Tips

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.
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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.
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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.

A better question might be: “Can you afford not to have them?” As with anything that you buy there are many levels of quality; however even the basic inexpensive systems can provide an excellent improvement in your shop’s security; often for well under $1,000. Most will record and can be viewed remotely from anywhere that you have internet access. And, it’s not just crime that is being addressed. Was that wheel cover or body damage there when the car arrived? What actually did happen in the shop, at the front counter, or in the parking lot? Put cameras near the top of your equipment to buy list before you wish you had done so sooner.

That is, the “furniture” in the shop area. In many shops the equipment was put in place years ago. New items were placed where they would fit. But how efficient are the locations now? Is the brake lathe located where most of the brake service is done? Is the supply cabinet at one end of the shop? Take a look at everything and rearrange it to achieve minimal steps for all staff. Then the next time you add or replace a piece of equipment spend some time at your staff meeting discussing the most efficient place to put it.

How about the speed of your advisors and techs? How many two finger typists do you have? Poor typing skills are killing the efficiency in many shops. This is one area of training which needs to be at or near the top of your list. Buy some typing programs. Create a contest with prizes for the most improved employee. This area will only become more critical as time goes on. Excellent keyboarding skills improve efficiency and profits, and can be achieved at a very low cost to the shop.

The typical shop has too little inventory and much of what it does have is incorrect causing significant inefficiency. Waiting for parts, even for a few minutes, is time and money which is never recovered. Let your management system decide what to stock. It does not matter what type of part it is or whether anyone else stocks it or if you only stock one of them. If the part sells every 120 days or less, stock it. If not, return it. Use your management system to reorder weekly or even daily. It’s really that simple.

That must be the correct way since so many shop owners seem to follow that policy. However, a fellow shop owner frequently reminds me that we should do just the opposite. Of course, he is right. Just think of how much grief you could have saved over the years if you took more time to find the right people and spent much less time getting rid of the bad apples. Make a sign and post it in your office today: “Hire slow, fire fast!”

Sometimes we get mixed up in our sales approach. We really want that job we are being asked about, but we don’t want to sound like we are desperate or that we are begging for it. On one hand I am not suggesting that you become a beggar. But, there is nothing wrong with making it clear to the customer that you really want to do that job. Be confident. Be politely aggressive. Go get that job!

Some of us have a very bad habit. We figure out what we need to do to hit our GP (gross profit) targets. So, we adjust the numbers accordingly in our management system. Then, when we are working up an estimate or preparing the final bill, we override the system we put in place and destroy our GP! Of course we then complain that we just can’t seem to hit those GP targets. Either learn to break the habit or have someone else do the estimating and billing. Your profit and loss statement will appreciate it.

If you are the typical shop owner the answer is: “Budget? What budget?” What would you call someone who will spend a quarter million, a half million, one million or more dollars in the next twelve months without a written plan of where that money will go? While it will take some time and effort the result will likely allow you to add 5%, 10% or even more to your bottom line at the end of the year simply by creating a written plan and making a reasonable attempt to follow it. Written budgets typically identify areas of waste and give you good reasons to say “no” when you should. So, start something new today. Create a plan, stop the leaks, and keep more of the money which you have worked so hard to earn.

Right under the hood, that is. Way back in the good old days it was common for shops to place stickers in the engine area, usually on the air cleaner or the radiator shroud. Today you may have to be a bit more creative, but you can be just as effective. Create a weatherproof sticker about the size of a business card which includes your shop name, web site, phone number and a towing number. Select a bright color that catches the eye. Place one under the hood of every car that goes through your shop. Even though many customers are unlikely to be able to do much about a leak or noise or other issue, many will still open the hood to take a look. Save them the trip to the phone book and give them the number they can punch in their cell phone right now.

There are telemarketers and there are businesses who call their customers. You should be the latter and should be doing it often. Is their oil change due next week? Call them. Are there recommendations from a visit a month ago? Call them. Haven’t seen them in a long time? Call them. Car serviced last week? Call them. The trick here, as with most everything, is to create a system, assign someone (a nice someone!) to do it, and then go for it. It is inexpensive, personal, and very effective when you communicate your concern caring for them and their car as opposed to just another guy trying to sell them something.

Maybe it is. But that is not enough today. You must also appear competitive and that is a totally different issue. Does it matter what the shop up the street charges? You bet it matters. You need to know what other shops are offering, especially for common services. This is often how customers judge you. Make sure that your prices are adjusted in such a way that customers see you as being reasonable. Survey your competition annually to make sure that you are in the ball park on price sensitive services while also making sure that your total gross profit targets are being achieved.

You used them on the job, so it would seem reasonable that you charge for them. But adding a generic line to the bottom of the bill is no different than many of the charges which phone companies and others tack on as far as the customer is concerned. Who likes that? Take some time to enter small items into your inventory and create kits listing these items which are specific for the job being performed. List them on the bill as you would any other part. Include them in canned jobs so they come up automatically when that job is performed. This way you charge for the items you used and the customer does not receive a bill with vague added fees at the bottom.

While it may seem to be an obvious thing to do many shops still do not consistently check for which factory maintenance items are currently due on every car in the shop. Most shops today have quick and accurate access to what is due. You can either created canned jobs for everything listed or offer items individually. Almost every car will be due for something. Create a solid system where techs and advisors check it every time on every car and watch your average RO increase.

There is certainly no rule that says you must send all recommendation follow up letters at the same time interval for every customer and vehicle.
If they just spent a small amount of money, a few weeks would seem reasonable. If they just dropped four figures you may want to give them 60 to 90 days for their budget to recover. If you find an air conditioning issue in the fall in the frozen north, set the follow up date for April of the next year. Look at the each situation individually and adjust follow up dates accordingly in order increase your odds of a good response to your reminders.

Do you even have one? Maybe you should. It could be a type of service, or one or two vehicle makes. Look around your town. Very few businesses operate today without some type of focus. An auto service shop without some type of specialty is likely to have a more difficult time in the coming years. While conventional wisdom says that narrowing the focus of a business will be a cause for decreasing sales, just the opposite is more likely to occur if the shop uses the proper approach. Then you can enjoy less hassle and lower costs in the areas of training, equipment, inventory, software, marketing and a number of others.

While most management software systems have provided for multiple rates for years many shops still use one or two rates. Here is a simple way to get ten rates. Designate all labor procedures at one of four difficulty levels (some labor guides do this for you). Assign both a repair rate and a diagnostic rate to each level. Then create a tire rate and an oil change rate. This will give you far more flexibility in achieving your gross profit goals.

Maybe you should. Is your day a bit short of full? Is there a tech available for a few minutes? A free quick look can be a powerful marketing tool when done properly. Develop a system to perform free quick checks and begin a relationship with a new customer. You may just end up with some four figure RO’s that you never would have gotten otherwise.

Five estimates to write, seven calls to make, a dozen parts to order and three techs screaming because they are stuck. Who will you handle next? Probably the most demanding customer who may not be the best for your bottom line. Try recording the previous average RO dollars for each customer on your schedule. Now the decision becomes simple. Highest average RO (and most likely to buy) goes to the front of the line. This approach will get your techs busy faster, achieve the best total for your day and take care of your best customers.

Mailing to your data base can be very expensive, especially if you do it often. How carefully do you look at who you are mailing to? In the typical shop well under half (maybe as few as a quarter) of your customers really carry the load. The rest will rarely or never respond regardless of what you send to them. Take some time to thoroughly examine each customer. Set some minimum standards on who should receive your mailings. This will often have a large impact on your costs without a significant change in response to your direct mail marketing.