The Institute’s Leading Edge Podcast

194 - The Strategy in Succession: The Story of Oswald Service & Repair

194 - The Strategy in Succession: The Story of Oswald Service & Repair
February 25, 2026 - 00:57:04
Show Summary:
This episode shares how Oswald Service and Repair grew from a 1939 service station into a multi location shop in Idaho Falls. It breaks down the realities of family succession and the damage caused by unclear roles and rushed promotions. The conversation highlights why outside experience can strengthen a returning successor. It also explains how professionalism and stronger HR practices reshaped shop culture. The Oswald Way is presented as the values framework guiding hiring, discipline, and hard ethical decisions. The episode reinforces the need for coaching, clear timelines, and a focus on building long term business value.
 
Host(s):
Michael Smith, Chief Strategy Officer at The Institute
 
Guest(s):
Kevin & Renae Oswald, Owners, Oswald Service & Repair
 
Show Highlights:
[00:01:48] – The business began in 1939 as a classic full service station.
[00:03:10] – A hard truth: the shop could only support one family.
[00:04:00] – Leaving the family business built skills and perspective.
[00:06:10] – Early roles blended selling, wrenching, and managing daily work.
[00:10:20] – A nursing career provided stability during ownership transition.
[00:12:10] – Imposter syndrome hit when stepping into community leadership.
[00:15:35] – Raising professionalism standards changed shop culture and HR.
[00:23:40] – Family succession failed without structure, clarity, and mentoring.
[00:34:05] – A clear exit timeline prevents resentment and legal conflict.
[00:41:55] – The Oswald Way guides ethics, decisions, and team alignment.
 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/LbptEoPXC44
 
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
 
Michael Smith: Hi everybody. Thank you for joining us today. It's good to have y'all on board. I'm Michael Smith, chief Strategy Officer here at the Institute. I also have the privilege of running what we call the Legacy Program, and I am pleased to introduce to you today two of my dear friends clients, but friends more than anything who are in the legacy program.
And the topic today that we're gonna talk about is succession. Succession has many terms to it, which I'll describe in a minute. But I wanna welcome Kevin and Renee Oswald again. Two dear friends that I have the privilege of walking beside. Welcome and thank you both for agreeing to come and to share your story with us.
It's a fabulous story.
Kevin Oswald: You're welcome.
Michael Smith: Lots of
Kevin Oswald: it.
Michael Smith: Yeah. It's good to see you both. Thank you. So yeah, we're gonna talk about succession today and we're gonna talk about family businesses and you know, in our industry there were a lot of family rollovers in the business. And I don't know, maybe in the last decade or two that's lightened up a little bit.
I, you have a long, deep, rich history. As a company and as a family, and you are a succession story unfolding. And so we just thought it would be great to just sit and visit a little bit. I said to the Oswalds before we started a family succession can be tender in terms of some hot topics, and they're welcome to tell me.
That's a good question. We're not answering it and we're all good with that too. So we'll just dig in and chat a little bit. Kevin, can you tell us a little bit, because I love the story of you in the industry. But give us the background. What, tell us about your family. How'd you get into it? When, where'd you come from?
How, how did you become a part of this?
Kevin Oswald: Absolutely. So my grandfather started this business in 1939. It was the quintessential old service station where they came out with the bow, tie, the hat, and the bell rang and you ran. And went out there. You pumped the gas, you checked the tires, you, you checked the oil, you washed the windshield.
And that's the type of business that we had. In fact, that service station model served our family up through three generations after my grandfather retired. My. Father took over the business. My father was in the business with my grandfather for about five years. Took over the business from my grandfather.
And I can remember working at the service station when I was in high school. Washing those windshields were kind of the way that I built my biceps. And you know, my father, if you left one bug on that windshield, he made you go back out and do it again. So, you know, the, the service in Oswald's service is something that was instilled in me at a young age.
In 2004, I purchased the business from my father, but there's, there's kind of a backstory to that too. Just shortly after I graduated high school, me and my father were talking and he said, Kevin. This business will only support one family. If you wanna stay, that's fine. I can afford to pay you $8 an hour, but I would recommend you go to school and you do something else for a living.
Kind of my father's nice way of saying I don't want you to be in this industry and get out. So I, I did go to school for a little while. I ended up going to work for 14 years at other independent shops, and at that point in time when my father was ready to talk, retire. I came back into the business, but God, what valuable lessons that I learned.
You know, not staying in the mainstream and doing things my father's way, but able to get out and look at how other shops operate and you know what they do, and bring that knowledge back into the business was something that was just really invaluable to the business.
Michael Smith: Did the three was the third generation business that you bought in the same building?
That your grandpa's was in, or had you guys moved around a little bit. Same building even, right?
Kevin Oswald: No, same exact building. Yep, same building. So it was long about, I believe 2000 I took over in 2004. 2011 is when I built the new shop and we moved from the service station just a block to the north to where our.
Present shop in Idaho Falls sits. And so we got out of the service station model of it. We had some elderly people that especially some elderly ladies that came in and said, Kevin, I've never pumped my gas before and you guys are closing this service station. What do I do? And so they would come in every week to the shop.
I would take them out, I would pump the gas for 'em. And of course I'd probably get a plate of cookies for the effort. And you know, it it, it, it was a good thing. It really was. So, and now we've got a son that is involved in the business. We've got a fourth generation going. I have two locations right now with a third one under construction.
Michael Smith: Oh, beautiful, beautiful. That's a great story. And, and I, I am always intrigued by the story about your father saying, this can only support one family. And so with respect, it's my family. I'm gonna continue to feed and son, please go do something else. Right? And I, I love the integrity in that. I also love the.
In some ways cutting you loose to the world, right? Just like you, I'm not gonna, you're not gonna be under my wing. We can't afford it, he thought, right? But also, you know, you gotta go out and make your own way, which is a beautiful catalyst to have to get up, get out, go try other things. So, Renee, I want to come to you in a second, but I want to finish an aspect of the story.
Not so much where Kevin, but the independence that you worked in, you started as a technician. Right?
Kevin Oswald: Yes.
Michael Smith: And then were you selling at the other independents? Were you store manager somewhere along the way? How, what did you do? How far did you go before you jumped back in as the succeeding owner? For your dad's business.
Okay.
Kevin Oswald: So I first left and went to a a tire store and I kind of ran the alignment and brake shop at this tire store. And so, yeah, I was direct involvement with sales, with the public speaking with customers. And then once the sale was done, I'd, run over to the toolbox, put the car up in the air and take care of the work and get things taken care of.
So that was about seven years at this tire shop. And, you know, the, the tire store this is where I was first introduced to a career path and I, I remember the owner of the tire shop saying, you know. If you do me a good job, I promise I will build you a store and you can manage it. So that was always the thought is I was going to climb up the ladder, I was gonna become a manager in this organization and manage a store.
It came to the point where we started having kids and decided we don't wanna leave Idaho Falls. We love it here and the world is a cold, scary place, so we wanna stay here. And so I ended up leaving there and went to another independent alignment and brake shop in town and ended up managing that for seven years.
Okay, so, and again, the person who owned this alignment shop also owned a body shop in town, and to this day it is still one of the premier body shops to take your vehicle to. I mean, just, attention to detail and everything that is done there. And you know, that's where I learned a lot of that from, you know, my first stop, I learned a lot about business.
My second stop, I learned a lot about customer service and you know, how to take care of the customer and do things right. And then. I, you know, about a year before my father retired, I gave him a year's advance notice and said, I am taking the service station over from my dad. And the transition went well, but again, I mean, things that I learned on those two stops were just so invaluable and just gave me a leg up.
Going back into the family business,
Michael Smith: were you mentored? Carefully by the places that you went and learned or was this sort of deep water OJT in you go figure it out for yourself, or some combination of both.
Kevin Oswald: You know, the first place? No we, we had regular training at the first place that they would bring me in and they would also send me to, so at the first place, no, at the second place it was, you know, here's my vision.
This is the way that I want things done, and I've got a body shop to run, and we'll see you later.
Michael Smith: Keep it going
Kevin Oswald: money
Michael Smith: and
Kevin Oswald: I don't wanna
Michael Smith: hear from
Kevin Oswald: you. Yeah, exactly. And, you know, being able to have the autonomy to do that and, you know, and the trust he had in me was just, oh, just speaks volumes of the man.
I just,
Michael Smith: well, yeah, and, and you, from the standpoint, and I'm not blowing smoke at you from an esteem building standpoint, right? There's nothing like having to figure it out for yourself. And then when it's working, have them come and recognize that and then give you even more leeway. And I talk about confidence building, right?
To get ready to do it on your own, to have that resource available. But to learn to stand without it is, yes, it's a key conversation about succession, especially family succession, like what you guys are working on. So fascinating. So I have more questions, but Renee, will you tell us a little bit. About your involvement in the family business, the Oswald family business.
'cause I know you spent great time in an other industry learning an awful lot, which you've brought back to the independent automotive service world. So tell us a little bit about yourself and you can start back in where you grew up or when you guys met, or first date or whatever, however far back you want to go.
Renae Oswald: Well, what I'll, I'll just add to that is, you know, Kevin talks about being at the service station and. Cleaning the bugs off of the windshield? Well, it was on a well traveled road and so it was there were three boys, three Oswald boys that worked there and so many a time we teenage girls were driving by honking our horns and, you know, so.
Yes, I remember those days fondly and you know, their boys, Kevin did have hair back in the day and
Kevin Oswald: I sported a mullet. That was just, you did. Oh man.
Renae Oswald: Yeah.
Kevin Oswald: Yeah, it was great.
Renae Oswald: So, yes, I mean that, the little service station has a big place in my heart. And I have been along for the ride. Kevin and I were high school sweethearts and so we married a couple years out of high school.
I did pursue another career. I'm a registered nurse, so I really didn't have a lot to do with the business when we took it over. I think the benefit of me having my own career when Kevin purchased the business from his dad was, we were not completely dependent on that income like his parents had been.
You know, it was, it was very much dad had to bring in the bacon or else they weren't going to eat, and so. I gave us a little bit of a landing pad for, for exploration with a new business and trying to figure out how to run a business and but I wasn't really truly too involved. I had my own leadership trajectory in healthcare and.
Kevin and I would, you know, we would work a little bit on, on the service station or the, you know, repair business together, but mostly in a consultive way. Because I had my own thing going until it was very fortunate because in January of 2020 I left healthcare and, you know, what happened in 2020 with COVID.
Yeah, it was timing. And I had, I had started a podcast of which there was one sponsor and it was Oswald Service and Repair. And so it, it was great. I had started getting more involved in the community and really starting to represent our business. So I think if you looked at my involvement in the business now.
It doesn't make any sense, but I'm more the face of Oswald service because I am more present in the community. I am you know, IO oversee our marketing efforts and really anything that is an outward representation of Oswald service. So that's kinda where I got involved. I will say that it was an interesting transition for me because.
WW we were running the business and doing the best we can and doing well. You know, we've, we've had a good business and definitely has done a different level of business than his father's business was for sure. But I walked into the to networking room with all sorts of business operators in eastern Idaho, and I felt like such a fraud because I had been in healthcare for, you know, decades and I did not really know what I was doing.
And I kind of felt like we as business owners. Didn't really know what we were doing. We were just really fortunate that it had worked out well. Clearly we must have known something because it was working well, but we hadn't had that imposter syndrome heavy being in that room with influential individuals in our community.
And so that was a, that was a good lesson for me in the fact that I had had all this confidence in the career that I was in and then making this switch. I felt, you know, like I was right back to having to prove myself and, and feel like I needed to be a member of, of that room. You know? Now I realize none of us know what we're doing.
We're all just doing the best that we can. And it's a, it's a facade. If, if anybody watching this is like, oh, the Oswalds have it together, it is not true. Like we are just figuring it out as we go along and we have great advisors and individuals that we surround ourselves that have helped us to be successful.
So that's what I see as my role. In our business. I am truly, Kevin and I have been on a journey trying to figure this out because it was so his thing, and then I come, you know, in and I'm like, Hey, I'm a part of this too. And for us to really figure out how to be partners has been a struggle for us.
But we are like, I just feel so strongly right now that we are, you know, in sync, in step we're respecting each other's role. And each other's input in this business, and it has very much amplified what we've been able to do, especially over the last five to seven years.
Michael Smith: Yeah. I am so impressed by how you two operate, not only together, but also the company that you run and the leadership position that you've established in the marketplace that you're in.
Renee, I wanna build a little bit on your leadership in healthcare conversation. If, if we can when, when you came over. From healthcare and you looked at our industry, and you're not gonna hurt anybody's feelings if you give us a hard truth or two. What did you learn in healthcare that you looked at, you know, when you got into the family business and looked around, Hey, there's some things I can bring to the table right away that we need in our industry.
What, what, what could you share with the folks that are listening to, to raise the bar a little bit on the way we might see some things that you got to see from outside. What did you, what did you see when you came back?
Renae Oswald: Well, I did work for a big corporation and it was very professional and you know, I, I worked with a lot of very professional individuals and I, I tell you, I really had to.
Adjust when I would come into the shop because we didn't always act very professional and it wasn't so much to our customers, but definitely in the back, you know, in the back shop. It, we took this business over, like Kevin said, in 2004. And I had seen the evolution through, you know, since we got married and, and y'all know it has changed, you know, things that were.
The way that behaviors were in the, in the shop have definitely improved over the years, but I did come in with the perception a little bit. Like it felt very our shop and I was coming from a corporate world where I was like, these are, these just don't always align. And I kind of had to separate myself, well, this is the way man PA works and this is the way corporate works.
And so it was a little bit of a difficult transition to say, no, we couldn't, we can, we can function this way. We don't have to be ong, let individuals behave in a way that is not reflective of professionalism. It's okay to raise that bar and, and, and project something that is really a more professional, more polished.
Organization. So it, it was rough for me and probably as a woman too, because it's not necessarily an environment that is, you know, woman dom dominated. And you know, I came from nursing, which typically is, and so that was also an adjustment for me to I, I didn't feel like I fit in and, and I've, again, it's been a great marriage, not only just because we're married, but in being able to figure out that partnership and.
And how I can have a voice. And Kevin's been really great about allowing me to do that. And, and we have definitely evolved in our behaviors all the way around the shop.
Michael Smith: Yeah, no, and I, and I'm, I'm intrigued by your, you know, healing humans background to come to the healing cars world, right? Where the customer experience the bedside manner, right?
The way we treat you treated patients in the healthcare business, and not necessarily by the healthcare systems, but by the patient care on the ground. Some, some of that translating to, into the on automotive service business about how we love our long-term value, LTV customers too, right? So many lessons.
Renae Oswald: So many parallels too. Mm-hmm. I mean, when I think about Kevin, and I would say this all the time, he would be like, you're lucky because your patients can talk to you. And I'm like, yeah, it's true. I mean, the majority of my patients could tell me what was wrong with them or give me symptoms and all sorts of stuff.
And you all are having to really, you know, work with something that maybe will give you a signal and then you have to, you know, really locate where that problem is. There's a lot of parallels and I think. He, there was a bit of an injustice in the fact that if a physician makes an a, a mistake, well, it's practicing medicine, but if a technician makes a mistake, you know you're crooks and you're all of these other things.
So it is kind of, it was interesting to look at those parallels and how much they paralleled. Now, obviously human life. Has a lot of value. And I'm not trying to say that an sure, you know, engine is the exact same. But there were so many parallels in the fact that we are in a service industry. Our role is to serve our patients or our clients or our customers.
And yeah, tons of parallels throughout that.
Michael Smith: Yeah, and the parallel, and I love this 'cause I about every group I ever speak to, I will say to our industry, this is one of the most difficult small businesses that I've ever seen, and I will frequently reference healthcare as the other one. Right? Human physical systems, mental systems are complex.
Lift the hood on a car. Nowadays, all the computers and the chips is as well. Very complicated businesses. And Renee, you made an interesting point. Physicians practicing that they're practicing medicine. We're not supposed to practice anything. We're supposed to get everything right a hundred percent of the time.
Nothing ever fails when we're done. No parts break on the way out of the dr. I mean, it's just, it's a different perspective of the world. Physicians and nurses are respected professionally. Our industry tends to not be seen at the same level or in the same light. So fascinating. Kevin, what And, and again, we're gonna get to succession.
But I love the sort of the interplay about how you run your business and what you see. Renee walked back in from healthcare. What did she bring as an insider that you saw, you know, your own version of it? What, what did she bring to Oswald that's now there that you guys didn't know you needed, but now it's here.
Right? Tell, tell us a little bit from your angle.
Kevin Oswald: Oh, professionalism. The, the human resource aspect of it. You know back in the day I was practicing cowboy justice. You know I, I remember a technician that upset me and I told him to get the blank outta my shop, and I pushed his. Toolbox out into the parking lot.
And, you know, those are the kind of things that Renee brought in and he, she was just like, you know, cowboy, you can't do that. You, you've gotta rein it in a little bit. There's certain things that we need to do. You know, our program that we go through you know, Idaho is an at will state. We can.
Fire for any cause or just cause I should say. And she brought in a progressive discipline within our organization where, hey, you know, you made this mistake. How can we help you? And being able to use that progressive discipline to help our employees improve. And at the end of the day, if they're not going to improve you know.
I'm sorry, we tried, but this just isn't working out. And I, I don't push their toolboxes outside anymore, but offer to help them move their toolbox or whatever we need to do and go from there. But yeah, you know, it was just shenanigans in the shop, you know, the, the eighties and yeah. And I, I'm gonna author a book someday and it's gonna be entitled, A Thousand Things You Can Do With Break Clean, you know, just, you know, things that you used to do back in the shop and she's a hundred percent right.
You know, it would never fly where she's at. And so, you know, it, it, it, it's fun being able to take the aspect of professionalism and bring into the shop, but. It's also fun to be able to still have that light spirit in the shop, excuse me. And you know, and be able to come to a place where it is fun to work and come to a place where you feel valued.
And that that's everything that she brought right there.
Michael Smith: That's beautiful. Beautiful. And thank you Renee for bringing it to our industry too. Right? There are a lot of good, wonderful players out there, and there's an awful lot of room for us to continue to, to grow and to bring that value back to, to the communities that we, that we all love and serve as best.
We know how. It's great. You mentioned the fourth generation. Can you tell us within the parameters of your comfort zone, tell us about those two boys and what have you told them about the business and how did they both get a little bit into it and how did they look at it and where are they now? And I, fascinating story again to your family privacy comfort level.
What might you share with us? You have a wonderful story.
Kevin Oswald: You know, I think this is something that both Renee and I are gonna talk back and forth about, but you know, the boys were in the business and you know, it was always the dream that they would take the business over and I would retire and we would hold hands and sing kumbaya and head off into the sunset.
And that didn't happen. There were some things, especially with my eldest son that we did not anticipate, we were not prepared for. And you know, I, I take accountability and responsibility for what happened there with him. And I mean, if you wanna expound on that a little bit, Renee.
Renae Oswald: Yeah. I mean, so I guess what I will say is, I'll back up. We never really. Expected either of our boys to be in the business. We were very clear with them as they were growing up. Like, you do not have to do this. This is not what we expect for you to do. We don't, you know, if you walk away from this, that's absolutely fine.
Michael Smith: So not to interrupt you, but just to add to this, like you said to them, we take the weight of the fourth generation off your shoulders. There's no family guilt. There's no family pressure. We're saying to you straight up, if you wanna do something else, you can. If you want to be in you. Absolutely. I love that.
That's such a. Wonderful gift to give to them that you did right to take, to make it an optional choice, not a forced one of, even a subtly forced one.
Renae Oswald: It was a good gift. Although I feel like we took it back later, but
Michael Smith: the story continues,
Renae Oswald: right? Yeah. I mean, so our, both of our boys knew, you know, like that's fine that this doesn't have to be our role.
So our oldest son, actually, he did go to college and he was in his second semester, I think that he was finishing that up. He went on, you know, to like a summer job and it didn't, it was not his fit. So he called us and he said, Hey, can I come? And we, they had worked in the shop during their high school years, so they'd had some, you know, he'd had some exposure to this.
And he is like, this isn't gonna fit for me. Can I come? I wanna come home and I wanna work for you guys. And we were like. Yeah, this is a good business. This is gonna be great. You don't necessarily need college. We can teach you the things that you need to learn here. We're happy to bring you in. And that's where it kind of started.
So it was at that point where we were like, oh, well this really could be fourth generation. And, and then we got kind of sucked into the romantic idea about that. Right? Because here's another fun thing about our story. We have Kevin's grandfather and grandmother mechanic, married to a nurse. We have Kevin's mother and father, mechanic, married to a nurse.
We have, he and I mechanic, married to a nurse and our son. Guess what his. Fiance was studying nursing, right? She was gonna become, she's gonna be a nurse. So we got really sucked into this romantic idea that we had this fourth generation of technician and nurse, and it was all of this. And I think that that also puts some pressure on him.
He, he was fine in the business and, and he was successful in the business. He actually worked more as a service advisor for us. And then we had a transition with our, one of our locations, and we needed a manager tomorrow. And we were like, well, of course that's gonna be our son, because he's the natural heir of all of this.
And so we just, we didn't really ask him. We said, Hey, kid, you are now expected to go run this because it's the natural progression of your trajectory. And so here you are, you've just been deemed a manager. Did we mentor him into that role? No. Did we have a lot of structure for him to be able to step into that role?
No. Were we there holding his hand and really helping him figure out how to do this? Well? No, and he did the very best that he could, but honestly, Michael, I think we fried him. I think that because of our structure, lack of structure, lack of clarity, this kid is. Well, the one that would line up his toys in a row, he needed structure and he needed clarity and we did not provide that for him.
Well, and he was so kind to us, and he stayed around for longer than he should have until it was absolutely detrimental to his mental health, his physical, you know, just everything. He's like, I just don't wanna do this anymore. And you know, I, I do give Kevin and I a lot of kudos 'cause even, you know, at that time we were like.
We could tell it was obvious. We were having performance issues and there were things and we were like, you know what? You're right. And we wanna support you in whatever that next step is. And so he's been able to go and, you know, do something which we just see him blossoming every day 'cause he is so excited about.
So it's fun to be able to see that. And the other bonus to that was when the older brother got out of the way. We've really been able to see the younger son who, who, who, who decided to do this straight out of, you know he, he, out of high school, he was, he was like, yeah, I wanna be in this business.
We've seen him blossom into something that, I mean, we have no worries that this business is gonna be in great hands because
he's
Michael Smith: repressive young man.
Renae Oswald: Yeah, he's gonna do a great job, but only until his brother, you know, it had to be that he kind of stepped out of the way. Before the sun really blossomed.
Michael Smith: Well, you, you guys did what almost everybody does. You get ready to promote somebody who is you. You want them in the new role and we tend to move people into the role and help. They'll figure it out as they go and some of the stuff that we talk about all the time in the legacy program, but also. Us is to make sure that we can think about these career paths and figure out what's next for each individual and try to pre-prepare them, right?
Get them ready before we promote them from being a master of their current position to being an apprentice of the next one. And in the apprenticeship, some people struggle, right? Some people, like you said, need a lot of guidance. Some people love the freedom to do that, but everybody's different in that way.
And so we always tend to do that. And having this. Progression is a possibility in front of people. Gives them something to aim at. It also gives them a chance to feel comfortable that they, you know, you're knocking imposter syndrome components off of them with everything you teach them before they need it.
Then when they step into it, being right next to them and saying, okay, you're on your own but you're not. Right. Each of us has an arm up in battle, if you will. So go do your thing, but you're never gonna be alone right here. These are all ways we can make this easier, but then we only. Do that. If we have time to stop and think about it.
And I love the way you said it. It was like, we needed it. We needed it. Now he's the obvious era apparent. Congratulations, you're promoted now. Go make it work. And then you guys went off and worked on the business and it's like, like somehow genetically he's supposed to know what you all have learned over the course of your lives.
Right? So, and we do this all the time. Everybody does this all the time. And, and even non-family businesses do this all the time. So I, this is a story well, well worn. It's been told a lot. So, but not to go too deep. He's happy now in his next iteration of a, of a, of a, of a, A pathway. Right. So that makes Thanksgivings easier when you all get together, when there's all that business pressures not in the middle of it.
Right. So,
Renae Oswald: well, you know, that's been the good thing I will say about our family is that we have been very open and transparent, you know, through all of this and try to be very honest about, yeah, we realize we own, you know, we kind of set you up to fail and. We own that. And so it really has been able to maintain relationships.
And I am super grateful for that with our boys. It, it did strain their relationship, you know, and working together. And I think that there's some healing left to do there, but for the most part, nobody's os you know, nobody's not talking to each other. And you're right, Thanksgiving is fine and it's.
And it's a good, it's good, but it, I do, I would caution anybody who's listening and contemplating this in their life, and especially if they are that kid that's in their family business, that's like, I don't know if I really wanna be here. Don't, don't wait to have those conversations because I know it's hard.
It's so scary. You don't wanna go to your parents or whoever it is and say, I'm not sure that this is for me. But it has been, like I said, it started taking a toll on his mental health because he was trying to keep it all together when he didn't need to. You know, it, the honesty and just being transparent, the sooner the better, so that either you can, you know, rectify the situation you're in or change.
And again, terrifying 'cause of the unknown, but honestly, watching him now and see how happy he is in what he's doing, I wish that we could have given this to him five years ago.
Michael Smith: Mm-hmm. Well, and that, and you, you, if it happened now, you would. You had to go through this to figure it out. Right? Which is a beautiful thing of you sharing with other people to think about as well.
So tell us about your second son. He stepped up out of the shadows and into the light with his older brother Stepping aside I'm assuming you didn't trust him into general manager role overnight and, and leave him on the flagpole in the wind. Right. That he's taken a different path. So, and again, this is part of.
What we're sharing here is what's different about your second son who, who I think the world of both of them, right? They're both wonderfully young men. And, but tell us about the second one and what you're doing differently given what you've learned. Right. What's the, what's your pathway of support for his succession interest at this point?
Kevin Oswald: Collaboration. That is the biggest thing right there. What I take from Nick is we just assumed. We never asked him what he wanted to do. We just said, here you be the manager of our Rexburg location. See you. Bye. Had we sat down and assessed his hopes and his dreams, figured out what he wanted to do and worked collaboratively, lead with him and get his buy-in on what was going on, I, I think we would've had a different outcome there.
And that's just a mistake we're not going to do with Jacob. You know, we want to be able to have a, a clear. Career path with him. Let him know of my intentions as far as an exit strategy goes. Put a timeline on that so he has something to look forward to. Renee and I have a relative that took over their family business and for years and years.
Dad, when are you gonna sell it, dad? When are you gonna sell it? Well, we'll get around to it. Well, maybe in a couple of years. Well, we'll have to sit down someday and talk about that. And it got to the point where, I mean, things went. To court to try and accelerate this process. And now, you know, it's to the point where the father and the son, they don't even have a relationship anymore.
Yes. I'm so sorry. And, you know, had the father in that instance, been able to give some clarity to the son and get their buy-in on what was going on and together create a plan for succession. I mean, things would've looked much different. Now, I understand as an owner, that's a really hard thing to do because you know, you're talking to a person and me.
Who's not really goal oriented, it's just fly by the seat of your pants and I'll get it done when I get it done. But to be able to have something out there that is in writing that says, okay, in 10 years from now, I plan on taking a step back. Seven years from now, I am going to promote you to you know.
An area manager or something like that, and, and give them a career path, something to look forward to. And then they know when the heck you're gonna get out of the way. And they're, I'm, you know, I, I liken my son to a hunting dog. I mean, he's just sitting there. Buy you wagging his tail and he's looking up at you like, I'm ready to go get that duck.
I'm ready to retrieve this, and I'm just waiting for you to release me so I can go do my job. And, you know, that's, that's what I see with my son and I see myself just being able to say, go and, and just release him and be able to let him run after that duck and retrieve it.
Michael Smith: What a wonderful potential energy.
Device sitting next to you in your son, he is cocked up and ready to go. And what he needs from you is a plan and guidance and patience and mentoring. And also the command. Once in a while, it's like, okay, go get this one. Go get that one, and there's another new experience to be had. It really leans back into a mentoring model, a long-term career development model.
Right, which I know I'm gonna ask you a little bit more about what you're doing organization wide, but this does open that door to the concept that people who work with you are thinking about their lives beyond tomorrow. Right? A lot of 'em show up to do their job today, but it's like, well, what's this gonna turn into a year from now, five from now, 10 from now?
You guys built this beautiful you've expanded, right? You didn't start the business. You took something much smaller than it was. A generation ago and have turned it into something much bigger, much more successful. And you're in growth mode, right? I mean, you're, you're, the systems you're putting in are allowing you to punch the accelerator and make this thing a true legacy company.
Generational wealth building machine, which of course is of interest to the family members that might step in behind you, but there's a lot of learning to do. Not just you guys, also of, of course, but, but the, the generation behind you and not just pushing 'em out there at the end and saying, okay, it's a decade out.
We're done. Good luck with this and wipe your hands to it, getting 'em ready, you know, knocking that imposter syndrome off one bite at a time. So, Renee, I know you grew up in healthcare. There was more of this there. But would you speak not so much from the healthcare perspective, but what, what you see you're bringing into Oswald?
Along these lines, what are you guys building that is gonna make this different for your son and for the, maybe the generation that follows this one too, right? And your family.
Renae Oswald: Yeah. Thanks for that question, Michael. Because I was just thinking as you guys were talking, I, it sounds real easy to, I mean, when we just say it, we'll have a plan and present the plan and, you know, follow this and have some clarity.
But one of the pitfalls that we fell into and, and unfortunately what our first son was a collateral damage kind of was, is that we didn't have our own clarity at all. We didn't know, I mean, we were just following the model that we were kind of shown, you know, like build it and then the, the kid will buy it.
Michael Smith: Yep.
Renae Oswald: And you know, we'll step away and we'll be, landlords, and that may absolutely be what we end up doing. I'm not really, you know, I mean, but we didn't really see. Our vision as being the legacy. Just like you talked about, we did not see that vision we needed to have. It happened to be you in our lives, you know, to help get, help us paint that picture a little clearer.
We were just hitting a brush stroke here and there. And so we had to go back and really understand that for ourselves because there's no way you can teach that or mentor somebody else into that role when you don't have it clear yourself. Absolutely.
Michael Smith: Right.
Renae Oswald: That was probably some of the best work that I think that we've done over the last few years and and where we're going because we have really been able to.
Identify our vision, mission, values, and we have shaped absolutely everything af after what we call the Oswald Way. And it's the list of 10 values that we live by, you know, that includes our mission and vision and who we are and what we're doing, and. I'm telling you, we get off track and when we have to come back, we pull that out and we're like, wait a minute.
We know what the answer is here. It's the Oswald way. Well, we didn't have that. We didn't have that to be able to present to our son five years ago or whatever to be able to say, this is where we're going. Is this the, is this where you wanna be? Is this the path that you wanna go down? So I really feel like we are much more structured in clarity.
And clarity is kindness. If anybody follows Brene Brown, you know, we hear that a lot, but I believe it to my core that clarity is kindness. And sometimes we aren't willing to say the hard things because we think we're protecting people and we're actually causing more harm. We don't have to do it in a cruel way, but truly being clear is kind.
And I see that more and more with our operation. That we still get sucked into some of the ways that we've done stuff. It's easy to do. But we can, we can see that you know, that that guiding principle that's leading us and we can pull ourselves back to that. And so I think going forward, that is what's making the difference for us is.
That we have something that we're working towards. And you know, Kevin talks about not being goal oriented and he really undersells, you know, himself. Maybe he doesn't have a list of 10 things that he's like, yeah, I'm gonna reach these goals. But he's always been very driven in making sure that his, he didn't wanna fail on the third generation.
Right. We didn't want the third generation to be the Oh. You're the statistic where you close the business and you know, we haven't, we have, you know, quadrupled, I would imagine. I think you know what dad was ever able to do and so where it might not be real clearly written, he definitely is a very driven individual and the Oswald Way has really helped give us that guiding principle to continue that trajectory in a way that is very values based.
Michael Smith: Right, so I love that. Renee, Kevin, when you guys have internal conversations with the team, the Oswald Way, how do you use the Oswald Way on a sort of a. Momentary basis, right? It comes up all the time. You go back to the Oswald way a lot. So like when does it come up? How do you use it, the clarity that you have?
Give us an example or two if you wouldn't mind.
Kevin Oswald: Oh, absolutely. It's all the time. You know, you buy a part from the parts house, you put the part on the vehicle, oh, crud that didn't fix it. Do I put the part back in the box and return it as defective or. Is it it? It is what it is. You know we made a mistake and we need to eat this part.
Well, Oswald service you know, we need to eat this part. We had a situation where vehicle came in a long time. And he said that there's a horrible noise coming from the engine and it's not running well. We bring it in and find out it has eight quarts of oil in it and the capacity is four.
And of course, it cavitated and air into the system and it ruined the engine. Well, guess who did the oil change a month and a half before. It was us, but this particular vehicle was still under factory warranty. With Honda, we could have easily said, Hey, let's just drain four quarts out of this thing and tell 'em to take it to Honda, that you know, the engine's bad and it should be under warranty.
And that discussion did come up. But as me and my manager looked at each other in the eye, we just both shook our head and said, we can't do that. I mean, that was an expensive thing that we had to do. But I mean, those are our guiding principles. I mean, if you're gonna talk it, you have to walk it and you have to show people that that's the way that we do business.
And by people I mean your employees. Yep.
Michael Smith: I love that, Kevin. Thank you, Renee. This, this nobility I like to. Use the word in this kind of a scenario as a platform for the Oswald Way, how does that resonate with your community leadership work? You're sitting in community groups with the business leaders of your region, getting to know them.
You operate this way. You have to have their respect. How does, how does this help you guys to, to build local presence and reputation and brand strength? Brand value? Tell us a little bit about that. Because I know coming from the outside, this is very clear for you. Right. And how this works so
Renae Oswald: well. It's actually really fun, Michael, because it's, it's a surprise for people when I start talking to them about this and they're like, you're an automotive repair shop.
I mean, yeah, we are, and we've got our crap together. Excuse my language. But, you know this is the way that we wanna function. And, you know, I mean. When you sit in business meetings, you sit with other business leaders, you hear them talk about mission, vision, values and all of that kinda stuff. But how many of us, and I will say this, coming from the corporation that I was at before, we had beautiful mission, vision values, and we never looked at 'em.
I don't believe that they live by them. And so it's, it's a, it's really, it's a real test for us. And it's a good test for me because I love for somebody to say, well, you're an automotive repair. Why do you have this? And I, you know, you guys are crooks. I can't believe that you would even claim to have this kind of stuff.
I love that kind of challenge because I can say, yeah, we have a responsibility to live up to what we're saying that we're doing, and I want you to test us. And the minute that we're not living up to the Oswald way on our website, we actually, and we actually promote this. Like we publish it and we say, if you ever see us not behave this way, I need you to call us out on this.
I want you to be, you have permission to hold us accountable. If you ever see me functioning this contrary to this in our business, in the community, however we're doing it, I expect you to call me out on it. And so it's been really fun to be able to represent the Oswald Way and to have. I mean, there's probably a point, 1% chance where I'm a little bit worried like, oh gosh, are we really doing this?
But for the most part, we are. And to be able to say, you know, test us. I, and, and I want them to show us if we're not living that way, so that we can improve. And that is what we use it for as our clearing call and our you know, this is now, if we're not living to this. This is how we can improve. So it's fun to use in the community.
It's fun to be a little bit different in the industry. I love it.
Michael Smith: Absolutely, and, and you know, it, it's statistically absolutely true that the masters of every industry are ma more mature, not just age, but experienced people who have higher level social thinking. Than people who are young, immature, and just getting into a job.
And so the more you, we've talked about this a lot internally in the groups that we're in and someti in our time together. The more you walk this out internally and externally, the more you become a beacon in the industry. But that serves you from the standpoint that the very best team members, the greatest leaders, the people who are the masters, who are they?
Some of 'em gave up long ago hoping they would ever find a shop that walks the way you guys walk. And all of a sudden they bump into you and they go, oh, this is weird. Could it be true? I didn't think this industry had a lot of folks that thought that. That way when they find you, you are the great.
Treasure box. They want to take their gem that they are and jump in and be part of it, and it changes everything because when they show up every day and they live it and walk it and breathe it because it's theirs as well, then the customers feel it. And when the customers feel it, the community feels it, and literally it becomes real.
It's a self-fulfilling prophecy when the belief structure becomes real and it's, and you've got it. The Oswald way is the, the flywheel, if you will. You just keep spinning it faster and faster and it has a big, makes a bigger and bigger tornado, a bigger, bigger impact. And you guys are, be doing this beautifully and your son get to the opportunity to walk in and join you.
Nick, on his own path, Jake possibly. Coming alongside, right? To see what, what his his part of this would be and the attunement that you have to him and to his future and his career is absolutely precious. Would any comments on that then? I want to take it one step further and a little bit of time that we have left.
Any thoughts about this with you all? How does that resonate with you? That's your hearts, right?
Renae Oswald: Kev
Kevin Oswald: you know, it's just really kind of romantic to me just to think about having my son in the business, having this fourth generation. And for the longest time when Nick decided to leave the business you know, it. It really kind of hurt because again, as I said earlier, I just thought it was gonna be the three of us going off into the sunset and having to shift.
And you know, it changed my mindset and go, okay, you know, we need to concentrate on Jake. We need to concentrate on his success. We need to make sure that you know, the mistakes that we made with his eldest brother. We try to write that with him, and I, I, I think it's wonderful.
Michael Smith: Mm-hmm. That's beautiful.
Renee, your, your thoughts at this point to share?
Renae Oswald: I think just based off of something that you said about how people in the industry can see it. I, I'm telling you, the team that we have right now is beyond what we ever thought we could have. And we just had an individual that left our organization.
We hired him, you know, it was one of those like, oh, he is gonna produce, he's just this little, you know, and he was a machine. He could absolutely do work and do it fantastically, but, and Kevin can speak to this, he knew he wasn't the right fit, but we thought we can make it work. I don't know why we continue to keep trying to convince ourselves that we can do this.
Right. And of course, he ended up being miserable in our organization. It was not the culture that he wanted. He wanted to be a burner producer. Scorch the earth. I don't care who I, you know, take down in the, in the process. And man, he is an amazing tech for whoever he's working for now. I mean, they're, they're going to get some great work outta him, but what we saw was it was not the right fit.
He, he didn't fit in our culture because of how we behave. And that's okay. That's absolutely okay. But the team that we have now are exactly like you just talked about. We, where have these gems come from? Like we are just so fortunate to be able to have individuals who are not only technically competent and so good at their work, but they are.
Aligned with the Oswald Way and they appreciate what we're trying to build. And we have one individual, bless his heart, who had said yes to a different shop and I'm so sorry to one of our competitors, but then took that back because. They were like, we see where you're going. We wanna be with you. And so we're, we're coming on your training.
And, you know, we didn't offer him anything really different than the other shop did. It's just the vision and the way that we have it organized was what he, that's something he wanted to be a part of. So that's, that's such a compliment.
Michael Smith: Mm-hmm. That's brilliant. And, and I will just say this, to add to what you're saying, it isn't just to leaders in your business, this trickles down from a career development standpoint.
It trickles down in your conversations about performance and about, you know, pay. Everything you guys do is aligned with the Oswald Way, and when you walk it as consistently as you do. And you're giving your, your team something to believe in, right? And what it ends up doing is drawing people who believe in the same thing to join you in what you believe in, and then collectively you're making the difference that you wanna make in the world that you live in, and that that rubs off.
The customers feel it and perspective, new team members feel it, and, and in a odd kind of a way, which works out best in the end. Even people who might be there that don't feel it. Feel it because then they feel maybe this isn't the best place for me. And it gives them clarity about where to go and find their future joy as well.
This is you know, I, it, it plays out very similar to what you're doing every single time and it's, it's an iterative. Process that takes time to get its momentum up. But once it does, it takes on a life of its own. And you guys are building something very noble, something very powerful. And the beauty of having your family walk in behind you is just, I mean, that's just, that's got to be icing on the cake of all of this, which I, I know how you both feel, right?
It's, it's it's almost tear making, right? It's so deep and, and, and beautiful. So listen, thank you both. So much. Anything else you wanna share with our folks before we peel out either of you? Any wishes or anything for them? Any recommendations before we go?
Renae Oswald: I, I would just say we can't thank you enough, Michael, for being our Sherpa through all of this because, you know, we've, we've been with, we've been with coaches for much of our business ownership and they have taken us, every one of them have been so valuable in our lives.
Have taken us different places in different steps in this organization, in, in our organization. And we are, we're with the right individuals now that are taking us to that next step. And so I just highly recommend coaching and mentoring in whatever form you can get that as business owners, it's worth absolutely every penny of your investment.
Michael Smith: Yeah, we couldn't agree more. Thank you, Renee. Thank you for that. Your kind words too. Yes. Kevin, final thoughts for our folks that have joined us?
Kevin Oswald: Yeah, absolutely. I just wanna reiterate what Renee was talking about again, and Michael. Thank you. You know, we always say that we need to work on the business instead of in the business.
Now I'm working on the business and I feel like I am. Now transitioning from working on the business to a new level of working on the value of my business. And so you know, I'm transitioning from the day to day to building value in my business. You know, doing that for, you know, expansion, acquisition working on our culture, working on our pro our processes.
And you know, this is a mindset that I didn't have two years ago. And, thank you, Michael, for you're welcome. Opening my eyes to something else that was out there. And yeah we're going full guns. So
Michael Smith: my privilege to walk beside you. I'm deeply proud of you two, and I love what you're building, so just don't stop, just keep going.
We're watching you, the whole market's watching you. Thank you. And thanks to everybody who came to join us today. We hope there's lots of nuggets here for you. And if you want any more information, we are here. We'd love to chat with you. So Oswald, again, thank you. More power to you. Keep going. Can't wait to see you in the headline.
Love you guys. Bye. Thank you.

