mylesj
Forum Replies Created
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Richard,
How many FTE certified techs and how many people overall?
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Richard, I’m familiar with three of those companies. I have a few questions for you. What part of the country is your shop located? How what is the population in your MSA? What do you work on most of the time? How many full time equivalent certified techs do you have? How many people work there in total including all part timers? What is the most common labor rate you charge? What do the shops below your rate usually charge? What is the dealership rate for the brand(s) of vehicles you service most often? Now the big question – what don’t you know? Are you good with accounting and spreadsheets? Are you good at keeping the bays full? Do you make a substantial contribution towards employee health care and retirement plans? Do you know the all up cost of the best techs at the best independents and dealerships in your area?
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Tom – It is a good thing. Here in the northwest we’ve had about a 20% increase in population and a 20% decrease in per capita electrical use in the last 20 years so we have not needed to add generating capacity. We went to R38 insulation minimums many years ago. You’ll figure out how to push more of your usage to off peak rates.
Clark – Oregon is looking at both an annual fee as part of registration and mileage recorders as ways to pay for roads. I’d like to see a ton mile tax as the fairest way to pay for roads since a 1500 pound metro car and. a 4500 pound SUV wear out the road at different rates.
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Tom,
Ask this question a different way. What is the parts /labor split on your average ticket? What are your parts pricing policies, what are your labor rates and pricing policies and how do parts sales affect the incomes of workers? Do you pay flat rate, straight time or a mix? I think you will get a better picture.
You also need to consider the attitudes that exist in the area under consideration. I’m not trying to be political, but realistic. In areas with lower labor rates and higher unemployment many shops have more techs than they need. The shop staffs for the busiest times and guys are often idle. In many areas it is not the work that the techs do that is valued, it is their ability to install high margin parts. Labor rates are lower and parts margins are high. Shop efficiency rarely breaks 60%. In areas with higher labor rates and lower unemployment shops are staffed for average work load. Shop efficiency is generally 90 to 120%.
Some well qualified techs make $15 and hour and 10% of all parts with few benefits, others make $40 an hour, no parts money and good benefits. That is why you’ll get a wide variety of responses to your original question.
Think about this – why is the same house worth $80,000 in Florida, $200,000 in Minnesota, $250,000 in Oregon and $400,000 California? I just looked at getting the exact same house built in Arizona and Oregon and the difference was 50% not including the lot and permits, etc.
Is the management style focused on how to get the days required profit out of the customers that show up today or is it focused on being sure that all time available today is sold today?
Size of market is important too. In a small market that guy charging 300% will lose business eventually.
In a big market there is enough churn for that to be a viable policy. -
“he couldn’t recover all our previous responses” – guys, understand that postings at Google are NOT your responses, they are Google’s responses. They have no liability for anything that is wrong or disappears. You want it free, Google wants to sell aggregated data to Power and Polk and many others. That is the deal you make using Google services. Polk sold for $1.4Billion this year mainly for the value of the data that has been aggregated by CarFax from management systems, insurers and on-line sources. The true cost of free services like VIN decoders and Google services is covered by the value of your information
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When looking at schedulers be sure to check the level of integration with your invoicing system. If your first appointment of the day doesn’t show or is an hour late does your scheduling system help you or make more work for you?
Can it show you which techs are tied up and which are free? Can it give you early warning of tight spots? For example will it recognize that a tech running over on a job at 10:30 in the morning puts a job promised at 5pm in jeopardy of missing its promised delivery time? Will it tell you this at 11 when you can do something about it or not until you start on that job that is promised at 5? If one tech needs to work after another can you see when the first guy is done? For example can the alignment guy tell which other tech is finished or is going to be finished next with a vehicle that then needs alignment?
Any job that does not go according to schedule means that any printed schedule is then obsolete. You need something that interacts with your invoicing system and time clock for best results.
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jwilkers2,
My first question – would people come to your shop if you charged 80 to 90 % of new car dealer rates??
Second question – can you easily bring in twice as much work as you have today??
My first rule working with a shop is a commitment to get to 85% efficiency ASAP. I feel that 85% is the minimum number to make it worth while to be self employed all of your life. IF you are willing to make that your goal and make all decisions driven by how fast it gets you to that number and IF you answered yes to both of these questions, you need to fire or lay off two techs and raise your rates to within 20% of dealer rates right away. When all decisions are made by the effect on the efficiency number, decisions are easier.
