Wheelingauto

I originally learned from Mitch S seminars, then local get togethers and then 20 groups. As I have said in multiple threads, Jay, u need to learn and be a business owner quick. All these ideas are great but if u don't grasp structure and understand business matrices you will most likely run out of steam before you make real money

 

 

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When you take in all fees, discounts etc what is your all in discount rate on a monthly basis? What type of volume do you do?

 

We have a company who charges all in 1.44%.....everything...

 

 

Definitely right. First things first though to set labor rates and parts margins that will get you at or over your target margins. Measurement of ELR would be the next step.

 

 

To set a margin is one thing, to actually achieve it is another. I belonged to 20 groups for many years and I can tell you there are many who mean well but never get there.

efl?

UGh.....typing too fast and not re reading....ELR.

 

Effective Labor Rate. You say you charge $80 per hour. Lets say you have 4 techs each working 8 hours a day and they were 100% efficient. 8x4=32 32x80=$2560 = 100% elr

 

Lets say you collected $2200 in same scenario. 2200 divided by 32 = 68.75 divided by 80 = .85% elr.

 

This is the basic scenario, it can be more complicated with a lot of other factors but this is a start.

 

 

Your overall GP should be around 60%. Parts 50%, Labor 70%. 1:1 ratio.

 

At those figures you are you are at 67% GP on labor ($25/hr for tech and $75 for labor rate). at $28/80 you would be at 65%.

 

This is provided he has 100% EFL which I highly doubt.

If you did your job and fixed the car right, treated them well then they should return. But they don’t sometimes. RETENTION; This is the cheapest form of marketing there is so get this right and do it consistently. For me, I want to be everything automotive for my customers. I invite them in for any reason, tires low on air, stop by. Questions about warranties, recalls etc., stop by and ask. We will find the answers. The more I can get them to subconsciously think about me as the solution to car issues the more of their car dollar expenditures I can expect them to spend with me. But it takes a while and a lot of effort to get there.

 

First off, with every customer who comes in for an oil change you must ask them what interval they follow. If it does not align with your values figure out why/who/what’s acceptable. Get away from 3mos/3k, its long gone and you’re working against the tide if you continue to insist it. Once you find out what interval they follow set up the reminder sticker to account for it. Some management programs measure average daily miles driven. There is software you can buy/rent that will use this data and calculate the next service date and sticker. Once you (and they) know service expectations figure out how to communicate with them when their next service is due. Call when service is due, text, e mail. Once this is done consistently and accurately you will see a large increase in repeat customers. A lot of shops say I don’t want to be bothered with an oil change only bring me the repair work. Well most every service visit begins or includes an oil change.

 

Another big thing in retention marketing starts with, inspect every vehicle, estimate and present the findings. Over the years I have seen customer roll in with a new set of tires and when asked I hear “We had no idea you sell tires”, Ouch! Guess I didn’t tell them huh? Even if you don’t sell the entire ticket you’ve told them what they need and hopefully let them know you can do it. If they don’t buy it note it on the invoice and them send them a reminder after 6 weeks.

We also have a program where we mail a postcard every 6 months when someone has not been in. We mail a different postcard at 6 mos, 12 mos, 18 mos, 24 mos and 30 mos. They say if someone bought a new car they are usually ready to get back in the independent shop after 30 months. This system will keep your name in their head even if they are not ready to return. For us, after 36 months we delete them from the database.

 

Sorry if this sounds preachy, not intended. These programs have done very well for us and are just a few ideas that might work for you.

So a lot of industry Guru's will tell you to instantly fix car count issues put out a cheap oil change or discounted package. This will fill your bays quickly. They then tell you inspect every car, estimate everything and present it (you should be doing this part all the time BTW). Problem is the type of customers who respond to these already know you will be doing this and just aren't interested in anything else or if they are, you need to be the cheapest they can find. They will leave you for the next coupon as well.

 

Proper marketing is like planting seeds. You must prepare the ground, plant, water and wait. There are no silver bullets and it all takes time. There are sever things to consider as you market.

