Transmission Repair

The ATRA Powertain Expo is my favorite because I learn a lot and get to visit with online friends.

I've been in transmission repair industry for 40 years and been a shop owner 26 years.  I've already retired quite comfortably.

20 hours ago, Joe Marconi said:

When I was in business, I had two locations, and we were open Monday thru Sat. Saturday was usually to 2pm, unless we were busy that day. 

As I posted earlier, we were open 5 days a week, Mon-Fri 8:00 am - 6:00 pm.  However, if we had slow days, I would give the guys time off.  Some of the guys took it, some didn't.   This is because I paid the employees by the hour.  Giving them time off was considered a pay cut by some and if they needed money, they wouldn't take off.

What I've learned from this thread is that a 4-day work week doesn't mean the business is open only 4 days a week.  Employees only work 4-day work weeks but the business is open 5-6 days a week.  Here's a video from down under New Zealand with their perspective on the 4-day work week.

12:56

Although we had a classroom with weekly in-house training, we put away $200/wk. for the ATRA Powertrain Expo every year into a separate banking account.

Our weekly training was the employees' highlight of the week.  Here's why... We supplied lunch and during lunch we would chit-chat and discuss "The Job Of The Week" which was the past week's job that kicked our proverbial tails.  After discussing The Job Of The Week, the formal training through online or live would commence.  We did that every Tuesday and the entire event, including lunch would last about 90 minutes.  Sometimes suggestions for making the shop better would come up, shop policies would sometimes come up.  Over the years, weekly shop training and lunch became so automatic, everybody, including me, it was a given.  I don't know how any well-oiled shop could not have them.

This topic has been beat to death.  Let's just agree to take the "Wait and see." position, Okay?

Funny you should post this today.  Just today I went to a non-factory Apple iPhone repair store.  They are open only 3 days a week, Tues, Wed, & Fri. only.  They were closed today... I won't be back, either.

The REAL 4-day work week goes for employees only, not the store hours.  Here's another way to think about it....11:41

4 hours ago, Joe Marconi said:

Larry, you bring up a few things I did not consider. And I guess if there is a strategy that works for one, who is to say it's wrong or right? As always, thank you for your perspective. 

I would be lying if I said nobody ever had something negative to say about my strategy.  I've been told my strategy is unethical.  Another said "You can't get that kind of money for that job."  Another said, "How can you let that customer walk?  Just because you're greedy?" and on, and on.  All complaints were some variation of those 3 objections.  That didn't deter me.

One thing for sure, all the shop owners I did consulting work for and practiced qualifying customers that way, went back to their old ways after I left.  Only one of them are still in business.  My opinion of why they are still in business is because they added full car repair to their formerly 'transmissions only' business.  The biggest problem I see with struggling transmission shops today is they don't cover their costs.  I train them in job costing and I hear objections like "I can't get that much." or "If I charged that much, I'd be the highest priced shop in my area." etc., etc., etc.    

My experience has been that they either follow my training (or any good training) or go out of business.  A great example is my former shop.  I sold my former shop to a multi-shop owner/competitor.  They had 4 shops in total, we were shop #5.  Before the sale, we were doing a consistent $1.2M/yr. in sales for the 3 years prior to the sale.  Their rent was $11K/mo. or 11% of sales.  Within 5 years, sales were down to $400K/yr.  Rent became a whopping 33% of sales.  No shop can survive like that.  They eventually folded, employees left, and they took all the shop equipment with them.  The $85K judgement we got against them wasn't worth the paper it was written on.  Sad, sad, sad state of affairs in the end.  Perhaps I'll write a book about it some day.

Great questions, Joe.  My answer on both questions would be "it depends."  There's a lot of variables involved before I give a definitive answer.  All I can say is what my experience has been in the past because at different stages of my career, I've asked myself the same questions.  I'll just tell you about one.

I came to the crossroads in my career when in deciding if I wanted to take in European vehicles, specifically, European transmissions.  Every job was like a new adventure in uncharted waters.  They took more time, more money for parts, and a higher percentage of those Euro jobs would turn into a "dead job" sitting in the back parking lot awaiting payment.   I considered myself lucky if we were paid as soon as the work was completed.  To add insult to injury, there was a higher rate of  no-goes (failed the final road test) and warranty claims.  Perplexing to say the lease because I didn't want to turn away work.

Unrelated to this topic, I bought a list of all the vehicles currently licensed in our county from our state's DMV to see where our bread & butter-type jobs were at.  I put the list into a database and would write queries.  Two years after I bought the list, a new question/query came up.  I wanted to see how many European makes are there in our county.  I couldn't believe my eyes at the answer... an infinitesimal 6%!  In my mind, I see way-more than that going down the freeway.  Moreover, I later discovered from AAA that the rate of European vehicles nationwide was only 10%.  Ever buy a particular model and color of a vehicle that you never see on the road?  Then, after you start owning that particular model and color of a vehicle, then they seem to be everywhere!  A similar phenomenon I call "a head-turner" was exactly what was going on with me.  Every time I saw a Euro on the road, it was a "head-turner".  Any other type of car was merely just traffic.