If the answer to either question is NO then you need to understand what it takes to change those things to a yes. Failing that you need to seriously reconsider the whole thing. Maybe you, your dad and a helper would be a good place to go if more volume is not easily available. Lots of shops do $300K gross sales per full time tech. Four techs at $80 an hour for 220 days a year is over $560,000 in labor billing at an average of 8 hours per day. That would give you and your dad $185,000 of net labor profit after paying your salary as a tech. That is without any parts profit. You may not be able to get good productivity numbers for your present crew with only 3 bays available. Shops that hit higher numbers have 1.5 to 2 bays per tech.
You are so far off the mark that working out a new pay plan for your present crew is not something I would do. One good flat rater could equal your whole shops production. You need a good diagnostician, a flat rater and a helper. That is about what your shop can support at this point. Hopefully you qualify as the diagnostic guy and one of your long term employees has the ability to knock out flat rate if left alone to do so. Your dad can be the helper until you get to making more money.
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It is hard to find a tech in the Seattle area. Boeing has been hiring 100 a week for a while now as they ramp up production on the Dreamliner. Dealerships that don’t pay well were the first target. Independent shops that don’t pay enough are losing their guys to those same dealers who now realize they need to pay more.
The current crop of younger workers will do a really good job IF you tell them exactly what to do. I don’t know why this is. I have observed it enough to believe it. You may think that worker is a slacker because they don’t figure out what to do on their own. Guess what? That worker needs an active manager. Between ADD meds for 30% of the kids and helicopter parents for another 30% how can it be otherwise?
Tom – the first shop I managed existed mainly to train people on those items you mentioned, showing up on time every day, listening, etc. They had a basic understanding of cars but no understanding of what work meant. If they didn’t “get it” in a month it wasn’t going to happen. That was in the mid 1970s. Maybe you are more aware of it now. Maybe it didn’t become a problem until we had a prolonged downturn. At a certain point people who don’t see themselves as being financially successful stop trying. Most shops (not the best run shops) have been in the soup right since 9/11.
JMazur – your statement “truly what needs to happen is that everyone needs to take responsibility for their themselves, their own family, and their children” is exactly correct. I can’t agree with your statement that follows about religiosity helping to accomplish this. I live in a fairly godless part of the country. The bible thumpers here are often the worst employees. They directly or indirectly insult customers and co-workers that hold different beliefs, without even realizing it. Just like “beer and bait syndrome” people they have something else that gets top of mind. Neither group is focused on what they can do to make this job more profitable and make this customer happier.
FNGJWS – I like the beer and bait syndrome. There is an old quote to the effect that – “you can’t get a Catalan to work all day if he can pay his bills working half a day”. Most of those techs that took the Boeing jobs did it because it was easier. Starting pay for a 40 hour week is $51K with full benefits. That is low pay for a good dealership flat rater.
The last public official I remember that tried to make a public conversation out of telling hard truths was Jimmy Carter. He got hammered for it. I don’t think any major politico has touched it since. He wanted to talk about how the energy problems were damaging the nation and talked about limiting the use of oil to strengthen the economy. Here is the introduction to that point.”Too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does but by what one owns”, the president said.
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I think we are seeing the same thing as at the end of the Reagan recession. People who strung it out as long as possible on taking care of their cars ended up buying new ones. From talking to shop owners it seems you guys in New England have been seeing more actual repair work the last couple of years, the $500+ jobs, than other parts of the country. The Yankees decided early on to be careful with their money. Some places just kept going full bore until they ran into the wall, some in 2009 and some very recently. It is easy to find out by looking at the housing price changes. There are markets with busy shops with housing up 10% or more in the last two years and there are others with empty shops where housing has gone down 10% or more in that same period. It is a generalization, but still a good way to gauge your shop against your market.
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I think we are seeing the same thing as at the end of the Reagan recession. People who strung it out as long as possible on taking care of their cars ended up buying new ones. From talking to shop owners it seems you guys in New England have been seeing more actual repair work the last couple of years, the $500+ jobs, than other parts of the country. The Yankees decided early on to be careful with their money. Some places just kept going full bore until they ran into the wall, some in 2009 and some very recently. It is easy to find out by looking at the housing price changes. There are markets with busy shops with housing up 10% or more in the last two years and there are others with empty shops where housing has gone down 10% or more in that same period. It is a generalization, but still a good way to gauge your shop against your market.
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Tom,
In addition to eBay many enthusiast sites have a classified area for parts. That may help with parts for a single brand or if you have a lot of off road or performance items.
If you have general service parts that are more than a little old, there are companies that specialize in clutch parts, in suspension parts, in pre-OBD emissions, etc. For example Rare Parts buys NOS suspension parts. There are others that are harder to find.
