and it works so well we have to limit how many texts we send out any time we do it, and another is a rebate check. Both go to existing customers, and you can choose exactly what category of customers, and how many, to send out. You could talk to any of these resources to get ideas.

I'm really interested in an answer to this, since I'm considering whether or not to open another shop. Mostly wondering how soon a 2nd location can be self sustaining cash flow wise and how soon to be profitable.

We just use the number that comes from Mitchell, which is total RO count/total sales including sales tax. It's really a management tool that is tracked so as long as we do it the same we can use the number for managing. It only makes a difference when comparing ourselves to each other.

14 hours ago, ScottSpec said:

How do you calculate the average R.O. in your shop? I know the simple calculation is to divide gross sales by R.O.'s, but that alone can give you a pretty inaccurate number. I am big into documenting and making notes on everything. I save all emails from customers, etc. So every car or part that goes thru the shop gets an invoice. This helps keep track of what happened and when, makes sure inventory is not lost, and that taxes are paid. So when a loaner car needs an oil change or light bulb, a R.O. is created. If one of the employees needs an oil filter, an R.O. is created. There is no labor on those and the parts are billed at cost. We also do Maryland State inspections. Quite often they are for other shops and the R.O. is never going to be more than the cost of the inspection. When they bring it back for re-inspection, another R.O. is created for $0. If a customer comes by to have us check their oil, coolant, ck tire pressure, etc. an R.O. is created. So simply dividing gross sales by R.O. count can rally skew numbers. Also, do you include sales tax?

I have played around with many variations. Sometimes I will filter out the invoices below a certain amount or with no labor. I figure the inclusion or exclusion of sales tax is not a big deal as long as you stick with the same methodology.

Scott 

In my shop we just use the Mitchell number, which includes every RO and includes sales tax. It does include some $0 sales RO's like for a shop vehicle or my personal vehicles, or some comebacks. There are so many ways to handle shop and personal vehicles, it either jacks up gross sales if you include at regular price, or hurts RO ave and GP% if written at $0. I agree, it's pretty hard to do an exact comparison of RO ave from shop to shop because of some differences in how we calculate it, but it can show trends for our own shop and give us a range of comparison with other shops.

I've considered doing some hand calculations, but in the end as long as I calculate it the same every month it shows the trends we are using to manage the shop.

When I bought my partner out a few years ago, he said it was time to raise our labor rate. Because I lost his customer base, and he was the expert mechanic, I was afraid to raise the rate. I worked my butt off and struggled. I finally got over my fear, and challenged by other shop owners I raised my rates. Nothing happened. So I raised them again. I don't recommend this, but I can tell you what I did and what happened. I ended up raising our labor rate from $89 to $125 in a period of 18 months. Nothing happened. Except I started being profitable. I know I am the highest labor rate in town. The shop across the street, a very good shop, is at $90, we're both very busy. The big difference between me and the owner across the street is that he's the main guy and can't leave, and I don't work in my shop in daily operations and have taken up to a month off at a time. I know this is not recommended, but I ended up not caring what any other shop in town did. I concentrated on giving great service. Besides, if any shop works towards a 60% GP you have to get it somewhere. There is less push back on labor rates (rarely comes up) than there is on parts pricing. 

BTW, I'm just sharing experience here. We've had lot's of issues to overcome. I found out last year that we were not charging nearly enough on parts compared to other shops, and getting that pricing correct has really helped our profitability. Also, we try to stay comparable by quoting an opening estimate for testing at $98. If we really get pinned down on labor rate we quote our average labor rate, which is 110-115, and we say it's our average rate. Not recommending thus stuff, just saying what we do.

Richard G

May was a record breaking month for us in every way. We added another service writer and another tech and needed the month to be good. We over doubled last May, up 110% in gross sales, and nearly tripled GP, up 180%. June was also good compared to last June, gross sales up 50% and GP up 44%. However, with adding a service writer and a tech we need to be up. We are currently booking almost a week out, so I'm very happy we increased staff when we did. We are a relatively new shop, so we've been up every year. I don't expect it will always be this way.

Richard G