I soon reasoned if I ever chose to not work on European vehicles, I would still have 94% of the market!  After several months of thought, I finally would say "no" to European vehicle owners in a very special way.  My strategy was to price the work so high, the customer would be the person saying "no" and not me.  Anything can be had/done for a price.  Looking back, that was one of the best business decisions I've made in my career.  In the end, we still worked on Euros, just not near as many.  I guesstimate we still had 95-

96% of the market

The lesson I learned was to NEVER say "no" to any customer.  If the customer has the type of car or job you don't want to take on, don't be the person that says "no".   Let the customer say "no".

It will the battery to crap out first.  EVs are very dependable.

On 9/25/2022 at 9:55 AM, Transmission Repair said:

It takes years and billions of dollars to get a chip manufacturing facility (fabs) up and running.  Intel is currently spending 40 billion on new chip facilities. (fabs)  Currently, there 11 chip fabs in the works.  That's the good part.  The bad part is they won't be up and running any time soon.  What's really crazy is a Taiwan-based company, TSMC, is coming to the U.S. to build a fab to help shortening the lead time from order, to delivery.  I don't want to make this a long post, but here's a link to the story behind the story of U.S. chip fabs...

https://www.tomshardware.com/news/new-us-fabs-everything-we-know

I wanted to give updated numbers and a chart to the number of chip fabs being constructed in the U.S. as well as their proposed cost.  First, their combined cost will be north of $234 billion dollars in 11 different fabs.  The chart below will better show the context these fabs are in.

Notice the TSMC (Taiwan Semiconductor Manufacturing Company) is building a fab here near Phoenix.  They produce 53% of the global chip industry.  It's great they are coming to the U.S.  The earliest any of the fabs will be completed is Intel's fab in Rio Rancho, NM is 2023.  The latest is Samsung's Austin, TX fab in 2042.  Like I said in my previous post, it takes years and billions of dollars to get a fab up and running.  I hope the above spreadsheet will help you get a context of all the chip plants that are about to be built and are being built.

On 9/24/2022 at 5:06 AM, Joe Marconi said:

From what I am hearing from my fellow shop owner friends, the shops in my area, Northeast (New York), auto repair shops are busy and steady. However, there is a feeling from many shop owners to be cautious about the future. 

Things that give shop owners concern: Inflation, the cost of living affecting the consumer's ability to afford auto repairs, dissatisfaction with the current administration,  and possible recession. 

Your thoughts? 

The formal definition of a recession is when we have 3 consecutive quarters of the GDP in negative numbers.  For those that may not know, GDP stands for Gross Domestic Products.  In a healthy economy, that number should be positive, or at worst case zero%.  The end of this quarter (today, Sept. 30, 2022) will meet the formal definition of a recession. Here's a news story from yesterday's Fox Business Report.  Watch it and be aware.

2:17

27 minutes ago, Joe Marconi said:

Not to get political, but we need to move from a mentality of entitlement to a mindset of accountability. That is not to say that if people need help, we should help them, but moving forward we need to define clearly what the government should do, and not do. 

I understand your position on politics.  There's always debate on certain topics and politics top the list followed by religion and what's the best motor oil. 🙂  I also agree that the average Joe American needs to move from a mentality of entitlement to a mindset of accountability.  Me, personally, have never had a dollar I didn't work for.  To me, that's my bailout money if you want to call it that way.  Accountability is the best word for that.  

There's good Democrats and bad Democrats and the same can be said of all other parties as well.  Our country wasn't founded on bailouts.  It was founded on accountability and freedom.   I hope to do my small part to keep it that way.

1 hour ago, Joe Marconi said:

You should work for the government as an advisor.  I get it, and you make sense. 

People need to go back to old fashion values and be accountable for their actions. Not looking for a bailout. 

Our Democrats, both inside and outside the White House, always look for a government bailout.  Did you hear President Biden just promise Florida and Florida residents that the Federal Government will cover the costs of Hurricane Ian?!?!?   Oh, brother...

21 minutes ago, Joe Marconi said:

You bring up a great point.  How did they get into this situation to begin with?   What would they do if there were no bail out?  All good points. 

 

They got into that situation because nobody has thought that far ahead to think of it, Joe.  Biden promising a $10K bailout just compounded the problem.  I was never good at paying bills with HOPE.  Assuming 2 different $10K of student loans are paid 2 different ways.  One is loan forgiveness and one other way is the old fashioned way of simply paying your bills.  