193 - Ask Me Anything: Why Most Shops Aren't as Profitable as They Think

193 - Ask Me Anything: Why Most Shops Aren't as Profitable as They Think
February 18, 2026 - 00:58:05
Show Summary:
If your shop shows strong net profit but your bank account feels empty this episode explains why. It defines the gap between paper profit and real cash flow and outlines debt service coverage current ratio and two turnkey rates that reveal true break even. The conversation exposes hidden profit drains such as inaccurate labor costing excess overhead unused subscriptions credit card fees insurance costs and parts leakage. It also examines marketing ROI customer acquisition cost lifetime value and technician utilization. You will leave with a clear plan to protect cash strengthen reserves and make confident financial
 
Host(s):
Kent Bullard, COO of The Institute
 
Guest(s):
Eric Joern, CPA, CM&AA, AAM, KAIZEN CPAs + Advisors
Show Highlights:
[00:02:29] – Why profit on your P and L does not mean cash in the bank
[00:05:54] – How debt service coverage reveals true financial strength
[00:08:26] – Current ratio and short term liabilities explained simply
[00:11:00] – Sales tax mismanagement and the tax squeeze trap
[00:13:45] – Inaccurate labor costing distorts gross profit
[00:16:30] – The two turnkey rates every shop must calculate
[00:20:10] – Marketing ROI customer acquisition cost and lifetime value
[00:33:10] – Subscription creep and IT spending that drains profit
[00:51:00] – Parts leakage and missed charges costing thousands
[00:54:45] – Simple expense audits that uncover hidden cash
 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/MfSztSEzZag
 
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
 
Kent Bullard: Hello everybody and welcome to today's Ask Me Anything. Uh, I'm joined with Eric Jorn from Kaizen CPA. Um, I said that right? Correct. Kaizen,
Eric Joern: you, you, you guys got it down.
Kent Bullard: Nailed
Eric Joern: it. I appreciate that. Love it. Love it.
Kent Bullard: To today, we're gonna be talking about why you're not as profitable as you, you think. It. Um, this isn't a MA so as you guys are asking questions in the comments, me and Eric are gonna be paying attention to that and making sure that we get those questions answered.
Kent Bullard: Okay. Um, a few things I want to just touch base on and we'll, we'll re revisit this again, but we have a few things that we've got coming up that we're doing in partnership with Kaizen. Which is we have a financial intensive, which is gonna be going over all of your finances, getting everything set up correctly.
Kent Bullard: Um, here at Institute Headquarters in April on the 23rd through the 20. Fourth, I think it's a two day. Um, you guys can find that on our website at we are the institute.com/events or upcoming events. Um, and check that out. It's gonna be fantastic. Eric, do you wanna speak a little bit to that?
Eric Joern: Yeah, yeah, I'd love to.
Eric Joern: We're we're excited. We have, uh, our whole entire partner group will be there. So you are getting the whole roster of heavy hitters and it, and it is gonna cover finance from A to Z meaning. How does this interpret financials? Your basic p and l and balance sheet, and what information to clean from that?
Eric Joern: All the way to I've exited my business and how do I manage that new wealth that I created through the process and obviously the steps on how to get from A to Z to. That, uh, that wealth creation stage.
Kent Bullard: We've had a lot of people, especially through our, our round tables and through through the institute work that have asked for, you know, something like this and we, we spent a lot of time going through all the items that need to be included in that us as well as, uh, oh, I guess I'm Cecil today.
Eric Joern: Love that.
Kent Bullard: But, uh, to really just define exactly what you guys need in an intensive. So if you, if you're really scrambling with your finances, this is a, this is the intensive. You should, you should attend. Um, and the last thing, and maybe I'll say that for later, let's, let's just jump into some content.
Kent Bullard: Okay? So Eric, I'm gonna ask you why. In your experience with the shops that you worked with, why do you feel that they're not as profitable as they think they are?
Eric Joern: Wow. Do we not only work with around 200 shops ourselves as current clients, we probably talk to another 200 shops every year that, that are not clients.
Eric Joern: So when we're talk, when we're going through the financials, right, that actually one of the biggest questions we get is, I made money on paper, but I have no cash. Right, and profit can be an interesting thing to to think about, right? You can just say, Hey, this is what is on my p and l, and I'm good and happy with it.
Eric Joern: All, but what we don't know is we were hyper leveraged. Meaning we, we used a bunch of loans to buy everything that we needed, or, hey, we're early, you know, we're early on year one, two, or three. We had to go out to the bank, get loans to buy all the equipment to maybe we bought the shop and now we're paying the TE service.
Eric Joern: Well, that, that's not accounted for on the bottom line on your p and l No, that comes out of your profit. So that might be one of the, um, supernatural reasons why you, uh, you might not feel like, Hey, I'm as profitable as the, as the p and l my accountant gave me. Or even worse, the tax return said.
Kent Bullard: I mean, there's a lot of things, there's a lot of things you can look into.
Kent Bullard: You know, I, I've, uh, had a client in the past where, I mean, they were doing about 27% net profit. And so we went through the numbers. We looked at their, their gp, we looked at their parts, we looked at their labor, we looked at their expense controls and everything, and they were a 27%, uh, net operating profit.
Kent Bullard: But like you just said, they were over leveraged. They took a lot of loans. They, they overextended and so their debt repayments every month was like $13,000. So it was eating all of their profits up, let alone being able to set anything aside for taxes or for, you know, being able to, uh, you know. Have, have a, have a cushion, right?
Kent Bullard: I mean, how many shops out there have you worked with that don't have that? You know, three to six months of operating capital.
Eric Joern: Yeah. Build a reserve, right? Pay down debt. Eradicate debt. Build a reserve. Oh, and you gotta pay taxes too, right? So maybe you hit $300,000 of profit on paper and you could be. That profitable performance wise.
Eric Joern: But now we're paying a third Don, uncle Sam. The third goes to debt service and the third is sitting in our savings account. 'cause we had no emergency savings.
Kent Bullard: That's right. And think about that. So if you've, if you've, if you're showing net profitability on paper and you don't have any money, what's gonna happen come tax season?
Eric Joern: Yep. You're gonna, you're gonna get squeezed. I call it a, the tax squeeze.
Kent Bullard: It hurts, it punches you in the face.
Eric Joern: It's uh, it's something that we dealt with a lot. Uh, you know, we've worked with businesses outside of the automotive repair industry. Um, our construction contractor, contracting friends. Right. You guys see 'em in your shops, right?
Eric Joern: They get new trucks pretty, pretty frequently 'cause they don't want to pay tax. Right? So they're buying trucks every year, but they buy 'em on loan and eventually we run out of deductions 'cause we're accelerating. We're super aggressive 'cause we don't wanna pay tax. And now we gotta pay loan payments. But I run out of deductions.
Eric Joern: Next thing you know, I have no cash 'cause I'm using it to pay my my trucks off, but I don't have the tax deduction 'cause I used it or maybe even wasted it in prior years. Now all of a sudden, I don't know where I'm gonna get the cash to pay my taxes. And we see 'em on installment plans for taxes all the time.
Kent Bullard: So, you know, we might be, there might be somebody out there right now who's like, well, I'm not profitable. Yeah. I, you know, so I'm not even showing profit on paper. How do I, uh, and in fact, I'd love to just talk to you about this, about cash flow strategies. How do I know if I'm in a healthy position or not?
Eric Joern: Yeah. We, um, couple things, right? So a, we can put on our banker's lens and a banker's going to look for one and a half to two times what's called debt service coverage ratio. Meaning I'm making enough. Profit and cash flow from my operations to cover my debt. At least one and a half. My debt payments at least one and a half to two times throughout the year.
Eric Joern: So meaning if say, so
Kent Bullard: what's the, Eric, what, what would be the formula for that? How would I know what my ratio is and whether or not I'm, I'm one and a half to two over.
Eric Joern: Yep. So what is, what is your principal portion of your loan payments? So meaning I say I make a $2,000. Per month loan payment of that 1500 pays down my principal 500 is expense on my p and l as interest expense.
Eric Joern: So we have then our net profit at the end of the year. So say that is a hundred thousand and well actually, that that already does, uh, no, it maths out. Nevermind it doesn't. So we have 18,000 that we have in debt service and we have a hundred thousand in profit. Right. We're now covering that debt service.
Eric Joern: Five times it's five and change, but let's just say five times we're covering that. So that means with the profit we can afford to pay our debt payments five times. Good, healthy position to be in. So then
Kent Bullard: you're in a healthy position there. But if you don't, if you're below two
Eric Joern: Yep.
Kent Bullard: How does the bank view that?
Eric Joern: Yeah. Yeah. Two, two, they have to sit in front of a loan committee and make a hard decision. Right. And that you might get some emotional, um, decision making to, to make a debt decision. They might say, eh, we gotta look now at history. What does proforma look like? What do we look at going forward? Um, and we don't want to get into a point where we have, we have the bankers making an emotional decision, right?
Eric Joern: At the end of the day, they gotta get paid and they gotta safely get paid. Right? They're gonna evaluate a risk-based decision. So when we're in one and a half to two, I believe under one and a half is almost a, at least for most lending situations that we, we go to now you can go SBA, there's a lot of other routes you can jump through, but most banks are aren't happy with a one and a half.
Eric Joern: Uh, one and a half is bare bones, bottom line. Um, so we really wanna see that that's leverage,
Kent Bullard: and especially depending on the ba, the bank that you work with. You might not have a great conversation with them because they're not gonna be kind of like a, a smaller bank that is looking at loans like that.
Kent Bullard: They might be large and they wouldn't care. It wouldn't be worth it to them.
Eric Joern: Absolutely. And then they're gonna look at something like a current ratio, right? How many, how much, how much do I have in current assets? So, so now we're moving to a balance sheet, right? Um, which is weird. Most of us don't even look at a balance sheet ever.
Eric Joern: Right? How many shop owners actually know what's on their balance sheet? So,
Kent Bullard: so just to to recap, we have debt service coverage ratio.
Eric Joern: Yep.
Kent Bullard: Right. Okay. And then now you're talking about your current ratio. What's the current ratio?
Eric Joern: Yeah, current ratio. Simple. Simple equation. Current assets divided by current liabilities.
Eric Joern: So, so what does that mean? So say I, you, I have a lot of terms with my parts vendors, right? And at the end of the month, a lot of us as shop owners have been in this position. We haven't, we've kept our, our finger off the pulse and, and next thing you know, we get that parts statement and it's 15,000. We got 10 grand in the bank and our heart c crunches a little bit.
Eric Joern: Well, we have an under one debt service ratio, right? We have less cash than we have. Debt owed to our vendors and Right. And we're talking short term debt, meaning this is, these are things that we have to pay in less than a year. So that's what, a, not even that,
Kent Bullard: but the short term is gonna have a lot higher interest rate on that.
Eric Joern: Exactly. So
Kent Bullard: even you could be making payments and feeling like you're making a dent, but it's not touching the principle
Eric Joern: for credit cards. Right. It's
Kent Bullard: not touching the principle.
Eric Joern: Exactly. So, so, so we wanna see that at least over one. Right. And it, and it really depends on, on what your, um, how much do you, how much.
Eric Joern: Volume to go through. Right. If, if we're constantly churning, if you're just barely over one, well that gets a little scary, right? You, you lose one, you know, something happens. The shop has to shut down for a period of time.
Kent Bullard: You're not gonna have that, that cushion to be able to keep operations up. Yeah.
Kent Bullard: 'cause you don't have it.
Eric Joern: I,
Kent Bullard: I advise, you know, taking some kind of percentage and doing an allocation every single month or every, every, every period where you're gonna be doing your regular rhythm, either the 12th or 25th, whatever, whatever your rhythm is. And just setting aside that money. Just, just 'cause put it in a, in a bank account that you have to physically go to, to pull money out just so that you know that if something happens, it's there.
Kent Bullard: It's not, it's not touched.
Eric Joern: New Shop, our
Kent Bullard: biggest.
Eric Joern: Using that principle.
Kent Bullard: Oh, go ahead. Sorry.
Eric Joern: Eric. New shop. We're new at this, I guess.
Kent Bullard: Yeah.
Eric Joern: Uh, new shop owners, um, one of the biggest things that we see, sales tax debt, because they don't do exactly what you talked about, right? Every 10th, 25th, whatever it may be, we're moving that money over.
Eric Joern: That is, uh, I'll, I'll call that precious cargo, the sales tax money that you collect because it's never really yours. Taking it, handing it off back to the state. You're never, it's not an income, it's not expense.
Kent Bullard: What would you recommend in terms of how, how, how much should I be putting away for that,
Eric Joern: for sales tax?
Eric Joern: Um, well, the great news is you can run a report on your shop management system that tells you exactly how much sales tax you collected. That's the, that's the simplest way to do it. Right. So we we're on Friday or maybe Monday every week. We go and we look and see in our shop management system, we collected, you know, $2,000 in sales tax and we're gonna transfer that money right over into a, an account that we pay our sales tax out of.
Eric Joern: And that way we don't spend it. And, and we're getting into Profit First Concepts. Uh, I actually taught a class on Profit first, I think last week or the week before.
Kent Bullard: Um, it's something I'm, I'm personally really passionate about. I've been doing Profit First myself personally for, you know. A very long time, and it's something that's like a, I also did it in juxtaposition with like, uh, Rami, uh, the automated, like, I'll teach you to be rich.
Kent Bullard: Okay. Yep. Those systems, because like behaviorally, like I am, I'm impulsive, I have a DHD, I have a hard time managing my finances, so I try to create the systems that are automatic that I don't have to touch because as soon as I touch it, I'm gonna break it.
Eric Joern: Yeah.
Kent Bullard: Oh, a hundred percent And I'm gonna ruin something.
Kent Bullard: Um, but for me, I also make sure that there's at least an additional cushion on top of that. Not just, you know, say we took in 2000, but maybe I might have like a, a five to 10% cushion on top of that to say, okay, instead of 2000, we're gonna do $2,200 and move that over.
Eric Joern: Absolutely
Kent Bullard: right, so that you have just a little bit more just in case.
Kent Bullard: 'cause something always happens. Something always comes up.
Eric Joern: And the great news, if the cash is not in your bank account, you're probably not going to spend it.
Kent Bullard: Exactly. You, I don't see it. It doesn't exist.
Eric Joern: Yeah.
Kent Bullard: Right.
Eric Joern: A hundred percent. All right, so, so we talked about cash flow, but now let's talk about, you know, hey, I think I'm.
Eric Joern: Like most shop owners we're probably mostly making our profitability decisions based on our shop management system only, and I think
Kent Bullard: half the conversation there
Eric Joern: ha exactly. I think most of you know why shop owners think they're profitable and then they're really not come from, Hey, we have not captured accurate data inside of our shop management system.
Kent Bullard: That's the other thing is like, you know, I've, I've, I've brought in a few. New clients over the past, you know, one or two months. And we go in there and we're looking at their labor gp, the shop management system says that they're at 70% or around there. And I go, all right, I automatically don't trust that.
Kent Bullard: So let's jump in. And we see that it's not, it's not adding any kind of a, a labor or wage or cost to that in the shop management system.
Eric Joern: Yeah.
Kent Bullard: Which, if we actually ran the numbers, you know, like one of my clients, um. Three weeks ago they were, we were doing the math and it's like, that's the thing. I love it that Wayne says it, the math's got a math.
Kent Bullard: So we look at the math, got a math, we're missing, we're missing $15,000 at the bottom line, but we've got our margins, quote unquote. But when we add back in, we see that, oh, we didn't get a 70% labor gp. Mm-hmm. We got, you know, a lot less than that. Less than 50% or around 50%. And if you were to add that back in, well that's where the money went.
Kent Bullard: That's where your net profitability went. You know, we talk about shooting for that 65% gp so that you have that. But here's the thing, and this is the way I like to think about it. So my GP essentially is for every dollar I bring in, like if I were to bring a dollar in and my GP was at 50%, that's 50 cents on the dollar.
Kent Bullard: I get to pay my expenses with those 50 cents. And so then it comes down to cost controls. And this is where I see a lot of the shops are like, well, I don't, I'm, I'm getting the margin Now. You set your, your parts margin, your labor margins. You're, you're getting a little better about how you, how you estimate the jobs and, and the work and all that, and how we sell it.
Kent Bullard: We get more conversion, but at some point, all of that money doesn't make it to the bottom line. Where do you see a lot of people kind of miss when it comes to expense controls? What are the things that are out of, out of sync or, uh, out of leverage or over leveraged?
Eric Joern: Yeah. Yeah. Well, a lot of what we see is those who, who aren't intentional with their spending.
Eric Joern: So they might be working with a marketing agency. Because somebody told 'em to, right? Hey, you need to spend more on marketing. You need to spend 5% of your sales on marketing. They hear something like that. And I'm using marketing because
Kent Bullard: I'm
guilty.
Kent Bullard: We've said that,
Eric Joern: but with a
Kent Bullard: caveat and an
Eric Joern: Exactly. Yeah. It is.
Eric Joern: Uh, yeah. Five. Go spend 5%. Okay, cool. We're gonna go sponsor my, my, uh, my nephew's baseball program. Um, well, not really good ROI out of it. Theoretically, you could spend, hey, and you know what, and if you spend the same amount on marketing, but it works. It increases sales. Now we have more. We have a lower overhead cost and a higher net income cost.
Eric Joern: So that's why I talk about being intentional with your expenses. Right? What is my ROI on that individual expense? Will it increase labor or will it increase? Um, increase gross profit will increase revenue. And if we can increase revenue, we could start outrunning our other expenses after we pay our technicians and pay for our parts.
Eric Joern: Now we, but a lot of people don't even know what
Kent Bullard: their, what, where that, that first break even is.
Eric Joern: Yep. The turnkey rate. And now you, and you have two questions to answer, right? Yeah. Turnkey rate on your p and l and turnkey rate from a cash flow standpoint, right? Because we started the conversation about talking about debt service, but on my p and l is, is our turnkey rate, right?
Eric Joern: What, what other expenses do I need to pay, but if I ignore my debt service? I, I'm not really hitting the cash net profit that I need to the money that actually will end in the shop, right? 'cause if we're doing planning on profit, right? Ideally we say, okay, we want to hit, uh, and when it comes to profit, I start like, like, I like to talk about dollars and percentage, right?
Eric Joern: Mm-hmm. Percentage says I'm operating efficiently, but dollars are what I can do with that profit.
Kent Bullard: Exactly.
Eric Joern: And if I want to do a build, right? Hey, I, I wanna do an expansion on my shop. And I need to earmark how much, how much, how many dollars did I have? And I, and if I set that and I say, Hey, I want to hit this profit and have this excess profit to, to fund this buildup for next year, but I forgot that, hey, I also need to include my, my loan payments in there.
Eric Joern: I'm gonna come up short of that number because I just did, I did the math, didn't math
Kent Bullard: you, you didn't do a proper burn rate calculation. I know that I'm gonna be spending an additional 5,000 a month for the next eight months. They said it's gonna be four months, I'm gonna double up. 'cause construction usually takes longer than that.
Kent Bullard: Yeah. And instead of 5,000, maybe I'll shoot for 8,000 a month and if, if, if I don't have that 8,000 in, in, you know, uh, my net operating after the fact. Well even then, 'cause you're, again, you were saying paying the debt service off. Right? Mm-hmm. All that debt, all that liability that's gonna eat away at your cash flow.
Eric Joern: You might have the percentage, but you don't have the money, then
Kent Bullard: you don't have the money and the dollars to pay it.
Eric Joern: Yep. Super important to think about that. Um, but now as we're, we're coming through the operating expense section, right, right away I'm going to look at occupancy. What's it cost for me to be in my building, right?
Eric Joern: Because if I'm at 12.5% for that number. Well, I don't have an operating expense problem. I have a revenue problem. That's where my focus needs to be all in on revenue at that point. But if I'm at 4%. My net income's not where it wants to be and my, what my gross profit is. Now we need to start combing through the rest of the expenses.
Kent Bullard: So, so first off, you said marketing and I, I want to caution people. So if we're already having an issue when it comes to revenue. Like overall revenue. One of the worst things we can do is turn off the spigot, so it comes with an asterisk. There's always a few things I look at when it comes to marketing.
Kent Bullard: I'm gonna just go through them really briefly. The first is, are we optimizing every vehicle that's coming in? So 300% rule, good, thorough inspection? Are we estimating all the work that was found and identified, excuse me, identified and determined how those gonna kill me for that? And old hell, at
Eric Joern: least you didn't fumble kaizen.
Kent Bullard: Right. Right. And then, and then the third and the third a hundred percent is that we, that we presented and converted as much as the work as we can. The, the next thing is are we, are we actually following up on that deferred work? 'cause that's another bit of opportunity. Uh, then I look at regular touchpoint with customers.
Kent Bullard: So what is our incoming phone script that would convert more of our best customers? And we address that. What does our check-in process look like? Where we can set expectations and also look at things like, you know, uh, making sure, Hey, where did you find us? So we know what lead source is gonna be most effective.
Kent Bullard: And then at the end, like when we do the customer checkout, we ask for the three RSS review, referral and return appointment. Then we look at. What is our next best step when it comes to marketing our current customers? How many people haven't been in the last six to seven to eight months that we can call and get scheduled an appointment?
Kent Bullard: Do it on slow day action plan.
Yeah.
Kent Bullard: Then not even touching marketing yet. We're gonna go to referrals. Can we ask our customers to get us a referral and go through referral list? And then once we've exhausted a lot of those things, then it can come down to how are we spending our marketing dollars?
Eric Joern: I think people forget about how valuable.
Eric Joern: A customer is once they're in your database, once they exist in your database, what is the cost to get that name inside of your database? You might be surprised it might be a hundred dollars to get that customer in that just that name in your database. So meaning if, if I'm, if, if I. You know, I'm, I'm rushing through and I'm passing on those opportunities and I think you listed it five or six easy opportunities.
Kent Bullard: Oh yeah. And those don't, those don't cost you anything other than time and effort and fixing your processes.
Eric Joern: But if it costs you a hundred dollars to bring this new customer in the door to replace an existing one, right? We're taking that right off, right out of gross profit,
Kent Bullard: right?
Eric Joern: So if you made $300 of gross profit, you really only now have made $200 because of that cost, initial cost of acquisition, you had to pay for
Kent Bullard: the marketing.
Kent Bullard: Yeah,
Eric Joern: you can say, Hey, lifetime value and justify it that way. But I, I don't like doing math calculations to justify, um, improper execution. We can, I love
Kent Bullard: that.
Eric Joern: You can find, well, it's like statistics in general, right? You can find, you can swing the statistics any way you want to justify what you want, want to do.
Eric Joern: But if you do that and you're, at the end of the day, you're not hitting your goals, you're just, you're just giving yourself an excuse. You're not holding yourself accountable too.
Kent Bullard: So, so I wanna go back, 'cause right now we talked about, you know, we're looking at expense control. By the way, those of you who joined us later.
Kent Bullard: In this, uh, live stream, ask questions. We're talking about why you are not as profitable as you think. You know, it looks on paper that you're profitable, but you don't have anything in the bank account. That's what we are conversing about today. Uh, again, joined with Eric Jordan from Kaizen, uh, CPA. The, what I wanna go back to is you said there's two, two turnkey rates that we want to.
Kent Bullard: Pay attention to. What are those specifically? 'cause we, we went into 'em, but I just want to clarify those for everybody out there.
Eric Joern: Yeah. Yeah.
Kent Bullard: The first turnkey rate is what?
Eric Joern: Yeah. What, what is our, our, what is our net income turnkey rate, right? So how much on our p and l does it cost for us to break even? So, so we,
Kent Bullard: right.
Kent Bullard: So that, would that be all expenses plus our. Debt services.
Eric Joern: So I'd do that before debt service, right? 'cause that's the ca, that'll be a cash flow turnkey,
Kent Bullard: right?
Eric Joern: Meaning, meaning we're gonna take that one step further. So, you know, are we operating profit or are we operating at break even, right? Are we charging right margins, et cetera.
Kent Bullard: So, so for those who don't, you know, I'd look at things like, what does it cost me to do? So my cost of goods and services plus my, my expenses, and that could be sales expense, marketing expense, and fixed expenses. Correct.
Eric Joern: Yep. Yeah. What it cost me to be in my building, pay my accountant. I have beautiful to,
Kent Bullard: and so if I were to add that up, that becomes my first benchmark for cash flow.
Kent Bullard: Right? My break even for cash flow.
Eric Joern: Yep. Yep. Let's just say we're in a million dollar shop and that number's 400,000, right? It costs me 400,000 to pay my rent. I pay myself as the, in the peer owner seat. Um, I'm paying my accountant, I'm paying for my shop management system. I'm paying for my marketing agency, et cetera, all those things.
Kent Bullard: So, so at the very least, I have to be doing around $34,000 a month to make that. So that would be my first benchmark to break even. The second turnkey rate is what
Eric Joern: is now we're now we're talking about. Total cash flow. So now we have to factor in what my debt service is, right? What do I have to pay on long, long-term fixed debt?
Eric Joern: So that, that's not gonna include like a credit card unless you're holding credit card long. You, you've accumulated debt on a credit card, you're carrying a balance.
Kent Bullard: I, I'd rather assume people are than aren't. 'cause if you look at, you know, today's statistics, most people have, have, um, that debt.
Eric Joern: And if you're doing that, my suggestion is you're stopping using the credit card.
Kent Bullard: Yeah. Stop and freeze it. Cut it. Yep. Throw it away. Uh, we're, I wouldn't close the account there. Somebody would argue, well, I want to, I want to have my credit, my point liability. How are my points? Liability alone is just either that or set it to automatically pay off every single month, but you still have to account for it.
Kent Bullard: So my second would be, okay, how much do I pay in my debt services monthly?
Eric Joern: Yep. Yep, yep. So what do I have to pay for debt service monthly? So, right, if, if, if, if I'm, if I have that same example and we're at 34,000 and we have another 6,000 a month in, in debt service, now we're at
Kent Bullard: 40,000, then I'm target 40,000
Eric Joern: or
Kent Bullard: 40 a month, I would say, I would even say add another 10 to 15% cushion on top of that so that you can have some kind of a plan to pay some of these debts down a little sooner.
Kent Bullard: Yeah.
Eric Joern: You
Kent Bullard: know, avalanche, snowball method, whatever that is. If we don't plan for it, then the money's not gonna be there for it.
Eric Joern: Start building some reserves
Kent Bullard: or build reserves. Yeah. Set aside 10 to 15% just into an account. And, uh, for me personally, I like to see six months of operating expense, but I had a client they're doing, they'll do about 5 million.
Kent Bullard: Right. And it's like, okay, well they're, they're, they're, how much do keep for, I mean, three months is gonna be, do you know what I mean? So it's
Eric Joern: like that better be in, in a income bearing account, not a, uh, checking account,
Kent Bullard: uh, money market account of some kind. Savings
Eric Joern: account, money market, high yield savings account.
Eric Joern: Those are starting to temper a lot. But I mean, we, we lived in a world where we're getting four or 5% and pretty accessible cash. Um, huge opportunity missed by a lot all the time. It's, it blows my mind. Uh, you, you, you open great business, great business owner, right? You've accumulated $400,000 of cash and you're earning in a traditional savings account, less than a percent of, of return on that money.
Eric Joern: You are probably, it is devaluing as it sits in that savings account.
Kent Bullard: So if I were.
Kent Bullard: To set these benchmarks. I've got 34,000 to hit my cash flow. I've got 40,000 to make sure I'm covering my debt service. Then after that, I can start thinking about what the net profitability is and what I can take home. Right. Exactly. In order to hit whatever that number is. So if I wanna make 200,000, uh, in net profit that I get to take home from my investment, I would have to do that after the fact, after that 34 and that 40,000.
Eric Joern: Yeah. Yeah.
Kent Bullard: Anything beyond that.
Eric Joern: 60, 58, $60,000 a month. And
Kent Bullard: I would say
Eric Joern: right in gross profit. Um, yeah, adding a little cushion. Right. I don't wanna factor a little cushion in there. Yep. And I love adding
Kent Bullard: a little cushion.
Eric Joern: It's smart though. It is smart. 'cause again, we are. We are people who, um, generally use what's available to us.
Eric Joern: And if we Right.
Kent Bullard: So if it's available, then we're gonna use it. Unless we've already set it aside and said, no, we're not gonna touch this, then I can't use it for something that I shouldn't be using it for.
Eric Joern: Yeah. And so if we set our goal at 55, and that's the exact number to hit it, right? We're gonna do as much as we need to to hit the 55.
Kent Bullard: Mm-hmm.
Eric Joern: But if we set it at 58 and we hit 58, and even though that's got a little bit of slack in it, that means. That
Kent Bullard: month has to make up for the month. We didn't hit 55.
Eric Joern: Exactly. Another great point.
Kent Bullard: This, this is something that, you know, just in, in, if we're talking about profitability and revenue and all that, one of the things I, I've seen, it's like, look, we, we are hitting this target for 55%.
Kent Bullard: Let's say it's, let's say it's parts margin. We're gonna hit 55% parts margin. Yeah. And what they'll do is they'll say, well, some of these things are underneath 55%. I can't charge that much. It's gonna be 48, it's gonna be 50, whatever that is. Yeah. And then they have one that might be up near 70. And they go, oh, that's way too much.
Kent Bullard: I'm gonna dial it down to 60. It's like, no, no, no, no. You needed that. You needed that buffer to, to make up the difference so that you hit that average again, it's an average, not like. The benchmark you, we wanna hit above it sometimes and, and below it. We can't help sometimes, but they have to even out to hit that, that number.
Kent Bullard: It's the same thing with our cash flow. You're gonna have months where you're gonna do 60,000, 65,000 revenue, but then you'll have months where you're gonna be a lot closer towards where you don't want to be, where you're starting to out kick your coverage. You're starting to be, dip into your cash reserves.
Kent Bullard: Right.
Eric Joern: What happens in January, February, right when our, our revenues naturally debt. Outta seasonality, uh, all of a sudden maintaining the same rate. Then as you do in June or July when things pick up, that generally doesn't work that well.
Kent Bullard: I, I think oftentimes people forget, most of this is two things like we, like right now we're kind of talking about, a little bit about generating revenue, but it's, but most of this conversation is gonna be about expense controls, and the thing is, you can, you can only go down to zero as much as you can.
Kent Bullard: Right? Yeah. You're gonna hit, you're gonna hit that zero point and go, well, I, I can't go any lower because this is what it costs to rent my building. This is what it costs to, you know, pay these, these softwares and licenses or pay the employees and all that. And so then the question is, what are we doing to increase revenue?
Kent Bullard: Yeah. But let's talk more about our expense control. So one of 'em we talked about was marketing. The second we talked about was occupancy or your rent, or your lease, or your mortgage, whatever that is for the building you're in. What are other areas that we might wanna look at?
Eric Joern: Insurance
Kent Bullard: and how do we know that we're out of, out of whack with that?
Eric Joern: Yeah. Yeah. And it, it is where things get more difficult, right. While it, it's a lot easier to spend time concentrating on gross profit. Right. We, there's millions of benchmarks on what we need to pay for a technician, what we need to get for markup on a part. Um. And how to handle that. And, and it's impactful, right?
Eric Joern: But once we get past that, it starts getting more complex, right? Because insurance, how do you know how much you should pay in insurance? And now you have variabilities around, do we provide health insurance for our employees? Where are we located? Um, have ex location has a significant impact, right? If I'm in, if I have a shop in Florida, my insurance load is gonna be astronomical compared to South Dakota.
Kent Bullard: Yeah. And it's, it's important to have some grain of, you know, um, grain of salt there. You know, that's why we look at, in our gear performance groups, we're looking at comparative data. There. Peer groups are a great way to do it. Yeah. Where's that benchmark and where, how do I compare against that? But that doesn't necessarily mean that that's the end all be all.
Kent Bullard: You might have a benchmark that's gonna be a little higher, like. For instance, I had, I, uh, I had a client and they're kind of in a family situation where they sold the business. They're doing it where they're paying out an employee kind of a rate on that, and they're still kind of working in the business.
Kent Bullard: So it's like, okay, well if we, if we looked at all this, their margins are all where they need to be, okay, but they're not, they're hitting it, you know, five to 7% net profit. And it's because their employment expense is way too high because they have too many bodies for what that business is supposed to do.
Kent Bullard: Yeah. Right. And so it's like, okay, well if this is the situation, they're a C corp, how they're, how they're formulated and everything. So it's like, okay, if that's the situation, then our benchmark for net profit can't be 20%. It's gotta be 30%.
Eric Joern: Yep.
Kent Bullard: And then we work back the numbers from there, and that'll end up making sure that you drop the 20% that you're looking forward to at the end of the year.
Kent Bullard: Like you, it's, we use these benchmarks to make strategic decisions about how, how we control our expenses and how we, how we manage these things. So. Other than occupancy, what are we looking at?
Eric Joern: Yeah, so, so we're looking at, uh, we've looked at occupancy, we've talked about marketing, we've talked about insurance.
Eric Joern: And insurance. You can just go, right, you can go shop rates, um, you know. Uh, even us as a firm, right? We participate in a peer group similar to gear performance groups. Uh, and one of the things that we found was our IT spend was dramatically higher than the rest in our group. And we, we went out and we did some market evaluation.
Eric Joern: We found that, hey, you know what? We agree, uh, and we went and. Found a way to cut that expense pretty dramatically. Um, so as you go through your p and l, right, great exercise. It might not be a, Hey, here's a specific dollar I need to hit, but this might say I'm spending much, much more on this expense than anybody else that's in my peer group.
Eric Joern: I should probably go shop and talk to other providers that can provide this service. And it could be something as small as, you know, I've been using Cintas for uniforms and cleaning carpets and all that fun stuff and you know, maybe I have some. Extra people that are in my shop that have nothing going on, or not, not as much utilization.
Eric Joern: Maybe we buy a washer and dryer and clean our own uniforms. And, and I, I think that's probably a crazy idea. Um, but, you know, it's, it's using that thought and creative exercise to come up with concepts like that.
Kent Bullard: I like looking for the gap. So like if I've got a goal set, okay. And we can use that. Same example, you're talking about 34, 40,000.
Kent Bullard: Let's say our goal is 60,000. We have that gap of 20,000 we gotta make. Yep. Right? And so what I, what I often fear is that people go, okay, well. I'm looking for the one thing that's gonna get the $20,000. I was like, no, no, no. It's, it's a combination of things. So what can I reduce in my, my IT expense? By the way, we did this last year and we cut it, uh, down to a seventh of what it was annually.
Eric Joern: Wow.
Kent Bullard: And that was one of those things where it's like, okay, well we saved that much money. Okay. Uh, now we can look at what do we do to increase our revenue. It might be looking at your average repair order, increasing your inspection process, or, uh, building a better sales presentation or adding, adding more value, or even your marketing can curate the types of people that you're bringing in who are gonna value your business more than those you're currently bringing in.
Kent Bullard: So it's, it's all of those different strategies combined to make the difference of that $20,000 gap. Absolutely. You know, it can't just be, I'm looking for the one thing, it's, I'm gonna have things that are gonna add to it. I'm gonna have things that, that I can take away to make that gap happen.
Eric Joern: Right.
Eric Joern: Yeah. It's,
Kent Bullard: and if we do
Eric Joern: that, that 5,000 cuts right? Is, is the principle of it. I mean, think about your personal spending, right? Amazon has probably created a lot more debt in this in the world. In consumer world, it's possible because it's easy. They made it so easy to buy and you know, Hey, it's $10, it's $15, it's $10, it's $15.
Kent Bullard: Yeah.
Eric Joern: And then you look at the month and you spend $800 on Amazon. Oh gosh. And you're like, what did I buy? How often are we doing that Inside of our shops too, right? Hey,
Kent Bullard: my, my wife a little upset with me recently 'cause we, we ended up, uh, deleting DoorDash.
Eric Joern: Mm-hmm. Oh,
Kent Bullard: that's
Eric Joern: a big
Kent Bullard: one.
Eric Joern: Yeah.
Kent Bullard: But it's like those little things.
Kent Bullard: They, they, you know, raindrops make oceans, man. So we covered marketing, occupancy insurance, it spend, let's do one more. What's one other big area that people tend to miss in their expense controls that are not allowing them to get the net profit they're looking for?
Eric Joern: I mean, so, so we, labor is always a, a sensitive category, right?
Eric Joern: And we oftentimes, when we're talking about chops and we focus on gross profit, we're talking about technician labor, but then there's an all sorts of other labor that falls below the line. Meaning we might be paying our service advisors, so right. Are we paying our service advisors correctly and are they right for the amount of volume that our shop has?
Eric Joern: But maybe we have multiple, uh, maybe we are paying an office manager, we're paying a third party bookkeeper and we're paying a CPA.
Kent Bullard: Maybe we're a little top heavy when it comes to our, you know.
Eric Joern: Financial backend.
Kent Bullard: Exactly. Our management suite or whatever that looks like, right?
Eric Joern: Yeah. Or maybe we have duplicate subscription.
Eric Joern: The subscriptions really is, is where we find it's never big dollars. Right? It's, you know, the a hundred bucks, 200 bucks a month. I can't tell you how many shops we've gone through the GL with them. They say, I thought I canceled that. Or, or, oh, we haven't used that in quite a while. And, you know, maybe it was a one time use, you know, it was a labor guide I needed specific access to, to figure out how to execute a certain repair.
Eric Joern: And it's on an autorenew and, oh yeah, I can, on that subscription.
Kent Bullard: I, well, like we even made a switch recently. Um, well. Mid last year, but we went from Slack to moving to just using Google Chat. We had it. We had the company. We're like, oh, I don't know why we didn't do this before, but I mean, when Slack is 500 bucks a month, 600 bucks a month, 700 bucks a month, depending on how many users you have, that adds up.
Kent Bullard: So what are your software subscriptions that you guys are paying for that you're not actually using?
Eric Joern: And it doesn't have to be, you have to cut the whole software, but sometimes you need to cut user seats. We did the same, we did a similar thing with Adobe.
Kent Bullard: Mm-hmm.
Eric Joern: Um, where we had Adobe it, it bloomed because we thought everybody needed it.
Eric Joern: And then we looked at this, you know, next thing you know, we spent $20,000 in Adobe licenses and we said, oh, something's wrong here. So we went and interviewed the staff and turned out about 10% of the staff used it more than. You know, weekly and we said, Hmm, there's gotta be a better, cheaper alternative.
Eric Joern: And maybe these power users need seats, right? Or, you know, we, we operate on a chat GPT team subscription, and while we could just go and say, everybody needs chat GPT. Now that's great. That costs our firm, I think it's like around another $20,000 a year of every single. Employee got that subscription. Yeah.
Eric Joern: But instead we are asking our team to request it. The why, how often are you gonna use it? Are you using a free version with nonsensitive data first? And you're using that on a regular recurring basis because we want ROI out of that product again. Right. Okay. You're using it regularly. Now how can I measure the noticeable improvement in efficiency?
Eric Joern: And now I can calculate an ROI. Does it make sense for me to spend the money on that? Because, you know, it's
Kent Bullard: something that, just a simple calculation of what's my ROI on this is, it could save a lot of of dollars. Um, one we have a, oh, go ahead Eric.
Eric Joern: No, we, yeah, yeah. One interesting. Oh, and we got a good question here.
Kent Bullard: Yeah, we had a, a question. Sorry. What's, what's the question? Is Todd Ainsworth? So what do you think is a good target percentage for social media presence?
Eric Joern: Wow. That's an, that's a, I wish that was an easy question to answer.
Kent Bullard: That's a really nuanced question. 'cause you're talking about marketing in general.
Kent Bullard: Marketing could be anywhere from five to 10 to 12%, depending on if you're maintaining or growing, at least what we've seen. But for me, it depends on your return. So if you're, if you're getting a five to one return on your dollar spend for social media, then yeah, do keep going. But if you're only, if you're getting a one-to-one, that's something to consider.
Kent Bullard: Maybe, you know, another marketing, uh, campaign or another marketing area, uh, like your Google Ads is getting a much higher, uh. Dollar to dollar ratio. So take the expense from that and put it towards there.
Eric Joern: Yeah, I, I, I avoid generalized p and l percentages when it comes to marketing spend. I, I think you have to dig deeper, right?
Eric Joern: Yeah. So, so what is my cost per acquisition, my lifetime value for that customer? So you need to know your gross profit. My lifetime value. So here's how much revenue I have through the lifetime of that customer. So say my average customer visits me 20 times in their lifetime, whatever it may be, and they spend X amount is my a RO, and here's my X amount gross profit percentage, and here's what I had to pay to acquire that customer.
Eric Joern: Whether it's a social media presence, whether it's a mailer, whether it's whatever it may be. Right, and that that will answer your question individually on that. On that decision
Kent Bullard: I was doing, I was doing the maths. If, if they brought, you know, if our clients came in 20 times in their lifetime, it's $750 average pay order, it's around $15,000.
Kent Bullard: And let's say my cost per acquisition is 50. I dunno, I've seen, I've seen a wide range, some, depending on where people are at, they might have population density, they might have to invest more, but, you know, earn from 50 to 150 for your, your cost per acquisition.
Eric Joern: Mm-hmm.
Kent Bullard: Right.
Eric Joern: That's a pretty good ROI.
Kent Bullard: That's a healthy ROI, it's 500, or like, I had somebody who was doing radio ads and they only got three people in, but it was $1,600
Eric Joern: Yeah,
Kent Bullard: a month for radio ads. That's
Eric Joern: not a good ROI Your lifetime value is, you know, $2,200. Right? And then your gross profit is 50% and then it costs you $500 to acquire a new customer.
Eric Joern: So really lifetime value, you get outta that customer is like, I think that was six 12 or something around that. Uh. That's not gonna pay bills long term for your shop. You're not, you're not gonna be able to have that growth. Um, and, and actually when it comes to percentage, I think what something that's real, something that's really important to pair with your marketing cost is your how much cost to be in my building, right?
Eric Joern: Because if I'm on a, if I'm on an interstate, or I'm in a high dense populated area where, you know, people are Googling, uh, looking for an automotive repair shop, uh. It's gonna be a lot cheaper to bring them in the door than if I am off the beaten path in a more rural area. The cost for me to get somebody in the door might be significantly higher.
Kent Bullard: Well, and I. Frankly, marketing is something I really love because I want to challenge those out there. If you've got a marketing budget, be really creative with it. Mm-hmm. In, in, um, embrace those restrictions. Right. So some, somebody I was working with a little while ago, they had like a, you know, $50 off. Uh, if you spend, you know, X number of dollars with us as a promotion.
Kent Bullard: Okay, well I could be really creative with. $25. Yeah. And have fresh baked cookies that I could be giving to my new customers that come in, or, you know, be more creative with that and donate it to a local, you know, community center that is, you know, really embedded in the, in the community and does good things.
Kent Bullard: And it's like you could be so much more impactful with your dollars than you think. And it doesn't necessarily have to be like a transactional thing. It could be very. Cultural, it could be, you know, a lot of the, the value elements there and reinforce the type of people that you were trying to bring in.
Eric Joern: Yeah. You can host an event to help to show somebody how to do a pre road trip inspection of their vehicle. Something like that, right? Gets 'em in the door, makes 'em think about how important the safety and reliability of that vehicle is long term. So, and who's gonna show up to that, to that event?
Eric Joern: Probably your ICP, your ideal fit customer. That's another whole, whole marketing concept you can go to down a rabbit hole of is who is, who is my ideal fit customer. 'cause I see these questions on the Facebook groups, on the forums, you know? Oh, uh. They don't, they won't like that labor rate or they won't like that part markup.
Eric Joern: And, and my question was put a lot of our own biases on that, I feel our own bias is your, is your ideal fit customer? The person that understands what a labor rate would be for, to go somewhere else for a shop or they looking at, Hey, how much will it cost to get my car operating safely back on the road?
Eric Joern: And what am I willing to pay for it? That's generally your, your ideal fit customer and do they value good service fixing, fixing it right the first time and probably time, right?
Kent Bullard: So, so one of the things I want to touch on right now, Todd, by the way, thank you so much for the question. Those of you out there who have any more questions, me and Eric are watching the chat.
Kent Bullard: We want to answer them live while we have you here. Um, one thing I want to touch on is we can talk about these expense controls all we want, but a lot of shops out there I know are likely struggling with one of the biggest hurdles is visibility. You're telling me, you know, you know, why am I not profitable?
Kent Bullard: I could see this, the numbers in the shop management system, but my p and l's not great.
Eric Joern: Yeah.
Kent Bullard: Here's where I'm gonna recommend, you know, we've been working with Eric and frankly, you guys and your team have done the majority of the work, but put together a kind of a, a chart of accounts program build. So if you guys are really struggling to just get it organized and get it clean so you can see what's going on.
Kent Bullard: Um, Eric now has a service that, uh, we're offering through the institute. Do you wanna talk a little bit about that?
Eric Joern: Yeah. Yeah, a hundred percent. And I'll, I'll talk, I'll open up with something we've, we found, we just finished going through this exercise with somebody, and one of the things we found was through their prior accounting process, they had bought some equipment on lease.
Eric Joern: Well, I said I, I guess I contradict myself. They bought equipment on lease, so when people see a lease, they think I'm paying a monthly, I have a monthly expense that I'm incurring for that. But there's a difference between what's called operating lease and a capital lease. So he had a dollar buyout at the end of the lease, which that means effectively we bought that equipment on a loan.
Eric Joern: Called it a lease, so that's called a capital lease. Well, guess what? In the prior year, if we would've treated it correctly as a capital lease, we could have accelerated all the depreciation, taking it in one year, versus spreading that cost, spreading that out over the lifetime of the payments. There's.
Eric Joern: There's cost benefits, that's a whole nother decision matrix. But our goal is something as simple as that is, Hey, hey, we need to educate you around. That's how you handle this. So you have the opportunity to make that decision, right? If you, if you don't do it right, you no longer have the opportunity to make the decision on how I take that as a deduction, and is it an accurate reflection?
Eric Joern: You know, if I own that at the end of the, at, at the end of the day, I don't think I want that in my lease expense account, right? I, I really want. To know, Hey, I now have an asset that my business owns exactly, and I'm going to look at that much differently than I look at something that I have an ongoing expense for.
Eric Joern: And a bank looks at that differently too.
Kent Bullard: So, so frankly, a lot of you out there might be struggling with, well, I don't know what decision to make because we just don't have the visibility. Yeah. I would urge you, I mean, it's, it's worth the time and the effort to get this done. The, the, the money to spend is, is totally worth it.
Kent Bullard: The return on investment. Think about being able to make a. All the strategic decisions that we've been talking about with good numbers so that you can do the math and actually see what the ROI for, you know, the, the expense controls would gain you in an annual year or even for the lifetime of your business over the years.
Kent Bullard: It, it will save you so much money and earn you even more. Um, and I highly advise, reach out to Eric and Kaizen and, and get that service done for you if you don't have clean books.
Eric Joern: Yeah. Yeah. And I'll walk you through the process really quick of how that, what that looks and feels like because this e.
Eric Joern: Even if you, you don't go this route. Think, just even think this through, right? So we start off and we do a call, we, we have a questionnaire, and then we have a call where we talk through the questionnaire and that questionnaire identifies items in your accounting process that we might feel this becomes gaps.
Eric Joern: Then we're gonna address maybe even some operational things that you're doing inside of the shop that aren't even just on the p and l itself. And then we're gonna make sure that that institute GPG Ready reporting, uh, chart of accounts, is loaded into your QuickBooks file. We're gonna make sure we build a system that.
Eric Joern: Matches your shop management system, back to your books. And obviously we're also gonna coach you around your shop management system on making sure you handle transactions correctly, um, in there so you have accurate reporting, and then we're gonna create you a roadmap on exactly how to replicate that every month.
Eric Joern: And you walk away with essentially a, a built accounting system, um, that you can hand off to your bookkeeper. Uh, or you can, if you're executing it yourself, you can execute it yourself or, um, you know, I, I've, I have a feeling in many cases we're going to, you know, provide enough lift for our, our client to, or our, uh, that person that we're working with that they say, Hey, I don't want to deal with this.
Eric Joern: This is much more complex than I thought. And you guys just keep doing it.
Kent Bullard: And I highly recommend getting it done. You know, whenever we start with a new client. That's, you know, we address things like the urgent needs in care and then the immediate next step is how do we gain visibility? 'cause we can't make good decisions that have lasting, impactful, positive results if we don't know what's going on.
Kent Bullard: And that visibility is massively important. Alright. Um, we're kind of in the, the final minutes here with this, uh. A MA. Anyone out there watching now, if you have any questions about, you know, why you're not as profitable as you think you should be, this is the time to ask them. Uh, you know, I was thinking about this.
Kent Bullard: I was in a manager performance group meeting, um, a little while back, and we were, they were doing an exercise on proficiency. Now proficiency is really just how are we optimizing and utilizing the available hours that we have? And this is in conflict with efficiency. 'cause they're like, my guys are my, my technicians are productive.
Kent Bullard: It's like, no, no, no. Your technicians are efficient. So when they're on the vehicles, they are getting the work done in a very timely and efficient manner. However, you're not utilizing all of the available time that you have in the shop. And that comes down to the shop's workflow, right? Mm-hmm. And we were doing some math in between, you know, uh, the groups here, we found $5 million of, of.
Kent Bullard: Unutilized potential.
Eric Joern: Wow.
Kent Bullard: And it's like, it's like, look, and, and, you know, everyone kind of was like hanging their heads. It's like, oh my gosh, we, we missed a fight. It's like, no, no, no. Look, look at this. This is a good thing. Look at all this opportunity we just found. We just found $5 million. Okay. Then it comes down to just improving your workflow.
Kent Bullard: How do we schedule out? Are we, are we maximizing the technician, um, uh, utilization their time? Are we, are we, uh, setting their day up for success? Are we communicating effectively? Are we managing our parts, ordering effectively, or, you know, all those things that come operationally that if you've got the numbers dialed in, and this is where I'm like, this is a frustration of mine.
Kent Bullard: You're working with somebody and they're like, I need more cards. I need more of this. And it's like, if you. Have a system that is fundamentally broken and you want to dial that engine up to, you know, two, 300% of what it's doing. All you're doing is exacerbating those core fundamental issues that are there in preexisting.
Kent Bullard: And so I wanna optimize before I. Increase personally, that's my, that's my statement.
Eric Joern: The worst thing you could do is have to hire another technician because you've increased car count because we're not efficient or we're not optimizing. We're efficient on the car. We
Kent Bullard: might have in our process. You're stretch, you're stretching the work for three technicians across five technicians, and then you've got those additional to, uh, annual salaries weighing down your expense controls.
Kent Bullard: And so again, there, where's my profitability going while I'm paying? Probably far too much for labor 'cause we just didn't optimize the system. Not that any of those five technicians are doing the wrong things. But if you're gonna have five technicians, let's make sure they can produce the work of five technicians.
Eric Joern: And then the knee jerk reaction is, I got a bad technician. Right? Is the first thing that they think of is, oh, they're a 50% productivity, they're a bad technician. No, always start with you and your process and your system and, and. Are there cases I made the wrong hire or the wrong person's in the wrong C?
Eric Joern: Sure that can exist. I'm just gonna
Kent Bullard: assume that people are doing their best first.
Eric Joern: Exactly. Until you rule out that my systems, processes and procedures are not failing them. You can't put it on the employee.
Kent Bullard: Yeah. So we covered marketing, occupancy insurance, IT spend, I love the IT and software. That one is such a time sink labor, right?
Kent Bullard: Um, and then subscriptions. Anything else? Yeah.
Eric Joern: Now, now I have to think through a, a whole p and l. I mean, we never talk, we never do. You don't have
Kent Bullard: them lay
Eric Joern: laid down in your
Kent Bullard: head. Man,
Eric Joern: we, we, uh, we never really talk about parts. Um, and we talk about parts. Gross profit, which is largely managed the shop management system.
Eric Joern: Um. Parts Leakage to me is probably one of the largest expenses that we see that are, that are outside of, I guess, the initial gross profit measurement.
Kent Bullard: So, so let's talk about parts leakage for a second.
Eric Joern: Yep.
Kent Bullard: What is parts leakage?
Eric Joern: What is parts leakage? So, so normally people think about it as, Hey, um, people are stealing from me.
Eric Joern: Usually not the case, but sometimes the case. Uh, but maybe we're not charging for parts, right? Or, Hey, this is too much work for me to tag this on an ro. Um. And, you know, let's talk about a, a, a drain plug gasket, right? Let's say we do 300 oil changes and drain plug gasket costs us 25 cents and we forex it on our, uh, pricing matrix.
Eric Joern: That's a dollar per car. Um. Times 400 cars. It's $400 a month. It's five grand a year right there. And that's just, and I, trust me, I hear, uh, it's not worth me doing that. And I think it's
Kent Bullard: 5,000 bucks.
Eric Joern: That's $5,000. And then you $5. Five grand. I mean, that's a nice, that's a pretty decent vacation. Um, you know, you have those personal goals, Hey, $5,000.
Eric Joern: If you, uh, you know, let's just say your cost of customer acquisition is 20%, right? That's, that is now. A hundred thousand dollars in new revenue if my math, maths,
Kent Bullard: yeah. If we're, if we're not, if we're not ordering the correct part or a, you know, maybe a cheaper part, we're gonna end up paying warranty on that.
Kent Bullard: Or we're able to eat the cost there. Are we not managing our core properly? Right.
Eric Joern: Core return process? Are we not doing a statement reconciliation? Are we not comparing our parts usage report back to all the parts that are tagged on a repair order? I mean, uh, it
Kent Bullard: just, that can save you, that can save you so much money in the long run because you've got all this, this, um.
Kent Bullard: Inventory that essentially isn't being leveraged the way that it should be. Same with the labor inventory. We're not, we're not utilizing it as best as we can.
Eric Joern: Yeah. It's, and again, it's leaking, right? It, it's not, we're not mis generally, we're not mispricing, we're not, we're just, we're just letting stuff drift, right?
Eric Joern: We're, we, we, we haven't sharpened our processes, systems, and procedures to account for all these things. I mean, I'm working, we're working with the three location CHOP group, and we did, uh. If, I don't wanna call it an audit 'cause we didn't do an official audit, uh, but we did an analysis of, of their parts spend versus their parts usage inside of their shop management system.
Eric Joern: And we found a hundred thousand dollars gap across three stores in a 12 month period. Um, you know, and then we've narrowed it down to, hey, what we've pur my parts purchase is logged in. My shop management system accounts for 50% of that, and then the other percent just is not accounted for at all.
Kent Bullard: This is what drives me a little nuts is like, it's not like you're, a lot of the stuff that we're talking about, it's money that's already there.
Kent Bullard: It's, this is stuff that's already in the shop. It's not doing any access, it's just being a little more, um, judicious with what we're doing. Right. I'd love to take a moment here, just those of you who've been watching the live. Just to talk about some of these categories. I'd love to know in the comments where you feel, uh, or where you think you could probably do a bit of expense control.
Kent Bullard: So those categories are marketing, occupancy, insurance. I'm gonna, I'm gonna put it, spend and subscriptions together. That makes sense. Uh, labor. And I don't mean tech wages, I mean, you know, payroll,
Eric Joern: overhead,
Kent Bullard: overhead,
Eric Joern: labor.
Kent Bullard: And uh, and the last would be. Uh, parts leakage. Where do you guys feel that you could save some dollars there?
Kent Bullard: Lemme know in the comments.
Eric Joern: Oh, yep.
Kent Bullard: Sorry. Go ahead.
Eric Joern: I, I, I might, while people are, are punching that in the comments, um, another overhead expense and, and again, doesn't move the needle, but everybody can do it and it's a very easy thing to go shop your card. Credit card processing fees.
Kent Bullard: Oh my gosh, yes.
Eric Joern: And you know, I, I know there's a whole dynamic now around, uh, should I pass that onto my customer at this point or not?
Eric Joern: What, what's your take on that?
Kent Bullard: I, you know. He, here's the, here's the thick of it. If, if I wanna make the 20% for fair profit, my, my consumer's gonna pay for all of that. Yeah. Regardless, either it's gonna be loaded here or loaded there. It's gonna be in my, in my labor, in my parts. It's gonna be, it's gonna be somewhere.
Kent Bullard: I think if you're talking about eating the, the credit card processing fees, just, just make sure you're, you're compensating it somewhere else. And frankly, I'd rather have a consistent experience for all of my customers, so I just eat that. But, but make sure it's calculated somewhere else. It's a better customer experience, right?
Kent Bullard: Mm-hmm. If it, if it's negligible where it is, then look at the customer experience.
Eric Joern: Yeah.
Kent Bullard: Okay. And then the last bit of that is. Um, I mean, think about the savings. If you're processing a million dollars in a year and you can save a half a percent on, on credit card fees, how much is that?
Eric Joern: There's your, there's your, there's your $5,000 vacation again.
Kent Bullard: Yeah, it's a lot of money. It adds up. Um, so we're at, we're just at the end here. I did wanna say, um, you know, we're doing the institute's doing a, a launch live stream on, uh, Monday. That's gonna be 1:00 PM Mountain Time, 2:00 PM Central. We'd love for you guys to tune in. We're giving away, uh, some fun prizes and we're doing the launch of the Odd Academy, going into some details, there's some training, and we'd love for all of you to be a part of that.
Kent Bullard: Um. Eric, this has been fantastic. Uh, those of you out there who, who are curious about our financial intensive will post, you know, in the follow up here, some information there as well as the chart of accounts services or, I, I don't know what we're exactly calling that, but getting your books cleaned up.
Kent Bullard: Um, you guys do a fantastic job. So check out, uh, Kaizen CPAs for that. Any final comments on this?
Eric Joern: Uh, hey. Everybody should walk away from this, this meeting right now. Go, go look at your general ledger, start looking at those expenses that you're paying for. What don't I need, right? Am I in too big of a QuickBooks subscription?
Eric Joern: Am I using, did I pay for HR services in my payroll processor that I'm not using? All these things you, if you spend some time going through it, I bet you'll find probably that $5,000 vacation today.
Kent Bullard: Awesome. Eric, thank you so much for joining me. Those of you out there, uh. We're, are we hanging out for a little bit?
Kent Bullard: No. Uh, follow up. We'll post the recording of this later. Uh, thank you all for being here, and we'll see you on the next one.
Eric Joern: Thanks everyone.