 

First, image. Every impression you make both in printed, digital and live must tell the same story. If you print up a bunch of post cards and use stock photography of tall Scandinavian people all with blond hair and blue eyes and the people show up to the shop and there are a bunch of brown haired, brown eyed short Italians there well....you have probably not met expectations you created. Take a minute and think about the concept and not about the Italians and Scandinavians.

 

Now, if you want to sell Chinese tires to the bottom of the market don't put out a flyer with high end Euro cars.

 

PROSPECTING; Getting new customers who are not part of your current database.

 

The first thing to do with the best immediate results are get out of the shop and meet people. Go to Chamber of commerce events, networking events, get out to the local diner if thats where people congregate but get out there and meet people. Brush up your elevator speech and tell anyone who will listen what you do and why you're so passionate about it. The more you love what you do the more it will show and draw people who want their cars fixed right to you.

 

 

Web presence, you MUST have a website if you want to be relevant. Once people hear about you they will do their homework. They will look you up on the web. The better your image thru your website, google, yahoo, and all the other sites the better. Claim you business and put in the right info. Hours, address, phone etc. Make sure it's all the same so the spiders (electronic web crawlers) don't get confused. I would suggest not spending any money with review sites (yelp, angies list)until you get a chance to see what if any draws to your business. Get some reviews out there. Ask people to legitimately review you on Google and anywhere else they can/will. There are programs where you can send out emails after service to gain reviews and get feedback on how you did.

 

Google campaigns both pay per click and SEO are valuable but you need to get your image and website in order first.

 

I would invest most if not all of my prospecting dollars above. Electronic and networking. Anything left over would be spent in community involvement and the smaller the community the more I would spend there.

 

I would not incentivize people to refer you. Your best customers refer you because the like/love you. They do it for the reward of knowing they are putting two good people together. When you incentivize them they are doing it for a reward.

 

Next post: Internal marketing, getting your customers back. (got to do some work first)

duplicated post, sorry

They say when you go from owning one shop to multiple the plan needs to be getting to three pretty quickly. I can tell you that the dynamics and/or skillset of running one location to multiple is completely different. I dont know you but my some of the questions, comments and the part about just beginning to take paychecks I would think your one location is way to risky at this point. I would perfect the one operation before ever considering a second. You should be hitting a solid and consistent 20% net (after paying yourself if you work there) before ever thinking you are ready for more.

I am currently getting out of the used tire business (Too many comebacks a month later for leaks or junk) so i am looking to purchase low end tires to fulfill the need for the bottom feeders that are looking for used tires. If anyone has any leads that is greatly appreciated.

 

April fools is not until.....well.....april

 

But good one though..

So your now in business having both employees and a physical location. I would suggest strongly on getting some business training (quick!) and spending some time every day with your business owner hat on.

 

You need to do two things IMO rather quickly. You need to add up all over head expenses, cost of employees, desired profit and establish pricing based on that info. Not on what you once charged or what the shop next door charges. Remember the shop next door might charge less per hour than you but maybe they charge more hours to perform a repair or find other way to produce profit. Either way, it should not affect what you do unless you wish to compete with them.

 

Which leads to item #2. You need to figure out who you are (as a business) and who you cater to and compete with. If you wish to compete with chains they will most likely win since they are designed to compete on price, they have corporate pockets and the one truly accountable is usually not on site.

 

If you're going to feel guilty about anything feel guilty your shortchanging your business, employees and family by subsidizing the cost of auto repair for your customers, that is truly something to feel guilty about.

If you're looking into a 20 group Bob is not the right guy to talk to. IMO you need to speak with Jim.

 

Good luck!

What is mastermind and which 20 groups are you looking at? Have you spoken to Jim Murphy?

 

 

Excellent!

 

 

I see above you've stated a connection with Elite.....to what capacity? Are you in a 20 group, part of a one on one coaching? Or looking to be a coach?

What kind of financial and operational growth have you guys seen?

Since being in 20 group? First year we in group we did 875k. Last year 2.4 mil. Was 5 bays and 2200 sq ft, now 12,500 and 15 bays

 

 

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I think the reasons I dropped out (or graduated, depends on how you look at it) would be the same even in a new group. I do enjoy talking shop though so I would always be open to the idea.