In both cases, you're going owe the tax due on $10K either way.  You're going to owe taxes on $10K to pay toward the loan you took out.  And in the other scenario of $10K of loan forgiveness, you're going to owe taxes on $10K to pay toward the loan on your student debt because it's a taxable event.

Further assume both parties are in the 23% tax bracket.  That ends up costing either party $2,300 in taxes on the $10K.  So... the student loan  pay off is really just $7,700 worth of effect debt paid.  If it's still unclear, post me a response.

Speaking of taxes...

There has been a lot of controversy over the student loan bailout program.  Whether a person is for it, or against it, it's costing tax payers money.  Here's a tidbit of tax information few, if any, think about.

I'll start off with a hypothetical scenario.  Let's say a person gets $10,000 in loan forgiveness.  That's a taxable event.  The person that gets a $10K in loan forgiveness still owes the tax that would be due on the $10K.  Yes, they owe state and federal income tax on $10K because loan forgiveness is viewed in the same light as if it were income.

IMHO, if a person can't afford to pay off their student loan, they would be hard pressed to have the money for the taxes due on $10K worth of loan forgiveness.  Think about it...

It takes years and billions of dollars to get a chip manufacturing facility (fabs) up and running.  Intel is currently spending 40 billion on new chip facilities. (fabs)  Currently, there 11 chip fabs in the works.  That's the good part.  The bad part is they won't be up and running any time soon.  What's really crazy is a Taiwan-based company, TSMC, is coming to the U.S. to build a fab to help shortening the lead time from order, to delivery.  I don't want to make this a long post, but here's a link to the story behind the story of U.S. chip fabs...

https://www.tomshardware.com/news/new-us-fabs-everything-we-know

On 8/1/2021 at 11:15 AM, Joe Marconi said:

Wow! Go for you! I hear this more and more across the country as an Elite business coach. 

I saw a local news story where it said the people are eating out more because it's cheaper than going to the grocery store.  Why is that?  Here's what I believe.

The majority of restaurants and eateries in general are Mom & Pop businesses.  Covid killed a lot of them off but the survivors are coming around to re-establish what they once had.  Like transmission shops, they are afraid to raise their prices for fear of losing business.  So, they absorb their increased food cost.  Sound familiar?  This is the point I'm trying to get across.  Example:

My wife and I went out to a new restaurant in our neighborhood.  They opened up recently, since the Covid scare.  I was shocked to see they charge 25 or 50 cents for condiments, depending on what it is.  I chose Bar-B-Que sauce and $1.00 was a line item on the receipt. (I had 2 at 50 cents each)  BTW, this new restaurant was NOT cheaper than buying the same at the grocery store.  Nearly $40 for a table of 2.  I can easily fix multiple lunches and dinners at home for the same $40 bucks.

MORAL TO THE STORY:  Price your services based off your costs, not some preconceived notion on what you think customers will pay.  Good customers will stick with you and will pay whatever you ask.

1 hour ago, Joe Marconi said:

We are almost into the 4th quarter of 2022, which means that you need to consider your 2022 tax return. Many shops are having a very good year, which means there may be more taxable income at your bottom line.

What do you do to plan for and minimize paying taxes, while still maintaining a cash reserve? 

 

Great reminder!  Because my wife is an accountant, she handles all accounting functions.  She has a 2-year degree in accounting and a Bachelors in Economics.  Lucky me, huh?  We met online and married in 2006.  Even with all that, she impressed upon me that we still need a CPA to double-check the tax liability amount.  So, we hired a CPA with whom we became great friends.

He told me the most common bookkeeping error he sees in small business is misclassifying employees.  Businesses will hire someone and claim they are a subcontractor and no withholding in their paychecks.  At the end of the year, the employee is shocked to get a 1099.  Often times that would trigger a tax audit.

As our CPA was telling the story, I felt like he knew my history because that's EXACTLY happened to me in 1986-87.  I was audited by the Texas Tax Commission only to discover I owed $50K in payroll taxes to the IRS.  It took me 5 years to pay that off.  Even as I write, a cold chill comes over me just thinking and writing about it.  My tip:  There's no such thing as a 1099 employee.

1 hour ago, Joe Marconi said:

As a former auto shop owner, one of the things that kept me up at night was not knowing enough about all the labor laws and human resource regulations.  

How do you keep up with all the changes to the labor laws and human resource regulations in your state? 

For many years, I handled all payroll duties in my home state of Texas.  After moving to Utah, there was also state income tax to contend with.  Texas doesn't have any state income tax.  As the business grew, it was becoming progressively difficult to work payroll duties into my weekly routine.  

