Joe Marconi

You are spot on, Carm. Tom has a remarkable, but not uncommon story. You know the expression, "When the student is ready, the teacher will appear." I had to fail miserably at the age of 35, before I knew that I needed help with my business. But, once I changed my mindset, my world changed for the better. Carm, your podcasts are changing the industry, and in a very positive way. I also enjoy listening to the Aftermarket Radio Network. Thanks for all you do for our industry!

Great podcast. As a business coach, the content discussed in this show is very relevant.

I was taught a valuable lesson in pricing back in the 1980s by a fellow shop owner. Tom (not his real name) owned a five-bay independent auto repair shop. We met in a training class and became instant friends. The discussion of labor rates and pricing came up often, and his opinion was spot on. He would tell me, “Joe, we will never get paid what we deserve until we put a higher value on what we do.” This leads me to the reason for this blog: The mindset that auto repair shops should price themselves lower than new car dealerships, is a myth. Tom would emphasize, “Look at your expenses, your payroll, the benefits you give to your customers, and don’t forget your payroll and company profit. Then, do the math and set your prices.” What influenced me was not only his forward-thinking but the fact that he would call the local dealers, to make sure his labor rate was ABOVE theirs! Positioning your prices lower than the dealer just because you are an independent auto repair shop is selling yourself short. Your labor rate and prices should be determined by you, factoring in your overhead operating expenses, payroll, financial goals, the amount of net profit you desire, and the value you provide to your customers. Another thing: don’t be everything to everyone. Understand your key profile customers and build your marketing plan around them. Cater to those who are loyal to you. Here’s the bottom line with pricing: sell value, not parts and labor. When the value increases, the price fades as an issue.

Agree 100%. Our country is off track. I totally understand WHY people want to be here in the United States, but there has to be rules. And I do question the WHY some people want to be here. It's not the same as it once was. We were once a melting pot with common dreams and goals. What happened?

As a former shop owner, and now a Business Coach with Elite, I often get asked, "What Shop Management program should I get?" This is a tough question, since there are so many variables. So, I thought it would be good for the group to tell us WHY you chose your business system and what you like or dislike about it. Thanks in advance.

Happy Father's Day! Spend quality time with family!

For most repair shops, the summer season is usually a busy time, with a lot of opportunities. However, that doesn't take away from the fact that we still need to market our businesses. And sometimes too busy can have negative side-effects. What Summer Marketing Strategies do you implement that have worked for you over the years?

Thank you for your perspective on your situation. Pay programs have changed throughout the years, with an emphasis on bringing the service team together and understanding the needs of the company and the individual. One thing, you mentioned you got paid a base wage of $300. I remember hiring service advisors years back from dealers, and they were shocked that I paid a decent base wage. I can't help thinking that a low base wage is a constant concern in the mind of the service advisor. I always believed that the base pay must take care of the basic needs of life, with the opportunity to earn more.

I am a firm believer in providing employees with a competitive wage and the opportunity to earn more through incentives. However, any additional incentive bonus must pay for itself. That means any additional incentive compensation must not eat into company profits. While we typically look at payroll as an expense, everyone in your company must be productive enough to support their compensation plan. This is especially true with service advisors. Too often, shop owners don’t properly establish sales and gross profit goals. What occurs then is that the incentive pay, which is above the base pay, reduces overall gross profit, which decreases net profit. Here are a few guidelines when considering a pay plan for service advisors. First, you need to know your breakeven and calculate it at least twice a year. Remember breakeven is never a goal, it’s just the sales number your company must attain BEFOFE it makes any profit. Next, you need to establish sales and net profit goals above breakeven. Many shops shoot for a 20% net profit, so you need to determine your desired labor and part gross profit. If you don’t know how to calculate your breakeven or gross profit, please reach out for help from your accountant or a business coach. After that, you need to establish minimum sales and gross profit goals that must be achieved consistently before any incentive is to be paid. In other words, if you determine that achieving a 20% net profit requires on average $30,000 in sales per week with an overall gross profit of $20,000 per week, then that becomes your minimum required weekly goal that must be maintained by your service advisor team every week. This is important because you don’t want three weeks where your sales and gross profit were below your goals, and pay an incentive bonus in the fourth week, just because your service advisors had one good week. Additional pay incentives can only be paid when the company is consistent in achieving its required sales, gross profit, and net profit. One thing, if the goal is too high and perceived as unattainable, your service advisors will give up. Lowering the bar in some cases may be needed, just have a plan in place to incrementally raise the bar to ultimately achieve your desired financial goals. Please also note that for you to have a consistently profitable business requires a healthy work environment, training programs, systems, processes, and of course a great technician team. One last thing, the service advisor’s base pay must meet the individual’s basic needs in life. And as I said earlier, incentive pay is the opportunity to earn more. However, they must consistently produce, after all, incentive pay should be earned, and never an entitlement.