191 - Ask Me Anything: How to Set a Labor Rate That Actually Reflects Your Value

191 - Ask Me Anything: How to Set a Labor Rate That Actually Reflects Your Value
February 11, 2026 - 01:05:37
Show Summary:
This AMA explains how to price labor fairly and profitably. Lucas and Cecil break down why book time often misses real world steps and shop friction. They argue shops should charge for full value, not fear being the highest priced option. The episode covers building confident service advisors through financial literacy and clear scripting. They outline how to defend diagnostic fees by separating testing from code scanning. They warn against routine discounts and show how underpricing destroys reserves and stability. The conversation closes with practical math for labor rates, technician pay, and productivity.
 
Host(s):
Lucas Underwood, Shop Owner of L&N Performance Auto Repair and Changing the Industry Podcast
 
Guest(s):
Cecil Bullard, Founder of The Institute
 
Show Highlights:
[00:01:00] – Book time versus rate changes debate[00:02:10] – Why book time ignores real work[00:04:00] – Customers pay for all inefficiencies[00:05:30] – Stop selling transparency and time talk[00:10:40] – Advisor confidence starts with numbers[00:14:15] – Sell diagnostics as cost saving testing[00:22:00] – Labor rates lag inflation and reality[00:36:55] – Discounts can bankrupt your shop fast[00:42:30] – Slow times need calls and scheduling[00:58:10] – Pay plans must reward productivity
 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/O0tKJR3Lxv8
 