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Lots of shop software programs provide data to Carfax. If your software has a VIN decoder in it then there is a high likelihood the data is going to Carfax. Carfax offers a free VIN decoder to software developers in return for information on each work order. I surveyed my users and about 95% voted no. They did not want any data leaving their shops for any reason. Many of them use the free decoder at CarQuest (paste VIN in and copy result back to vehicle record)
In the short term having everyone know about the history of a vehicle is a good thing. The problem is a long term one. All of the data companies (Carfax, JDPower, RLPolk) slice and dice this data for resale. Age and composition of the local fleet is important information for proper parts stocking for your zip code/city/region. Aggregated data is also used when nationals are evaluating new locations. If your zip shows a higher proportion of frequent services in an area of concentration for the national chain you may be inviting competition. This kind of analysis used to happen from state registration records which are no longer available in most jurisdictions. I used to have a license to search state records here. We were bonded and could not use any information about the owner of a vehicle other than the zip code where the car was registered. We could, for example, tell a guy the top zip codes for Subaru registrations in a given area. Other customers were looking at the age of certain brands in certain zip codes to judge the relative economic conditions in that zip code. Inferred marketing is a big business.
You pay the data aggregators to collect your data which is then resold. They charge you lower prices than they would if the data were not resold. Carfax gets the shop management software developers to do the work and you get charged as part of your shop management program rather than directly by Carfax.
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Below is a link to a section of the contract that applies if Demand Force does not deliver $3 of value for every $1 you pay them. I’m not saying they are unusual in these details just that the dollar justification they use in deciding if they are delivering is extreme. For example new customers are valued at $2000. Demand Force is meeting their obligations if your cost of acquiring a new customer does not exceed $666. The question to you is how many services will it take to generate $666 net profit? For a high average ticket shop that can be a good deal.
Go down to guarantee; limitations at this address:
http://www.demandforce.com/terms.php
.
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See if your local community colege gives Business Psychology 101. A good recommendation for any service writer or customer facing worker.
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You need someone who knows how to fix cars and who knows how to fix people. You can gain the people skills in less time than you can “get” vehicle technology.
This may sound odd but many states employment divisions have incentives to hire injured/disabled workers. I know one tech who was injured skiing and is now a service writer. The shop owner got some financial assistance while getting the tech up to speed as a service writer.
If you find someone that you like that does not have a service writer background get a committment from them to take a business psychology class at the nearest community college. They have to learn how to fix people.
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Lenny,
I work with one shop that has a post card sized power of attorney over the car that is good until the work is fully paid for, similar to Dennis R’s suggestion above. Good for the future but that doesn’t help you now.
I may be mistaken but I’m assuming that getting storage fees will not solve your problem? It sounds like you want something along the lines of progress payments, but the owners are not authorizing any progress.
One of my customers recent had to let one of his vintage British mechanics go, just not enough work available.
Looks like the best way forward for you is to tell your customers to either pick up their cars or authorize progress. Any progress gets made under the new rules your have established for newer customers. You can educate them as to the costs and time involved of exposing surfaces to weather etc. Even if half of them take their cars, you have shop space that you don’t have now and lower liability.
Ever talk to your insurance agent about that liability? We used to call our agent when we went over a certain value of vehicles inside to get a temporary boost in coverage instead of paying a higher rate all the time.
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Two things.
I had the same problem the first few years I had my shop. Receivables jumped and I didn’t have Christmas money. I set a total credit amount for the shop, not to be exceeded. It got interesting. A few times a customer needing credit embarrassed a dead beat into paying.
You have the advantage as you are keeping the cars inside and you have a legitimate lien. You need to come up with a storage rate based on your cost per square foot and the extra insurance to cover stated valuations. That may be $50 a day or more in order for you to turn a profit on storage.
The bottom line (more ways than one) is, are you willing to go to small claims court or exercise your lien? You need to put that decision in your original paperwork with them. That way they know what will happen if they fail to deliver on their side of the contract. It is very hard to threaten people with these actions. When they fall x dollars behind, they need to get a letter from you with a copy of the original paperwork saying you will be performing action certain on date certain if not paid by then. No drama, just business.
You probably want your lawyer to help you with the right wording for your jurisdiction.
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Lenny,
To paraphrase the policies of a high end restoration shop on the left coast doing long term restorations.
1. If you need a delivery date, don’t leave the car here
2. Leave the car and $5,000 (this was several years ago so maybe $10K now)
3. We will call you when the $5,000 is gone and go over the work to date.
4. You have two weeks to decide if you want us to continue. If you don’t make a decision by then we start charging $25 a day storage fee.
These guys were doing primarily Jags and had a contact in England finding NOS parts and scrounging barns and estate sales.
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Hi Tom,
You definitely want to provide the protection of a corporate form for your family.
These guys have a good reputation if you want to do it yourself.
http://www.legalzoom.com/limited-liability-company/limited-liability-company-overview.html
