Tips

It’s really quite simple, and many shops have mastered the practice. Kill the GP (gross profit). In an effort to “make customers happy”, we’ll drop the parts GP a few points. Let’s do the same for labor. Add that to decreased sales and we have a sure fire way to destroy our already sagging profits. Do not give in to this temptation like so many shops do when the going gets rough. There are many creative ways to offer attractive pricing and options without decreasing your GP. Remember, when business slows, getting your proper GP becomes even more critical. Closely monitor the way that your GP is trending in both parts and labor so that your profits are not wiped out.

For many shops, the reason is within. It starts with a sales drop that is often due to market conditions. So, the techs figure that if few folks are buying the things that they are finding, why bother to look very hard for other work. Of course the service advisors have noticed increased sales resistance, so why waste time estimating and presenting all of those things that won’t be sold anyway. We’ll just wait until things get busier and then we’ll get back to doing a thorough job of inspecting, estimating and presenting. After all, that makes perfect sense, right? Of course, just the opposite is true, unless your goal is to decrease sales even further. If there was ever a time to look harder, estimate better, and take more time in presenting services, slow times are it. What are you doing at your shop to crank up efforts in these areas?

For many people, the area they work in can make a huge difference in how much they get done and how well they do it. Set up their desk area in such a way that the only thing in their range of sight is the one thing they are working on at the time. Basically, have an area behind them to place all of their other work. Also, it can be very helpful to have a private office available for them to make selling calls. You just might be surprised how well your advisors can do if you provide them with an excellent environment to do their job.

You have a list of things that you want to occur every time, but you just can’t seem to get it to happen. The answer is in your management software. Create a canned job that is placed on every RO. For every item that you want done, write a single line with a brief reminder. The advisor then deletes that line when the item has been completed. Examples might include: Add the warranty, update the recommendations, or get the email address. Give your staff the tools to do the job the way you want it done. A simple system like this can significantly improve you finished RO.

It may seem obvious to you, but do you have a clear written work flow policy that everyone on your staff follows? When the shop is full of cars, a weak procedure for what order to follow can throw sand in those efficiency gears. Make sure that your staff understands that all tests and inspections are to be completed and turned in to the service advisor before they start installing parts, changing fluids, etc. Techs get a feeling of accomplishment when things are done, so they are inclined to install those shocks, service that fluid, and fix that light before fully completing and turning in testing and inspection results. But, soon they are stuck with nothing to do! Explain to them why a good work flow benefits everyone. Then get an extra car or two done when your lot is full.

A few years ago, marketing budgets were relatively small. A few years before that they didn’t even exist! Today they are often a huge part of the expense statement (you do have this area broken done to a dozen or more lines, right?). Here are a few marketing costs to look at for some savings. Discounts: Use them when you have to instead of just giving them away when they may not be required to make the sale. Switch to more email: It’s a lot cheaper than snail mail. And, speaking of snail mail: Send it only to people who are reasonably likely to respond. Postage: Check into permits which can reduce costs significantly. Vendor programs: Make sure to audit the cost vs. benefits each year before you renew. Printing: On line printers are often far less costly than local stores. Radio: Consider Google or similar types of radio ad purchases. Yellow Pages: A recent news article stated that this method is dropping fast, including the internet versions. The bottom line is that you need to thoroughly review all marketing costs at least once a year and keep this area of your budget under control.

We certainly need to keep our buildings in excellent condition to project the best image to customers. However, we also want to get the most out every dollar we spend in this area. Several suggested areas to review include snowplowing, lawn care, and general building maintenance. Are you shopping for the best deal every year for these services? Have you considered which services you can have your employees handle? Rent is another large expense for many shops. If you are in an area which has taken a severe economic hit, have you asked to renegotiate your lease? Maybe the landlord wants to do what he can to keep you happy and increase chances of renewal. It won’t cost you a thing to ask!