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
Lucas Underwood: Oh, we wanna thank you for being here, everybody. I hope y'all are doing fantastic. I am so excited to be here. My name is Lucas Underwood with Changing the Industry podcast, and Ellen, in performance here in Blowing Rock, North Carolina. I am joined by the one, the only Cecil Bullard, and we're gonna be talking about labor rates today.
Lucas Underwood: Cecil, buddy, how you doing?
Cecil Bullard: I'm doing great. Yeah, I'm doing great. Luke
Lucas Underwood: Cecil, man, I'm telling you what, I'm so excited for this because this morning a question came up about exactly this. It was like to the t some of the stuff that Yeah, absolutely. Some of the stuff we've been talking about, some of the things we were saying, Hey, we need to cover this in today's webinar, a MA.
Lucas Underwood: And so my buddy Dan asked a question, and Dan, for those of you who don't know him, he is probably one of the most solid shop owners you could ever meet. Absolute standup guy. And he threw out a question that stirred up a lot of emotion, right? And there's a lot of perspectives on this and Dan shared his perspective.
Lucas Underwood: I don't think there's anything wrong with Dan's perspective, Cecil, but I wanna talk about it and I wanna break this down because I have a different perspective than Dan does. So is it okay if I read you this post real quick?
Cecil Bullard: Oh please.
Lucas Underwood: Alright, sounds good. Dan says, if we're using the manufacturer, labor guide is the baseline, but then automatically adding 20 to 25%.
Lucas Underwood: To every job because the guide is wrong, aren't we? Basically saying we don't trust the system we claim to follow. If you need 25% more revenue, why not just raise your labor rate, 200 to two 50? Same money, way cleaner, way more transparent. The guide should set time. Your rate should set value. And I'm not saying every job is the same.
Lucas Underwood: Older vehicle, rust belt stuff, diesel trucks, specialty work, those absolutely justify different labor rates or categories. Charge more for harder work all day long. That makes sense. But changing the rate is honest. Changing the time feels like we're gaming the book. If we all say we use a standard, then we should actually use the standard.
Lucas Underwood: Otherwise, it undermines our credibility as an industry. Seems simpler. Just to price your hour correctly and leave the book time alone. Now Cecil, I wanna share my perspective first. As a shop owner, right? I've, I have worked with a number of manufacturers and folks from the manufacturers over the years, and I understand how book hour is calculated and from what I have gathered and I've not seen the process.
Lucas Underwood: I'm not saying this is a hundred percent accurate, but from what I've seen of the process, they take a vehicle that is a new vehicle, they put it into a shop and they lay out the tools required for the job. They lay the part out in front of the technician and he changes that part three times. And after the third time it's changed.
Lucas Underwood: They average that time out between each one. He gets a coffee break, gets to sit down for a few minutes rest, and then go back and do the job again. They average that time out. That doesn't count for pulling the car in. It doesn't count for test driving the car when you get done. It doesn't count for riding up the ticket and putting the documentation in.
Lucas Underwood: And so I believe in my shop, if I'm gonna pay my guys based on some type of production based pay system, that depends on hours. It's only fair to add time for those things because the book doesn't account for that. And so that's what I shared with him. And I also personally believe that those labor rates, we should have variables based on the skill level associated with each one.
Lucas Underwood: So I think he's right about that. See someone, when you hear that post, what do you think? Make
Cecil Bullard: a couple of things. First of all, when Labor, eight times the way that you described it were decided and how they're decided even today, they don't account for all the things that the technician does. I call those things brown bananas.
Cecil Bullard: Okay. I tell the banana story, people have heard it, but my grocery store's gonna buy 5,000 bananas today. Yeah. And this week. And they're gonna sell, they're not gonna sell 5,000. Some of those bananas are gonna get eaten. If you wa, if you've ever been through your grocery store and you see a banana peel up in the milk section in the back, somebody ate a banana as they were walking around.
Cecil Bullard: And they basically ripped the grocery store off for a banana. And then some of the bananas are gonna go, they're gonna get brown. And people don't like brown bananas, so they don't buy 'em, and they end up getting thrown away or used in banana nut bread or whatever. But you have to pay for the brown bananas.
Cecil Bullard: And it's something I don't think we understand in this industry is that it doesn't matter the inefficiencies in my business, the customer has to pay for all inefficiencies, all brown bananas, everything. So number one. It, the book was done a very specific way. And by the way, the manufacturers have always multiplied the book time by 1.5 to two.
Cecil Bullard: Yeah. And we're now getting to about three, right? 1.3. And is that honest or dishonest? Let me cover that. Number one, I'm gonna do what it takes. That's legal, moral, and ethical to put 20% net in the bottom of my business. All right? And some of the things I'm gonna do, I'm not gonna be transparent.
Cecil Bullard: This whole idea of transparency, are you gotta be shitting me, right? I'm sorry, I just said a word. I probably shouldn't, but, okay.
Lucas Underwood: Sorry, Ken's not watching. It'll be fine.
Cecil Bullard: Do you wanna be, do you want to go into a restaurant that has transparency? No, I've worked
Lucas Underwood: on the other side of that.
Cecil Bullard: Okay. And so let's just stop talking about transparency. Like we have to tell the customer everything and be just upfront about everything, number one, I don't want to I don't know. I think I'm a very moral, very I have a real good sense of morality and all of that. Even my company has like a three and a half page statement about all that, just to be clear that we don't make mistakes in that area.
Cecil Bullard: But I'm sorry, I'm not gonna be completely a hundred percent transparent with you. Lucas, I'm sorry. I can't do that, right? Yeah, because I don't iage
Lucas Underwood: want you to there know there's how many sausage is
Cecil Bullard: made that occasionally there's rats in the back or cockroaches or, that I trimmed the green parts of the meat off and only kept the good parts of the meat so that you could have it right.
Cecil Bullard: Whatever. I don't want you to know that. Okay. And number two, why would I ever talk to a client about the time on a job?
Lucas Underwood: Yeah. I,
Cecil Bullard: other than I'm gonna need the car for two, two days.
Lucas Underwood: Yeah.
Lucas Underwood: Now are there some states that mandate it or are there some states that require
Cecil Bullard: it? No, not that I know of at this point.
Cecil Bullard: It doesn't matter. In California and certainly Utah I believe New York Washington State, these are not Utah, but the others are very much for the consumer and less for the business. Utah's more business oriented, less consumer oriented. But in those states, the law basically says that what you have to do is you have to let the customer know what you'll be doing and what the costs will be by before you do the, as they authorize the work.
Cecil Bullard: They have to authorize that. So even in Utah like even my shop, they won't tell me the whole cost. And which drives me nuts. 'cause I think you should be really upfront with your client, look, we're gonna do these three things, and when you come in, the bill's gonna be $2,100. And so now how do we help you go about your day?
Cecil Bullard: Do you need a car? Do you need a loaner car? Do can you, are you all right without one? What can I do for you? Assume close, redirect assume close redirect. And, but I'm never telling a customer about the time. I'm not saying, oh, by the way by the book, this is two hours and we're gonna charge you, $240.
Cecil Bullard: Oh, wait a minute. That's $120 an hour. There's a shop down the street that says they're $95 an hour. There'll, there will always be somebody down the street. And playing games about it all too, which I hate. We've got a prominent guy. He's got his own podcast. He talks about free diagnostic all the time.
Cecil Bullard: Except it ain't free.
Lucas Underwood: Yeah. Yeah.
Cecil Bullard: You want to talk about, excuse me, deceptive. Tell your clients they're getting free diagnostic and then just charge every other client an extra seven or eight or $9 an hour Yeah. To cover that expense
Lucas Underwood: Or charge free, say you're doing free diagnostics. Re do a code scan and start changing parts.
Lucas Underwood: Right?
Cecil Bullard: Yeah. And by the way, that's not what's best for the client.
Lucas Underwood: Yeah,
Cecil Bullard: right.
Lucas Underwood: You're percent right. You're a hundred percent. And that's my thing too, is like my whole drive, everything is about serving the client at a high level. Yeah. And I'm with you. I don't share the time and some of the things that came up, like last night we were talking about another post that came up and there was a post where somebody had just searched on Google, how much time does it call for to replace this?
Lucas Underwood: And it gave them the book time for a specific job. And I think this creates more of a divide. When you start getting just a book or below book, I think it creates more of a di divide between the technician and the shop. It creates more of a divide between the technicians and the industry and they're looking at it, especially if they're paid flat rate or some type of hybrid system, and they're saying, Hey dude, I'm getting taken advantage of here,
Cecil Bullard: but if I have
Lucas Underwood: a, this isn't right.
Cecil Bullard: If I have an hourly rate and it's your hourly rate, it's 36 bucks an hour, $32 an hour, whatever it is, then if I ask you to take the trash out, you take the trash out. 'cause I'm paying you, right? I'm the manager, owner, whatever. Or if I ask you to clean your bay, or if I ask you to, I don't know, help with a car or something, you just do it.
Cecil Bullard: Because you're already paid. If you're in a hybrid system, which is 60% of your pay comes as a, as an hourly rate, and 40% comes. Now when I'm asking you to do extra stuff, it's gonna hurt you financially. It's gonna affect you financially. And so that starts to create that divide. Yeah. So in my shop, when I charged 1.3 on the labor, I gave my tech credit for 1.3 because that's what I realistically felt that the tech should have with the paperwork and with the test drive and the verification.
Cecil Bullard: Yeah, absolutely. And all that kind of stuff. And that helped me have good productivity, helped my techs feel good about themselves, which meant that they actually, Maslow we can't, if we don't feel like we're gonna pay our bills, if we don't feel like, if we feel like we're being cheated, et cetera, we can't think about how do I do that job better?
Cecil Bullard: How you know God Exactly.
Lucas Underwood: A
Cecil Bullard: hundred
Lucas Underwood: percent,
Cecil Bullard: et cetera. The
Lucas Underwood: base needs have to be met.
Cecil Bullard: Yeah.
Lucas Underwood: And I'm a hundred percent with you now. We've got an incoming question. Kirti, I do wanna say this. We talk about in the industry I just give a price for the repair. I don't talk about labor charge or parts or anything like that.
Lucas Underwood: I just talk about repairing the vehicle. Here's the price to repair the vehicle. Cecil Chad's got this question, says, thank you guys for doing this to help us out. I have a service advisor who is well intentioned, but doesn't sell with confidence. I've spent years a few years with formal training and I don't know how to get her to sell with more confidence.
Lucas Underwood: Any suggestions? I'll tell you, Chad, from my perspective. I think it's a lot about them understanding why we're doing what we're doing. So many employees do not understand the financials of the business. And Cecil and I had a talk about my advisor just the other day, or my shop manager, about the importance of her understanding the numbers.
Lucas Underwood: She's got to understand the numbers to see the value in what we do and to have confidence in what she's telling her clients. And so if she can't look at that and understand, hey, we're not making all of that, we're not keeping that money, yes, that's expensive, but if she can't see why it's expensive, that's a problem.
Lucas Underwood: Cecil, what do you think? I,
Cecil Bullard: I also think a good service advisor has a disconnect button.
Cecil Bullard: It's not my car. I didn't, yeah, I didn't buy it. I didn't build it, I didn't drive it. I didn't break it. It's not my, it's not wallet. You can't sell in
Lucas Underwood: their
Cecil Bullard: wallet. It's not my wallet.
Lucas Underwood: Yeah.
Cecil Bullard: And so I have to disconnect myself from how I feel about spending money on my car.
Cecil Bullard: Yeah. I hate, I would hate being the shop that Cecil takes his car to because I know what good customer service is, and I know when it's not. And I also know when someone's jing my chain.
Lucas Underwood: Yeah.
Cecil Bullard: And and I also know when a service advisor's not confident in what they're telling you they're doing.
Cecil Bullard: I listened to phone calls. I just had a meeting with a service advisor a couple days ago, and I listened to two phone calls and I'm about ready to shoot myself. To have to listen to that. There were pauses, there was ums and ahs. There was the tech says blah, blah, blah. There was, very much a lack of confidence.
Cecil Bullard: And you're not gonna sell that way.
Lucas Underwood: No.
Cecil Bullard: You have to disconnect your personal thoughts of what I might do on my car. And by the way, my car, you've seen mine, my car is perfect. It's gonna be taken care of. And it doesn't matter to me what it costs. It's gonna be what it is. Still. I feel so bad
Lucas Underwood: for those Ford service advisors.
Lucas Underwood: Something
Cecil Bullard: Yeah. That have to deal with me.
Lucas Underwood: Yeah. I couldn't imagine
Cecil Bullard: still. And I'm like, Hey you, you told me you were gonna call me at one. It's two 30. I haven't, I'm having a call from you. What the hell? That's it. And oh, I'm sorry, Cecil. But if you can't help them understand the whys and they can't put two and two together.
Lucas Underwood: Yeah.
Cecil Bullard: This is probably also a person that's struggling with their own finances. With making money. They've never made any real money. They can't imagine Yeah. Paying $3,000 to have their car repaired because 3000 would, they wouldn't be able to pay their rent. They'd be kicked outta their apartment or their house, whatever.
Cecil Bullard: Absolutely. And man you have to, I don't know. You, I would say you have to have a disconnect button that you say, it's not my $3,000. It's not my, it's not my concern. I had a client recently say, Hey Cece, you've talked about financing that every shop should probably have some financing.
Cecil Bullard: So I've looked into all the financing. It's 24 to 30%. I said, yeah. Yeah. It's unfortunate that people put themselves in a position where they have to spend 24% to finance the repairs on their car, but it's not my fault. Yeah. I just, need to be able to take care of their car.
Lucas Underwood: I, I had an experience years ago and I had an advisor here that was very much in the same boat.
Lucas Underwood: And I'll never forget, I had an older gentleman that came in and when he came in, I was talking to him and I, the advisor's standing there and he's in his seventies, he's retired. And I said, Hey, can you tell him how it is that you can afford the repairs on your vehicle? And he said son, he said, my dad told me when I was very young, he said, the minute that you can have an IRA and you can start putting money in that IRAI want you to put money in it, I never want you to stop.
Lucas Underwood: And he said, so I started at $60, then I went to a hundred dollars, and then I went to $200 and I maxed it out. And he said, I got to the point, I maxed that out. And he said, I stopped putting money in it when I was 60 some years old. And he said, now I've got six and a half million dollars in the bank. And he said, look, I'm just telling you that, you can live like this as long as you're smart with your money.
Lucas Underwood: The. Folks that are on that front counter, if they've not been smart with their money, it impacts their perspective. They can't see clearly if they're not making enough money they can't see clearly. And the other thing, I'll tell you, I learned this a long time ago. Send your service advisors to another shop and let them buy a service at another shop and see what that experience is like.
Cecil Bullard: Yeah. '
Lucas Underwood: cause you're gonna find out what your value is real quick.
Cecil Bullard: I like to go to a quick lube like a Jiffy Lube once a year, just, and then I take it to the shop and have the oil changed and checked and all that, but I like to go have
Lucas Underwood: plugs, not sideways.
Cecil Bullard: Yeah. I like to go have the experience because it helps me understand the difference of, yeah.
Cecil Bullard: What a real experience is and what it isn't. I, let me add on this. This particular service advisor if they understand the numbers and I've gone through why the shop needs to make 20% and how that's really not 20% when it's all said and done. 'cause I have to pay taxes and I have to invest in the company in order to make sure everybody gets what they need.
Cecil Bullard: And I have to provide medical and dental and 4 0 1 ks Yeah. And all that kind of stuff today in this. And at the same time, we have all of these techs bitching about not getting paid enough, which I agree with him a hundred percent. And I still have a service advisor that cannot or will not sell with confidence.
Cecil Bullard: I've got a problem. Yeah. I've got a real problem and probably after two years it's not gonna change. Yeah. And maybe there's another, maybe the job of CSI, where it's like making phone calls and doing some marketing and tracking some numbers for me is a great job for that person.
Cecil Bullard: But selling at the service counter, one of the toughest jobs I've had in my entire life
Lucas Underwood: Yeah.
Cecil Bullard: Is not for everybody.
Lucas Underwood: Yeah, you're exactly right. And I'm gonna tell you, I know this is a little bit off topic, but I've done it with technicians and I've done it with service advisors and I've tried and tried to make it work.
Lucas Underwood: And I've got people who really dislike me because
Cecil Bullard: Yeah.
Lucas Underwood: I let it go for too long and it's I wanna be a technician. I'm a good technician. I'm gonna be a technician. No, you're not.
Cecil Bullard: But you also have to think, you have to think about this too. Frankly, I'm not responsible for only one person.
Lucas Underwood: Yeah.
Cecil Bullard: When I own the shop, I'm responsible for everybody that works for me and their families. And if I have one person, that was a
Lucas Underwood: hard one for me.
Cecil Bullard: Yeah, that was a hard, I have one. If I have one person that's screwing it up, whether that's my service advisor or a tech or I don't know, whoever gets up to me to take care of that, because it's not fair to everybody else.
Cecil Bullard: If my service advisor can't sell with confidence and I'm gonna have a lower average repair order, I'm gonna have lower productivity, which means I can't pay my tax as much as I should. Probably can't pay my service advisor as much as I should, and I'm not gonna take home the money that I should. So my family's gonna be affected.
Cecil Bullard: And and it is, it's not right.
Lucas Underwood: What the problem is that we always get attached to those people and we believe. They're also attached to us and feel the same type of loyalty we feel to them. And I think the manager situation I went through last year is a perfect example of that.
Lucas Underwood: I held on too long, we talked about it, we went over it over and over again. You told me from the word go, I don't know if this is the right person then, Aaron told me, I don't know if this is the right person. I think there are a
Cecil Bullard: couple of times where I told you we need to get rid of this person.
Lucas Underwood: Yeah. Period. Oh yeah. And I knew And you knew. I knew. And I was telling you I knew.
Cecil Bullard: Yeah.
Lucas Underwood: But I'm still paying the effects of that right now. I, we just had January and February. So this big ice storm comes through.
Cecil Bullard: Yeah. Terrible.
Lucas Underwood: And 'cause we're up in the mountains, it was like four inches of sleet and then it rained on it, and then it froze.
Lucas Underwood: Solid. They were taking equipment, trying to dig the ice up and you can't get the ice up.
Cecil Bullard: Yeah.
Lucas Underwood: And so it's finally melting now and cars are flooding in the shop, but we went through four weeks where cars could not get here. They couldn't get out.
Cecil Bullard: Yeah.
Lucas Underwood: And so like it completely zonked the shop of all of its money.
Cecil Bullard: So here's another reason to charge what you need to, because not only do I, I need three months worth of operating capital in the bank.
Lucas Underwood: But here's
Cecil Bullard: the thing. If I wanna have a safe, secure business, I need three months worth of operating capital in the bank. And if I don't charge enough, I can't have that.
Lucas Underwood: That's where I'm going with this, is that, that the reason I didn't have it is because I kept somebody that was not the right fit for the shop. Yeah. And it zonked the funds back last year because they kept making bad decisions.
Cecil Bullard: Yeah.
Lucas Underwood: And so at the end of the day. I go and I terminate that person.
Lucas Underwood: And you know what they did? I said, dude, I don't really care. It's fine. Like, why are you upset? Why are you bothered by this? Yeah. It's just a, it's just business. I don't care. Just a job.
Cecil Bullard: Whatever job. Who cares?
Lucas Underwood: And I'm over here dude, I've been over here like suffering and beating myself up for months.
Lucas Underwood: This, and you're telling me you don't care
Cecil Bullard: for
Lucas Underwood: months? Yeah. And so we gotta be careful where we show that loyalty to and,
Cecil Bullard: I think, I think that we need to be loyal. I always say I'm willing to do anything for my employees except their job. I, as long as you're doing your job and I need to define what that is and the results I want, and do that well, yeah.
Cecil Bullard: Then I'm as loyal as anybody could be. I'll take money outta my pocket. To help you out. Yeah. And I know you will, and I know most owners that I know will do that.
Lucas Underwood: Yeah.
Cecil Bullard: But if you're not doing your job, if you're not being loyal to me and to the company. I just had a whole thing about company men and company people.
Cecil Bullard: When you have a manager that you pay a salary to and a decent salary, that person needs to be on the side of the company. And by the way I would say the same thing with the service advisor. If we've set our prices the way we've set them, whether and whether or not we're we raised our labor rate 30%, or we put a 1.3 on our labor, yeah.
Cecil Bullard: Times, whichever, however we did it, and the price is the price, then the person that's a loyal person to the company has no problem telling the customer that's the price.
Lucas Underwood: Yeah.
Cecil Bullard: Otherwise, you're not loyal to the company. You're loyal to whatever your fears, your whatever and what can the client do to you?
Cecil Bullard: That's the other thing. I've never been hurt by any client that I didn't allow them to hurt me. Yeah. So you at the service counter, you can't hurt me. You you can't. And. Do I care? Yeah. I kind of care. I want you to buy, I want you to be happy. I want you to be our client, but if you're not, I'm done.
Cecil Bullard: Yeah. I don't have any more time or energy for that because the 85% of the people that want to bring their car to my shop, I need it for them.
Lucas Underwood: Yeah,
Cecil Bullard: right.
Lucas Underwood: You're exactly right. You're exactly right. And man, I'm telling you, it's just like these service advisors who go in and adjust the numbers, and it's dude I gave you a threshold.
Lucas Underwood: I gave you the numbers. You can't just keep lowering every job.
Cecil Bullard: I'll Yeah, I'll choke you out.
Lucas Underwood: Yeah.
Cecil Bullard: I have to make ano I we have to make a certain, some points here.
Lucas Underwood: Yeah.
Cecil Bullard: All right. Now in 1980, my shop was $70 an hour. Palm Springs, California. Yeah. And I don't know what the average was in 1980, but it was probably close to that.
Cecil Bullard: And I took that $70 an hour and I raised it by 3%. Up to the year 20 25, 20 26. Right now, there would not be a shop in the United States under $264 an hour.
Lucas Underwood: Yeah. If you had done that, just
Cecil Bullard: followed inflation. If you'd just done it 3%, which is just normal inflation.
Lucas Underwood: Yeah.
Cecil Bullard: Forget the fact that in 1980 I didn't have half the regulations, my insurance costs a lot less my, all kinds of things.
Cecil Bullard: Even HR stuff. I never worried about being sued until a few years ago. And now it's like I can't, we had a guy that we let go white guy over 55. By the way, that's a protected class. I'm not supposed to terminate that person. It's, things have changed so dramatically and there's so much liability now that we didn't have in 1980.
Cecil Bullard: I can't even, Ima, at 2 64, it's. Still not enough. And I know what people are gonna say, you're half the people out there are gonna go wait a minute. See? So there's a guy in my neighborhood that is still at $65 an hour.
Lucas Underwood: Yeah. So what,
Cecil Bullard: right? Let him be 65. Let him take all the crap and all the cheap customers, and all the people that, that wanna buy, I don't know, Walmart parts or white labeled crap parts and put 'em on their car and Yeah.
Cecil Bullard: And let 'em be that. So what should we be? I believe it or not, I have a shop right now, it's about $320 an hour and I'm really happy about that. But my, our average shop in the United States for the Institute probably right now is Pushin in the one eighties, one nineties.
Lucas Underwood: Yeah.
Cecil Bullard: Now the last,
Lucas Underwood: and we just raised mine again.
Lucas Underwood: We just came up a little bit more. Yeah.
Cecil Bullard: And the last survey that was done, I think it, it was either tech metric or it was parts the parts guys.
Lucas Underwood: Yeah, parts
Cecil Bullard: two. The average was like 1 26. In the United States. So how do you pay a tech a, a master tech who's gotta buy tools and who, who's gonna bust their knuckles and work their butt off?
Cecil Bullard: How do you pay them 30 bucks an hour?
Cecil Bullard: And have a happy master tech and charge 126 and still make the profit that you need.
Lucas Underwood: Yeah.
Cecil Bullard: And by the way, 26,
Lucas Underwood: I tell people all the time that there has to be money, right? Yeah. I have these meetings with these techs and I'm like, Hey. And I do the same thing with my guys.
Lucas Underwood: Hey,
Cecil Bullard: yeah,
Lucas Underwood: I get that you wanna make more money, but we have to have production. There has to be production there.
Cecil Bullard: Yeah. We've
Lucas Underwood: got another question coming in.
Cecil Bullard: Yeah. Production's a thing that kills us in our,
Lucas Underwood: yeah. Ab it is in our profitability. It absolutely is. Yeah. Oh, very cool. I know this bunch right here.
Lucas Underwood: Good afternoon guys. If most other shops in our areas charge little to no diagnostic fees, we charge higher than our labor rate. How can we help clients understand the value of testing? Oh, buddy. I just tell 'em like, Hey, go over there. They can do the testing and they can fix it, and when they don't fix it, you can bring it to me and I'll get it right for you.
Lucas Underwood: Especially on the diesels. I have no problem with that. Cecil, the way I've always done this is I have always been very transparent about it. I know you don't necessarily like the word transparent, but I've always explained to them this is the most advanced part of our job, and in this town we're known for doing the most advanced testing.
Lucas Underwood: Of anybody up here. We have lots of very high-end equipment that allows us to do this. Have lots of subscriptions, lots of OE tools, and we have the equipment that the manufacturer has to work on your vehicle here in shop. And so we have very highly trained staff. Now, what I'm gonna explain to you is that a lot of these shops aren't actually doing what you think they are.
Lucas Underwood: They'll say that they're doing diagnostics, but really what they're doing is a code scan. And a code scan is simply that code's like a zip code. You put that on an envelope, drop it in the mailbox. It might get it to the right town, but it's not gonna get it to your door. It just gives us an area that the problem exists in.
Lucas Underwood: And so a lot of shops take that and they use that to try and sell additional parts. We don't do that here and that's why I charge you more for testing so I can be upfront and clear with you. And that way we don't go broke trying to figure out what's wrong with your car. We actually get to the bottom of what's wrong with your car.
Lucas Underwood: And so I think a transparent conversation that sense is what's worked best for us. What about you, Cecil? What do you think?
Cecil Bullard: They're moving my camera around.
Lucas Underwood: I know, right? I'm
Cecil Bullard: busy
Lucas Underwood: now.
Cecil Bullard: So the I have a script that I have used for years and years, lucas, the least expensive way to fix a vehicle and take care of a vehicle is to have a technician that knows and understands that vehicle.
Cecil Bullard: Do a proper diagnostic.
Lucas Underwood: Yeah.
Cecil Bullard: So that we know what's wrong and we can make intelligent decisions about that service or repair, and so that we don't put parts and do things on the car that aren't necessary.
Lucas Underwood: Yep.
Cecil Bullard: It will save the average customer thousands and thousands of dollars over the life of their vehicle if they have a proper diagnostic done.
Cecil Bullard: And I've had people go what if it is the, thermostat. If it is the thermostat as your cousin told you, then at the very least we will know. Not only that we verified that was the problem, but we'll also know if that was caused by something else. And we'll know that when we fix the thermostat that the car will be in, the vehicle will be in great shape.
Lucas Underwood: Do you know how to shut 'em down? You know how to stop 'em dead in their tracks? No. You say, Hey, listen, I've got this. I've got this thing that I do in this situation. We can do it together if you'd like. And they say, what? And I say, Hey, call 'em up. Put 'em on speaker phone and let's ask them if it doesn't fix the car
Cecil Bullard: now.
Lucas Underwood: Are they going to pay you back for the repair or make the proper repair if it doesn't fix it? Because I am.
Cecil Bullard: Yeah.
Lucas Underwood: And they say, huh? I said, yeah, just give 'em a call and ask Hey, if that's not the correct diagnosis, are they gonna give you your money back for the parts? Are they gonna pay for the labor?
Cecil Bullard: I would love it if it doesn't fix the
Lucas Underwood: car.
Cecil Bullard: If the, from the pet boys in the auto zones. If the if, it was like, oh, so I'm gonna buy this part. I'm gonna take it to a shop, or I'm gonna tell the shop that you coded my car and you told me. And if that, if I take it to the shop and they do this work and it doesn't fix it, are you gonna pay my bill?
Cecil Bullard: Right.
Lucas Underwood: Yeah, exactly. You gonna,
Cecil Bullard: the,
Lucas Underwood: oh they, you wanna see that, you wanna see 'em scramble a little bit and I've got shops around me who brag about how cheap they are and they brag about all this stuff. And one of the things that I've dealt with over all these years, being in the industry and doing the podcast and talking to all these people is this extreme fear.
Lucas Underwood: Being more expensive than somebody else. And I tell 'em that it's like they couldn't imagine, oh my gosh, I charge more than someone else. And I ask 'em, I'm like, Hey, let's just be really transparent about this. Did you buy the cheapest TV in Walmart? Because they still sell a 14 inch black and white tv.
Lucas Underwood: And they said, no, I wouldn't want that. Okay. Did you buy the cheapest car? No. Did you buy the cheapest pair shoes? The could the you
Cecil Bullard: had, yeah.
Lucas Underwood: Yeah.
Lucas Underwood: Exactly. No, we don't. We don't. That's not how we make decisions. It's not just about price. It's about value. And I think what shops miss is that they don't see their own value.
Lucas Underwood: They don't dig into their own value and understand it. They've never been to another shop to experience it because they've been working on their own stuff.
Cecil Bullard: This is and there's also this false expectation with your technicians that, the book time is two hours and I'm gonna charge two hours.
Cecil Bullard: 'cause the book time must be the law. That's what the other shop's gonna do. They're gonna look at the book time. And so I'm comparing myself, like I wanna be comparative to them price wise and then we expect our technicians to get it done in 1.5 so that we can actually make a living. Or if we're gonna take time off of a job, we take it off in the tech doesn't get the time or the credit for the time, even though it should be the time.
Cecil Bullard: There's no wonder that we're having such a conversation with the techs that is not a good conversation.
Lucas Underwood: Yeah,
Cecil Bullard: because we're, we want to be the cheapest guy in town who wants to be the cheapest guy in town. As you were talking, I'm thinking to myself, the shops that, that I've had. I probably work with 3000 shops if I do the math.
Cecil Bullard: In my career I've owned five total. I've ran another six or seven, but I've actually worked with, as a coach and a consultant about 3000. And do you know that the shops that are the most consistent, the shops that are the most profitable, the shops that have the highest customer satisfaction ratings Yep.
Cecil Bullard: Are also the most expensive shops for sure. They're not the cheapest shops. And so how do you put that together in your brain and say, I still want to be the cheapest guy in town.
Lucas Underwood: Yeah.
Lucas Underwood: It doesn't listen my parents I think you've been here, have you been to the shop before? Have you ever been
Cecil Bullard: here?
Cecil Bullard: I have never been to the shop, no.
Lucas Underwood: Okay. So I've been closed. Where the shop, right? Where the shop's at? We used to have these rental cabins and there were nine of them. And then for years, right? I was young when we put 'em in. I was 15, 16 years old, maybe 17 years old when we put these cabins in. And for years my parents ran them for 99 a night.
Lucas Underwood: Now, these were log cabins, actual log cabins, and they had a one bedroom. They had like a living room and a bathroom, and then they had a full kitchen, right? Really nice little cabins. And they were set up at an angle, and yeah, they were close to each other. But motel rooms up here were going for 2 65 a night.
Cecil Bullard: And so why were your cabins like 300 a night? Creates
Lucas Underwood: value
Cecil Bullard: too.
Lucas Underwood: And so the occupancy rate stayed in the twenties, thirties and forties. Now, my parents they loved people, right? Like they loved giving back. They loved taking care of people. The majority of what they did was to be good to people.
Lucas Underwood: And that was their reward. It wasn't the profit. And so I respect what they did. I'm not saying anything bad, but we raised the rates. Occupancy went up. Yep. And so we were asking people questions. We were saying, Hey, you said you've been up here for all these years. Why haven't you stayed here before?
Lucas Underwood: And they said, we thought something was wrong with them. Too cheap. They were way too cheap.
Cecil Bullard: Yeah.
Lucas Underwood: I've had a couple people come out and say, Hey you told me to raise my rates and it put me out of business. Let me tell you something. If you don't bring the value, if you are not providing a good service, if you're not fixing the car, if you're not calling them back, if you're not taking care of them, yeah.
Lucas Underwood: You probably don't wanna raise your rates that high because I would, you're selling exactly what you're worth. So be careful. If you're not bringing value,
Cecil Bullard: I would almost guarantee you, I don't know I might put money on it, that any shop today could raise their rates by. $15, 20 bucks an hour,
Lucas Underwood: nobody even
Cecil Bullard: know.
Cecil Bullard: And nobody would even know. Not one customer. The only people that would be nervous about it is whoever's talking to your clients.
Lucas Underwood: Yeah.
Cecil Bullard: And you know why? Because over the last 25 years, I've seen shop after shop go up sometimes much more than I thought. I had a shop go like 56 bucks. I was at a diesel thing thoroughbred diesel show,
Lucas Underwood: strive to th or strive to.
Cecil Bullard: And one of our clients, yeah. And one of our clients was there. Yeah. And I said do I have any clients in the audience? Because I don't always know every client we have now. 'cause I don't work with everybody. And guy stood up young young young guy, and I said what was your lab rate when you came to the institute and how long have you, and he said, been with the institute about a year from the last diesel show.
Cecil Bullard: And he said, my liberate was, I think $93, $92 an hour. And I said, okay. And what is your lib rate today? He said, we're $197 an hour. He'd gone up a hundred bucks in a year. Now, by the way, the next question was, how many clients did you lose? He said probably a couple, but he said, but the people we lost were the people that we could never make any money off of.
Cecil Bullard: They always give us trouble, never happy,
Lucas Underwood: no matter what
Cecil Bullard: you did. They were the ones we didn't want. Yeah.
Lucas Underwood: Yep.
Cecil Bullard: And you're like, you think about that, let's say they had three technicians and they were 70% productive. That's 21 hours, that's okay. Let's say 18 hours a day times a hundred dollars, right?
Cecil Bullard: Yep. Times X many days. And that's profit coming in and, okay, so maybe I'm not greedy about money, but wouldn't it be nice to give my people a 20% raise? Yeah. And make sure I had three months worth operating capital in the bank. And so the weather wouldn't affect me
Lucas Underwood: Here. Here's the thing is it's just like this.
Lucas Underwood: I, I told a good friend of mine, Tobin and Tobin and I have been friends for years, and I told Tobin a while back when we met, I said, you have got to get these rates up. $65 an hour is not gonna cut it. I promise. I see your rent, I see your financials. I know what you're doing. I've been there like, you've gotta get the rate up.
Lucas Underwood: And he looked at me, we were at Outback in blowing rock, North Carolina, and he said, Lucas, if I raise my rates, everybody's gonna leave. And I said, Tobin, it ain't gonna matter 'cause you're gonna be outta business anyway. If you don't, I said, you're either gonna go outta business because you didn't raise your rates, or you're gonna go outta business because you lost your clients, or you're gonna find out this is gonna work.
Cecil Bullard: Yeah.
Lucas Underwood: And so today, we talked to him the other day and he said, man, he said, if you hadn't told me that, he said, I'd been outta business. And I said, look, if somebody hadn't told me that I'd be outta business. Right?
Cecil Bullard: Yeah.
Lucas Underwood: It's, I can't. And that's what this group, and that's what the institute, and that's what this podcast is all about, is hey, there's a lot of people out here that don't know this, and they're walking in fear because they don't know any better.
Lucas Underwood: And so we're about bringing the knowledge.
Cecil Bullard: Do you know how many shops? I would tell you that more than half the shops that we have worked with. So more than more than 1500 shops. If they had not raised their rates, if they had not fixed their parts margins, put a matrix in place. If they had not, worked on their systems and processes, they wouldn't be here today.
Cecil Bullard: 1500 shops, right? Yeah. Would not be here today because they, I can't tell you how many guys I beat 'em and they come up and they gimme a hug or they, shake my hand and they're like, cec. Oh my God, you saved my life. You saved my company. Yeah, you saved my family, blah, blah, blah.
Cecil Bullard: And it's very rewarding to have that and to do that. But man, what about the other? Two, the ones we've not reached yet, two shops out there, which we just can't seem to reach.
Lucas Underwood: Yep. All
Cecil Bullard: we got. Our next question, do you think we need to do? Okay, go ahead, get the next question.
Lucas Underwood: All right. What is your opinion on veteran military or senior citizen discounts?
Lucas Underwood: Now look, I'm gonna tell you something. Now that I'm in the shop, or not in the shop as much, it doesn't happen as much. But when I was in the shop, you know what I did? I grabbed that, their wallet, and I took the money outta that wallet and I walked around the front counter and I pulled that cash outta my wallet and I laid down and paid what I wanted to give them for a discount right there on the front counter.
Lucas Underwood: And you wanna talk about making an impact, sir, I appreciate your service and what you did for our country. You provided me the opportunity to be here and do what I do. Thank you. Now, not only does it make an impact with them, but it makes an impact with you because I have seen so many shops discount themselves to poverty.
Lucas Underwood: Literal poverty.
Cecil Bullard: Yeah. I had I had a shop, a new shop probably two months ago, come on that I'm coaching and they made about $1,200 in that month. They discounted over 12,000. Okay. And you're going what was your discount? We have a AAA discount. We have a senior discount. We have a military veteran discount.
Cecil Bullard: And so literally, and we have crap rates. And by the way, so we weren't making anything anyway. And so if you want to, corporates, corporations, big corporations understand this.
Lucas Underwood: Yeah.
Cecil Bullard: Small business does not. When you walk into Walmart and there's a discount item and you're gonna save 20 bucks on that thing, they're getting in your wallet somewhere to make up for that 20 bucks.
Cecil Bullard: You, period.
Lucas Underwood: You're exactly right.
Cecil Bullard: Period. Because if they don't make the profit they need to then their stockholders sell the stock, the stocks worth nothing, and the company goes bankrupt and we don't Yeah,
Lucas Underwood: they got that product on a discount they got. Yeah. There was somewhere they still made their margins.
Lucas Underwood: Right.
Cecil Bullard: So if you routinely want to give away 10% to say veterans or old people, and by the way, I'm now in that, I get that, those discounts.
Lucas Underwood: See, so you know that 20 years ago you got into that category, right?
Cecil Bullard: Yeah. Yeah. Shut up. So anyway yeah, scissor used to do it at 55 and I used to like, there was a scissor.
Cecil Bullard: Here it is gone. I wonder why. But I used to like Sizzler and they would be, look at my hair and I've been white for I don't know, 30 years now. Yeah. They would look at my hair and they'd go, oh, we're gonna give you the senior discount. I was probably 42 at the time. If you're gonna discount 10%, you have to raise your rates by more than 10% because you're talking about parts and labor that I'm discounting.
Cecil Bullard: Yeah. I'm not just discounting the labor. So I can't raise my labor rate 10% and go, okay, that's good for a 10% discount. 'cause the parts, I'm actually discounting the parts also. Yeah. So I probably have to go up around 20% on my labor rate in order to make up for the parts and the, or at least probably.
Cecil Bullard: 18% on my labor rate and to make up for the parts if I'm gonna give 10% discounts away.
Lucas Underwood: Yeah. And you absolutely have to put stock in that discount. You can't just drop that money and say I just took it off the repair order need. I
Cecil Bullard: just took it off my
Lucas Underwood: wallet. You need way to track it.
Cecil Bullard: Right?
Lucas Underwood: Yeah.
Cecil Bullard: I just took it outta my wallet.
Cecil Bullard: And that's the killer too, is it's,
Lucas Underwood: yeah.
Cecil Bullard: You're better off. I'm, I might've been the one that told you this, but go down to the bank and get some 20 fresh, crisp $20 bills and when you're ready to discount, whoop out a couple twenties, hand it over to the customer, say, I wanna help you today. 'Cause you're old or because you're a veteran, or because it's just one of those days.
Cecil Bullard: And watch those $20 bills disappear. And then tell me how often you're gonna do that.
Lucas Underwood: My buddy John that runs a diesel shop down in Morganton, North Carolina, he and I were talking a while back and I said, I was explaining this process to him and he said, but Lucas, if I do that, I won't have any money.
Lucas Underwood: And I said, that's my point because you don't have any money now, but you're giving it away. Yeah. So how do you feel okay about this
Cecil Bullard: now? So I
Lucas Underwood: won't be able to pay my bills
Cecil Bullard: in our shop. We, when we added features, we added price. So when we gave loaner cars out, we went up four bucks an hour. When we watched every car, we went up $4 an hour.
Cecil Bullard: We calculated our costs, we doubled what that was gonna be. We raised our labor rates. Yeah. And in that shop we we made a profit. And when we made a profit, we said to ourselves, we want give back. So we set aside a budget, $30,000 a year goes to and we went down to one of the local churches that Pat talked to the pastor, and we said, we know you have people in your community that need help.
Cecil Bullard: We are willing to help. We'll either you pay for the parts and we'll do the labor up to $30,000 a year or, yeah. We'll pay for both up to 30,000 until the money's gone. Yeah. And the pastor wanted to pay for the parts and we took care of the labor, but we kept track of it. And when we were done with 30 grand, we were done.
Cecil Bullard: 'cause that's what we set aside based on the profit that we were making. The thing about it is people want to give and give. We all do. I think we're all, I think in general, humanity wants to give, they want to take care of people, they want to feel good about their relationships.
Cecil Bullard: And the problem is you can't give what you don't have. Yeah. So if I don't have any empathy, sympathy, because I'm just worn out, and then I can't give, if I don't have any time because I'm working 90 hours a week, I can't, not only can I not give to my people at church, but I can't give to my own family.
Cecil Bullard: Right?
Lucas Underwood: Yep.
Cecil Bullard: And if there's no money, I can't give to my clients, I can't give to my family, I can't give to anybody.
Lucas Underwood: It can be addictive. It can be a crutch. Yeah. And so I see so many people use it as a crutch. They get a, they get afraid and they begin, like they start discounting to make that client happy.
Lucas Underwood: The client gets used to saying, Hey, can I get a discount? Next thing you know, you've built a pattern and it's really hard to break that pattern. I just don't believe in doing discounts. Yeah. Yeah. So my advice would be, would just pay for repair, filing?
Cecil Bullard: No, no discounts. Just, and I never discounted and I don't discount today.
Cecil Bullard: Don't get me wrong. We do some stuff here at the institute, but it's not me. It's the younger people who are like, oh, we're gonna do this Ferd and we're gonna give a timeframe. Thanks St. Stu.
Lucas Underwood: Man. How many times have I told you about that stew guy? You gotta
Cecil Bullard: watch. Shoot 'em both, both him and Kent at the same time.
Lucas Underwood: Now look I am doing a little bit of discounts, but I'm also working really hard to try and get the car count up for this shot. And
Cecil Bullard: if a calculated discounts too. Yeah. If they're calculated, if I know that I'm making the money somewhere else, yeah. If I know that I'm gonna have a certain average of ator and I can make that up, then I'm ha I'm okay with that.
Lucas Underwood: But hey, this
Cecil Bullard: next question, once you start the pattern, it's the pattern.
Lucas Underwood: It, yeah. It's hard to break that pattern, buddy. Yeah. It's hard to break that pattern. The next question is, what are some marketing strategies for slower times? We're already doing Google Ads website, et cetera. Now listen, I can tell you about slow times.
Lucas Underwood: This shop that typically sees nine to 12 cars a day for the three or four weeks after this storm saw like one car a week. Yeah. And like we've got a 8 73 Bobcat that we push the parking lot with sometimes. Cecil I backed it out of the shop the other day and I got out of the bobcat and I was getting ready to go in and grab myself a drink and all this stuff, and I start to step off the machine and it felt like it moved funny.
Lucas Underwood: So I put my hand on the machine and I could take this 13,000 pound machine and push it around the parking lot with my hands with no ice force at all on it. Said, I think I'm gonna get back in the machine before it slides off and it's something, right? Yeah. It was so slick. And we shouldn't have wanted our clients to be out the mistake that we made, I'm gonna tell you something about this because this is important to the slow day strategy.
Lucas Underwood: The mistake we made is that right before the holidays, the staff didn't want to disappoint any clients. And so what they did was, is they began to back us down as far as reserves go. Yeah. They were trying to get everything finished to make everybody happy, so they didn't have their car sitting here over a holiday, and it killed our reserves.
Lucas Underwood: And so then when it did slow down. We didn't have any reserve stuff to work on and it impacted we continually load the lot up and keep things here. And even if it means some people and like we're listening to them, we're talking to them. There's a great scene in the show, the Bear on fx, and in it, it's a lady and she's organizing the kitchen and it's this really fine dining restaurant.
Lucas Underwood: And she said, this table likes to eat slow and they're in no hurry. This table will fuss if it's slow. We need to hurry this, rush this slow this, take this to this table, do this with this table. If you don't have someone managing your workflow in a way that they can understand what's coming in and going out and the customer expectations and then using those expectations to the shop's advantage, you're missing out because that's where true revenue and auto repair comes from.
Lucas Underwood: And so I'm gonna tell you right now i's one thing you can do when you get slow and you need cars right now. And that's called pick up the phone and start calling 'em.
Cecil Bullard: Yep.
Lucas Underwood: Plain and simple. Yep. That's the one thing that will work.
Cecil Bullard: Let me talk about two or three strategies here. Number one, when you're busy, don't stop marketing.
Cecil Bullard: Yes. Don't slow it down. Nothing. Keep, okay, keep my budget's tight. See? So
Lucas Underwood: I gotta cut all my marketing out.
Cecil Bullard: Yeah. Number two, are you booking the customer's next appointment? You wanna create consistency in your business. Book the next appointment. And you know what, some people are gonna say no, some people aren't gonna show up.
Cecil Bullard: But what if you could get three or four cards booked out every day for the next six months that would actually show up? What would that do for your consistency of car count?
Lucas Underwood: It's back to the Tobin thing, right? I asked him, yeah. Hey would you rather just go outta business?
Lucas Underwood: Would you rather not be able to pay your bills than ask them or would you rather be afraid of asking them? Would you? Yeah.
Cecil Bullard: And by the way, don't ask 'em, just tell 'em they have an appointment. It you're the person that's supposed to be taking care of their car. Tell them how they're gonna take care of their car.
Cecil Bullard: It's a strategy, right? And then do you have a referral program? Are you asking for referrals? Are you doing, is this a part of your everyday life? Does every customer that walks in your door get asked for a referral? Yeah. There, there's just these little things and then there's the 20 calls process, what you're talking about.
Cecil Bullard: Get on people that, that didn't show up for their appointment. Get on the phone. People that had work that didn't do that work get on the phone. I call it 20 calls. 'cause in my shop we were slow. We, my service advisors made 20 phone calls. Were three appointments. When they made three appointments, they have to make no more phone calls.
Cecil Bullard: All done.
Lucas Underwood: Here's the thing is I I will use chat GPT here and there for fun stuff and I don't like, I don't want my brain to turn to mush, so I still try to use my brain, still try to be on
Cecil Bullard: top of it.
Lucas Underwood: Yeah. But I was dropping things in chat GBTA while back, not at this recent slowdown, but the one before it where it just lightened up a little bit.
Lucas Underwood: And so I was putting some data into chat GPT because I have found that it sees patterns that I miss.
Cecil Bullard: Yeah.
Lucas Underwood: And it's obvious patterns. And it's very much like hiring the institute to coach you in your business because you see things and your coaches see things from a different perspective.
Lucas Underwood: And so it, it's easier for you to catch something because you're not just used to it. That's not just the way it's been. Yeah. And so I put our customer data into chat, GPT, and it brought up this really interesting fact and it said, I. If you acquired or if you reignited, or I can't remember the word it used basically shook up
Cecil Bullard: 10% or
Lucas Underwood: whatever.
Lucas Underwood: It's the client base from six to 18 months. Yeah. The ones that have not been here in six to 18 months, if you shook up 5% of them, you would have two months of work.
Cecil Bullard: Yeah.
Lucas Underwood: And I'm like, huh, I hadn't thought about it like that. So customer, guess what? We're gonna make some telephone calls.
Cecil Bullard: Customer retention management
Lucas Underwood: yeah,
Cecil Bullard: booking appointments, 20 calls, phone calls. There, there are multiple strategies to ramp up as fast as I can ramp up. But
Cecil Bullard: Yeah, don't stop your marketing ever.
Lucas Underwood: Now, something else, and I'm sure that you know this, but something else that I have learned, me, I use shop wear and I have got the analytics and shop wear laid out really well.
Lucas Underwood: I and Cecil, I take my hours per RO and I take my revenue and I've got a little bit of an algorithm that I've built in Excel and I use that and I say, okay, if I can take three jobs a day, three and a half hours per ro, how many jobs do I have? If this is the number, my average repair order's about 1100 bucks, what's my car count be, need to be, exactly what does my car count need to be and where am I?
Lucas Underwood: How many days of work do I have on what's sitting in the shop right now? And how many do I have coming in
Cecil Bullard: on
Lucas Underwood: appointments, knowing that some of those may not show, knowing that some of those may not turn into those bigger tickets
Cecil Bullard: we're
Lucas Underwood: using.
Cecil Bullard: But if you're keeping track of the data, you can actually anticipate a
Cecil Bullard: 12% loss or whatever.
Lucas Underwood: Exactly. Whatever
Cecil Bullard: that loss is.
Lucas Underwood: Exactly. And see that's what we do is we're tracking the averages and so we're paying attention to that. Yeah. Now, my algorithm, the way I've got it built out is, Hey, listen, if I get to sub seven days of work, you're getting on the telephone and you're making telephone calls.
Cecil Bullard: Yeah.
Lucas Underwood: If I get,
Cecil Bullard: yeah. It's a red light.
Lucas Underwood: Exactly. If I get to, 14 days, we're backing out a little bit, trying to give ourselves some breathing room, but I'm bouncing the shop based on the data that's available. Yeah. So many people try to run their shops based off of what's in here and up here they base it on emotion.
Lucas Underwood: Yeah. You
Cecil Bullard: stop, there's facts, there's information. Yeah. You have to stop. That's that. Somebody asked me the other day, said, Cecil. If you only had, if it was one thing, what's the one thing that you gotta tell people? Run your shop like a business. Understand the numbers. Yeah. And what they're telling you.
Cecil Bullard: You do that and you'll make so much. Oh, I'm much money. You'll have so much more consistency, et cetera. The problem you have in the industry is we have a lot of great guys. They're wonderful techs, et cetera. Men and women. They're just not great business people.
Lucas Underwood: Yep.
Lucas Underwood: Go ahead.
Cecil Bullard: When I started a business I wasn't a great business person, but I got news for you, man.
Cecil Bullard: I learned, I got mentors, I hired people, I did whatever it took to get good at this business. I want to be the best at this business of anybody. And I continue to learn today because to me, that's everything's
Lucas Underwood: Cecil. I'm not afraid to tell the story of what happened with the family business. Like it was not ran like a business.
Lucas Underwood: The business was turned over to another family member and because it wasn't ran like a business, the accountant really wasn't watching it. The bookkeeper was stealing money. The person who was running the business was stealing money. The person who was working in the business was stealing money. We're talking about $3 million.
Cecil Bullard: Yeah. Millions.
Lucas Underwood: We're talking about millions of dollars
Cecil Bullard: I have seen and all of this shop that the same really millions of dollars over time going away.
Lucas Underwood: And all of this happened when my father was taking care of my terminally ill mother and had no bandwidth to take care of
Cecil Bullard: attention was away.
Lucas Underwood: Yeah. And here's the thing about it is if systems had been in place and it had been ran like a business before that this wouldn't have happened,
Cecil Bullard: flags would've came up and people would've attention would've been drawn.
Lucas Underwood: And to all the shop owners in this room listening and to all the folks who come back and listen later.
Lucas Underwood: My dad didn't think that my mom was gonna get cancer. My dad didn't think that he was gonna be away from the business. My dad didn't think those people would steal from him because they were some of his closest allies.
Cecil Bullard: Yeah.
Lucas Underwood: Yet they did
Cecil Bullard: well. And I don't think you, I don't think you can live your life going, oh my God, my wife might get cancer.
Cecil Bullard: Of
Lucas Underwood: course you
Cecil Bullard: can. Or man, everybody around me is gonna steal from me if I'm not paying attention. But I think you, you live your life. I understand the business. I understand this exactly as well as it can be. Understood. Exactly. So if my wife gets cancer or if someone starts hundred percent from me, that I'm very aware of that and I can take care of that very quickly.
Lucas Underwood: And that is exactly what I'm trying to say, seasonal to the T, is that if it had been ran like a business all along. Then it wouldn't have been a scramble to try and figure it out. He didn't have the bandwidth to run it at a, as a business when that happened. He didn't have the bandwidth to babysit
it
Cecil Bullard: and fix and he didn't set it up that way because he didn't know how to set it up that way.
Cecil Bullard: Or he probably would have the thing now. Absolutely.
Lucas Underwood: A hundred percent.
Cecil Bullard: There. There are so many resources. The Yeah we're announcing a new learning thing. Auto Academy. It's gonna be fantastic. Yeah. But even our YouTube, your YouTube, there's so many resources. If you really want to know the numbers, I've done multiple things about the numbers of the business.
Cecil Bullard: Yeah. And I know you have two and we've done it together and Yes. They're just out there. Just take some time to dig up that stuff. Yeah. And pay attention. Exactly.
Lucas Underwood: And look,
Cecil Bullard: it can be the difference between retiring with. $3,500 a month from your social security and nothing else, or retiring with six and a half million dollars in the bank and $3,500 a month from your social security.
Cecil Bullard: Yeah.
Lucas Underwood: Yeah, you're exactly right. You're exactly right. And here's the thing and I think this is where so many shop owners miss it. Cecil, I loved pulling out an oscilloscope and using my deductive reasoning skills. To work on a car. It was my favorite thing. Yep. Yeah,
Cecil Bullard: it's fantastic.
Lucas Underwood: And to see that problem be solved and to make it through it and it work and the customer's happy and the car runs like it's supposed to, I fell in love with that process.
Cecil Bullard: Yep.
Lucas Underwood: And it took me years to fall in love with the same process of learning what screw to adjust and what number and what KPI to check and how to do it to make the business do that too.
Lucas Underwood: You can fall in love with the management of your business the same way you fell in love with working on the car or doing the diagnostics or whatever it is. Just because you don't know right now, doesn't mean you can't learn and you can't figure it out. You're not,
Cecil Bullard: you're not stuck loving only one thing in your life.
Cecil Bullard: Yeah. At least hopefully because, you. For me it was a very hard change to go from being a tech to being a service advisor. And there was some depression involved because I wasn't fixing cars and fixing cars was like crack cocaine. It was just like, yeah,
Lucas Underwood: me too.
Cecil Bullard: I had to learn that selling was now my crack cocaine and getting people's confidence in controlling the conversation and learning how to be really good at that.
Cecil Bullard: And then I went to become, oh, I'm now I'm gonna manage a business or I'm gonna own a business. It's a whole nother, it's different skill sets, but you can be just as in love with that, as you can be in love with anything else.
Lucas Underwood: You're exactly right. And here's the thing is I think for me, like I had built my importance of fixing that car, right?
Lucas Underwood: How many shop owners have you seen that you have a really hard time getting them to let go of the back of shop process or the front counter process? They need to be in control of it. And they will self-sabotage. To make sure they remain in control of it and they don't even realize they're doing it.
Lucas Underwood: And they're like, happens all this doesn't work. People can't figure this out.
Cecil Bullard: Yeah.
Lucas Underwood: And the thing is like they, they get their self worth and their value from doing that. And I am learning, okay? And Michael Smith has been a big help with this, but I am learning
Cecil Bullard: guy.
Lucas Underwood: He is, I'm learning like, Hey, Lucas your vision's been shortsighted and if you want to have meaning and value and you wanna feel like you have purpose in life, teach the other people that work for you.
Lucas Underwood: How to do the things that you did, so then you can move on to bigger and better things and impact more people.
Cecil Bullard: And you can, as I said, you can't give somebody something you don't have. So if you have a business that's limited by you, then you only have so much to give. If you have a business that runs like a business where you can grow it and you can bring people in and train people and stuff, now you can affect a lot more lives.
Cecil Bullard: Absolutely. And the other thing is, at the end of the day, there's gonna be a day for all of us, like it or not, where we're like, okay, either I'm getting so old that I can't do what I used to do and so I can't fix cars. And the legacy that you're gonna leave, the legacy that you're gonna leave is what the knowledge that you give and the help that you give to other people to be successful, that's what's gonna be there.
Cecil Bullard: You can't,
Lucas Underwood: yeah.
Cecil Bullard: Yeah. So to me, like for the institute, how many people can I help? How much?
Lucas Underwood: Yes.
Cecil Bullard: When I had the brain tumor last year or the, yeah, last year. It, you don't know what's gonna happen and what are you thinking about and have I done enough here? Have I changed enough lives, et cetera.
Cecil Bullard: Sure. And it was really nice. I got a lot of people that were very supportive. I got a lot of people that said, Hey, Cecil, I just wanted you to know, you've just, you've really changed my life and a lot of the people's lives and my company. And I still like today I am like, okay, how many more lives can we change right before the game's up?
Cecil Bullard: How many lives can we change? And it's not, for me, it's not about the money, it's about helping as many people understand the machine so that they can really make the machine run well.
Lucas Underwood: You're absolutely right. And I'm just gonna be completely honest with you. I don't think I've ever told you this, when all that was going on I sent Kent an email and I said, I am really worried about this.
Lucas Underwood: I'm really concerned. I really need Cecil to pull through with this. And he said, I really appreciate that. And I said, good, because it was his turn to buy dinner.
Cecil Bullard: There you go. That's right. I'm saying like, come on, Nancy. He's, he owes me a steak and a good glass of whiskey. Are you kidding? Oh no. I feel like he's
Lucas Underwood: trying to skip out on the bill.
Lucas Underwood: What is going
Cecil Bullard: on
Lucas Underwood: here?
Cecil Bullard: No. Yeah that's wonderful. Hey, one, one more thing. Yeah. Before I know we're at the end.
Lucas Underwood: Yeah.
Cecil Bullard: There, there is some math around setting your labor rate. So there's a couple of things. Number one, if it's me and I, now, I don't say everybody should.
Cecil Bullard: I, now it's if it's me or this is what I would do if somebody around me was 200 bucks an hour, I'm gonna be two 20. I'm always gonna be the most expensive guy in town. And so I'm not calling around to find the cheapest guy and try to be close to him or below him. Yeah. I'm actually calling around to find the most expensive guy and I wanna be a little more expensive than him because I have, I really feel like I have that value.
Cecil Bullard: So if the labor rates in your area are, if the dealership's two 50 and you're working on those cars. Why would you be less than two 50? Yeah. Okay. I'm
Lucas Underwood: sorry. But dealerships are less skilled than independent shops. Did I say that out loud?
Cecil Bullard: I know that. And by the way, the consumer believes that to be true too for the last five years.
Cecil Bullard: Yeah,
Lucas Underwood: exactly.
Cecil Bullard: So the other thing about that is I can afford to pay up to 40% of my effective labor rate. So whatever your posted rate is, that doesn't mean anything. What do you really get per hour? And that is a calculation of labor dollars brought in a time period times labor hours that were billed, right?
Cecil Bullard: Yeah. And so you may say I'm see something $180 an hour, but my effective labor rate's only 140. Alright? Yeah. And so I can't base my, what I pay my tech on 180. I have to base my tech on what I pay at 140. Because that's what I'm getting paid and can pay. And
Lucas Underwood: you have to take into account production.
Lucas Underwood: You can't
Cecil Bullard: just, yeah. And I, yeah. And and that's why when we build these performance enhanced pay plans, they pay more when they're productive and less when they're not productive. So that we hold margin throughout, right? Yeah. Yeah. And but I can afford to pay up to 40% loaded, meaning FICA few to workers' comp, all the expenses that I would expense.
Cecil Bullard: So if I'm $150 an hour, I can pay $60 an hour to my best tech in that shop. And then I gotta back that off about $12. So I really have about 48 that I can pay. And if I wanna build it I'm probably gonna take 30 to 32 or 35, give them a base based on the clock, and then I'm gonna build 14 or 15 into a bonus structure.
Cecil Bullard: And by the way, at that point, I can actually pay more because when they get above 40 hours. And if I'm using a 1.3 matrix, I should have some people that can do more than 40 hours a week. And if I do that and I get above that, any money that comes in, I have higher margins. So I can actually afford to pay more than, yep, that $60, I could probably go to 64 loaded or 65 loaded.
Cecil Bullard: If they are productive and if they're not productive, if they're 70% like the rest of the industry, I can't even afford to pay 60 now. I've got to be down in the forties.
Lucas Underwood: Yeah, exactly.
Cecil Bullard: A hundred percent. So I just wanted that kind of to be out there. And I know we have a labor rate calculator. And I don't have an example of it here.
Cecil Bullard: I'm not, I didn't I got here and I was like, oh, did they? But I'm more happy we had a webinar.
Lucas Underwood: Oh,
Cecil Bullard: Yeah. Some days, I more than happy to whoever wants that if they hit Raleigh, who, what are they gonna, where are they gonna go?
Lucas Underwood: I think they can email it to info at the institute.com.
Cecil Bullard: Info@theinstitute.com. We are sure. The institute
Lucas Underwood: dot
Cecil Bullard: com's on the Yeah, we are the institute.com info.
Lucas Underwood: Yep.
Cecil Bullard: And we'll make sure, and it'll be on the screen here. Yeah.
Lucas Underwood: Got it.
Cecil Bullard: I think we're at that time, buddy, as much
Lucas Underwood: as, yeah, we were at that time six minutes ago, but I was just gonna let you talk as long as you wanted to talk.
Lucas Underwood: Cecil folks.
Cecil Bullard: There you go.
Lucas Underwood: Thank you so much for being here, and thank you for being part of what's changing the industry. We all believe in making the industry a better place for not just shop owners, but technicians, service advisors, and the consumer. So thank you for being part of what's changing it.
Lucas Underwood: Thank you to the institute for putting this on, and we look forward to seeing you guys real soon.