I was in 20 groups for many years. I started in a RLO 20 group some 18 or so years ago. After our Coach left and joined with Elite I stayed with them for many years. I think I dropped out 3-4 years ago. I miss some aspects of it but there were many things in the process that became stagnant. That was the sign to me to drop out.

To put it simply.

I love working on cars but I should have kept that as a hobby.

 

Too many techs become self employed, thinking there will be riches to come.

 

 

 

This what I have done in the past. Labor rate pays everybodys income and shop expense.

Mark up on parts pays for comebacks. Your mark up depends on how many comebacks you have.

A good shop should not have to mark up their parts more than 30%

So when the customer brings their own parts and they are quality, Just add 30% to the price and you will be just fine.

Yes your insurance will cover everything should there be a problem.

I never had any.

 

The statements made above sort of explain themselves. I have always been taught.....

 

When discussing parts discuss margin not markup, if you dont know the difference it is rather large. To mark up a part that costs you $100 50% you would charge $150. To have a 50% margin on a part that costs you $100 you would charge $200.

 

This has nothing to do with the comeback ratio. The best shops still need a minimum 50% margin on parts to maintain profitability.

 

Has you known this when you were in business you may have had the opportunity to fund a retirement program not only for yourself, but also the employees and have more than a tool box of old tools.

 

It is unfortunate that so many techs hang their own shingle and never learn the business skills to be successful. The only thing you are doing by working cheaper is subsidizing customers vehicle expenses at the cost of your own families financial health.

i would call myself rich if i had $10 million.

 

 

So would I, what does that have to do with this post?

All these posts are really interesting and gave me a lot of great insights but also things to think about.

 

Its fascinating to hear how you actually got where you are right now and I am grateful that all of you made the effort to share it!

 

What was the hardest thing you had to face in your business? Building a loyal customer base and good reputation? To overcome your competition?

 

 

Be a businessman first. Sit down with a retired (or active) accountant and understand financial statements. Understand Gross sales, gross profit, expenses and net profit. Understand the industry benchmarks you want to follow so you can measure, adjust and baseline against. It's easy to say I want to make a profit. There is a huge difference in 3% and 20%. Figure out how to measure the businesses performance.

 

Next, sit and dream about what your business is. Who you cater to and who you do not. Figure out who you compete with and who you do not. Because your in business does not mean you must compete with every shop./offer/special.

Before taking the leap be financially stable. If you cant go a month without a paycheck and are going to always work from a position of fear it wont work.

 

Know the 80/20 rule. 80% of you headaches come from 20% of your customers. 80% of your profit comes from 20% of you customers. MOST IMPORTANT THING I can tell you...figure out who you wish to cater to, the top 20% or the bottom? Understand what value is and how to deliver it to the top 20%. ( I gave away my answer to the last question)

 

Building a business takes a long time. The more you know who you are (as a business) who you cater to and keep score of how you do it the more profitable you will be and the more fun it will be.

 

Dont bend your beliefs to gain a job.

 

Trying to manage cash flow on 3% net profit is not fun and takes many years off your life.

When we are asked to install parts purchased elsewhere we explain we can't. Then we calmly explain the part markup supports the entire business and its employees as stated above. But the biggest reason is liability. When you supply a part not only do you forgo all consumer protections and warranty claims on the entire repair, you incur a liability most consumers aren't aware of. We have an insurance company and they require product liability coverage from our suppliers. .

 

This discussion came up on another larger discussion board and it's bull. I called my insurance agent and specifically asked them about this scenario and although it sounds really really good it's bull

 

If this were the case your insurance would not trust you to secure proof of liability insurance they would require you to provide it prior to issuing policy. This would be way to cumbersome to collect and provide even if true.

 

What if someone walked in with all genuine Honda timing belt components having tried to do the job themselves and decided it was too hard. What then? I am sure Honda has liability insurance, cant complain about the quality....