Of course there are a number of taxes that you simply have to pay and there is nothing you can do about them. But, are your property taxes too high? How about your personal property taxes? Real estate values have been dropping like a rock. Have you checked to see if the value of your property should be reduced? Might you be over reporting the value of your equipment? These are easy things to overlook when we review our expenses. You probably pay plenty of taxes already. Don’t pay any more than you legitimately need to pay.

If you don’t have them, it’s a problem. Of course, if you do have them, it’s a problem, too. The trick is to take the time to create a good system to address the issues which occur when offering loaners. Excellent procedures will reduce the vast majority of the problems that tend to happen. Develop a solid system for loaning the cars out. Set a budget and stick to it no matter what. Make a weekly inspection checklist to keep the cars ready for use. In today’s market, most shops should offer loaner cars. Figure out how to do it right and you will appreciate the benefits.

It’s common for shops to tie some type of marketing to the Christmas season. Some may also do something for the 4th of July. Now, if we take a look at our calendars we quickly see that there are plenty of other holidays; and it seems like there are more being added every year! It’s pretty easy to pick one holiday each month and figure out some type of marketing to coincide with it. Get creative and make it fun for your customers! A holiday of the month promotion might be a great marketing system for your shop. After doing it for the first year, you will then have it solidly in place and you can repeat the system annually with only minor modifications.

What causes sick days? Sick employees, of course! So, how about doing what you can to prevent them from getting sick in the first place. Before winter arrives, offer free flu shots. They really do work. When winter arrives, do what you do at home; fire up a humidifier. Offer to assist with a health club membership. Basically, make a list of all of the things that you do (or should be doing) to maintain your health. Then see what you can offer to your staff. When the car count explodes during lousy weather, your odds of having a full staff will increase.

Often we place our focus primarily on what we charge for parts. While that is certainly important, make sure that you also concentrate on what you pay for parts. It is generally agreed that the cheapest part is not always the best way to go, however successful shop owners make sure that they are getting the best price they can for the products which they prefer to use. Great vendor service is critical, but it also needs to be complemented with excellent pricing. Working on both ends of the parts gross profit picture is the best way to achieve your targets.

Internet usage is growing rapidly and will continue to do so. More and more customers prefer the ease of using the internet instead of stopping in or calling your shop. Develop a specific estimate request form on your web site where customers can submit information to you. Once it is received you can take your time to research the options and contact the customer. This will also allow you to get their email and other contact information for your marketing efforts. Remember that estimate requests are often the first step to gaining new customers. The easier you make the process, the more new customers will end up at your shop.

Should it be? Hotel prices typically vary a large amount depending on days of the week. Yet their costs remain close to the same. Gas prices frequently go up during holiday periods. Rental prices are often seasonal. Might this approach be applicable at your shop? Are you slow or busy when you are preparing an estimate? What does your schedule look like? When you are saving estimates for future use, enter both an ideal price and a minimum acceptable price. Following basic supply and demand principles may be an excellent way for you to keep the work load steadier while improving your gross profit.

Pay systems are often frustrating. Since there are certain benefits to salary or hourly and certain others for flat rate; how about mixing the best of both worlds? Take what would be the right hourly or salary pay for your shop and cut it in half. Then do the same with flat rate. Add both of them together to determine tech pay. The tech now has a more predictable weekly paycheck and the shop benefits from the incentive part. Different levels of the flat rate portion of the system are recommended to maintain proper labor gross profit for the shop depending on the amount of hours produced.

Are you someone who gets involved with almost every detail of what goes on in your shop, but you want to spend more time working on the business instead of in it? Odds are that you have at least some relatively intelligent employees. After all, you hired them! So, how about letting your staff handle more of the day to day details. The typical shop owner finds that when he or she does so, most items are taken care of in a proper manner. Concentrate on the more critical issues that should be occupying most of your time and allow your staff to do what you pay them for.

Tow truck drivers can equal free and highly effective marketing if you handle them correctly. Do you offer them coffee in cold weather and cold drinks when the weather is hot? Do you offer to help them with whatever they may need? Do you promptly move cars for them to make it easier for them to unhook? Do you show that you are happy to see them when they walk in the door? Make your shop the friendliest place that they visit during their day. They will remember you and your car count will reflect it.