192 - Standing at the Crossroads featuring Brian Bates, EAS Tire and Auto

192 - Standing at the Crossroads featuring Brian Bates, EAS Tire and Auto
February 9, 2025 - 01:42:25
 
Show Summary:
Service, leadership, and purpose sit at the center of Brian Bates’ journey. A military veteran and president of EAS Tire and Auto in Denver, Brian shares how his path from technician to multi-location owner was shaped by mentorship, values-based leadership, and a deep belief that business exists to serve people first.
This episode of Leading Edge: Standing at the Crossroads explores what it takes to scale without losing your soul. Brian reflects on building culture before growth, hiring for character, creating opportunity for others, and why fixing cars was never the end goal, only the entry point. From nearly running out of cash to leading a rapidly growing organization, he breaks down the leadership shifts required to move from survival, to success, to significance.
At its core, this conversation is about legacy. Not store count, revenue, or titles, but the lasting impact a leader leaves on people, families, teams, and communities through principled decisions and servant leadership.
Thinking about the legacy you are building as a shop owner or leader? Meet with Michael Smith to start a leadership and legacy strategy conversation: https://theinstitute.zohobookings.com/#/Executive-Owner-Strategy-Session
 
Host(s):
Kent Bullard, COO of The Institute
Michael Smith, Chief Strategy Officer at The Institute
 
Guest(s):
Brian Bates, owenr of EAS Tire and Auto
 
Show Highlights:
[00:02:54] - Brian Bates shares how the auto industry started as a practical move to provide for his family, then became something bigger.
[00:05:38] - A strong mentor helped turn leadership theory into real-world skill through daily application.
[00:11:34] - Brian Bates says fixing cars was “a ticket to the dance,” but the real work is serving people.
[00:12:21] - The shift from “building my lifestyle” to “removing obstacles for others” became Brian Bates’ definition of leadership.
[00:16:10] - The turning point came when the question changed from “how much more can I take?” to “how far can I take this?”
[00:23:00] - Culture stopped being chaos once purpose and values were defined clearly enough to attract the right people.
[00:29:18] - Big growth goals felt outrageous at first, then got outpaced by momentum and opportunity.
[00:49:15] - Values-based accountability replaces rules with ownership, and misfits often choose to exit on their own.
[01:23:37] - Brian Bates breaks down success as survival, success, and significance, then explains what it looks like to leave without the business collapsing.
 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/_n_jyKDI-Rc
 