 

Brutal honesty, we don't make money if we don't supply and mark up the parts. If the above scenario occurs I will install at a higher labor rate to make up for the lost GP, customer always has the choice of what to do.

I recently did a drivabilty repair on a 1999 Bonneville, a week after all was done the customer called to share his concern about the price of the MAF we replaced. I told him there we many out there and the only ones we have positive results with were the AC Delco new ones. He stated he could buy the same thing for less of course. The sensor cost me over $250 and my margin is 39%. Am I out of line charging this?

And how do you handle price objections similar to this?

 

I've always hated being questioned about price after an agreement was made. You gave them a price, they agreed, Should be all done but....we have to address questions like this at some point

 

I prefer to be completely up front as others have said. I run a business that uses both parts and labor to accomplish what I am selling, a properly repaired automobile. This requires me having vendors who I trust will provide me with quality components I can use to repair your vehicle. Sourcing things from an unknown and the cheapest vendors come with risks I am unwilling to take even if you are. We also must make a resonable profit on parts in order to remain in business.

 

There was another good example in another thread about sourcing internet based parts here :

 

Buying online can be risky. Each year billions of $ worth of counterfeit parts are sold. Remember Amazon, Ebay etc. allow any business to sell on their website. There is no way to know if the Moog, Denso, or even Dorman parts you order are real. Companies overseas are copying parts, boxes etc to match the original and then they end up on the internet. Buying from the cheapest supplier or using a website that allows anonymous suppliers is just asking for trouble.

 

Either way you need to establish a policy which accounts for the few times you may be asked this.

My argument Is I dont think Joe should be focused on stirring up the masses to get a response that will not do any of us good. Whining about what AAP is doing is like whining about what the national auto chains are doing with all the low priced based offers (or free) which do not align with out viewpoints.

 

You might want to write about AAA too!!! look at what they are doing!

 

In selecting a vendor I am looking for an entity who can supply me with quality parts, give me great delivery and who will stand behind it when needed. Since WP and other vendors can do that I purchase from them. I do not purchase from the AAP AZ and the like because they sell crap. The more they do stuff for free the less I have to deal with those that believe it is/should be free.

 

I can then focus on my customers and their needs.

 

After reading both of your posts I think you may feel as if I am protecting or aligned with Advanced or any other parts vendor. I am not. I choose not to buy from advanced for the same reasons above but more importantly they sell junk. My point about where do you buy your parts from is NAPA Auto Value all do the same thing and advertise the same way. I am happy to hear you think they dont by you but up here in the big city they do. And weather they admit to you or not they will there also. Their bosses are looking for growth.

 

As far as comparison of auto parts stores and cheap oil changes. They both are trying to do the same thing. Take the car out of your bay and put it in their bay or parking lot. There are many auto repair shops who advertise free code scans just as there are many who do free brake inspections...maybe you do that?

 

It;'s all in an effort to get the magical $$$$. I can say if you (meaning anyone) do free brake inspections or cheap oil changes your devaluing our industry.....but what good would it do me?

 

 

I see Joe Marconi who writes for a National publication who by fault becomes an industry leader standing on a soap box creating headlines that lather up the common folk to get a reaction. What I think he should be doing is educating us about what we should focus on as small businessmen. How about you forget about the few that make life difficult and focus on the ones who don't. When the one idiot darkens your door step who installed Chinese ball joints and now wants you to fix it right get paid, every step of the way. Charge for what you know, and what you fix without concern of what someone else would do.

 

 

 

 

 

 

 

 

 

No, you're right. I did not win the internet message board fight.

 

I have never spent a penny with AAP. But I do spend more than 10k a month with World Pac (Guess who owns them).

 

MY thoughts are as small business owners we should figure out our Unique selling points. If ours are weak or non existent we need to create or strengthen them. Figure out what you need to do to be successful. Whining about what they are does nothing for you.

 

 

I wrote on a different thread that buying from these stores is like holding the knife that is cutting your own throat. I still stand by that statement.

 

I will address the rest of your post when I get a chance. What I would like to know @thetrustedmechanic is where do you buy your parts from?

 

Please let us know where you purchase your aftermarket parts from.