Joe Marconi

Let's all remember, that a labor rate is an internal number we need to know in order to remain profitable after we pay our technicians. The consumer does not the ability to understand this number. For example: If a shop charges $175 labor to replace front pads and rotors on a Honda Civic, and that can be done in 45 minutes, that translates to about $233 per hour. HOWEVER, if your labor charge for an oil change service on that same Honda is $20.00 and that is done in 30 minutes, that equals $40 per hour. Sell the value of the job to your valued customers and receive value in return for your labor. My hope is that ALL shops across this great nation crunch their numbers and realize how labor is crucial to their success and to pay their employees!

Great topic discussion! For me, this hits home, since I recently sold my company. I knew it was time to pack in when I found myself getting too frustrated over everything, and I didn't have the desire or the passion anymore to work through the issues. In my younger years, I took on any challenged and worked through them. That changed and I knew it was time. But after 41 years in business, and 47 years in the auto business, it was a good run. Fortunately, I did a lot of the right things after a decade or so of struggling. So all is. My advice to ANYONE in business: build your personal wealth while in business, and it's never too young to plan for your exit. Life may throw you a curveball. Again: Great Discussion!

When a shop hires service personnel to answer the phones, one of the biggest concerns is handling the calls? And also, is the shop losing lost sales due to the wrong people on the phone, or due to proper phone training? How do you ensure the effectiveness of your service team on the phone?

I would tell my service advisors, "Build relationships with your best customers and won't have to sell. All you'll need to do is tell." You just proved that!!!! Thank you!

Agree. I think that what's so important to all shop owners is that they need to truly understand the cost of doing business. Early on as a business owner, I confused busy with being profitable. After failing, I realized that the KPIs of the business drive the business for the long term.

Great point! We, and everyone in our company, need to believe in the prices we charge. And also, everyone in the company needs to know the why. Great points!

Shop owners today understand the challenges of rising costs and inflation. Without addressing this issue and making the needed adjustment to your margins, the increase in your expenses will end up hurting your bottom line. Adjusting prices, up or down, is a function of being in business and, at times, unavoidable. Shop owners often fear that their customers may push back with any price increase. They ask themselves, “Will my customers understand? Will they shop other auto repair shops to compare my prices?” The truth is your true profile customers are not loyal to you because of the prices you charge for your services and repairs. Yes, you need to be competitive, but you also need to be profitable. Your best customers are loyal because of the value they receive from doing business with you. Those are the customers you need to focus on and spend most of your energy on. If you determine that you need to raise your prices, do it, but never apologize. Continue to build value in what you do. When value increases, price fades as an issue. However, when the customer does not see the value in your services and repairs, the customer will then focus more on the price.

I have not heard that. Where are you located?

From what I am seeing, $500 to $600 is the average. I recommend we get what we need, costs are still rising on everything, and we need to stay ahead of the increases, or we will not be able to catch up.

Agree. I am not in favor of "extra charges" on the invoice. I hope I did not mislead anyone. What I am saying is that when you look at expenses, whether is it a utility bill or a bundle of shop rags, every expense has to be calculated into your cost of doing business. Essentially, the labor margin and the part margin should provide enough gross profit to pay for all the shop's expenses. I hope this better explains my strategy.

Let me add another thought to this conversation. Every expense, in some way, must be passed on to the customer. As business owners, we need to factor in all costs of doing business; every can of rust penetrate, every shop rag we use, every wire tie, every nut, bolt, washer, etc. This is how a business operates. Some states allow a Shop Supplies fee to offset the miscellaneous fees that aren't normally billed on the customer's invoice. Be careful with Shop Supplies and hazmat charges, in some states you can recoup what you spend, but you cannot make a profit on it. The bottom line here is truly the bottom line. Shop owners need to sit down and look at all costs. And then adjust their part and labor margins to ensure that a reasonable net profit is attained. Profit is not a dirty word. Profit ensures that shops are providing the very best service and repairs by reinvesting in the best tools and equipment, afford ongoing training, and remain in business to continue to serve their community. Also, profit provides a decent wage for their employees and themselves. Sorry to go on about this, but it came to mind, and thought it fit into this conversation.

That's what I am hearing from most of the shops around the country. In spite of the gas prices and rising expenses, shops, in general, are doing good.

That is an issue! Is business better this year than last year?

Thanks! We are all here to help each other! The power of Auto Shop Owner!

Wow, tough position to be in. Are you sure you can't find a place for him? It is so hard to find superstars.

The EV push is real. Every carmaker is transitioning to EV production, with more and more models scheduled to come out in the coming years. While this will change the auto repair industry, there is one thing that EVs will bring to the auto repair shops: Opportunity in the way of tire sales and all the related services and repairs. I know many shops will be resistant to this change, especially those traditionally involved with heavy repairs, such as engine and transmission work. But change is not always a bad thing, and as shop owners, you need to find ways to adapt and thrive. Will tire sales become part of your future? Are you selling tires now? What other changes do we need to be aware of?