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
Kent Bullard: Hello everybody and welcome to the Institute's Leading Edge Crossroads podcast where we examine the decisions that professionals make that define careers that shape industries that inspire thought leadership and ultimately build lasting legacies. I'm Kent Bullard and I'm joined here with my esteemed colleague, Michael Hertzberg Smith.
Kent Bullard: And today we're privileged to be speaking with Brian Bates of EAS Tire and Auto. You're the president there out of Denver. Today's guest, Brian Bates is a proud fourth generation Colorado native and an accomplished entrepreneur with a rich history of service and dedication. After graduating from Golden High School in 1991, Brian followed his family's tradition of military service joining the army and serving honorably until 1996.
Kent Bullard: During this time in Germany, he and his wife Rondi welcome their son, the first of two children who would become your greatest pride. Right. Right. Brian transitioned into the automotive industry balancing work as a technician at Planet Honda and earning a degree in business management from Metro State University of Denver in 2000.
Kent Bullard: With an A SCL one Master Technician Certification and an a M designation, he quickly rose to prominence in the field. In 2004, he took the leap to entrepreneurship opening his first shop in Columbine Hills. Today he is the owner of 12 Thriving Shops and a founding partner of Straightaway Tire and Auto.
Kent Bullard: Formed in 2023 with Michael Smith's help, and alongside four of your closest friends. Recognize for your excellence. Brian's shops were awarded the number one Napa auto Care Center in the nation in 2018. Beyond his professional success, he treasures his roles as a family man recently celebrating the birth of his first grandchild, Tatum Duke, in October, 2024.
Kent Bullard: When not working, Brian enjoys snow skiing, boating, wake boarding, and four-wheeling, inviting the adventurous spirit of his Colorado roots. We're thrilled to have Brian Bates share his remarkable journey and insights with us today on the Institute's leading Edge Crossroads podcast. Welcome, Brian.
Brian Bates: All right.
Brian Bates: Thank you. Thanks for having me on, Ken. Good seeing you again, Michael. You too, my friend.
Kent Bullard: I love it. Listeners as we go through the topics today, the shared experience from Brian, if you have any questions or comments about this content, please go down in the comments and ask your questions. That's the whole point of this podcast.
Kent Bullard: We also ask if you do enjoy what you hear, please like and share so that others can benefit from this conversation as well. And of course, you can find more information about the institute at We are the institute.com. So Brian, I wanna start off, you know, what originally drew you into the industry and what inspired you to commit to it?
Brian Bates: Well, you know, the first thing that drew me to the industry was the ability, the opportunity to provide for my family after getting outta the military and while I was going to pursue my degree at Metro State. The, the idea that I could make decent money and work during the day was very inviting at the time.
Brian Bates: I, you know, most of my options were in the restaurant industry or some, you know, retail industry that, you know, would be odd hours, odd days, that sort of thing. So that was the original draw. And then after being in it for a few years, I was just really drawn by the people, you know, the customers the ownership of the dealership, the store manager, my colleagues that I was working with on a day-to-day basis.
Brian Bates: And just really had a good time working and in the trenches and just doing all the rolling up the sleeves, getting dirty and filling. At the end of the day, like I'd really accomplished something and watching my pay increase as my knowledge increased, being able to invest in myself with technical expertise, with experience, the challenge of.
Brian Bates: Figuring out what's going on with a car or beating flat rate time and making, you know, more money as a result. So, and again, working with other people and as I grew in the dealership, I became a mentor and had several apprentices working for me throughout the years. And that was also rewarding and exciting to see them grow and to be able to share my knowledge with them and help them experience the same sort of success that I was able to, and the same opportunities that I was able to, I got into the industry.
Brian Bates: So that, that was my initial draw to the industry and then it just kind of took off from there.
Michael Smith: Well, you had a positive mentor relationship at the dealership, if I remember the original stories. Could you tell us a little bit about that positive mentor in your life and how it kind of got you started and kind of a thought process about how to be in this industry?
Brian Bates: Yeah. So it, it really was an unintentional situation, but I just can't think of a better luck of the draw or a better situation just by, you know, happenstance for me or anybody in any industry really. I I was going to, to school, getting my degree going to night school mostly. I had some day classes, but most of them were night.
Brian Bates: And so as I moved up in the ranks, I was able to really utilize a lot of that knowledge that I was learning at the dealer or at school. At the dealership as I was working on it, especially since I was getting a degree in management, which is mainly people once I realized that my a degree in management wasn't all about accounting and spreadsheets and you know, crunching numbers and whatnot and I realized that it was all about leadership and organizational behavior, you know, motivating people and all those fun things that we kinda talk about on a daily basis.
Brian Bates: That's what really. Gave me a passion for getting a degree in management. And so I was fortunate to have the dealership, the service manager at the dealership who ended up being the fixed operation manager, as the dealership grew. He was very passionate about leadership and just about the industry and mentoring and helping people.
Brian Bates: And so as I was learning all the stuff I was learning at school, I was able to really talk with him and have that second sort of education and mentorship. That was the application of the knowledge. You know, not knowledge isn't alone, isn't power. The application of the knowledge is really where the power comes in.
Brian Bates: And so the ability to really apply all that knowledge as I was growing and learning and working at the dealership, and then to multiply that with a mentor that really could help me make sense of what, you know, what. What to do in certain situations and kind of how the world works and how to, like you said, Michael, how to be and the important things about just work in general, but especially the automotive industry.
Brian Bates: That was that, that was just so powerful in my career that that, like I said, I just can't imagine that I could have been in a better situation than that.
Michael Smith: So many, I'm sorry. So many of us have these leadership experiences where we get. Into leaders, being leaders ourselves. And we look back and, well, I don't wanna do this and I don't wanna do that.
Michael Smith: Oh my gosh. When I'm a leader, I'm not gonna do that. And I'm just pleased you and I talked, Ben, known each other for quite a while and I know who, how that mentor meant a lot to you and how you were able to walk outta that experience with those memories and with those perspectives. And to some extent have it be a little bit of your leadership foundation as you came out into your own.
Michael Smith: And I just I loved it. That's why I just asked, I know that's, to have a positive start. Like that's a great building, building block start. Right. So
Kent Bullard: we've been Absolutely,
Michael Smith: yeah.
Kent Bullard: We've been having kind of this internal conversation outside the podcast, I mean, today just about application. And I'm curious to know, what do you think was the driving factor or the inspiration for you to take what you were learning and to apply it?
Kent Bullard: What got you to apply that knowledge?
Brian Bates: Well, a little bit of it was just being forced into they say necessity is a mother of invention, right? So I think it's the same about the application of knowledge is is, you know, the necessity of it. But you know, I started at the dealership just ripping plastic off of new vehicles and you know, getting 'em ready for the front line and which is really the, you know, as far as the service department, that's about the entry IST level, if that's a word in the dealership.
Brian Bates: And so went from there to being, you know, they started letting me work on vehicles and then worked my way into a line technician position. And then eventually after a couple years, I was a team leader. And then after a few more years I moved into a shop foreman position. So. It again, just kind of followed in line with where I was at school.
Brian Bates: After getting through my general studies after a couple years, I was actually moving into that leadership position and taking some of those basic management classes and you know, I also, while I was in the military, I was a sergeant, so had taken quite a bit of leadership classes in the military as well.
Brian Bates: So wasn't a stranger to leadership at all. But it just, you know, continued on as I was going into management. And, you know, a lot of that real instinctive leadership that you have in the military, which really is, you know, a lot of self preservation based and based on you know, the preservation of your colleagues and the people beside you and above you and, you know, that you're serving.
Brian Bates: So, all of that again, just is that building upon, you know, a foundation upon another foundation that really got me to the point where I was applying what I learned and again, my passion people, you know, probably not so much recently just because, you know, I've seen more as the business owner versus the car guy.
Brian Bates: But a lot of people used to ask me, Hey, you know, what kind of cars do you have? What cars do you love? What do you love about working on cars? And I mean, the answer to that is honestly I really don't have a passion to work on cars. That was just what gave me a ticket to the dance, was that I could work on cars and make money.
Brian Bates: And while I was mastering and learning more about how to run the shop how to lead people, how to be, you know, the best leader and the kind of leader that leader that people will follow and that I can inspire other people to to follow the purpose and the drive and where we're going as a company and where I'm, you know, wanting to go as a, as an individual in this field.
Brian Bates: And it being my career is you know, and that is all dependent on helping other people get where they want to go, right? I mean, this isn't I think some people feel like being in business or being a business owner is that everybody serves your your whim and that the business is there to serve your lifestyle.
Brian Bates: And I don't agree with that. I think that the purpose of being a business owner is that you have the ability to really have a significant impact on other people's lives and to help them get where they want to go. And the more you're able to do that a higher level and at, you know, a larger scale, then then you benefit from it, right?
Brian Bates: But you know that's a result. That's not the purpose. It's a, you know, a benefit or a result of what you're doing. And the purpose really is that you're, you know, you're helping other people get where they want to go so that you can, you know, get where you want to go and that's where you move from.
Brian Bates: Being a rank and file person to being a leader is that you're dependent on the results of the people that are on your team, right? The people you serve, people that you're saying, Hey, you know, I'm here to remove obstacles outta your way so that you can do what you want to or what what you're looking to do that I can help you get where you want go.
Brian Bates: Right. Versus, Hey, you know, I need you to do these items so that I can elevate myself to the next position or to a higher level. I mean, I think that's really old school thinking. So
Kent Bullard: I'm curious to know, going back to the early days, was it a cycle of, a consistent cycle of learning, applying and then seeing the results, you know, learn, apply, result, or were there key moments in the beginning part of your journey that got you focused on like memories that it's like, I distinctly remember this happened and I was like, I wanna pursue management, or I wanna pursue leadership.
Brian Bates: So, you know, that's a pretty loaded question, right? Because what's going through my mind is, and I say loaded meaning complex, right? Is that what's going through my mind is that there in, you know, my experience, there's that process, but it's not one dimensional, it's multidimensional. When you start you're thinking about, as a father, you know, you go through that, where do I want to be?
Brian Bates: How am I gonna get there? Here's the plan. Execute, then, you know, what are the results? And that can be in several different aspects. Just in, you know, as being a father or, you know, you know, be, you know, in, in your financial, knowledge and in your career. And, you know, Michael Smith does a a great exercise in one of his leadership classes about the Wheel of Life, you know, and there's all those spokes in the wheel of life.
Brian Bates: And so I think that's, that cycle is is, like I said, just multi-layer, multi-dimensional, and each one is kind of at a different phase at any given time. The as far as my career goes, I think again, that there's different things that kind of that, that I look at, Hey, this is where I wanna be. Maybe that could be, you know, one layer would be pay, another layer would be, you know, where I am as a technician, you know, my skill level as a technician, where I am in the company as far as, you know, the level of my position, right?
Brian Bates: Compared to other people in the company. So, you know, to answer your question. As far as my career I think that it was something that just kind of started building on itself. Right. And you know, John Maxwell talks about this in his, in one of his books. I think probably several of his books, a lot of 'em have the same thing, but they that at some point, I think in our careers, we go from this point of like, how far do I have to go?
Brian Bates: How much work do I have to do to attain success? And then that's kind of that input of energy. Right. And your. You're kind of feeling like you're exhausted and there's times where you know, you might feel like giving up or, you know, you might have to take a break, that sort of thing.
Brian Bates: And that to me is that input of energy you're constantly putting a ton of energy in. And in my career, at least at some point, those scales sort of tipped where you get more energy out of it than what you're putting into it. And you move to this instead of, how much do I have to do in order to reach success?
Brian Bates: I'm thinking, how far can I take this? And and just, you know, those victories give you more energy and you start really, you wake up saying, you know, Hey look, you know, you're excited to go to work. I had a friend, I was at the gym and told him, Hey, I've got a hard stop.
Brian Bates: I think it was six 30 I had to leave. And he goes, oh, do you have to go to work at that time? And I just looked at him and said, no, I get to go to work. Like, you know, I'm excited. I have a hard stop because I gotta get this, you know, this project going, and I'm excited to get there. And no, I don't have to.
Brian Bates: I have the opportunity and the privilege to go do this. So, but, you know, it's not always like that. And so over time I just felt like I could see that energy and the return on my investment just start to kind of build sort of the snowball. And then it started, you know, I started.
Brian Bates: Getting like that glimpse of, Hey, look, this is kind of fun. There's a lot of pain involved, but you know, every once in a while something's fun, right? And then then over time it's like, you know, this is about half pain, half fun. And then at this point in my career, I think is there's, you know, some moments of stress or frustration, but.
Brian Bates: By large, just a lot of fun and excitement and and something that again I wake up and I'm excited to, to get in and get going on the day and see, you know, what the day has in store for me.
Kent Bullard: I'm somewhat a little relieved that you have the same thoughts that a lot of us do in that Wow, today sucks a little bit.
Kent Bullard: And it's gonna be hard and it's challenging. And, you know, you said, you talked about the thought of giving up and the thought of, you know, maybe I need to take a break. But also I think I, I can appreciate that you more so have this con can continuous, iterative process of how am I continually moving forward or getting better until you hit that tipping point.
Kent Bullard: And I wanna talk about what that looked like for you. A little later on when you did hit that tipping point, what did it feel like? What did it look like? But more so I'm curious to go back to again, the struggle. So when you first started your business what were some of the most challenging obstacles that you faced and what do you think you did that helped you overcome those challenges?
Brian Bates: Well, I would say by far the largest challenge or obstacle that I faced was myself. You know, I mean, and I say that because if I knew now or back then what I know now, then I feel like I could have accomplished a ton more, a ton faster. So my frustrations. We're largely surrounded by people because that's the biggest challenge.
Brian Bates: I feel like most people in this industry, and I feel like just in business in general, right, when you're in the people business some people are, you know, in say the aeronautics business or you know, engineering or, you know, most business does serve people in some sort of a capacity, but I feel like the automotive.
Brian Bates: Industry is largely there to serve people, right? That, that's really the focus and people that understand that people are the focus. It's not cars. We, you know, we fix cars as a as part of our job. That's what we do. But really the focus is people. And and that's our job is to serve our customers, to serve the community, to serve our team members because.
Brian Bates: You know, in the end the further they get in life and the further we can help them accomplish what they're looking to accomplish, whether it's to have a reliable vehicle that they can depend on without breaking the bank and a place they can trust, or whether it's a place they can go to work and earn a good living and reach the potential that they deserve in life.
Brian Bates: That, that's really what the fact that when I said earlier that fixing cars just gave me a ticket to the dance, you know, the dance is the people, you know, fixing cars is not the dance. You know, if you can do, if you can fix the cars, then you know then you get a play out on the playground with everyone else.
Brian Bates: But if you can't fix cars, or if you can't work well and sell be a good advisor on the front counter, you know, be a good manager, that sort of thing, then then you don't get a play in where all the action is. So, so, what was your question
Michael Smith: again? So, just for fun. No I'll build on this when I, just for fun, when I met you. Many years ago you had three stores and you had four leaders around you. One was kind of a general manager and there were three store managers. And you were talking before about, gee, if I knew then what I know now, right.
Michael Smith: That those guys didn't really like each other and they didn't work very well together and there wasn't a lot of teamwork going on and they kind of had different agendas and you tried to go help and they did their own thing after you left and all kinds of crazy stuff like that. Just for fun, looking back, w what, knowing now what, you know, years later 'cause there'd be a lot of people that may be listening to this, that are living the life now that I'm just described, that you were living then what did, what would you have taken back and from today to that time to start with what were the things that you've learned that would've been useful then when it was a little messy with leadership and the people around you?
Brian Bates: You know, I would say the biggest thing that I learned. Having purpose being principle based having values as a company, operating principles, and how powerful that is to attract the sort of people that aren't dysfunctional, like what you talked about. Michael? I'd love to tell that story about how you and I met.
Brian Bates: If,
Michael Smith: yeah,
Brian Bates: That's just fine. You go for it. Well, we, you know, Michael and I met you know, just kind of make a long story short, he was an advisor that was helping consult with a group of other people. And I really needed to understand how to increase revenue and increase profitability, all those things that most business owners think about to some degree or another.
Brian Bates: Right? I mean, you know, you can't do this if you don't have the revenue and the expense structure figured out. And Michael was one of the first people to talk to me and he said, Hey, look, you really need to get your mission, your purpose put together and really work on your culture of the business, whatnot.
Brian Bates: It's, you know, fairly dysfunctional and it's creating a lot of problems and obstacles in your business. And I said, yeah I get that. Let me figure out how to sell more work first and then generate that revenue and then we'll get to the culture thing later. And and so we you know, Michael was very persistent and said, Hey, are you ready to start working on your culture and really, you know, taking your business to the next level?
Brian Bates: And as I started really analyzing what was going on in my business, I started realizing that it was all my frustrations were born out of, you know, just problems in the culture. And the culture was being dictated by some of the people that I hired. And, you know, I was, I was definitely never denied that the culture was all mine.
Brian Bates: You know, I owned it good and bad. And so I finally, sCU to Michael's, you know, suggestions of, Hey, let's work on it. Let's work on it. Said, yeah, you know what, you're right Michael. Let's work on this. And we just started creating a vision for the company that created a vacuum and drew people into this idea that we created.
Brian Bates: And I created it with the help of Michael and in collaboration with the rest of the team that was there at the time. And anybody that we hired afterwards, we were very clear that, hey, this is who we are as a company and these are the values that we hold important, and this is our purpose as a company and this is the mission that we're on.
Brian Bates: And if you're if you're excited about that, I think you'll fit really well into the team. If you're not, then I wouldn't. Accept a position here, right? Because we just know it's better off to, if people don't believe in teamwork or growth or servant being a servant to to other people or being a professional in this industry, those are four core values.
Brian Bates: Then then they probably won't work out. Those are the things that some of those people that were dysfunctional when Michael and I met those are the people that didn't work out, and it's because they didn't have those values. They didn't believe in teamwork. Like, like Michael said, they were backstabbing each other and they didn't believe in growing and being professional and and really caring about their customers and their teammates and the vendors and and really serving them and understanding that the result of increased revenue in general is a result of how well you serve people and care about them versus.
Brian Bates: Saying, Hey, let's manipulate people in order to generate revenue, which is you know, very shortsighted and lacks a ton of integrity, right? Has a bunch of problems associated with that. So, Michael I remember you asked me when we first started out, Hey, what do you wanna be doing in two years?
Brian Bates: And I said, well, I want to this was 2018. I said, well, I want to either build a company up to a place where I can sell it and get out of the industry because I was pretty burnt out. Or I said, I want to either be having fun and ready to continue to grow this business to to, to the highest, you know, potential that I can.
Brian Bates: And the more we got into it, the more I realized that they were really one and the same. Right? Businesses that are very attractive have great cultures. They have high revenue. They they're they're fun. They're they're functional, meaning that they're not passive aggressive. They're they're active and collaborative and and they feed they, you know, get energy from the the business itself.
Brian Bates: And once I out all the components that go into that, and much the same as kind of seeing that glimpse of leadership and there's a lot of pain and a little bit of, Hey, that was fun. You know, I wanna do it again. The same thing happened with the business over the years. And then it became something that, you know, over, you know, the next two years that Michael helped me build to the point where we were saying, Hey, look, this is a lot of fun.
Brian Bates: Let's you know, we're building something special here. And we could see people being drawn to the business and just kind of jumping on our crusade and saying, Hey, you know, we're gonna, we're gonna build something special here. And we made some predictions that were very bold. I believe we said we were going to get to 10 stores by 2025.
Brian Bates: We're at actually that bio is just a about a year outdated. We've got 14 stores right now. We're we're under LOI for another seven locations that will close by the end of probably the middle of January. And then we've got two more locations that we've got lined up for probably a February close.
Brian Bates: So we'll be somewhere around 23, 24 stores here by the end of the second, or the first quarter in 2025. And I think we predicted 25 stores by 2030 was in our mission statement. And that
Michael Smith: felt big at the time. Remember? That was like, wow, that's just
Brian Bates: so
Michael Smith: big and so far out.
Kent Bullard: It
Brian Bates: doesn't seem like it was a
Kent Bullard: big enough goal.
Michael Smith: Little did you know.
Brian Bates: Well, no, it wasn't. And you know, the funny part about it was everybody thought we were just crazy. They're just, you know, and as those that had a little bit of faith started seeing, oh wow this is really you know, moving in the right direction. And then we started acquiring a couple stores and then, you know, there was another.
Brian Bates: You know, people work for opportunity. They, they need money, right? They wanna be paid fairly, but the main reason the, especially the rock stars and unicorns are on your team is for the opportunity to see that, Hey, I've got the opportunity to compete for a position or to grow within the company based on my merits.
Brian Bates: They don't, you know, rock stars and unicorns don't expect entitlement, but they do expect to be paid for their talent and their efforts. And that involves having the opportunity to do that, right? I mean, if all we have is a position as a GS and there's a master tech that wants to join our team, you know, if there's not that opportunity, then he's not gonna join our team.
Brian Bates: Right? But, you know, if that master tech. Position is available and they say, Hey, I wanna move into management. And, you know, maybe being an area manager and learning the ropes here and possibly starting my own business. And if that opportunity is there and they see it then they wanna be on your team.
Brian Bates: If they see that, hey, this shop has been a three bay shop for the last 50 years and no sign of growing, no potential, then you know, they, you could pay them what they're looking to make. You know, the true unicorns aren't gonna wanna work there.
Michael Smith: Well, one of my, one of my favorite stories that, that you've told is that when you guys bought an a shutdown building and you put your brand on the front while you were getting ready to launch you started taking proactive phone calls from masters that were driving back and forth on their way to work.
Michael Smith: They saw the sign, you guys had your reputation in the market, and that they'd call and say, Hey, I'm a master tech. I'm a master service advisor. I'm a top end store manager, and when you guys start interviewing, I wanna be on the list. And it's such an interesting story because the industry is like, well, how are we gonna find good talent?
Michael Smith: And it's like, well, if you set this up right, they all they have to do is drive by the sign. Right. It's just an interesting you know, result that you guys have experienced. So,
Brian Bates: congratulations. Yeah. No, it does.
Congratulations
Michael Smith: feed on
Brian Bates: itself. And that, that is one of the you know, we have a little over a hundred employees or team members right now.
Brian Bates: And when we get done with this acquisition of seven locations, we'll have somewhere around 150. And it's a big question, Hey, I've got six people in my store and it's extremely challenging to keep my store staffed. How do you do it with 150? And it's, to me, it's relative that the larger you grow, the more opportunity is there.
Brian Bates: And so you do attract, if your culture is right, you do attract the right kind of people. Now there's other stores that, you know, we probably all know of a group, a chain of stores or something where. They're a large organization and they're struggling to keep good team members and their bays are empty, the parking lot's empty, that sort of thing.
Brian Bates: And it does work both ways, right? It's not a given that if you're just, if you just scale your company, that you know people are gonna be attracted to you, you still have to do the work. Right. You still have to, you have to scale
Michael Smith: it the right way. You have to scale it
Brian Bates: the right way.
Kent Bullard: Absolutely. So, I'm I wanna go back a little bit because you talked about the people that are saying, well, you know, I've got the three bay shop.
Kent Bullard: This is where I'm at. I'm, you know, at what point in your journey did you hit that crossroad? You see, I got the title there. Yeah, you got the crossroad in there. In there. When did you hit that crossroad? When you considered a future beyond the current business you had.
Brian Bates: So the question being when I was just at a single store and I considered a business beyond that.
Brian Bates: So bigger
Kent Bullard: than just the single location? Yeah. When did you decide to go big?
Brian Bates: What
Kent Bullard: happened? Right?
Brian Bates: Like, yeah. You know, that was a matter of just realizing. That I had people on my team that had bigger ambitions than to just work at a single location. Our first location was a four bay converted gas station.
Brian Bates: You know, had been a two bay gas station. The owner before me had added on a couple more lifts or a couple more bays, and I realized that if if I didn't give more opportunities, I was going to le lose people. And it was just going to be difficult to hold onto good, solid people. So. I found a, another store that had closed down during the 2008 recession, and we signed a lease on that building and started hiring more people.
Brian Bates: And the people that were at the first location, they were very excited that we were growing. I realized that our customers you know, something that I didn't expect, but the customers were really excited to see us growing too. You know, they, people like doing business with a winning, winning team.
Brian Bates: And so when they see that you're growing and that you're becoming, you know, larger or you know, you're having increased success as time goes on, there's a sense of comfort there, I think from your customers to know that, hey, they must be doing well. They must be doing a good job. I'm at the right place.
Brian Bates: And so they did get excited about and I think everybody. Well, well, not everybody. A lot of people like to see people win that if they understand small business that it's very risky. It's it's extremely grueling. You know, we almost went out of business a couple years after I bought the the shop.
Brian Bates: We were down to our last few thousand dollars and at the beginning of January, one year, which is not the time to, you know, be short on cash flow. And we just, we had the best January we'd ever had. We only had a January, one January to base that off of, but it was a really good January compared to that one.
Brian Bates: And we were able to put some money in in the bank and start building up our cash reserve again. So I think people understand how difficult it is and they they admire and respect when somebody is actually. Making progress so that I started seeing the the exponential traction of having a second location.
Brian Bates: I was able to attract more customers and more team members. And so, I had a conversation with John ler and Dan Gilley at the time, and they had told me from experience, Hey. If you go to two locations, you should plan to go to three locations because most people never stay at two locations.
Brian Bates: There are some, but most people either go from one to two to one, or they go from one to two to three, and you know, they may stay at three or they may move forward, but two locations is just twice as much work. 'cause you don't have the ability to have a layer of middle management there as an area manager and work on some of the stuff that.
Brian Bates: The business, you know, you know, it just so happens that running the business ends up being a full-time job at some point. So you just, you need to have people there to work on keeping everything going, the processes and working with the team members and whatnot. Helping them solve problems, solving their issues for them as they're bringing up, you know, challenges that they're faced with.
Brian Bates: So, so yeah. Then, you know, two businesses just, you know, I knew that I was gonna go to three, and then when I got to three, I met Michael and I was, you know, trying to run three individual businesses. And Michael was pretty quick to point out that, hey, we need to run a single business here, not three individuals.
Brian Bates: And then helped me find a find my, my business partner bill kind of a mutual friend, or Michael was a mutual friend of Bill and mine. And so, you know, bill and I hit it off and we both believed in the same things, had the same values and whatnot. And bill helped me run it as a single business versus three separate ones.
Brian Bates: And then that's really when things started taking off was just. Bringing all those components together and building a cohesive business versus multiplying, you know, the work we were able to multiply and scale the business versus just adding more and more tasks to our day. Well,
Michael Smith: you two together are a fantastic combination because you were by, by defensiveness, I suppose, having to work in the business quite a bit.
Michael Smith: And then when Bill showed up, he was fully capable from a background of 30 store overview. Right. Kind of a, he had a big background when he sat down, he said, give it to me. I'll run it. You go out and work on the business and I'll work in it. And you guys are a fabulous combination that way because he's a machine running it from within and you've done extraordinary things from the outside of your business working in, you know, from the outside.
Michael Smith: And it's been a, it's been a powerful combination. You two and that's scale allowed you to do that, right? You two then scaled up and then you could put talent around you and the talent that would aspire for growth came to you and the people who didn't want to grow left you and you replaced them with people who wanted to grow.
Michael Smith: And it sort of takes on a life of its own and Right, right. And it'd be great if you would share a little bit about that life of its own and the leaders that you can attract now versus the ones that left that didn't wanna be part of this. Right. Because you guys recruit and hire in a different way than most folks do.
Michael Smith: What you and Bill do at the beginning is different than what most people do. It'd be awesome if you would just share a little bit of a snippet of that about what you're able to do with what you've built.
Brian Bates: I I feel real fortunate that I was able to connect with somebody like Bill that is extremely talented and wise and and has the shares the same values and principles that I do.
Brian Bates: The other part of that though is that kind of going back to what we were talking about, really putting that defining that foundation of who are we as a business and what are our values and our mission and our purpose. That's really what Drew Bill to me, right? I mean, he had an offer to go work at the headquarters of Advanced Auto Parts, and he was ready to accept that offer, move to North Carolina.
Brian Bates: And
Michael Smith: yeah, not to interrupt you, but that was my conversation with him. I said wait. Freaking on the plane. I got one more guy you need to talk to before you decide to fly outta town. Right. And that was you guys getting together and connecting on your dreams or your visions together.
Michael Smith: Right. Which I just wanna throw that in. There was, he was one foot out the door on the way to Raleigh at that point. Interesting.
Brian Bates: Yeah. Yeah. Absolutely. And so, so, so I'd say I'm fortunate on one side, you know, there's, there is a little bit of luck involved there, but you know, those kind of people I think are around us.
Brian Bates: But if they're not attracted or you don't have something to attract them to your business, then you will never know. Right. You know, they'll either not reveal themselves as a unicorn and open up or. You'll know their unicorn and be frustrated that they don't want to take a job. And truly that's what you're trying to sell them is a job versus a career and an opportunity that you'll be frustrated that they're walking away and going somewhere else.
Brian Bates: I'm attracted to something else. So with with Bill coming on board I did express my passion for leadership and to grow the company and to run a business that we could look at and be very proud of. And all the principles that we wanted to build that business on are, you know, our purpose is, you know, very simple.
Brian Bates: It's a little bit more defined on our purpose statement, but it's just about making other people's lives better. And if we can fix a car or if we can help, a team member or be involved in the community and just use our position and our skills as auto repair professionals to make other people's lives better.
Brian Bates: Then the result is that we get rewarded with with more profits. However that just allows us to, gives us the power to grow our families and you know, to create this sort of a legacy that we wanna create. In the end, I, you know, I don't think anybody in in the right frame of mind, meaning that is doing this for the right reasons or business for the right reasons.
Brian Bates: Really if they are, looks at it and says, Hey, look, if I can, if I can manipulate people to do the right thing or help other people, then I can buy that Lear jet or that this is going to be one of those businesses where I'm going to be, you know, a multi-billionaire, that sort of thing.
Brian Bates: I mean, you know, is it possible? Maybe, but I think most people are just looking at it like, Hey, you know, if I do a solid business, I can earn a good living and, you know, retire someday and put, you know, my kids through school and live in a comfortable house. And. That's where it comes back to, you really need to, you know, once you define the higher purpose of working on cars, then a lot of that just, you know, it takes care of itself, right?
Brian Bates: You don't have to say, how do I, you know, how do I generate more sales? What's the sales program that, you know, the sales training I need to put my advisors in and, you know, the technicians and whatnot, and you're trying to manage personalities and you just feel like you're, you know, managing a three ring circus.
Brian Bates: So, so when it does come to finding that person that you're looking for, again, your biggest challenge is in your own in your own mirror of saying, what kind of business are, am I passionate about defining that business and then finding those people that wanna join in on that. Yep.
Michael Smith: And the beauty of it is that when you get that team built and you guys are walking out, the purpose of the character that the loyal brand ambassador customers that are meaning based, they're chasing meaning to find you guys, and they come for auto repair and they leave with a meaning connection.
Michael Smith: Their motivation internally is to come back to you again because you're talking their language. And those are the people that will build these long-term covenant relationships that are really, you know, the future profitability of the industry is knowing how to serve that top end client. And they come because of who you've demonstrated that you actually are.
Michael Smith: And it's just a super powerful, you're right, it takes care of itself in the end, right? Once you make that commitment, build the culture, get the rock stars, walk it out. In real life, those customers come and they're sticky. They'll stay forever. Right. They're
Brian Bates: great customers. So, so one of part of your question was how do we hire what's the process that we use to hire and that is the process is we I kind of joke around with our managers because we do a little bit of a two step process where we'll interview at a higher level for that candidate, and then we will have the managers really look into the technical capacity of the candidate.
Brian Bates: And we're, as we're developing our managers, we're developing them so that they can also hire for that higher or interview for that higher level. But really what we try to do is just. When we're interviewing for the character side of things, we're looking for, are these candidates, are they humble?
Brian Bates: Are they hungry, and are they smart? You know, and emotionally smart, meaning that they work well with other people and do they hold the values that we hold very high. And once we check those boxes, then we say, okay, now can you do the job that we're hiring you for? So in, in short, I just. Tell our managers, you know, if they don't understand that process, that we're just trying to make sure that we don't get any psycho killers into the, you know, trying to eliminate those, you know, murders from our from our shop.
Brian Bates: And
Michael Smith: but it is genius. It's genius because you and Bill spend your time making sure that the cultural fit is there and that you're hiring champions and these people are the real deal. And then when the time comes that they've passed that level of test, which it's a rarefied crowd that can join you at the level that you guys have chosen to live, then whether they can fix cars or sell at the front desk, lots of people can fix cars and sell at the front desk and don't fit your culture model.
Michael Smith: So it makes a lot of sense that's where you guys put your time is making sure you're hiring family and it's very powerful.
Brian Bates: And so I, I kind of say the ax murder tongue in cheek, but really they're not killing people, but they're killing the culture, right? I mean, they bring an ax in and they start swinging at your culture and it destroys your culture.
Brian Bates: And the beauty of. When you hire based on values and principles and purpose and whatnot, when you have the conversation, like one of our principles our values is teamwork and an operating principle is to be on time. Right? And the reason for that is your team is depending on you. I depend on, as a technician I would depend on an advisor to be there to take care of the customer so that I have work to work on or cars to work on, right?
Brian Bates: And as an advisor, they're depending on you to show up so that when they're taking care of the customers, that they can give the customer what they came in for. So instead of saying, Hey, the rules are to, you gotta be here, ready to work at eight o'clock, and if you don't follow those rules, we're gonna let you go.
Brian Bates: The conversation is, Hey, when we hired you, you expressed to me that you have a strong belief and you hold teamwork at a very high. Value and what you're doing when you don't show up on time is you're letting your team down. So, you know, is there something that's getting in the way of, you know, I mean, if you've got, you know, childcare duties and, you know, things get hung up or whatnot, then that's understandable.
Brian Bates: But if somebody just isn't motivated to get to work on time and and they just cannot. And it happens to all of us, right? Where it's this 23-year-old technician that for some reason can't make it to work before eight 15, no matter what you say. And even if you have these conversations and say, Hey, look you believe, you said you believe in teamwork, but you're violating that principle on a regular basis.
Brian Bates: So what is it? Is it that you don't believe in teamwork or that you know, you do believe in teamwork, but you're just, you know, violating your own personal value. And if that's the case, like you should rethink, you know, do you really believe in teamwork? And if you do, you should stay true to yourself on that.
Brian Bates: And the beauty of this is that, I can tell you just on that conversation alone, right? Just somebody that won't come into work or can't make it to work on time. And when you sit down and you talk to 'em and say, Hey, look, this is all about teamwork. Not a rule that if you break the rule, I'm the boss and you better do it.
Brian Bates: Or you're fired, right? But it's, Hey, we're building a team here and you're letting us down. And I've got a responsibility to everybody else on the team to make sure that people are coming, that, that are all the people that are joining our team also hold those values very highly. So, you've consistently demonstrated you can't make it to work before eight 15.
Brian Bates: You violated this over and even though you realize you're violating it, like, do you really fit in here? I mean, what you tell me, is this really where you should be? Like how and sometimes. And a lot of times, honestly, you know, and those are different con conversations based on whether they're violating different values.
Brian Bates: A lot of times they say, you know what I, I really don't feel like this is where I need to be. And you just say, well, what are you gonna do? And I'm gonna go find somewhere else to work. That's probably what I would suggest. Right? Yeah. And I can't tell you how many times I've had that conversation with people and they just self eliminate.
Brian Bates: Right. But it does give them the opportunity to leave on their own terms versus feeling like you unjustifiably fired them because of some arbitrary rule that really doesn't matter.
Michael Smith: Well, and Brian, to use language, Kent and I were talking about earlier today, you have set up a redemptive culture and you have redemptive conversations with people.
Michael Smith: And if they choose not to redeem, right? Not to challenge themselves and say, Hey, I'm living outside of my belief structure and I'm okay with that. I think I'll take that somewhere else. Then they're own, they're in charge of their own remedial solution to that, right? As you say, they self dismiss and you're like, well, can I help you?
Michael Smith: You know, I'll give you a good work referral. I can't give you a good cultural referral, but I'll give you a good work referral. Can I help you? Right, right. And it's just, it's a completely different. Expectations set. You're not in contest with them anymore. You're not pushing them to show up on time.
Michael Smith: They start either doing it because it becomes important to them, or they decide they don't care. And then they pick it up, take it somewhere
Brian Bates: else, right? And we've had,
Michael Smith: yeah,
Brian Bates: plenty of those conversations as well, right? Is, Hey, do you realize you're violating this principle that you know, on the surface have told me that you hold a very highly, and they go, you know what, I hadn't thought about it that way, but you're right.
Brian Bates: And I need to get my act together. And you know that also solves the problem when they look at it and it's just, it's about running a principle values-based organization versus a rules-based positional organization that is very ative, right? Hey, do it this way, or Get out
Michael Smith: well, and that.
Michael Smith: That very moment is very psychologically sticky, right? When somebody comes to a conclusion that you're helping them to become a better person and they actually make that decision for themselves, they appreciate that from you and they appreciate you, and that makes 'em stickier as an employee, right?
Michael Smith: They're less likely to pick up and go somewhere
Kent Bullard: else. It's very powerful. Who wouldn't wanna work for somebody that is driving that? I mean, you're people first. You know, one of the, one of the first things that made you kind of look at pursuing being better is that you were the obstacle. You changed your own perception first, and then you looked at, well, in order to take care of the people that I'm serving, they need more opportunity.
Kent Bullard: And so the reason you bought another business was to serve others. I mean, your whole drive is to help people. And who wouldn't want to be a part of that? How attractive is that to work for somebody whose sole purpose is to serve you, to make you the best possible version of yourself?
Brian Bates: Right.
Brian Bates: And that's the fundamental concept of a servant leader, right. Is, and that's exactly what I want to be known for, is somebody that came in and helped other people and was, you know, interested in their, personally, interested in their success, not interested in manipulating somebody for my personal success of building, you know, some accounts, you know, a cash account or whatnot.
Michael Smith: Well, and the beauty of it is they work harder for you. They produce more, they do it partially for themselves, partially to be part of a championship team, partially to make you proud of. Which is a beautiful relationship, and you end up getting more productivity out of them. Right? It, the productivity follows this self instead of chasing it.
Michael Smith: It's a self-fulfilling prophecy.
Kent Bullard: So, so you're building this legacy and you are actively building a lasting legacy. What are the, what elements are most important for you to leave both personally and professionally through your company?
Brian Bates: Leave? Like, when I leave the industry
Michael Smith: or
Kent Bullard: Yeah. The legacy. Leave this earth or whatever leaving looks like to you.
Michael Smith: Let's start with leaving the industry. Yeah. Let's, or leaving the company. Maybe stay in the industry, right? Let's back it off at death a little bit, right? So,
Brian Bates: yeah. Yeah. No. You know, bill does a good job at teaching a class the five levels of leadership. And one of the exercises at the end of that class is to write your own, your own obituary, right? And it can be just a career obituary or whatever you wanna, but it is, you know, like, what do you want people to say about you? And I always joke around that I've never heard an accountant give an obituary in my life, right? It's like, you know, and pull out the net worth statement as well.
Brian Bates: You know, he had these loans, but you know, he also had this money in the bank and, you know, well, we should all be so proud of Joe. You know, he was worth $800,000 when he passed away. And you know, there's the benefactors right there, Susie, and you know, Michael, or you know what, whatnot. But but you know, it's true, right?
Brian Bates: Is, you know, you want to turn around five years from now or 10 or 20 or 30 and say, man, that was really cool what I did, and not have regrets. Know that you're gonna make mistakes, but not regret you know, and to me, regretting is not trying or not, chasing or aiming for a noble purpose versus you know, things, right, or just, you know, some cash account.
Brian Bates: I think Sam Walton, he was on his deathbed and somebody asked him his thoughts as he was he was, you know, terminally ill. And he said, you know, I'm I got it all wrong. I mean, here's a guy who's a billionaire. And he said, you know, my, my wife doesn't like me. My daughter doesn't really know who I am.
Brian Bates: I don't know my daughter, and I'm one of the wealthiest people in the world. I messed up and, and those are things that, you know, experiences that, you know, are cautionary tales where you say, Hey, what are the important things? Well, you know, I wanna be known as someone who was there and that, you know, had a balanced involvement in my family, right?
Brian Bates: That I wasn't, you know, so involved at being a part of their life that I'd neglected giving them, you know, the security of, you know, you know, a good education and, you know, and living in a safe neighborhood and all those things that come with earning a good living, but not so much that, you know, that pursuit that, that I'm known as the workaholic that, you know, how proud are we of dad?
Brian Bates: We don't know who he is, but man, he worked his tail to the bone and look at all the things that we have as a result. So, you know, I wanna be known as a good, you know, father and husband and grandfather and and, you know, my parents are still alive, so, you know, definitely I think they would say I'm I turned out pretty good as a son and I, you know, spend a lot of time with them, which they, you know, appreciate more than anything.
Brian Bates: My my career, I wanted to be known as somebody that helped people get where they wanted to go. That, you know, provided a place that, that could, you know, really be proud of what they did for a living that they could be proud of the organization that they worked for and that they that they admired.
Brian Bates: You know, me as a as a, you know, person that, you know, stood for, good and principles had cared probably more than, you know, people thought I should care about people in the company. And, you know, that's easy to say. There's times where I think, you know, to me, I know I'm probably in, in the right place when people are saying, yeah, you know what, that person doesn't deserve to to be in this company, hasn't done something to, you know, like a capital, hey, that, you know, sin of they stole or they, you know, devalued a customer or something like that.
Brian Bates: But just, yeah, you know what, they don't have their stuff together. But you know, Brian. Gave them more grace than they deserved. And I want to be known as somebody who probably expected more than other people thought was possible. Right. And you know, I think, you know, we probably, you know, earned that reputation for sure, you know, amongst a lot of people is that, you know, five years ago they would've said, Hey, it's not possible to do the sort of things that we've done in the last five years.
Brian Bates: And I'm sure they're saying some of that about the next five years. Although we might have a little more credibility than we did five years ago,
Michael Smith: well fi three stores to 31 in a short period of time. It's quite a testimony. So, you know, that's quite a legacy in the business. You're, you guys are building, do
Kent Bullard: you, do you find, oh, sorry, go ahead, Brian.
Brian Bates: Oh no, I was just gonna say, you know, to your point about the number of stores I think I would be disappointed if I had two stores and they weren't. They weren't the sort of stores I could be proud of versus you know, having 31 stores. You know, to me it'd be, is it something you can be proud of?
Brian Bates: Because I do feel like there are, you know, organizations or, you know, individuals that are going out there and just saying, you know, Hey, look at all. I mean, it's like comparing belt buckles out at the rodeo, you know? I mean, we built scale. We built scale, but it was ugly look. Yeah, exactly right.
Brian Bates: Yeah. Yeah. And it and it all boils down when you look at those ugly stories, they always boiled down to how did it impact people? And the stories that people admire are the ones who are like, man, that company grew and, you know, they, we had fun, or their employees had a good time, they earned a good living.
Brian Bates: They, you know, they built something special that everybody admired and just, you know, were in awe about, you know, based on all those, you know, the, you know, Christmas parties and the community involvements and the the ability to, you know, help customers, you know, how good their, you know, their customer, their hospitality and their technical expertise, all those sorts of things, right?
Brian Bates: Those are the things where you look at it and you go, wow, man, that's a powerful organization, whether it's three stores or 50 stores, right? It could be three stores of, oh my gosh, that place is, I've heard that's a nightmare to work there. They're just abusive to their employees and all those ugly things.
Brian Bates: And so, again, to, to the point of our purpose and mission statement the purpose is to make people's lives better. And the mission is to do it at the largest scale possible, while still serving our purpose of making people's lives better. If at some point we're not making people's lives better, or we're, you know, doing, you know, like the scale is tipped of, Hey, you know, we're probably making more lives worse than we are better at that point, it's a failure, right.
Michael Smith: But I'm gonna, I'm gonna just recognize what you said. That's phenomenal. You're gonna do it right first, according to your definition of Right. And then scale is multiplication on the back end. But if you can't multiply doing it right, you're not gonna multiply. Right. You have it in order and your soul, which is beautiful.
Kent Bullard: I think that answered my question I was gonna ask, 'cause I can see that there's probably some people out there that think, you know, the only way that these people are able to scale and grow these platforms, these organizations is large, is because they took, you know, shortcuts or they lied or they cheated and did these things.
Kent Bullard: How do you feel or what are your thoughts on maintaining your values and principles as you scale? And I think you somewhat answered that, but I mean, what would you tell the people out there that who might be skeptic about, you know, well, I have to sell my soul in order to be able to attain something like this.
Brian Bates: I would go back to diving into your values, right? And really looking at this and saying the money and the growth as a result of doing the right thing. Doing the right thing doesn't result in, or, and making a bunch of money doesn't result in, now we can do the right thing. It, you know, that has to come first.
Brian Bates: So, and people have to define what that is for them. I you know, I'm not saying that, hey, you know, that purpose that I've defined for our company is the only true path. I've talked to a lot of business owners and they've got a lot of different purposes. And again, when we start talking about talking to team members and saying, Hey.
Brian Bates: Do you really feel like you fit in here? It doesn't mean that person is just a throwaway and you know that they'll never fit in anywhere. It's just, hey, you gotta find a place where you fit in that they believe in, you know, that gives you passion and that, you know, you get energy to, you know, make it to work at eight o'clock or whatnot.
Brian Bates: I had a technician, a shop foreman years ago, and he said, he was gonna leave me because he wanted to go work for another company that that were the technicians were extremely competitive and, you know, basically to the point of being cutthroat. But that was where he thrived. He just loved the competition of, Hey, I want to, you know, work by myself.
Brian Bates: I don't want to, you know, have lateral support to, you know, be there for my fellow technician. I just wanna bring my cars in, do my work, and show everybody that. I'm the best. And he called it a shark tank, right? He said, Hey, look, that place is a shark tank. And this whole, like, me helping other people out and being a shop foreman just has really taken a lot of my time and it's really like, I'm not happy
Kent Bullard: Having listened to your value and your purpose and everything you've talked about, you know, throughout this podcast, it's now glaringly obvious of like how selfish of a mentality that is in per once you have that perspective to say, well, he just wanted to carry about himself and no one else.
Kent Bullard: And obviously that person is gonna work themselves out of your organization because you are so driven on helping others. And that takes. You know, relationships that takes connection, that takes effort for someone else's benefit, which is almost the exact opposite of
Michael Smith: it. Well, and the team, it's completely selfless.
Michael Smith: The team will help you purge too, right? Right. I mean, once you get a team of people who are working as a team and some lone stars over there, star or not they're not gonna put up with that for very long. They're either gonna expect them to step into the team and contribute, or the team's gonna start to push 'em out the front door, so
Brian Bates: Right.
Brian Bates: Or they'll attract other people that are cutthroat. Right. I mean, those are the only people that will stick around. And yeah and we knew it was gonna be painful, but when he explained it to me that way, I thought, I'm gonna lose a lot of money. But I'm not gonna talk this guy out of leaving. I, you know, I mean, that, that's the last thing I, you know, the I can't make an argument to him.
Brian Bates: That was going to get him to stay. Because the only argument would be, Hey look, let's change the culture of this company. And you know, I'll get technicians next to you that are competitive as well and let's just see you guys, you know, fight over the work and you know, cut each other's throats
Michael Smith: well, and you're right, the alternative is they stay and then they're kind of a cancer.
Michael Smith: And then you know, you don't deal with them and other people can't figure out why you don't deal with them. And then now there's a cultural problem because you believe in teamwork, but you're not building teamwork and you're letting the star sit in the corner and be difficult. And if this toxic thing forms and it, we talk a little bit like cancer in the body and it's like, are you better off letting the cancer remove itself or cutting it out and sending that.
Michael Smith: Terribly painful, high performer, right? And it's like watching the money walk out the front door. But what you replace them with is somebody who fits and the team tightens up and helps each other more, and they more than replace themselves. It's just hard to watch that high producer walk out the front door and wish you could change it.
Michael Smith: It's like there goes the money in the short run, Rick,
Brian Bates: If you've been in this industry long enough, you've had, and this guy really wasn't a prima donna. I mean, he really tried to do this. He just came to the realization that he was trying to be somebody who he wasn't, and he needed to go work somewhere else.
Brian Bates: And I agreed with him. And I still see I saw him probably a couple weeks ago at a party that you know, was being held by a friend of mine that, you know, worked on our team and invited me to his birthday party. But still now, I mean, I still like the guy. He just he isn't a fit, right?
Brian Bates: I mean, he is. Great technician. And and he was trying to be somebody that he wasn't he didn't become toxic, anything like that. It was just one of those things where I just looked at it and said, man, these guys are hard to find and this is gonna hurt. But but at any rate, you know, that's, I think when you look at people, back to your point, Michael, when you said, Hey, look, we're not gonna give you a character reference, but we give you a reference when somebody leaves the team.
Brian Bates: You know, somebody, so if he was asking for a reference to a company that said, Hey, you know, we hire sharks. I would be like, man, this guy is perfect, too unique. He's gonna fit this, he's a great
Kent Bullard: way, he's gonna fit right in. And it's not, and it's not to disparage him in any sense. You know, I said selfish, but really you've got, if you've got two purposes or two, you know, directional ideologies and you're starting to split those, I mean, that, that's gonna cause friction in where you're going.
Kent Bullard: And really what you're looking for is that unification of purpose. Right. Not to say that his purpose is bad or negative or anything, because I could see good businesses being built off of that. Well, we are competitive at being the best. And that's what it looks like, right?
Brian Bates: Yep. Well, that's one of the first, times I listen to Mike speak. He talked about the Evergreen study in Harvard, and they is that is the Evergreen study, right? Oh yeah. The Evergreen
Michael Smith: project. Evergreen study, absolutely. Yep.
Brian Bates: Yep. And they they talked about alignment principle alignment, and that if the people on your team are not aligned with your values, then they're not a good fit.
Brian Bates: And when you truly get that synergy, it's when people align with your values and, you know, then you start building this culture that's based on, you know, those values and principles and purpose and whatnot. And that's really where you start, you know, picking up momentum. And again, it just, you know, that, that was probably, you know, in, at that phase of my business, when I needed to go from three and beyond stores, that was a defining moment for me.
Brian Bates: Was realizing that, hey, I'm hiring people based on their technical ability and they're coming in and it's completely dysfunctional because they don't all believe the same values. And and I was, you know, just running around, putting fires out and, you know, dealing with, you know, Michael said, you know, I would, you know, go in and try to fix something and leave, and somebody was undermining me in a conversation by the water cooler.
Brian Bates: And I mean, that sort of stuff you know, is very destructive. It's, you know, triangulation. I mean, you know, I know a lot more now than I did back then, and I can recognize it very quickly now and just say, Hey, this person needs to understand what they're doing is destructive. And when they understand that if they continue to do it, that person is gone.
Brian Bates: I don't care if that's our lead technician at the shop or not. We've, we have hired people based on gossip. Good technicians too. But we refuse to let technicians of any level come in and divide our team by gossiping and you know, talking smack about other people, we let 'em know we, we give them, you know, more warnings than we probably should, but in the end, if they're just hell bent on gossiping and disparaging other team members or myself, or, you know, leadership or the company in general, then you know, hey, you know, let me give you a reference to our competition.
Brian Bates: You can go do that there,
Michael Smith: as I've heard you say, you promote them to customers, so
Brian Bates: Yeah. Give them, release them to the industry so.
Kent Bullard: I love that. I love to kind of step into somewhat of a lightning round here. Okay. This has been a phenomenal conversation, but I wanna jump into a lightning round.
Kent Bullard: All right. Just a few questions and we'll dive into those. First question, what's a piece of advice that you once received that you now find invaluable?
Brian Bates: Invaluable? I would like to give two, two pieces of advice. One was when I was in high school, I wanted to be a veterinarian, and I interviewed as part of a class, kind of, you know, career day project.
Brian Bates: We were, we spent a day with a professional that we, you know, aspired to be. And I asked our local veterinarian who we'd been bringing our animals to for years. So it kind of, you know, formed a relationship with them. Some questions and one of I forget the question that I asked, but one of his answers was, you need to learn to love learning.
Brian Bates: And he just, you know, and that has always stuck with me that and I feel like the flip side of that, that he was cautioning me against was don't become complacent and stop growing. And, you know, stop learning that, you know, you will reach a high level of success if you really enjoy learning.
Brian Bates: Not just do it because it's a chore, but just really love the whole idea of learning. And you know, and I try to. The other day I was at the grocery store and I saw a pomegranate and I'm like, like, I've never bought a pomegranate before. What the heck is, you know, how do you eat a pomegranate? I don't know.
Brian Bates: And so I took it home and I couldn't really find any good answers on YouTube, or I just cut it and I threw it in a juicer and it tasted terrible. And I realized that it's just the seeds, right? It's like nobody eats the pomegranate and they just eat the seeds. And when I figured that out, I was like, oh, they're pretty good.
Brian Bates: I don't know if they're worth the effort of digging 'em out, but they're pretty good once you get 'em separated. But those are the sort of things, I mean, just small things all the way to like, how do, I mean, we're in we're in sponsored by investors in a larger group that that we formed with five other businesses that came outta the institute and or for others rather, but.
Brian Bates: Like, how do we operate and grow this to a I mean, I've read books about growing the business to a billion dollar a year business. And and it's possible, you know, I mean, we could we're we're certainly in those sort of circles that can help us grow to where we could be, you know.
Brian Bates: Billion dollar a year business. So, so to me that, that's the first set of piece of advice is no matter where I've been, I've always just like known that there's something else to learn and I wanna learn it and have fun at it. Like the pomegranate thing was a kind of a pain in the butt. I made a big mess, but it was like, it was just fun learning about pomegranates.
Brian Bates: Right. And then the second set of advice was when I was getting my degree, I had not yet committed to the fact that I was going to be in the automotive industry for my career. And I was talking to my mentor at the dealership, his name was Chuck, and he's from Texas. And he'd had a very interesting career.
Brian Bates: He had worked on cars as a young man and then had a. Then went into the business of selling satellites when the satellites in the eighties used to be these huge, you know, dishes that took up, you know, a quarter of your yard in the backyard. And and then he, you know, he he did some other some other, you know, things here and there, but he kept getting pulled back into the automotive industry and and then just found a passion for it eventually.
Brian Bates: And he said, you know, as I was talking about some of the options that I could do, as, as you know, I was getting close to getting my degree, he said excuse me. He said, you know, Brian, let me give you some advice. You're a car guy, you'll always be a car guy. And the sooner that you accept that, the more successful you'll be.
Brian Bates: If you try to get out of this industry, you'll realize that this industry. Has a lot more opportunity than most anything you'll find outside of this industry. And you're very talented in this industry. So save yourself the trouble and put your head down and make the most of this opportunity and it'll treat you well.
Brian Bates: And and he was right. You know, I think that the automotive industry is, it's always just been a solid industry with tons of opportunity and something that I think a lot of people look at all of the, you know, the pain that is, that can come out of this industry and it can cloud. The opportunity and the the good things that are in this industry that that you can't find anywhere else.
Brian Bates: Or if you do it might come with, you know, a lot of baggage that, you know, really drowns it out as well. So, so those are the two bits of advice. Great
Kent Bullard: advice, kind of, kind of making the most outta the opportunity that's already there right in front of you. Right. Make your own grass green.
Brian Bates: Yeah.
Kent Bullard: Picking
Brian Bates: your
Kent Bullard: purpose.
Brian Bates: Well, and there's the saying, right? The grass is green where you water it. And so, and you know, no matter where you go, there you are, that the challenges are usually in the mirror, right? The reason you're probably not happy is because, you know, the person in the mirror.
Brian Bates: It's not because of your situation or lack of opportunity, you know, you know, opportunity to do something that you have passion over whatnot. It's just like the way you're looking at things or the way you're approaching things, that's where your frustration is born from those areas, not.
Brian Bates: Because there's I'm gonna say this. You may or may not leave it in your podcast, but I read a book and there's this book that I, or this quote that I read and I memorized it because it was like, man, that is, that's just sums up so much. But it was written, I think in the late 18 hundreds by an English guy, and he said the fountain of content must spring from within because he who has such little knowledge of human natures to try to change anyone's disposition other than his own, will end his life in fruitless efforts and multiply that which he proposes to remove.
Brian Bates: And it's like, absolutely. It's such a powerful quote. I mean, it's, man, I read it in that book. Mm-hmm. And I was just like. Man, I've gotta memorize that because it's so true. You can't go around trying to change other people. And that happiness comes from, you know, from inside. It doesn't come from everything outside.
Brian Bates: It comes from within you. And it's about your perspective and how you view things. And seeing the glass is half full and deciding that you're going to be positive and that you're gonna bring energy and be in a fountain, not a drain. All those things, right? And if you try to, you know, go around by finding happiness, by changing other people, all you're going to do is make things worse and end your life, you know, waste your life.
Brian Bates: And make things worse. Right. So, anyways, that that's one of my favorite quotes. I love
Kent Bullard: that.
Brian Bates: My favorite quote and,
Kent Bullard: you know, learn to love learning. I wrote from pomegranates to private equity, you know, second lightning round question, you know, question lightning round.
Brian Bates: I don't know if I'm making it lightning for you, for a crock pot round.
Kent Bullard: How do you define success today and how has that definition shifted over time?
Brian Bates: Wow. You know, we Michael and I, as we were working on changing our culture, I read a book and this guy is saying, or he had asserted something in the book that everybody goes through. Phases in their life. And there's three main phases, and that is survival, success, and significance.
Brian Bates: And I think in each one of those phases, there's a success right there. There's a defining or definition of success. So when I first started in my business, the success was I'm surviving. And and you know that I was proud of that, right? I mean, but if I had gone 20 years and people said, Hey, how are you doing in business?
Brian Bates: Well, we survived another year. I. I wouldn't define that as success, but in that first phase, you know, those first two or three years, survival was a level of success. And then success, right? That's the, hey, we're growing, we're, you know, we're making good, you know, revenue, able to buy, you know, a nicer car than I had before.
Brian Bates: You know, take some nice vacations, that sort of thing. Able to employ, you know, people and give them opportunity and help customers. And we're known as the one of the top shops in the area to bring your vehicle. I mean, we've, we're gaining that reputation. So all those things, defining success as a small business.
Brian Bates: And it was like, wow, man, this is great. So when we achieved that, that was to me that was success. I would define that as success. And now, you know. We're in this significance phase where we say, okay, we obviously know how to survive and we know how to be successful. And you can't just disregard those two things and say, Hey, you know, we're going to now move into significance.
Brian Bates: They just, you know, they're at odds with each other for one, but you still, you have to build upon, you can't just, you know, walk through and then di discard that phase as you're going through. So at any rate, you know, knowing that we're very successful and we know what a successful, how a successful business should run and maintaining that success.
Brian Bates: And then also moving into using that success as a way to be significant in a lot of aspects of you know, the industry and in the community and my personal life and, you know, professional life and friends and, you know, just that whole wheel of life. That's really how I would define, you know, success moving forward.
Brian Bates: Right? And at some point you know, everybody exits their career either, you know, horizontally or vertically. I'm hoping, you know, vertically is is how I exit. But you know, when we get through or I get through to the point where I say, you know, Hey I was successful in this significant phase, I feel like it'll be that.
Brian Bates: I was able to develop people to run the business and to have the opportunity to run that bus, you know, the business, whatever, you know, phase it's in when I decide to to walk away. And that the business continues on and that, you know, there's a there's a tempered emotion that comes out of it.
Brian Bates: One, one of not, you know, I don't want a an emotion of, thank God that metal fart finally moved on. Right. You know, it's a, he should have moved on years ago. But I don't want people to go, oh my gosh, how are we gonna survive without him? Right? I want that level of success to be, man. He accomplished a lot of great things and did so much and prepared us.
Brian Bates: And gave us so much, you know, opportunity to grow and to learn and to be successful in this industry. And I wanna accomplish those sorts of things. And, you know, not these exact same things, but those sorts of things in my career that I can look back on and say, well, I'm really proud of that.
Brian Bates: And that people will say that, you know, he did a good job in this industry and added a lot of value to it. So that's, you know, I mean, when I look at legacy and success, to me it, it has some somewhat of that feel, right? I mean, as I'm going through, it starts, you know, forming and shape, you know, becoming a certain shape and color and light as.
Brian Bates: The more I go into, you know, my career, I always look at, you know, my life or my career, whatever is this blank canvas and you know. Bob Ross used to be that guy on PBS that had the big hair. And my mom loved to be happy Little
Michael Smith: picture, right?
Brian Bates: Yeah. And he would make a mistake. It's like, oh, there's a happy little mistake.
Brian Bates: And then all of a sudden it's like, holy cow, man, that like, it looks like he meant to put it in there even though he's, oops. And who knows if he did it on accident or or did it on purpose to try to make it look like an accident. But there's a lot of accidents that I've made in my life that I look back on.
Brian Bates: It's like, man, I'm glad I made that accident. And that just paints a that, that's that, you know, rock that's, you know, that looked like initially, boy that's a mistake. Oops. Didn't you know it was supposed to be a bush And, you know, I didn't do it right now. Looks like a rock. And now, you know, you build this painting around there and then, you know, you look at the finished painting, you go, man, that mistake, you know, looks like it was meant to be.
Brian Bates: Right. So,
Michael Smith: well, I'll
Brian Bates: say those are if
Michael Smith: you let me speak just for a second into your significance comment. You, as long as I've known you have been focused on. Deriving meaning and putting meaning in front of what you're doing and bringing people along with you. And I'll say it, a hundred employees, I'm gonna guess that if they're all reasonably stable and you don't have any more of those cowboys or cowgirls out there trying to do their own thing, that's 101 multiplication of what you've got in your hand.
Michael Smith: Now, of leaders and team members who are meaning driven they're focused on significance in the work that they do and the contribution that you guys make to your customers and to your communities, and that, that multiplication model is profound, right? It's not just about success taking home a paycheck or survival, whew, we survived another day.
Michael Smith: Right? You guys are in a different level than most businesses, period. And in our industry, it's an extraordinary. Level and you're multiplying. The bigger you guys get, the more people you bring with you that fit, that, the more they're empowered to walk out. Whether you go out and I hope you go out vertical or yeah, vertical.
Michael Smith: I wanna go out that way too, right? Let's go out and do something on the backside together. But you know, when you're out of it and those people are still in it and they're still making a contribution, that they're not making a survival contribution anymore, they're not making a success. They're in the meaning zone.
Michael Smith: They're in the significant zone, and they've got a hundred and 150 or more people out there spreading meaning. In the world. And that's really a profound legacy that we're talking about here. That's a huge contribution that you guys have made and what's important to you. I just, I didn't want that to go by without really telling you how powerful I think that is.
Michael Smith: So
Brian Bates: it's extremely powerful and I think if anybody people were to take one thing out of this podcast, I would say that's, I mean, if you're looking for the secret that's a huge part of it. If it's not the secret it's a huge part of it. The power of saying, Hey, it's not about money. It's about the, what the money represents.
Brian Bates: The money represents what we're doing. And the more we do the right thing, the more people pay us to do it right. They patronize our business. They support us and and they buy more from us which allows us to continue to grow. Whereas I, you know, I hear like we just, we hired a gal. She's actually, it's interesting.
Brian Bates: We were looking at the recruiting component and we decided rather than hire a recruiter to bring more people in, let's look at where the holes are in our bucket and let's seal those up and make it, you know, as a stable, a bucket as possible. Meaning that instead of seeing our bucket and saying, we've got a lot of holes in the bucket and we're leaking water, everybody has turnover in their company.
Brian Bates: Right? I feel like our turnover is pretty low, but I still feel like, Hey, you know, we could do a better job. There's people that you know, have probably left or that, you know, we've we've, you know, parted ways with that. Probably it was because of what we were doing, not or our environment or something that we weren't doing was the reason why they left.
Brian Bates: And so we hired a what we labeled our team development manager and that person. Comes in and has career discussions with our team members make sure that they're onboarded properly, they understand all the purpose of the business and all those things that right now it's becoming difficult for us to really, you know, make sure that there, there's a solid foundation there.
Brian Bates: So as we saw that starting to kind of wobble, we said, Hey, we need to hire somebody who's dedicated. It means so much that we dedicated somebody to say. This is, you know, where, you know what the company stands for. Make sure that they understand the values and that they align with those values. And now, where do you want to go in this career?
Brian Bates: Where do you want to go in this company? Let's bring our, you know, our training resources, everything into your, you know, to you so that you can grow as a person in a profession and what roadblocks are in your way. And give 'em the feedback to those managers, those leaders that are there to serve and to remove roadblocks so that people can perform at their highest level.
Brian Bates: So, at any rate the the idea that we're chasing money, the person that we hired said that they left a company because they were they were focused on making money. They were moving towards a very sales organized or sales centric culture instead of a people culture. And and we we agree with the philosophy that we're in the hospitality industry, right?
Brian Bates: And that's not just hospitality for our customers, but also for people on the team. And what hospitality means is just that experience, that full experience, not just the transaction. Like you can go to Motel six and get a bed and a shower and all those things, right? Or you can go to the Ritz Carlton or the Four Seasons.
Brian Bates: There's a super big difference in, in the price that you will pay, but people pay it for the experience, the hospitality. And not that we're looking to, you know, blow people away and overdo it with our hospitality. But we also want to know that, hey, look, the hospitality is extremely important.
Brian Bates: And so for us, and I think as you grow any business grows more and more. If you start really focusing on those numbers, then you will have people that will become discouraged about that and say, Hey, look, this is all about the money. All they care about is the money. And if you let that creep into your business you're in for trouble.
Brian Bates: Because the people that stay know, you know, they will have decided that the way to get recognized in this company is to make more money for the company and generate revenue. And so we we constantly, I don't think you can say it enough. It's not, it's like saying, you know, I love you in a marriage.
Brian Bates: You know, you don't just say, Hey, I love you. When you get married and then say, if anything changes, I'll let you know. You know, just know once a year on your
Michael Smith: anniversary
Brian Bates: one more time. Right. But it's it's the same thing about the revenue is a representation of the experience that the customer has.
Brian Bates: And part of that experience is connecting with a customer and understanding them and having them feel like they're cared for and they're not just a number, and you're not just, you know, targeting their wallet, you're targeting, you know, their needs as a customer and serving them. So when we celebrate a record month or you know, a great day or you know, a, you know, any sort of achievement or whatnot, we always recognize the behavior that goes into that.
Brian Bates: Right? It's like, Hey, this is a result. You know, the stats here the score at the end of a football game is representative of how they played the game and we're not. You know, we're, when teams take the field, they know they have to put points on the board in order to score, but they also know how they have to come together as a team and the actions that it takes in order to score those points.
Brian Bates: Otherwise they'd be. Going to the hardware store to get a ladder to climb up to the scoreboard to start, you know, putting points on the board, right? And so it's not about putting points on the board, it's what those points represent. And that's the the thing that makes people admire games and admire the people that win at those games is what it takes, the work and the effort that it takes to win that game.
Brian Bates: So, so at any rate, you know, again, if people take anything away from this podcast I hope they, they realize that's the key, right? Is the power of having that purpose and understanding that this is the reason why we're in business and it's something more noble than, you know, fixing cars and being the best repair shop in town.
Brian Bates: I mean, that's, it should be something that inspires the higher level that you develop that purpose and create it, and then reinforce it and bring other people onto your crusade. The higher level people you get, you don't get the people that are like, Hey, I just want to be the best and I wanna work in a shark tank and you know, we're gonna be the best shop and I'm gonna be the best person in the best shop you want to be.
Brian Bates: Hey, you know, and if that's what you want, then that's that's fine. But for us. That purpose of, you know, making other people's lives better and growing our influence and growing the company based on doing that at, you know, a larger and larger level is something that has has been really fun for us.
Michael Smith: Well, I'll tell you, you know, you you're walk and talk and testimony is that you guys are building a skyscraper and you're gonna have 31 floors on it here soon, and there's more in the pipeline behind that, right. As an idea. And every rockstar you bring in is another iron steel pillar. That you put in the ground at the foundation and the fact that you've doubled down on your investment by having the focus be their intake and their cultural alignment and their development and the strengthening of them.
Michael Smith: It's almost like you're getting these giant rockstar pillars and then you're deep, you're embedding them deep in concrete, and the stronger your foundation comes of this stuff, the more floors you can put on it, the more floors you can put on it. And it's, I mean, the you're investing in what you believe in and it's a beautiful thing to watch it succeed and grow and get stronger and taller and higher.
Michael Smith: And it's impressive indeed. You can see it from a long way away at this point. A lot of people watching you. So congratulations. You guys are killing it.
Kent Bullard: Yeah. Brian, this has been such a fulfilling. Conversation just jam packed with value. You kinda answered my final question, which is what message would you leave for somebody who is pursuing to do what you are doing?
Kent Bullard: And I think, you know, I wrote down here do what inspires. I think that's something you said and I think that speaks to everything that you've discussed today. And I just, I truly want to thank you from the bottom of my heart for sharing this with just me on a personal level. I've got a lot out of this and definitely spoken to some parts of myself.
Kent Bullard: So I thank you very much for that. Yeah,
Brian Bates: I I love sharing and helping, helping people. But I also think that gives me the or at least opens the door to learn from other people. And and the one thing that I always loved about going to the the bot or the peer groups the gear groups that you guys have is just getting with other owners and just knowing that it could be the guy that opened his shop two weeks ago, or the guy that has been running a shop for 40 years, but they're, I was gonna learn something from somebody.
Brian Bates: Right? And and I just always, I learned, well, I hadn't always learned, but through my experience, I learned that you just don't discount anybody that has anything to say or whatnot because everybody's has their own experience. And whether they're running a John Deere shop out in the middle of, you know, Kansas, or they're running some, you know, high euro shop in the middle of San Francisco, there's a, you know, there's something that they know that will help you in your business, right?
Brian Bates: I mean, if they're successful in business, it's not because they don't know what they're doing. They've figured something out that probably will help me to bring value to the people that are working in our stores, right? So it's it's, I don't know. Like I said, that's the passion that I developed with just business.
Brian Bates: And it doesn't matter whether you're running a. Plumbing business or you know, you know, medical supply business or whatnot. It's all about leadership and, you know, really serving other people through those principles because everything rises and falls in leadership. I mean, it, you know, you can see it time and time again where you go into a location that's struggling and this place lacks leadership.
Brian Bates: Or you go into a place that you know is struggling and then you put the right leader in there and it just takes off almost on day one and you go, yeah, that's the power of leadership. Right. So,
Kent Bullard: well, Brian, thank you so much for the time. Those of you who have been listening, again, if you have any questions or comments about the stuff we covered today, if you'd like to learn more again, comments below and you can find more information at, we are the institute.com.
Kent Bullard: Brian, thank you so much.
Michael Smith: Thank you my friend.
Kent Bullard: President of ESA Tire and Auto. It's been a pleasure.
Brian Bates: Yeah, it's a pleasure's been mine. Thank you guys for having me on.
Michael Smith: Take care, my friend. Yep.
 