In a 2020 referendum vote, the law was approved by 75% of the voters. However, many automaker-backed trade groups argued to block this law the past few years. A federal judge denied the latest attempt to block this law by the Alliance for Automotive Innovation. Right to Repair becomes law June 1, 2023.

On 6 June 1944 – 'D-Day' – Allied forces launched the largest amphibious invasion in the history of warfare. Codenamed Operation 'Overlord', the Allied landings on the beaches of Normandy marked the start of a long and costly campaign to liberate north-west Europe from Nazi occupation. A total of 4,414 Allied troops were killed on D-Day itself, including 2,501 Americans. More than 5,000 were wounded. In the ensuing Battle of Normandy, 73,000 Allied forces were killed and 153,000 wounded.

And this technology is spilling over to all models and brands. Technology is great, and it's also going to increase costs for repairs and routine services too.

According to an article in Body Shop Business, non luxury brand vehicle repair costs are 27% higher than gas-powered counterparts. And, Mid-size luxury brand repairs are 53% higher than non-EVs. This indicates that technology, information, and electronics will continue to drive opportunity for the collision/body shop businesses.

Great tip, Alex!

Memorial Day is a federal holiday in the United States for honoring and mourning the U.S. military personnel who have died while serving in the United States Armed Forces. Let us never forget those that have made the ultimate sacrifice.

In New York, we have had an annual safety inspection for as long as I can remember. And while our regular customers had no problem passing the inspection, we did find a lot of unsafe cars when bringing in first time customers for the inspection. Many states have eliminated the inspection, for a number of reasons. There are pros and cons, and I can see both sides. Texas may eliminate their inspection program - below is a link. Are you in favor or against a mandatory vehicle safety inspection? And why?

I remember years back, a shop owner friend of mine relied on a lot of fleet work, mostly from the local town. He worked on the all the trucks and vehicles for the town's highway department, local police and fire department. He built a very lucrative business. I would guess that this part of his business amounted to about 50% of his business. THEN...when the political winds changed, so did who the town choice of repair shops. My friend lost half of his business and struggled for years to build it up again, saying that he would rely on that much fleet work. I know this may be a rare occurrence, but it does bring up the question, "Is there a suggested fleet to retail business ratio?"

Wow, you bring up so many critical issues. In this country, business are supposed to be free enterprises. I too battled with insurance companies over the same issues you bring up. No one, and no insurance company, should dictate a shop labor rate, or any other aspect of ruining our business. Sometimes I feel that too many shop concede, and feel they need to either make up the difference somewhere else, or accept their rules out of fear.

Speaking with a friend of mine who owns a body shop, it is amazing how much control the insurance want with the repair. From adjusted labor times, to part procurement, etc. In one situation, the insurance company wanted to purchase a grill and bumper cover from a supplier in South Carolina (this body shop is in New York), by- passing the shop's profit and also having to wait for the parts to be shipped and delivered. The body shop owner fought back and a compromise was made, but why go through this? Body Shop owners, It's always been an issue dealing with some insurance companies. How do get around some of the road blocks and remain profitable, and in control of your Collision Shop?