I understand the problem. We cannot be responsible for everything, especially things that are not under our control. A few things: How often does this happen? Can some of these things be picked up during the initial multipoint inspection (such as chips in the windshield?) and do you know the overall cost you spend per year on these things? For example, if your shop pays out $1000 on things you feel you cannot ask the customer to pay for, could you add the $1000 to your cost of doing business? In other words, if you service 1000 cars per year, could you build into your pricing another $1.00 per car to offset this? Work on identifying what you can control and then find a way to help pay for it. Boy, I hope this helps. I am not sure about your question on the SW pay?

With so much talk these days about the technician shortage, I thought it would be a great idea to share a few recruiting tips that have helped. What tip can you share that you have had great success with?

You did really well with the sale, and a 27% net is amazing too! Selling a transmission business, like other specialized businesses, has challenges that general repairs shops don't. I remember back in the 70s there were muffler shops, radiator shops, speed shops, tune-up shops, electrical shops, brake shops, tire-only shops, wheel alignment & front end shops, and more. Due to the amount of repair work back then, all of these businesses enjoyed a piece of the pie and flourished. Before cars hit 100k (if they lasted that long) it was nearly certain that they would need transmission and/or engine work. Now, it's rare that a specialized business can survive without expanding its services and repair base. I do agree that when it's time to sell, a general repair shop has distinct advantages, especially if you own the land. And one thing is for sure: Start now to show a consistent net profit and year-over-year sales increases. From my experience, buyers look at sales, BUT it's the cash/net profit that is crucial in making a deal.

Charlie, amazing post my friend! Words of Wisdom for sure. The book Profit First should be required reading for any business owner. In fact, for everyone. Thank you for sharing a little of your story. I am sure that many of the shop owners reading it can relate. Myself included!

I find that the majority of shop owners share your work ethic, it's why shop owners are so resilient and never give up, even on the toughest problems. Profitability is an important topic these days, and I totally agree with you. While we can't price fix, we can share pricing on different jobs, perhaps in a survey or a post. Let me work on this. I will also work on a few training modules to help shops calculate their labor rate and pricing structure. Thanks, JimO for the feedback! This is exactly what I am looking for!

At Elite, We’re Growing and We’re Looking for Superstars! If you want to join the best of the best, then here’s your opportunity to tap into our growth, earn a great income, and have the luxury of working from home! Here’s a listing of the superstars we are currently looking for… Top Shop Operators - If you have the time, the principles, and a track record of success, then we have an opportunity for you to help other shop owners make their dreams come true in ways unlike any other. Top Sales Professionals - With our growth, we now have far more opportunities to help others, so if you are a gifted salesperson with industry experience, and if you live by the principle of never putting money ahead of people, this could be the ideal opportunity for you! Sales & Management Trainers – As the industry’s #1 sales & management training company, and we are looking for advisors, managers, and owners who would like to help us train others in the industry. To apply, send your resume to [email protected]

March 31, 2022—President Joe Biden is allocating $1 billion in advance appropriations to the Federal Highway Administration (FHWA) as part of his $5.8 billion budget proposal for 2023. How are you preparing for the EV future? Training? Shop layout? Tools and equipment? Etc.? Let's share and learn. The link below is an article in ADAPT.

Great comments, when people feel appreciated and treated with respect, it makes a big difference in their attitude toward their job and the company they work for.

There’s a lot of talk these days about finding quality employees. Creating a continuous recruiting process to find and hire quality people is essential for your overall success. However, shop owners also need to consider their existing employees and create a work environment where people feel wanted. The truth is you cannot afford to lose the people you have now, especially if those employees are superstars. Another reality is that with so many shops looking to hire, they may be trying to recruit and hire your employees! To attract and retain employees, shop owners must create an amazing workplace experience. A great pay plan must also be a factor, along with benefits, but it’s not the entire reason why people stay employed with you. The truth is, people don’t quit businesses, they quit their boss or their manager. This is not to say that a pay plan is unimportant. It is, especially these days. However, to get your employees truly engaged and want to continue working at your company requires having a workplace environment where people feel appreciated for the work they do, are encouraged, and have a feeling of shared purpose. This will help anchor your employees to your business and help prevent them from looking over the fence for greener grass. Lastly, get more involved with your employees on a personal level. Find out what matters to them. Find out what their goals are. When you align employee goals with company goals, you are well on your way to having a winning team. You will also create a strong bond with your employees. This strategy will help you retain employees, with a stronger and more profitable business in the long term.