190 - Ask Me Anything: What Your P&L Is Really Telling You: Reading Your P&L Without the BS

190 -Ask Me Anything: What Your P&L Is Really Telling You: Reading Your P&L Without the BS
February 04, 2026 - 01:02:24
 
Show Summary:
Cecil Bullard and Eric Joern break down why most shop P&Ls are confusing unreliable and overloaded with noise. They explain how inconsistent accounting practices distort margins and decision making, and why clean consistent structure matters more than perfect numbers. The discussion covers matching income to costs using accrual principles reducing unnecessary detail and using trends to spot real problems. This episode gives shop owners a clearer way to read their financials with confidence and control.
 
Host(s):
Cecil Bullard, Founder of The Institute
 
Guest:
Eric Joern, CPA, CM&AA, AAM, KAIZEN CPAs + Advisors
Show Highlights:
[00:00:02] – Why profit and loss statements matter for shop owners
[00:01:02] – Accurate P&Ls are rare and usually misunderstood
[00:02:22] – Accounting opinions create confusion and inconsistent reporting
[00:05:33] – Frankenstein P&Ls make performance comparisons impossible
[00:06:49] – Structure income and costs to clearly see gross profit
[00:10:33] – Long P&Ls cause decision fatigue and hide key issues
[00:14:15] – Misclassified wages distort margins and financial reality
[00:19:30] – Inventory purchases should not destroy monthly profitability
[00:26:19] – Every part and car needs accountability to prevent losses
[00:45:54] – Clean current financials matter more than fixing the past
 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/J-qbi8HoMLE
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
 