The other day, I checked my online personal bank accounts from my phone app. There was a charged amount of $1,300 that I did not recognize. After a phone call to the bank, they informed my that this charge was a mistake. The company that withdrew the money from my account was a Electric Company from the U.K. The bank put a stop payment, and the next day I got my money back. I asked the bank rep, how can a company or anyone gain access to my account. I did not get a reassuring answer. She simply said, it was a mistake. HOWEVER; the bank repair told me that this happens all the time, and she recommended that I check my bank accounts every day, because there is a window of about 24 hours that the bank can stop the mistake payment from happening. Once the money is electronically transferred, it is much harder and sometimes nearly impossible to get back. When I was in business, I would have my bookkeeper review all the bank transactions at least once a week. Knowing what I know now, I would recommend a daily review. Shops deal with a lot on money passing through too many hands.

I had two locations when I was in business, with sales well over 3 million. There are so many variables to this topic that it would take a live forum and a few weeks to go over every scenario. With that said, there are a few common attributes to growing a successful business. In particular: the systems, understanding your KPIs, understanding your market and business model, and strong leadership. And, the most important is your culture and the quality of people you employ. To play devil's advocate here, I am a writer for Ratchet and Wrench, and one of the things that I am very aware of, is that I need to be careful not to generalize a topic to a degree that I have all the answers in a 700 word article. I also know from presenting business management courses, that every business is different, and we need to be careful when listening to other's successes. I am not down-playing the value of reading articles, that has great value. However, we all know the challenges of being in business, and a shop owners journey is filled with twists and turns. We should continue to read, learn and grow. But, success is not always determined by a pre-set benchmark set of KPIs. Great conversation!

I am a firm believer of the multipoint vehicle inspection. However, I am not in favor in performing lengthy inspections for free. When I ran my auto repair company, my techs were required to perform a courtesy inspection on every vehicle. This was to ensure the safety of every customer no matter what the car was brought in for. But, there are times when a more lengthy inspection is needed, and must be explained and billed to the customer. For example: If a customer complains of a vibration or drive line noise, the service advisor must explain and sell the appropriate test procedure for that particular problem. The courtesy inspection is still done, but the more involved testing inspection is billed to the customer. The reason I bring this up is that as a business coach I see too many shop falling short on billed labor hours due to giving away too much, and not charging for testing and inspecting, when appropriate. How do you approach this issue?

During a recent discussion with a frustrated shop owner, he revealed me that he has been trying to find and hire a technician for nearly one year now. While I mentioned a few different strategies, he was firm in his position that nothing has worked. Is this shop owner's situation common? Or is something else going on? Let's discuss some of your best ways to attract and hire qualified auto technicians.

Yes, bad apples don't remove themselves. And they infect others.

A recent study, done by Harvard Business School, concluded that the real problem with attracting and retaining employees has more to do with the workplace environment, not pay or benefits. While the study did find that an adequate pay plan and offering an attractive benefits package did help with recruiting and retention, it’s not enough to satisfy the needs of employees, especially those of front-line workers. The study also stated that in 2021, many companies were convinced that giving raises, sign-on bonuses, and other perks would solve the worker shortage problem and prevent people from quitting. However, this strategy did not work. So, what does work regarding attracting quality people and keeping them employed? Essentially, it all comes down to the culture of your company. Management: do all it can to consider the individual needs of your employees. Your employees want to feel that they have a voice, that their opinion counts, and that their role in your company is both respected and recognized. Yes, pay and a great benefits package will go a long way toward making your employees feel secure, but that’s only financial security. People want more than money. To attract and keep top talent requires creating a company that people feel proud to work for. You need to reach the hearts and minds of your employees. Become a leader that people are enthusiastic about working for. You want your employees bragging to their friends and family that your shop is a great place to work! Step one to attracting and retaining quality employees: Create an amazing workplace environment for your employees! Trust me, happy employees make happy shop owners too!