I switched to QuickBooks Pro around 2001 and was happy to learn they (Intuit) had a payroll service for $30/mo.  They handled all the compliance issues, did direct deposit to all of my employees, and filed the quarterly 941 tax return.  They were a Godsend.  I was able to concentrate on running the business, not handling payroll.

They would draw money out of my account, pay the employees, as well as withhold the tax liability.  Fast forward to today, that same service is now $50/mo. +$5/per employee which I feel is cheap at twice the price because they handle it all.   They now offer a 50% off price for the first 3 months to see if works for you.   You DON'T have to be using QuickBooks to use Intuit's payroll services.  To see which plan works best for your situation, go to https://quickbooks.intuit.com/payroll/pricing/  if you're using QuickBooks and https://quickbooks.intuit.com/payroll/pricing/bundle/ if you're not using QuickBooks.

As if supply chain issues aren't bad enough.  We narrowly saved a railroad strike, but this is too much.

1 hour ago, DUFRESNES said:

I guess I gave you the wrong opinion.  We are in an up scale area.  I have logmein at home.  We take turns answering the phone on the weekends.  So far today I have made 4 appointments 2 only when loaners are available.  Both customers that need the loaners are the best customers with multiple cars in the family, but still need loaners.  I'm alot older than both of you and I am learning every day.  Right now it is half time and the Oregon Ducks are ahead of BYU.  Go Ducks

 

Being located in SLC, UT it makes me sad to see BYU losing by so much.  They are getting routed.

We did something similar to take phone calls at home.  We had a VPN between the shop and home as well as a mirror copy of the front counter machine.  We picked up quite a few jobs on weekends and after hours.  We didn't have loaners; we used Enterprise.  Due to the affluent nature of our area, we didn't have to provide substitute transportation very often, thank goodness.  I would pause our Google AdWords campaigns on Sundays.  We spent about $1K/wk. with Google.  I couldn't spend more money if I tried because on any given week, there were only 1,500-1,600 clicks to be had and our ad showed for every click.  I learned how to maintain the #1 position in the SERP.  It was great using call tracking.  Ah, the good old days...

18 minutes ago, Joe Marconi said:

Thanks, I did that.  There are not a lot of Ubers of Lyft cars available, and the wait time can be up to one hour. Unless we schedule a specific time.  

OK, I get it.  It's not that Uber and/or Lyft aren't in your area, it's the wait time.  Although I didn't think of that, it all makes perfect sense to me now.  Wow, your former shop must not be located near any metropolitan area.  We are located in Draper, Utah which is a suburb of Salt Lake City.  SLC is only 20 miles/30 minutes away.  I guess I should count my blessings.

I'm going to go off a tangent, but let me tell you about Draper and why we moved here.  I originally moved our shop to Draper in 2008 because of the more affluent area.  People had money, drove nice cars, and had good credit.  The average household income was double of our previous location.  

The problem I have is that I take a lot of what we have for granted.  I tend to think everybody's area is like ours.  I also tend to think everybody thinks like me.  Sad, but true.  All of that is not true; I need to be more humble and appreciate everyone's differences.  At 67, I'm still learning.)

Just as a test, try loading Uber and/or Lyft app on your phone.  Try ordering a ride.  I bet you can.  You never know unless you try.  Let me know how it turns out.

I considered other transmission shop owners as colleagues, not competition.  I got along with most all of them and a few of them I would take to lunch occasionally.  It was more of an atmosphere of cooperation, not an adversarial one.  We wouldn't tow a job out of each others shop.  However, there was one shop that was so Neanderthal that I simply couldn't get through to.  Talking to him was like doing battle.  The only good thing was the few times he towed jobs out of our shop, it was a customer with no money.  I didn't mind losing jobs like those.  He towed one dead job that had been sitting in our back parking lot for 2 months.  What I did mind is when he would tell the customer we didn't give him all the nuts/bolts/parts to the vehicle.

For the most part, the time I spent with other shop owners was definitely worth it.

1 hour ago, Joe Marconi said:

There seem to be mixed opinions on what Business System is the best. And also, not all business systems fit a particular repair shop model.

There are a lot of new players in the past few years: Auto Leap, Protractor, Teckmetrics, Shop Boss, Shop Monkey, and more.

Are you happy with your system?  What features are important to you? 

I've had 5 different SMSs in my career.  A common thread was I always had to tailor the way the business ran to how the software ran.  I didn't like that much.  However, in about 2000-2001 I found I could tailor QuickBooks to the way our business ran, not the other way around.  I could create and design ROs, estimates, reports, etc.  I could also create fields in vendor and customers.  I could go on, but I won't.

Admittedly, it takes a little programming experience but over the course of a couple of years, I finally had QB running just the way our business ran.  On the accounting side, we used QB for online banking, all taxes including 941 payments, A/R, payroll, and all accounting.  There was a token monthly fee for all of that, but was still my way of doing business.