What has been happening to your GP (gross profit), car count, average RO, expenses and other key numbers over the last few years, quarters and months? You probably have some idea, but do you have solid data at your fingertips? Take a few minutes at the end of each month to place your key numbers on a simple spreadsheet. This will allow you to look at the trend of each one over time, to catch weak trends before they get too bad, and take advantage of good ones.

For years, the approach to purchasing health insurance for many shop owners has been to see what several companies offered, discuss it with the employees, chose the one that seemed to offer the most for the lowest cost, then figure out how to pay for it. Maybe it’s time to try something different. Spend some time figuring out what the shop can afford for this expense. Set a non budget killing maximum. Then ask potential insurers to put together the best package they can. Discuss the options with the staff and select the one that works best for your shop. What works for your budget may not be the most deluxe plan that everyone desires, but remember that a shop that is closed because expenses got too far out of hand supplies health insurance to no one.

Most would agree that both management and technical training are becoming more critical each year. Not too long ago this often meant significant planning, travel, cost and lost production. Today with the increasing availability of on line options things have changed. Set your own schedule while making the most of employee down time. Travel only as far as your desk or lunch room. Costs are typically low and sometimes free. What most of us need to do first is to change our mindset and create systems within our shops to take advantage of these new methods of learning. Search on line, ask your vendors, watch your email. Come up with incentives for your staff while setting goals for hours per month. Then watch as skills and profits increase.

You’ve been in business for a number of years and you’ve accumulated a lot of knowledge about how to do things and not to do them. One problem may be that you are now saddled with the baggage from a lot of less than great decisions. It might be your building, your staff, your business model or a host of others. While constant adjustments are critical, sometimes adjustments simply aren’t enough. Just like with cars, sometimes it’s best to take what you have learned, junk most of what have now and start from scratch instead of trying to tune up something that is destined to never go very fast regardless of what you do. Pretend you have no shop and write out your plan for opening one, taking into account all that you have learned. Maybe you will literally start from scratch, or you might find it is at least time for a major overhaul.

A lot of equipment is needed to run a modern repair shop. Poorly equipped shops are often pointed out as an industry problem. While this is certainly true, there are also many shops that are over equipped for their needs, often because the owner is a tool and equipment junky. Discipline yourself to do an ROI (return on investment) calculation for all equipment purchases, and use realistic amounts in your estimates. If the numbers do not work, then consider a lesser version or used options. In some cases, it still may not work and you may be better off spending those funds elsewhere. There seem be an increasing number of ways to spend money in a repair shop today. Make sure to leave enough for all areas by not overdoing it with equipment.
–

We’ve heard it over and over, yet often we still do not fully comprehend how critical this is. It’s tough to find a great location and it can have its drawbacks, so it’s easy to convince ourselves to take the larger shop, better deal or easier route of a less than great location. Then we spend massive amounts in marketing trying to get people to come in. The fact is that, in most cases, the average or below average business person will do better in a great location than the excellent business person will do in a weak location. This business is difficult enough without adding the location hurdle to your list of things to battle. Avoid weak locations and make your business life significantly easier.
–

If it is not the large majority, it’s time to get up to speed! For most shops the availability of on line ordering is excellent, however many simply don’t put the systems in place or don’t use the systems that they have. And that does serious damage to efficiency which means lost profits. Insist that your vendors work with you to put the systems in place. Then make the use of the systems mandatory for your entire staff.

But, does it have to be? Make a list of every conceivable marketing idea (regardless of how odd it may seem) that you have ever heard of. You should come up with a rather long list. Now, divide them into low, medium and high cost. Chances are that the low cost list will have quite a few items. Many will require more creativity and elbow grease than money. Visiting other shops and businesses in your area would be one example. Low cost (or often free) marketing efforts require very little response to make them worthwhile and will frequently out perform many conventional high cost methods.