00:00:02:02 - 00:00:13:11Cecil BullardWelcome to ask Me Anything. Today I have, with me, Eric Joern. If I, if I mispronounced it. Eric, just correct me.
00:00:13:14 - 00:00:14:12Eric JoernYou got it.
00:00:14:14 - 00:00:42:25Cecil BullardFrom Kaizen, CPA. They do. Accounting. And, you have an awful lot of our clients. Yep. Which many of those we have recommended because accounting is so bad out there. So. So you guys do a good job. Yeah. So today we're going to we're going to start out kind of by talking about profit loss, profit loss statements and why they might be important.
00:00:42:25 - 00:01:02:05Cecil BullardAnd, of course, if you're out there, and you would like to ask a question or if you have any kind of a question at all, you want to do that, please put it in the comments. Rawley will be taking care of that for us. And, making sure we get those questions so we can get him answer.
00:01:02:07 - 00:01:26:20Cecil BullardLet me let me start out here, Eric. I always make this kind of comment I have seen, I don't know, 10,000 pals in my life. And, and, I can count on one hand the number of pals that I've seen that are actually accurate. Well done. And give us the information we need, at least in the beginning.
00:01:26:22 - 00:01:39:26Cecil BullardYeah. What? Why? Why is it so? I don't know, why is it so bad out there where there's so much inaccuracy and so much confusion around the profit and loss statement?
00:01:39:28 - 00:02:01:10Eric JoernYeah. You know, sometimes sometimes we have that we have that same question. But when we think about it right, there's a lot of moving pieces to generate a good financial statement. So first you have to have the right systems and processes set up. Then you have to have a you have the owner side or whoever's getting the data, collecting the data, doing the things right.
00:02:01:10 - 00:02:21:29Eric JoernSo is my shop management system accurate? How am I paying my bills? How am I running payroll? Am I using the right payroll software? Are those things happening correctly? When I'm collecting things right, do I or how often do I go to the bank and deposit cash and checks and do things like that? There's all these input factors that go into an accounting hub.
00:02:22:01 - 00:02:48:18Eric JoernAnd then across that there are all sorts of different theories on accounting, right. Accounting really isn't black and white, right. Our job is to show economic reality for that business. So we need to show what actually is happening. Well that's opinionated right. And that's why, you know, the institute has a specific way that they like to look at a PNL versus maybe, you know, Joe Schmo, CPA on the street.
00:02:48:19 - 00:02:55:08Eric JoernRight. And and probably their goal is what's the easiest way for me to file tax return? And, you know.
00:02:55:08 - 00:03:19:01Cecil BullardYou know that. Oh go ahead. I think that that. So first of all, you're making it seem like it's very complicated, very hard. I don't I don't see it that way myself. So that that might be somewhere where I disagree with you. My my accountant. You know, we have a CFO in the company. And, you know, if we had an outside of B, you guys.
00:03:19:03 - 00:03:55:26Cecil BullardBut, they are tied into our bank accounts. So they see payments coming and going. They're tied into our credit cards, so they see payments coming and going. So all deposits are kind of recorded through the bank account. All, all outgoing moneys go through one account or another. And as well as credit. And then once we, once we determine what the PNL needs to be set up like, and we create, what we chart of accounts for that.
00:03:55:28 - 00:04:17:08Cecil BullardExactly. Then it it seems to be like it's not overly complicated at that point. Right? And I would agree with you that I don't think I would disagree in the, in the fact that the numbers are going to say what the numbers say. I don't I don't think that we can like say, okay, well, that that number is not what I want.
00:04:17:08 - 00:04:46:12Cecil BullardSo I'm going to go see if I can find another number. But, but certainly the institute likes to look at the finances differently than maybe, some of it's running, I don't know, a shoe store would look at their finances. And so that is probably challenging for you guys in the fact that you have, you know, different types of companies you work with that, you know, might look a little different than they might be for automotive.
00:04:46:15 - 00:05:05:29Eric JoernYeah. And there's a lot of noise, right? So, so if you go out, you know, you go out into the Facebook groups and say, how should I have my pal there going to somebody's going to give them one direction and then they're going to go to their accountant, they're going to get a different direction, and then they're going to go to the institute or their coaching company, and they're going to get a different direction.
00:05:06:01 - 00:05:16:26Eric JoernAnd all that noise makes it really hard for them to, you know, what do I exactly do? Right. I, I need services or cost of goods.
00:05:16:28 - 00:05:18:00Cecil BullardAt the.
00:05:18:02 - 00:05:19:19Eric JoernRoad. My wage.
00:05:19:21 - 00:05:20:22Cecil BullardIs.
00:05:20:24 - 00:05:26:20Eric JoernRight. So I need to set up like this or that. We see.
00:05:26:20 - 00:05:33:00Cecil BullardA lot of that noise that is causing issues. And so we actually see sometimes, when their financial statements.
00:05:33:04 - 00:05:56:01Eric JoernAlmost Frankenstein, I'd say, meaning they brought in areas from different, different avenues and they put it all together. They said, oh, I like this idea. I'm going to implement this. I like this idea. I'm going to implement it this way. And then half of it's right here and half of it's here. And one of the things that we always say is, I'd rather have a financial statement that's consistently wrong than sometimes right.
00:05:56:03 - 00:06:14:16Eric JoernAnd I know that's a weird comment to make, but think about it. We're always measuring performance based on relativity, right? Did I improve from this from this prior measurement point? Well, if I'm constantly changing how I measure, I'm never going to have a relative measurement.
00:06:14:19 - 00:06:49:04Cecil BullardBut that's also probably one of the more difficult things for you guys is that, you know, whenever we we've changed accounting a couple of times in our business, you know, in the unknown, 15 years or so we've been in business, we've gone through, I think we're on our third different accounting. And every time it's like, well, we want to use QuickBooks and I want to use sage, and, and so we, we want to reset up and, and so if I'm not set up correctly in the first place, then I come in and I go, okay, I want to get set up this way.
00:06:49:06 - 00:07:23:29Cecil BullardI might be getting different numbers are looking at different numbers than I had previously. Which got a good challenge, right? Absolutely. At the Institute for automotive, the way that I learned it was I want to have, as my income, any income source that I have that's over, say, 2% of what I do in business. So if I'm if I'm selling, if 10% of my business is tires, I want to have a tire income separated out from labor income and parts income.
00:07:23:29 - 00:07:53:03Cecil BullardAnd then if there's a sublet income, I want to have sublet. And if there's, if I'm doing something like, some states we've got smog or we've got, safety, I want to I want to bring that income different because those things have different margins that I want to be able to look at. And so I want to have a relatively, I don't know, maybe 7 or 8 category sales taxes in there, but it's a pass through.
00:07:53:03 - 00:08:16:27Cecil BullardSo, but it still has to be accounted for in income. And then underneath that, and I think you have an example of a PNL that we can kind of pull apart here. But underneath that I want to have the same categories, as my variable expense. And, and that way I can see what my gross profit is.
00:08:17:00 - 00:08:28:04Cecil BullardAnd I'm trying to make sure that my parts profit is right, that my labor profit is right, that my sublet profit is right. So that at the end I have the right gross profit.
00:08:28:06 - 00:08:48:07Eric JoernExactly right. I mean, if we want to step back and say, hey, our our core framework for a good chart of accounts on a PNL is going to be I'm if I have a sales category, I should only have a corresponding cost of goods category for that. So if I had a sales category and I have no cost of goods, right.
00:08:48:07 - 00:09:12:16Eric JoernIs that truly a a operational revenue item, or is that maybe what we call other income? Right. Miscellaneous income that, you know, for instance, if we have an investment account, right, and we're getting capital gains and dividends and fun things like that, we're not going to report that. Or maybe I sell, maybe I, you know, customer doesn't pay their bill and I keep their car and then I resell that.
00:09:12:18 - 00:09:14:15Eric JoernWell, the gain that I.
00:09:14:18 - 00:09:25:13Cecil BullardWouldn't you handle that as, more on the balance sheet and then bring that in under the net profit as a additional income or a, additional loss or whatever.
00:09:25:13 - 00:09:47:06Eric JoernUnder exactly non-operating, gain or loss on the sale of, of something. Right. And it kind of goes back to your 2%. Right? If it's not greater than 2%. We're creating distractions by adding that up into sales. And that's really one of the things that I like to focus on is, is we'll see a piano. And I mean, you've reviewed 10,000, right?
00:09:47:06 - 00:09:51:21Eric JoernI believe that's considered mastery when you, when you, when you hit 10,000.
00:09:51:27 - 00:09:53:21Cecil BullardYeah.
00:09:53:23 - 00:10:16:17Eric JoernAnd what we see is, what ends up happening is there's a lot of noise added to a piano. And what I call by noises. We have accounts and we have all these accounts added and all these things which in one respect, I understand. Right. I want to know if if you know, somebody is charging me more than they charged me the month before, do I think my piano per vendor should be per vendor to review that?
00:10:16:17 - 00:10:21:04Eric JoernAbsolutely not. Right. Because then we start missing the big picture. I'll go.
00:10:21:04 - 00:10:33:07Cecil BullardInto, I can't imagine, like, looking at all that data. Yeah. I mean, it would be there would be no way to really bring it all together and try to figure it out.
00:10:33:09 - 00:10:51:15Eric JoernI'm an accountant. This is what I do for a living. And if I'm looking at a piano that's 5 or 10 pages long, I'm lost. I'm burned out through part of it because you can only process some, Jeff Bezos, I think it was once said, if I can come in and make three good decisions in a day, that's a great day.
00:10:51:18 - 00:10:55:04Cecil BullardYeah, I don't I don't think I disagree with that at all.
00:10:55:06 - 00:11:14:29Eric JoernAnd if you can look at a if you if you're looking at it and I think about it on the same, same way with your piano, right. If, if it's 5 or 10 pages long and it has all this detail on it. Right, making a determination on each individual account, is it almost like a decision and you're going to get fatigued after so many of them.
00:11:15:01 - 00:11:45:12Cecil BullardBut you have a, you have a, an expanded piano and you have a, I don't know, simplified a simplified piano, which is usually a page and a half to two and a half pages at the most to simplify this. Great. And, that's how I want to kind of see my business. I mean, I want to see my business in chunks, you know, what what was my income was my direct expense for that.
00:11:45:14 - 00:12:08:19Cecil BullardAnd then what was my net profit? And then what are my different categories? I think in we have a thing called a composite, which is different than a PNL. It takes, point of sale data and PNL data and kind of puts them together and makes the decisions for us. Does the math. Yeah, right. So how much did we lose because we weren't productive?
00:12:08:19 - 00:12:37:06Cecil BullardOh, we lost $17,043 this month, right. What was our average repair order? Oh, it was, know, $1,059.83. So I think that you want to look at your kind of in chunks, I look at I look at the income. Did the income match the income that we our goals and targets. Then I look at the expense.
00:12:37:06 - 00:12:57:20Cecil BullardAnd the only reason I'm really looking at the direct expense is because I want to know profit margins in certain areas, because I'm. I know what the margins ought to be. Right. Yeah. And then then I'm looking at my overall gross profit. Did I, did I, you know, depending on how I, my PNL is set up, is it you know, 64%.
00:12:57:20 - 00:13:20:04Cecil BullardIs it 74%. And, and then I go to the bottom line and I look at net before I go through everything else. Right? Did I make my 20% net profit? Bottom line is that, you know, is that does that make sense? Is that how you do it or is it would you recommend a different way to look at that.
00:13:20:06 - 00:13:53:06Eric JoernYeah. Yeah. No no that's a a great way. And I'll, I'll give you an example. So I will review our QC before our, our client's financials gets out of our onboarding process, which is our creation process for somebodies accounting process system. To our production team IQ. See all those financials. And the other day I was reviewing one and I looked service advisor cost and technician wages were at significantly low margins, or high margins.
00:13:53:08 - 00:14:15:02Eric JoernThe costs were very low. And it made me question, hey, how are they accomplishing this? I think I think tech cost was around 20% of tech labor or, tux labor sales. And the service advisor cost was around 3%. Well, then I go into the operating expense section, and we have some other roles in there, like a shop shop manager and shop foreman.
00:14:15:04 - 00:14:34:18Eric JoernSo that made me ask, go back and ask my team. I said, okay, I know they told you that. That's what these roles are. Now we need to ask the next question, are they in production roles? Right? Is my shop is my shop foreman. Are they are they producing billable labor hours? Because if they are, then they need to be included up in tech wages.
00:14:34:21 - 00:14:56:14Eric JoernAnd same thing with my my store manager. Right. If they're performing a role of a service advisor, well then they need to be included with the service advisor. And all of a sudden when you move those wages up now we're more at realistic category or ratios. Right? Our gross profit looks a little bit more to what I'd expect.
00:14:56:16 - 00:15:16:15Eric JoernAnd and it's a very different skill to look at a financial statement to, to expect what it should be than it is to say, I'm going to put the inputs in. And I think if I put the inputs in, it comes out right. You have to review a financial statement. What's the thinking of what should it look like?
00:15:16:17 - 00:15:38:00Cecil BullardWell, the I think when you've looked at many, right. There's a point where you say to yourself, okay, this is out of whack, right? This that's and that's the my like my fifth step. Once I've looked at my net, then I'm going, okay, what are the expenses look like, and where are we? Out of whack.
00:15:38:00 - 00:16:03:19Cecil BullardRight. If my labor cost is 20% of my labor income, I'm not. I'm either not paying people enough or I'm not accounting for all the income. It's it's somewhere else, right? Exactly. And we we see that all the time. You know, in December, I don't even want to talk about December 11th people, because so much is thrown in different places.
00:16:03:19 - 00:16:05:06Cecil BullardBut we just cleaned.
00:16:05:06 - 00:16:07:08Eric JoernUp the tax return.
00:16:07:10 - 00:16:37:19Cecil BullardYeah. It's amazing to me, sometimes how just how badly it is, and what I'm trying to do is figure out, you know, I need something to compare it to so that I can then go. Okay, we've got a problem here right now. I had a $35,000 charge on one of my account, one of my accounts, and we lost, $31,000, and we had, stellar month as far as sales go.
00:16:37:22 - 00:17:13:06Cecil BullardAnd you're trying to figure out, okay, where did that money go? Right. And there was 35,000 for, I think it was there their tax, their property tax, and it was all dumped in in one month in one pile. And then there was another 20,000 in, owner wages because they, they paid the tax. Right. So you see, either a bonus, or a dividend or whatever into the owner wages and you're like, okay, well, you know, we made $25,000.
00:17:13:08 - 00:17:35:17Cecil BullardWe didn't really lose 34% on this thing. But I think you need, at least for me, when I'm looking at my financials, I need to know that we're profitable. I need to know that we're profitable enough. And I need to be able to point out the two or 3 or 5 areas where we're not hitting the targets the way we need to hit the targets.
00:17:35:22 - 00:18:03:15Cecil BullardAnd so I, I agree with you. I think I, I wouldn't say consistently wrong is better than inconsistent, but I want consistent data and consistent reports. Now here's kind of another thing that I, I like, I like to see my columns, you know, how you have all the here's the categories and then you have here's the income that came in, here's the expense.
00:18:03:18 - 00:18:34:08Cecil BullardI let I also like to see, in there a percentage of what the sales was. So, so with the, the number, I like to see the percentage. And then I like to have a second column right next to it. That is last year this month. So I can compare like like data, with the percentages. And then I like to have a third column, which is the last running three months.
00:18:34:10 - 00:19:06:29Cecil BullardAnd the reason I like the last running three months is because these guys, shop owners, do unusual things with how they record stuff like I might buy $10,000 in oil in one month, and instead of putting it in an in the inventory on the balance sheet and then dealing with it in the PNL, as I take it out of inventory, I just put a $10,000 charge, and it looks like parts margin was completely blown this month when it really wasn't.
00:19:06:29 - 00:19:30:12Cecil BullardSo if I can see a running quarter like three months, it will kind of leverage that average. That stuff out. Do you guys, do you guys recommend that they account for things like $10,000 worth of oil on the balance sheet and not on the PNL? Or how do you recommend that that be done? Yeah.
00:19:30:14 - 00:19:50:22Eric JoernAll right. Deals set up for for parts costing is purchases go to inventory. And when we close a repair order we journal entry the cost into cost of goods. So that's true. True parts costing I mean it's what we we as accountant. Right. And this is what blows my mind. This is what we learned in college at a cost accounting.
00:19:50:24 - 00:20:12:05Eric JoernThat's exactly how they taught us to do cost accounting. But then we go into actuality. And I get it right. If we're filing a tax return and that's it, we're just going to when the money goes out, that's when we're expensing it. When the money comes in, that's when we're recording it as income. But if we're trying to measure actual performance of the business, you have to consider what are the economic realities of that of that month.
00:20:12:07 - 00:20:36:19Eric JoernRight. It's not you know, we bought bulk oil. We're going to use that oil over the next three months. If I expense it all this month, I'm going to make major profits the next two months. So we need to normalize things. And that's why, again, you look at a three month trend because that starts to normalize things. If you look at a one of our favorite reports is, a trailing 12 months, meaning I get to see every single month, every single month for the last 12 months.
00:20:36:19 - 00:20:40:03Eric JoernAnd I have actually an example of this. So we can we can pull off.
00:20:40:03 - 00:20:42:02Cecil BullardAnd yeah, go ahead and pull that up.
00:20:42:04 - 00:21:06:03Eric JoernYeah. Let's pull that up. And let's talk about what the benefits of looking at it this way and now this is more of a hey, I'm finding I'm finding trends that are happening, but also I'm finding, abnormal abnormalities. Right. There might be something that sticks out. So your $30,000 property tax bill should stick out, right. Because it's going to say 00000.
00:21:06:04 - 00:21:08:00Eric JoernThen $30,000.
00:21:08:03 - 00:21:08:14Cecil BullardRight.
00:21:08:14 - 00:21:24:17Eric JoernWell and and then we know, hey the right process for that. That's actually again it goes on to the balance sheet. And I know we're you know, our title of this is reading your panel without the bias. And I think it might be a balance sheet or might just be a fun title, but
00:21:24:19 - 00:21:29:04Cecil BullardIt was probably a fun title.
00:21:29:06 - 00:21:49:07Eric JoernBut again. Right, that payment should really go, you know, depending on how you're, you're paying property taxes, should either be a prepaid or you accrue that throughout the year. And then when that payment comes out, that's it all hits the balance sheet. Right. And again, the balance sheet is our holding place to normalize our financials. Make sure they look consistent month to month.
00:21:49:09 - 00:21:57:04Cecil BullardSo it sounds it sounds to me like you're recommending accrual based accounting and not cash based accounting. Oh much.
00:21:57:07 - 00:22:21:23Eric JoernAbsolutely. And what we like to use the word modified accrual accounting because you know, are we going to say we got an internet bill, right. Largely the same bill every month? Does it make sense in our accounting process to enter the bill? And then at mark the payment or we just post the expense right when we pay it because it's the same bill every single month.
00:22:21:26 - 00:22:42:07Eric JoernWe're going to treat that probably in a cash basis format, because it doesn't materially affect the financials. And it's more practical for a shop owner that's especially that's handling their own books to do it that way. Now, what we want to do is we want to highlight those major expenses and normalize them over time. Well, right. We are going to apply accrual treatments.
00:22:42:07 - 00:22:51:25Eric JoernThe most impactful items on a financial statement because we want as as reliable results on these financial statements as possible.
00:22:51:27 - 00:23:04:09Cecil BullardSo we're looking at, PNL here. All of the names have been changed to protect the innocent. Yeah. What what is right about this?
00:23:04:11 - 00:23:28:12Eric JoernYeah. So they they started going in the right direction. Right. So we got our, we have our parts sales, our labor sales, maybe some. There are some things that kind of get out of hand a little bit. They're in weird categories, right? We got this random $15,000 here. You don't really like seeing all those, you don't like seeing things that are are lonely on the on a rolling pad.
00:23:28:12 - 00:23:29:08Eric JoernAll right, we see.
00:23:29:08 - 00:23:34:14Cecil BullardTwo parts sales categories with the same titles.
00:23:34:16 - 00:23:55:18Eric JoernRight? Yeah, I think it's just a title. Again. Right. It's. Hey, we you know, they made some mistakes. They didn't know what to do with that dollar amount. And then we have. But we do. We have good bones here, right? We have labor sales. We have parts sales. Maybe there's a couple items here. We got subcontractor sales.
00:23:55:21 - 00:24:18:17Eric JoernWe got hazmat. Right. Those are all your your greater than 2% items. And maybe there's some slop in here that whatever. That's slop. Then we got things like your, you know, we talked about December pals, right. Here's, here's all your year end to just clean some things up of course. Probably the tax accountant jumping in there and just making some adjustments so they can file tax return again, I get it.
00:24:18:18 - 00:24:35:25Eric JoernThat's a direction that that needs to happen, right? You don't pay your taxes, you end up going to jail or your business gets shut down. Needs to happen. But it doesn't help us make good decisions about our business. But we have those good bones in there. But, you know, we got all these extra accounts, like parts sold to third party.
00:24:35:25 - 00:24:43:08Eric JoernWe have, you know, are we really measuring that? Any differently than our normal parts sales? If not, that's just noise.
00:24:43:08 - 00:25:02:03Cecil BullardAnd it ought to be a know it ought to be in the parts pile. It's not enough. Yeah. Don't get me wrong. We have, companies that sell online, so let me have 20% of their part sales be online sales, and we're not looking for a 58% margin on online sales though, that we're looking for different margins.
00:25:02:05 - 00:25:16:22Cecil BullardAnd so they will separate online sales. But if you're, you know, occasionally selling some parts to yourself or to your tax, just put it in part sales don't don't divide it out in a separate category. Yeah.
00:25:16:24 - 00:25:34:24Eric JoernExactly. It creates noise. And and there's a way to handle it inside your shop management system. So that way it translates to the, the account, the financials the right way when you do that. I mean, ideally, right, if your technician is buying parts, you know, do we want to write a repair order and, and do it that way?
00:25:34:24 - 00:25:38:24Eric JoernI mean, ideally they just buy either directly from the parts vendor.
00:25:38:26 - 00:26:04:11Cecil BullardOr ideally, but that in reality they're probably not right. They're probably the shop is carrying them at some point often. At least that's my experience. My experience is that the bulk of part sales through shops, the shop is creating a ticket or something, and then charging the tech when they get their paycheck or, you know, once a month or whatever.
00:26:04:14 - 00:26:19:00Cecil BullardAnd certainly, you know, if that's what you're going to do, then you need to be creating a ticket because you need, accountability for the cost and the and what you you know, what you charged and the money that came in.
00:26:19:06 - 00:26:36:18Eric JoernSo, yeah, if it runs through a shop, there should be an arrow on there. Any any car that touches your shop has to have an arrow. Any part that gets purchased through your shop has to have an arrow attached to it. Otherwise you lose accountability. The minute you say there's exceptions to that, you introduce the opportunity for theft.
00:26:36:18 - 00:26:40:23Eric JoernYou waste not and you lose accountability for it.
00:26:40:25 - 00:27:03:09Cecil BullardYeah, invisibility creates, lack of accountability. The other thing is having had an audit or to, you know, if there is, slop or things that are missing, then the IRS gets to make their best guess and, and their best guess is is never in your in your benefit.
00:27:03:11 - 00:27:08:00Eric JoernYeah. And it gets even worse. You start getting into state sales tax audits, right. Yeah.
00:27:08:01 - 00:27:12:03Cecil BullardDid you, did they pay the sales tax on that. Right.
00:27:12:05 - 00:27:35:10Eric JoernSales tax. Use tax. Did they pay it on the right. The minute they find one thing they're they're digging deep right there. They run somewhat like a business. Right. They find some if they don't find any evidence up front, they're going to stop digging pretty fast. They see something. If they see disorganization, slop up front, if they look at a set of financials and it doesn't make sense, they're going to go digging throughout everything.
00:27:35:12 - 00:27:38:12Eric JoernAnd the other thing are the worst.
00:27:38:12 - 00:28:07:15Cecil BullardYeah. And the other thing I think that that the shop owners, the average person probably doesn't understand is that the state sales tax is collecting sales tax from thousands and thousands of businesses. So they have data, and they have data that basically says if you're buying X amount of parts and you're you're in this type of business that you should be paying X amount of sales tax, right, and 100 and if you're, if you're outside of their window, right.
00:28:07:15 - 00:28:14:14Cecil BullardThe, the bell curve that that's an audit or that's a fine. Right. I mean.
00:28:14:16 - 00:28:26:06Eric JoernLiterally they're going to look to triangulate your sales tax returns to your financial statements. Back to the your income tax return. Yeah. So yeah.
00:28:26:08 - 00:28:50:11Cecil BullardThe IRS does the same thing. I mean they have they have data on I don't 200 plus thousand automotive shops that have been filing taxes. Now I would think that that would be really confusing because of how many bad panels I've seen. Right. But they've normalized that data as best they can. And if you're outside their windows, then they're they want to look a lot harder, right?
00:28:50:13 - 00:28:52:19Eric JoernAbsolutely, absolutely.
00:28:52:22 - 00:29:09:26Cecil BullardSo, on that panel that you have, there's an awful lot of, just crap, right? Tech a b c d what? Why, what's that noise there? Right. I mean, yeah.
00:29:09:28 - 00:29:29:23Eric JoernBut it's the right, right thought process. Right? In our cost of goods, we have our labor cost, right? So they have the right idea, they know what they need to measure, and then they added complexity. They added noise to it. Right. We're not making business decisions based on what we're paying that technician on our panel. We're going to look at that costs relativity.
00:29:29:23 - 00:29:38:22Eric JoernAnd then we're going to look at things like, hey, what was that individual's efficiency. That's not a measurement. And you get off your PNL right. You have to use to it.
00:29:38:29 - 00:29:47:23Cecil BullardThat's a different yeah of different data set exempt. So I would only have the payroll category. That's it. And it would just the.
00:29:47:23 - 00:29:48:25Eric JoernOne one item for.
00:29:48:25 - 00:30:17:27Cecil BullardTechnicians. Yeah. And then I like to see the text divide it out an above the line. And then sales below the line. And my management people below the line. And I like to see sales broken out from the rest. And techs broken out. Those three categories are kind of a necessity for me because I'm trying to manage sales cost and tech costs and then fixed expense costs.
00:30:18:00 - 00:30:18:27Cecil BullardRight?
00:30:18:29 - 00:30:40:23Eric JoernAbsolutely. Yeah. I mean, we even have right. More more noise here again. Right, right. Concept shop supplies we have here and we're probably charging shop supplies here as an income line. So we have the income and we have the cost line. That's correct. But then we add things like delivery and tax. So not only do we have you know, we can't make any decisions on those and we don't.
00:30:40:24 - 00:30:45:19Eric JoernRight. That's the cost of acquiring that shop supply. We don't need to break it out. That's creating.
00:30:45:19 - 00:30:59:18Cecil BullardMore work. When they created a category for tax because at 1.3 $10 on. And so now I have a whole new category that creates instead of just throwing it kind of in the pile.
00:30:59:21 - 00:31:18:08Eric JoernYeah. Well, and this is again where I get to the point of there's so much, there's so much noise out, out. And if you go out and you just try to figure this out on your own and you're getting information from there and there and QuickBooks and you're doing this and, you know, now I got my Shopify invoice on here, and here's my cost for my shop supplies.
00:31:18:10 - 00:31:42:21Eric JoernBut then I have my costs for my delivery, my costs for my tax. So I can understand why somebody naturally just says, I'm going to enter it in like that and actually with with wages. One of the funny things, we see it all the time, I don't think in this case it it didn't make sense for it to look like this, but we'll see that the, the wages, the wage cost is actually entered as the net check that goes to the employee.
00:31:42:23 - 00:32:03:03Eric JoernSo right there on their payroll and they're withholding their federal withholding. The IRS is in payroll taxes and their 401 K contributions in retirement. And they only captured the not the net check. And I'm but I'm like no you're paying them. They're choosing to take some of their money that you paid them and give it to those different parties.
00:32:03:06 - 00:32:14:26Eric JoernThat's still just their wage. That's not the net check. But hey, that's what came out of my bank account. Right? So if I go in and I run payroll in QuickBooks, it's going to come through as a net check to my employee.
00:32:14:29 - 00:32:40:15Cecil BullardBut no, that's really I mean, because we have, employees and they're going to we're paying for like and futa and worker's comp and, and worker's comp is not a cost. That is their cost. It's my cost. But ficken futa is at least in part their cost. Yep. Because we're taking money out of their check. And then if we have a for one can we have a for one k here.
00:32:40:15 - 00:33:05:10Cecil BullardSo we take money from your check and we hold on to it. And then we do whatever matching and we pay out like we would like in futa. Yeah. And and so we have to whatever your whole gross check is, that's what needs to be reported. And then the other things that come out that are your costs, we don't really care about.
00:33:05:15 - 00:33:09:07Cecil BullardIt's the things that we pay that we care about as far as the company goes.
00:33:09:09 - 00:33:28:06Eric JoernExactly. And again, right. If you only build your pal based on where the money comes out of the bank, right? The batch that goes directly into your employees accounts, whether it's direct deposit or checks. Right. That's a separate payroll. I mean, you might have something called impounding done. If you're using a payroll provider, that's a whole different story.
00:33:28:06 - 00:33:45:29Eric JoernRight. And then then there's no making sense of how that money happens unless you get a breakdown report from them. But yeah, if you're only following the cash flows, right, you're going to improperly account for and we see that time after time after time again, when those expense ratios don't look right, you know, hey, it's time to dig in.
00:33:45:29 - 00:34:09:18Eric JoernLet's figure out what's the answer. Okay. Yep. We found out that we didn't record payroll, right. Your payroll taxes look super high, right? They should only be. You know what? Seven, maybe 7 to 10% of your total wages paid? Not, you know, 20 to 30% of the total wages paid. Again, understanding those ratios helps you figure out is this even an accurate financial statement?
00:34:09:20 - 00:34:32:04Cecil BullardBut also, I would think that if you had a an audit from the IRS and they came in and they said, well, wait a minute, you you've shown this cost here, you didn't really show the money you pulled out of their account and you put in here. And so now your taxes aren't going to be right. And we're going to audit you and you're going to OS, X, y, z plus.
00:34:32:06 - 00:34:58:00Eric JoernAt the very least, it's going to cause them to start digging. Right. And when they're not, when they start digging, they're end up finding record keeping. That's not proper. And that's, you know, you could be doing everything right. But you I didn't keep these receipts. I didn't do treat this weird thing right. I mean, I think now we have three different ways that meals are taxed depending on who you're eating with and why you're eating a meal.
00:34:58:02 - 00:34:59:00Cecil Bullard
00:34:59:03 - 00:35:10:29Eric JoernSo there's a lot of complexity that was that was built and that's on the tax side of things. Right. That's not even on just your pal, but that hey, now I have one meals account. How do I properly handle that from a tax standpoint.
00:35:11:02 - 00:35:31:20Cecil BullardYeah I have to do two meals two different meals account because often I'm either out traveling and having a meal because I'm out, or I might be with a client having a meeting and a meal is a part of that. We actually have three, because then we also do events where we provide food, which is a different tax category altogether.
00:35:31:20 - 00:35:32:11Cecil BullardSo yeah.
00:35:32:11 - 00:35:49:10Eric JoernAnd shop owners. Right. Hey, hey, we're doing our lunches on Fridays to celebrate the week. And then we do our lunches on Thursdays for training. And then, you know, hey, maybe I took a customer out to eat again. All have now have different tax treatments. It's, it's complexity.
00:35:49:13 - 00:35:56:19Cecil BullardHow many? Not purposes. How many pages is the federal tax code now? Oh.
00:35:56:21 - 00:36:04:01Eric JoernI think I think it travels around the world and something like, 100 times or something like that. If you lay them page by.
00:36:04:01 - 00:36:05:02Cecil BullardThey say.
00:36:05:08 - 00:36:11:25Eric JoernYeah, it's it laps the world so many times I can't remember the exact number, but so let's.
00:36:11:28 - 00:36:30:28Cecil BullardLet's see if we can bring it, make it smaller for shop owners here. What, what? Keep it simple, right? Yep. Make sure and I, we have a sample, like, what do you want to call it?
00:36:30:28 - 00:36:31:29Eric JoernChart of accounts.
00:36:31:29 - 00:36:58:21Cecil BullardOr. Yeah. Yeah. Excuse me. And you've seen ours because I know I've sent it to clients and to you guys, and you guys do a good job of making those things happen for our clients. So keep it simple, right? Because I have the detail I can always print out later if I want to print out detailed to find problems.
00:36:58:24 - 00:37:13:19Cecil BullardAnd then, what do you think's the biggest mistake or the biggest? Top two mistakes that are made by small business owners, trying to do accounting or bookkeeping. Yeah, well.
00:37:13:22 - 00:37:19:03Eric JoernThe number one thing is they don't they don't know what a balance sheet is, and they've never looked at it.
00:37:19:06 - 00:37:46:19Cecil BullardYeah. By the way, I've seen if I've seen 10,000 panels, I've seen 10,000 balance sheets. And I could name on one finger the balance sheets that I've seen that were actually accurate. I have seen so many balance sheets where there's what's this, $150,000 here. Right. And oh, that was something that 25 years ago when we bought the business, that was something we quote unquote depreciated or we did whatever.
00:37:46:22 - 00:38:14:13Cecil BullardAnd it's this, it's this dead or something that's still hanging on and has not been accounted for at all. Yeah. And, and do you think, do you think it's a laziness from the bookkeeper, accountant, accountant person of just like, I'm not going to I'm not going to spend the time to do that because no one's ever going to really look at it, or it doesn't really make any difference.
00:38:14:15 - 00:38:37:06Eric JoernI think there's definitely that. Right. You know? Hey, the the piano has a lot of effect. It has a lot of impact. Meaning that's what's going on my tax return and I'm paying tax on it. It's probably what I'm using to make my business decision. So it's got a lot of impact. Those are two very impactful things. My balance sheet unless I go to a lender right, a lender is maybe going to think you're what's my current ratio.
00:38:37:06 - 00:38:46:00Eric JoernRight. Does my current assets cover my current debt. And then if they're like, hey, why do you have negative, how do you have negative that what is that?
00:38:46:03 - 00:38:49:07Cecil BullardAnd how does that balance sheet not balance. Right.
00:38:49:07 - 00:39:12:29Eric JoernI mean I've seen that a couple times. Right. Fortunately the softwares prevent you from doing that. But we see things on the ballot. Yeah. If a balance sheet is not accurate the PNL cannot be accurate. Right. Because if it's on the balance sheet then it's not on the PNL right. Meaning it cannot be accurate. So in our opinion, that is by far the number one thing is we see pretty panels and we see messy balance sheets.
00:39:12:29 - 00:39:17:14Eric JoernYou know, you say, well, as nice as your pencil looks, it can't be right.
00:39:17:16 - 00:39:35:22Cecil BullardSo we have a question or two. Should I have discounts shown on the PNL? And if I do, should it be split from parts and labor? So if I am discounting, am I taking that money in and then taking that money out as a discount? What's your recommendation?
00:39:35:24 - 00:39:53:15Eric JoernYeah. So the the discount line needs to be, needs to be there. Right. So we're going to show our gross labor sales. We want to know how much we're discounting. Now whether to split it out between labor discount and parts discount. Right. Really depends on your policy. In this case.
00:39:53:15 - 00:40:16:14Cecil BullardYou're trying to if you're trying to look at parts margin, which we want to be 58%, and you're trying to look at labor margin. And as a loaded labor margin, I want that to be around 64%. Then if I don't if I'm in, I'm discounting either all in part or all in labor. Then I'm going to get some funky numbers.
00:40:16:21 - 00:40:37:10Cecil BullardRight? And that's kind of point out to me some, some issues, but it'll be it'll be harder to put your finger on where the problem is. Right? Somebody that's seen a lot of panels and a lot of mistakes made will will get it faster. But for a general shop owner, you're just not going to see it. Yeah.
00:40:37:13 - 00:40:54:16Eric JoernYeah. I mean it really depends on the materiality of how you do it. Right? If I you know, this case, you know, they've issued $2,000 parts discounts through a year. Do I want to keep an extra line item for that. Probably doesn't make sense. Right. We're going to have one discount line because we know and we know how we run our business.
00:40:54:16 - 00:41:00:07Eric JoernWe're going to discount labor. And that's their choice. On how they're doing that. So that's how we're going to measure it.
00:41:00:13 - 00:41:07:27Cecil BullardBut it's also kind of kind of wonder was this really a discount or was this like a bad debt you wrote off. Right. Because of the way it's.
00:41:07:29 - 00:41:08:21Eric JoernHow you handle it in.
00:41:08:25 - 00:41:23:07Cecil BullardSeven months with nothing. And then all of a sudden you got, you know, a couple of months with stuff. And that's a good point. Yeah. I would be going. I'm not even sure that was a discount at this point. Did we account for a bad debt in the wrong place?
00:41:23:10 - 00:41:42:10Eric JoernRight. Yeah. And to me, discounts are a separate issue than parts and labor margin. Right. Because we're measuring parts of the labor margin at our stated, you know, our stated rate. And then we have discounting. Right. Discounting to me is a whole separate thing than pricing. Pricing is what am I setting? What am I selling a labor my labor for?
00:41:42:10 - 00:42:00:25Eric JoernWhat am I selling my parts for? Then I have a discount, right? And I have an allowance, right? We probably set budgets on how much we're willing to discount at each month, and that's how I'm holding my discounts accountable to my team, is based on what budget did I set and and did I? It really doesn't matter which bucket you chose it from at that point, right?
00:42:00:26 - 00:42:15:19Eric JoernBecause that because that all ends up in the same gross profit. But you have to know that these are two, two separate different things because discount rate your labor rates, your labor rate, your parts margin matrixes, your parts matrix discounts is a separate action.
00:42:15:21 - 00:42:41:26Cecil BullardAnd I see shops, that discounted $12,000 and didn't make two. And and you're you just shaking your head. There's there's a question here. Jensen, did you say service wages is not in cost of goods sold? What I said is that I like tech wages, so I don't know what you. If you're calling service wages. I'm not sure what you're saying.
00:42:41:29 - 00:43:16:24Cecil BullardI like the tech wages in a cost of goods sold. But I want the service advisor. My sales cost under and under the line in a, like a fixed kind of in the where the fixed expenses would be separated out a, so, yeah. Got to have got to have clarity around, what you're talking about, but, definitely for mine and for our clients, we want to see the technician wages and, above the line, and above the line, below the line.
00:43:16:26 - 00:43:28:25Cecil BullardSo you have, variable expenses, parts labor, etc., and then you have fixed expenses, and the variables are above the line and fixed or below the line.
00:43:28:27 - 00:43:51:15Eric JoernYep. Yeah. We're we're at a 100% agreement. If you happen to move service advisor up into cost of goods, maybe that's just how you've always done it. How you have your historical data, measured. You know, you just need you know, now, you you've moved the goalpost, right? So if our goal was 65% GP, now it might be 55% GP because we include service advisor.
00:43:51:15 - 00:44:12:20Eric JoernSo you just have to understand the relativity of how you structure it. But again, right. If you were comparing panels in a peer group. Right. We want everybody to do things the same way. So we're measuring apples to apples. The more variability you add into how we measure things and what you're comparing them to. Now all of a sudden you might have incorrect measurements.
00:44:12:22 - 00:44:35:11Cecil BullardAnd it's funny because I ran 20 groups for years and we have quite a few here groups and, and after, I don't know, 15 years, you find out that the one guy is measuring something in a completely absolute different way than somebody else is measuring it. And so you've been comparing this data. They've been in the group for 15 years and you've been comparing data.
00:44:35:13 - 00:44:57:20Cecil BullardAnd then all of a sudden somehow you're having a conversation like, oh yeah, that's this, this and this. And you're like, no, it's really not. So that makes it difficult. That's why we do the composite, data stuff so we can kind of decipher the data a little differently to make the peer group be able to have relative data.
00:44:57:22 - 00:44:58:27Cecil BullardExactly. Yeah.
00:44:59:00 - 00:45:14:08Eric JoernThe data hygiene is so important that, it's a big challenge that we want to. Especially when you come with industry wide data. Right? Is it has not been cleaned up enough as, as it has inside of a reporting composite. Like what you guys have.
00:45:14:11 - 00:45:43:00Cecil BullardSo we we I've recently sent you guys, I don't know, 4 or 5 clients that it's really a mess. I mean, it's just a disaster. And and, do you, you said earlier that, you know, bad data. As long as it's consistent, consistency is probably more important than being 100% accurate. Do you? Would you say, like, bite the bullet, get it cleaned up and start moving forward?
00:45:43:00 - 00:45:54:13Cecil BullardOr would you go back a certain period of time to try and clear that data up? So that you can create a, a broader, view of things?
00:45:54:16 - 00:46:11:06Eric JoernI'm going to give you the the perfect accountant answer. It depends. If I am somebody who is likely to go out and get that in the near term, meaning I'm going to go do an acquisition, I might need to clean up a few years because I'm going I might lose my ability to go get that, if I don't do that.
00:46:11:08 - 00:46:35:24Eric JoernBut for the most part, you know, 80% of the shop owners that come in our door, it's more important that we focus on moving forward than going backwards. So I'd say 80% of the time we might in those cases, we're going to start a brand new file, accounting files use the last file tax return as our starting point and focus really on clean data going forward for the current year.
00:46:35:27 - 00:46:55:10Cecil BullardSo is there any reason that I would say, okay. It's I don't know, it's, August and, we know that our financials are a disaster, and now I'm going to wait until December because that's the quote unquote end of my year.
00:46:55:13 - 00:47:17:09Eric JoernI'd probably go back to January 1st and and bring it, bring it forward through that current year. I might not go back and re clean up, you know, 2025, 2024 or 2023 if especially if we have a tax return filed again, unless. Right, hey, I show losses in those years that doesn't make a whole lot of sense to me.
00:47:17:09 - 00:47:35:20Eric JoernAnd I need to go out and get a loan from a bank, right? We might want to clean that up or hey, I, I have I have people interested in buying my business and we need good historical financial data. But for the most part, the cost of us going back and cleaning up prior years is is too much.
00:47:35:23 - 00:47:42:01Eric JoernIt's too much, and it's a distraction from getting the current information clean and and right moving forward.
00:47:42:03 - 00:48:07:18Cecil BullardBut I would say as, as a coaching consultant, that I don't care if you're 25 or you're 85, and if you own a business, you should have a plan, an out plan. And if I don't have good clean data, at least for three years, I'm not going to get paid for my business the way that I should be paid for my business.
00:48:07:20 - 00:48:32:08Cecil BullardAnd so whatever you're going to do, port in my in my brain, poor accounting, it's it could cost you hundreds of thousands of dollars. Oh, 100 in, in the short term, really, and, and the long and the long term,
00:48:32:11 - 00:48:33:18Eric JoernI just.
00:48:33:20 - 00:48:51:11Cecil BullardYeah. And, I don't know, I get a lot of, I don't know how, how often, but an awful lot of people saying, hey, I want to go buy the shop, or I'm looking at this shop or whatever. So what do you think it's worth? We do this a lot, and I'm like, okay, give me three years worth of profit and loss statements.
00:48:51:11 - 00:49:19:02Cecil BullardGive me that good balance sheet. And, you know, and, let's run some reports out of the point of sale. I'd like to know what the average repair orders and few other pieces of data. And then I can tell you with a three other questions, pretty much within a few dollars of what that business really is worth. But if the data is if I can't get three years, I had a guy in, Northern California go to buy a shop mini, this few years back.
00:49:19:02 - 00:49:51:17Cecil BullardAnd he's like, so I need to look at it. And, supposedly there was a few hundred thousand dollars of cash that was not in the on the panel. And so the business is worth 800,000, but the Pal only supports 200,000. It doesn't support 800,000 because that money can't be accounted for. Yeah. And the, the broker was arguing with me that that 200,000 was legitimate and should be accounted for.
00:49:51:17 - 00:50:12:16Cecil BullardAnd I was saying the bank won't account for it. I can't get a loan for it. So the answer is no. And it also clouds the other data. You know, when you're looking at, say, parts margin or labor margins, and you look at that business, you say, well, man, they're really poor. I know I can make them better because that's what I do for a living.
00:50:12:18 - 00:50:39:05Cecil BullardAnd, so I think there's hidden value in this business, but there isn't really, because it's $200,000 in parts and labor that you pulled off that you paid for, but you pulled it off and took it in its cash. So those margins with that cash in there would have looked a lot better. And what we really found was that there were also all the employees had been paid cash off the books for several years.
00:50:39:08 - 00:50:59:21Cecil BullardBecause the guy I told not to buy the business bought it anyway and overpaid for it anyway. Yeah. And, it's it's scary what you what what really happens? What you really see here absolutely scares the crap out of me sometimes. I think we got a question.
00:50:59:23 - 00:51:05:00Eric JoernSo. Oh. Warranty. Oh, fun. Yes.
00:51:05:03 - 00:51:06:12Cecil BullardGreat question. Go ahead.
00:51:06:14 - 00:51:34:04Eric JoernYeah. No. So this is important that you handle it properly in the shop management system. We don't we don't use the discounting function to handle warranty. Right. Most shop management systems have an ability to call other payment types. So, I'm assuming you're talking about a, an internal warranty, right? We have a comeback repair that we're doing, or we offer a three year, 36 on breaks or, you know, we pay for the brake job, whatever it may be.
00:51:34:06 - 00:51:51:25Eric JoernWe're going to have a a other payment type. So we're going to write up that repair order and we might what we want to do is kind of neutralize that effect on our on our gross profit margin. So we're going to write the parts around costs. We're going to write the labor around costs. So we might have a set rate that we use for what we do.
00:51:51:26 - 00:52:07:06Eric JoernAlso what we do to work on an internal like shop owned vehicle or maybe, hey, me as an owner, I've a my vehicle is owned by the shop. We're going to write those repair orders like that because I still need to pay my technician. I still need to account for the part. So those in need on a repair order.
00:52:07:06 - 00:52:26:26Eric JoernExactly. Now, if I pay my service advisor on gross profit and I say zero out, that repair order, or I discount that repair order, now that's a negative gross profit to my service advisor for something that paid. They're not really accountable for. So we like to neutralize the effect on gross profit.
00:52:26:29 - 00:52:55:01Cecil BullardAnd we actually had multiple warranty categories that we paid out. So we had tech error. We had parts failure, and we had just, you know, give away, and we had warranty legitimate, you know, that brake job, we warranty it for three years. It failed at two years. And we're going to redo the whole thing, as part of the warranty is not anybody's fault.
00:52:55:03 - 00:53:06:05Cecil BullardNot really part's fault? Not really the tech error. Yeah, it's a legitimate warranty. So we had, a minimum of four categories that we could look at.
00:53:06:08 - 00:53:28:27Eric JoernYeah, I like to keep that level of detail at the shop management system level. Maybe when it routes to your pal, you might have one line. Yeah. For all those things that your, I guess, quote unquote eating. Right. Because then we're looking at that, hey, I have a problem now we're going to go back to the source and say, okay, here's my four item break down inside my shop management system, and I'm going to then address, you know, that's a performance problem.
00:53:28:27 - 00:53:31:03Eric JoernSo I'm going to address it from there.
00:53:31:06 - 00:53:50:16Cecil BullardAs a as a consultant. I like to know where the warranty is coming from because then that can focus me in a direction that I can put a solution in place. But as far as the PNL, I just need to know that my overall warranty is below a certain percentage. And so I like to see that.
00:53:50:16 - 00:54:12:03Cecil BullardAnd that's another reason why I like to have the percentages, in the column. And I can tell you even today, the panels I get and I see hundreds every month, most of them don't have the percentages. I even got one last week where it was, December. And then it was the total, but it was only December's total.
00:54:12:03 - 00:54:41:12Cecil BullardSo there were two columns, but it was the same column with no percentages. There's there's no that there was no benefit to a second column. That's just a copy of the first column. Yeah. And, you just wonder why someone isn't paying attention to that. Who probably should, right? Yeah. And is that is that my is that my bookkeeper or my accountant's responsibility to go, hey, these are things that you should be looking at or is that not.
00:54:41:14 - 00:55:01:07Eric JoernSo I will say we've built we've ran into some limitations in the software inside of QuickBooks about being able to generate those reports. What the detail that we like to look at, exactly what you described, where you have like the either a trailing three months or a year to date comparison, along with the single month comparison with the percentages.
00:55:01:09 - 00:55:23:21Eric JoernWell, that's outside of the ability for QuickBooks to generate a report with that much data on it. So we've actually we use another software that that plugs into QuickBooks online, in which we can further customize and build our deliverable with those different reports like that, because we also found that issue of, hey, hey, if we can't add percentages here, you know, you lose some relativity to that.
00:55:23:21 - 00:55:43:14Cecil BullardReport and for me, the financials, I mean, obviously I want to pay my taxes and I don't want to be audited. And if I'm audited, I'd like it to be clean. Yeah. I cannot tell you how many shops we've come in. I had, I can give you, at least one example. Father and son, they owed the IRS 300,000.
00:55:43:14 - 00:56:02:27Cecil BullardAnd I'm looking at their panels and their accountant had been a bookkeeper, had been double accounting income. So the income that they had reported and stated was not the income that they really had. And so when it was all said and done, we kind of, sent it through what I would call a forensic accountant. We cleaned it up.
00:56:03:00 - 00:56:05:20Cecil BullardThey really didn't owe the IRS much.
00:56:05:22 - 00:56:09:10Eric JoernWe only have a three year statute of limitations to to correct that.
00:56:09:12 - 00:56:39:13Cecil BullardYeah. And, which. Yeah. And I've seen that happen a lot of times too, which makes me a little, a little nuts. All right. I think we had, like, a last question. I think we're getting to the end of this thing, credit card processing fees charged, separate line. Yeah, I, I always have credit card processing fees, and there should be a line for it as a cost in a below the line.
00:56:39:15 - 00:57:00:11Eric JoernYeah. So so they're talking if they charge for that. So if they charge for the fees, they pass it along. There's a few different ways to do it. I do think that that's a now an income item. Right. And we might actually bring up the cost or we might even apply the cost against that income, because it's really a pass through at that point.
00:57:00:13 - 00:57:01:03Eric JoernSo we might.
00:57:01:03 - 00:57:03:02Cecil BullardHave interesting philosophy. Yeah.
00:57:03:02 - 00:57:13:08Eric JoernYeah. Yeah. So if we're, if it becomes a pass through because we charge for that credit card fee, you know, we might only record the net additional or cost that we have.
00:57:13:10 - 00:57:26:06Cecil BullardSo you're saying, I'm going to report the $4,000 ticket as an income, but I'm also going to report the, I don't know, $40 that the credit card company is charging me to do that $4,000 ticket.
00:57:26:08 - 00:57:49:21Eric JoernYeah. So if we charge, say, $50 and, you know, our credit card fee and it costs us $40, right, we'd have a net $10 of income and we might report it just as a straight net $10. Again, that's a little bit newer. And we're still trying to understand how that really relates to how we do pricing, how we analyze gross profit, things like that on a financial.
00:57:49:24 - 00:57:57:08Eric JoernI mean, I think maybe the last 12 months is when people have started really adopting. We're going to pass on credit card fees to our customers.
00:57:57:10 - 00:58:22:01Cecil BullardYeah, I see that to it's very I'm seeing it at, the questions coming up more and more. We've never we haven't primarily in the past. But the question is coming up more and more now. All right. Before we before we wrap it all up, we have this financial intensive April the 23rd.
00:58:22:01 - 00:58:24:09Eric Joern2020 third and 24th.
00:58:24:11 - 00:58:29:18Cecil BullardYeah, I think it's 23rd and 24th. It might be 22nd, 23rd, but I'm pretty sure it's the 23rd and 24th. They total.
00:58:29:18 - 00:58:31:00Eric Joern23rd. 24th.
00:58:31:00 - 00:59:00:01Cecil BullardYeah. Okay. And and this we're going to be really teaching the importance of good, accounting. Good bookkeeping. And also, the things from the coaching perspective that you need to look at and what they mean to you and what that so I can look at a PNL and I can say we have a problem with parts the way we market parts.
00:59:00:01 - 00:59:19:20Cecil BullardOr I can look at a panel and say, man, we're not charging enough for our labor, because of the variance between parts and labor as a percentage. And so we're going to be teaching like we're going to get into the the nitty gritty, but without getting into the nitty gritty, it's not going to be an accountant thing where we're going to go through every line and go line by line.
00:59:19:20 - 00:59:42:02Cecil BullardWe're going to we're going to be really teaching the basics in how to really understand your business in a financial model. And you guys are going to participate in that, which is fantastic. I'm excited. We're already have quite a few people that have signed up for that. If you use the QR code here, you can get signed up for that.
00:59:42:02 - 01:00:09:13Cecil BullardIt's a, I don't know. I think it's a, I want to say two day class, but it might be three. I think it's extremely reasonably priced. And, we'd love to see you here in, in Utah for that. And I'm excited about it because this is like, my, my my Jones. Right. This is my this is my crack cocaine is this is the numbers and and and I'm not an accountant by far.
01:00:09:13 - 01:00:15:19Cecil BullardAnd I don't know that I could be, but, understanding the business numbers for me, it's like it's crack.
01:00:15:19 - 01:00:34:23Eric JoernSo you understand the impact it has on that business. Their generation. How it helps their technicians, their employees that work for them. And hey, even the community that that shop participates in, right? A more profitable, better shop is going to really have a better effect on the community as a whole.
01:00:34:25 - 01:00:56:04Cecil BullardAnd I always say there's there's like for the average shop, the typical shop right now is making about 4% net, institute shots, a little over 18. We, we, we vary between 18 and about 22 for our shops. But but about half the stuff that you're going to do to make money to fix that. Pretty simple. The other half's a little more complicated.
01:00:56:04 - 01:01:21:17Cecil BullardAnd you really need to understand your business like it's an engine and you need the right amount of fuel and air and and spark at the right time. And, and if you understand those things, it can make you not just thousands of dollars every year in profit, but it can make you tens of thousands or hundreds of thousands of dollars when you go to get, you know, sell your business or pass it on.
01:01:21:19 - 01:01:49:02Cecil BullardAnd so, yeah, the industry, the institute, you know, better business, better life, better industry. We find that the more profitable the businesses, the better the owner understands it, the better they can manage people. The more money they make, the happier everyone is. And so. Yeah. So, please, consider coming to the financial class and, Eric will do this again.
01:01:49:05 - 01:02:05:25Cecil BullardYep. Here in the near future. And if you do have questions that didn't get answered, pass them in and we'll do our best to get you answers for those, thank you very much for your time today, Eric. Yeah, of course, we love you guys over at Kaizen. And, I hope I pronounced it correctly.
01:02:06:01 - 01:02:07:23Eric JoernI think you got it. I think you got to date.
01:02:07:25 - 01:02:16:01Cecil BullardUs and shoot me. And, thank you for those of you that attended and had questions. Thank you very much. We'll see you next time.
01:02:16:02 - 01:02:18:13Eric JoernThank you so much. Thanks. Thanks, everybody.
 

189 - Standing at the Crossroads featuring Jason Brennan, Fine Tune Auto

189 - Standing at the Crossroads featuring Jason Brennan, Fine Tune Auto
January 27, 2025 - 01:19:04
 
Show Summary:
Curiosity turned into craftsmanship, and craftsmanship turned into leadership. Jason Brennan, owner of Fine Tune Automotive with three locations across Illinois and Northwest Indiana, shares how a lifelong habit of taking things apart evolved into building a scalable, people-centered auto repair business.
This episode of Leading Edge: Standing at the Crossroads dives into the realities of growing from one shop to multiple locations, including the financial discipline, people challenges, leadership mistakes, and mindset shifts required to scale without losing trust or culture. Jason opens up about learning business management the hard way, letting go of day-to-day control, and making pivotal leadership decisions that reshaped his team and company.
From earning trust with technicians, navigating acquisitions, and redefining success beyond store count, this conversation offers honest insight into what it takes to build a business that develops people and leaves a lasting legacy in the automotive repair industry.
Thinking about growth, leadership, or the legacy you are building as a shop owner? Meet with Michael Smith for a leadership and legacy strategy conversation: https://theinstitute.zohobookings.com/#/Executive-Owner-Strategy-Session
 
Host(s):
Kent Bullard, COO of The Institute
Michael Smith, Chief Strategy Officer at The Institute
 
Guest(s):
Jason Brennan, owner of Fine Tune Auto
 
Show Highlights:
[00:01:49] - Jason Brennan says his lifelong habit of taking things apart shaped everything that followed.
[00:03:37] - Jason realized the real reward wasn’t fixing cars, but watching his employees succeed.
[00:05:30] - Jason admits his biggest mistake was assuming technical skill meant business readiness.
[00:06:07] - Jason explains the non-technical skills that changed the trajectory of his company.
[00:08:18] - After 18 years in one shop, Jason shares what finally made expansion feel possible.
[00:13:54] - Jason planned for worst-case scenarios before opening the second location.
[00:19:28] - Jason recounts the day a key manager never showed up, forcing him to step in.
[00:25:46] - A tense shop meeting became the turning point that rebuilt trust and culture.
[00:39:10] - Jason compares acquiring a running shop to changing an airplane engine mid-flight.
[01:15:21] - Jason defines success by the people who grow alongside him.
 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/xJ4MYecafck
 
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
Kent Bullard: Welcome to the Institute's Leading Edge Crossroads podcast, where we examine the decisions, the crucial decisions that professionals make as they shape industries, drive careers, inspire thought leadership, and ultimately build lasting legacies. I'm Kent Bullard and I'm joined with my esteemed colleague Michael Smith.
Kent Bullard: And today we have a wonderful guest, Jason Brennan.
Michael Smith: Hi Jason.
Jason Brennan: Good morning.
Kent Bullard: Jason, would you please introduce yourself?
Jason Brennan: I'm Jason Brennan, owner of Fine Tune Auto. We've got three locations in Northwest Indiana, in Chicago, and I'm happy to be here with you guys.
Kent Bullard: We're very happy to have you. We've got an, I know, a phenomenal discussion ahead of us.
Kent Bullard: Those of you who are listening to this, either on the podcast or if you're looking at our website, if you have questions, I mean, it's very important to us that this is an open dialogue, that we're able to communicate what we talk about in this podcast with a greater audience. So if you have questions, if you have comments, we'd love to see those in the comment section down below.
Kent Bullard: If you do enjoy the content that we cover today, please like and share. 'cause it helps the algorithm and it also helps spread these valuable lessons to a greater audience. Again, we're all about helping the industry and raising the bar for everyone and we thank you for doing that. So let's jump right into the questions then.
Kent Bullard: Let's start with number one. What originally brought you to this industry and what inspired you to commit to this industry?
Jason Brennan: That's a really good question. The things that brought me to the industry were, you know, I came from a background a technician background, and I cannot. Right. I thought about this on the way in this morning because I knew you were gonna ask me a question like that.
Jason Brennan: So I thought, okay what really? Why did I do this? And
Michael Smith: what the heck was I thinking? Right?
Jason Brennan: I cannot remember a time when I wasn't taking something apart, repairing it, or trying to figure out how it worked in my whole entire life. So from a technical perspective or, you know, from a technical background, I think that's where it came from.
Jason Brennan: Just the curiosity about how things worked. I had to know how they worked. I took my toys apart when I was a kid. I think that's a similar story. You probably hear from a lot of a lot of people who started in the industry as technicians. So that was fun to me. It was more fun to take things apart and figure out how they worked than it was to play with them to me.
Jason Brennan: So, so, so that led to. Led me into a career where I could get paid to do that. Only I had to. I was responsible for making sure they worked when I was done at that point. So, you know, and so that's what inspired me to get into the industry was just I wanted a good career and doing something I loved and I knew that I could do that.
Jason Brennan: Fixing cars. And the other part of your question, I think was what caused me to want to stay. What's causing me to stay committed? Why am I committed? You know? I just ended up really loving it. You know, I ended up becoming a shop owner. I ended up starting to shop and you know, it, it, at first it was technical stuff, you know, I was really interested in the cars, doing a lot of diagnostics, building transmissions, whatever, you know, all the technical stuff.
Jason Brennan: And then I evolved into a, I. Into a service advisor and learned how to, you know, learn sales and learn how to communicate well with customers. And I'm still learning how to communicate with people the best that I can. 'Cause that's a, that's almost an art form, I think. But and then I became an owner and I and that's when I really, when one of my commitment really locked in, at first I was just like, man, what did I get myself into here?
Jason Brennan: But then the more I learned, the more I liked it. And what keeps me committed is is being able to be part of and facilitating the success of my employees. That's really the, it's the thing I like the most about it. There's other things that keep me committed, like the, you know, good service we provide to customers.
Jason Brennan: And the fact that I enjoy the actual the. What am I trying to say? The business that we're in I like all the, I like all the aspects of it, you know, the technical aspect and the customer service aspect. It's all fun to me. But the biggest thing is, the biggest thing that keeps me committed is that I can go to work and witness employees succeeding and becoming their best, the best they can be.
Kent Bullard: I, I'm curious 'cause I want to dive a little deeper, you know, to this I took things apart to see how they worked and I had to put 'em back together. You took that approach with toys and then vehicles. Did you bring that same mentality when it came to your business?
Jason Brennan: Oh, that's a real good question. Not at first because I didn't realize I needed to, and that was part of the reason why I struggled for years.
Jason Brennan: I didn't realize I underestimated the maybe even dismissed the, the fact that I needed to have business management knowledge in order successfully run an auto repair shop. I thought I had already learned enough as a technician that I could, well, I could fix cars so I can, I could just run a business automatically.
Jason Brennan: And that wasn't true. So
Michael Smith: what
Jason Brennan: were your,
Michael Smith: what were your biggest surprises? What were your biggest discoveries? Ooh, I don't know enough about that. What were the, what were a handful of topics you discovered?
Jason Brennan: The biggest one I'm still learning the most about, I think is what makes people tick. What do they want and how can I give it to 'em?
Jason Brennan: And how can we communicate that to each other so that we can make that happen? And that, that's something that, that I'm always working. I don't think I'll ever be done working on that, but you know, financial management. Forecasting, budgeting, how to read a p and l and a balance sheet. How to set key performance indicators and monitor them how to and how to affect them to keep where you need 'em to be.
Jason Brennan: All kinds of stuff, you know, that's just, yeah. Good list. Those are the main things, I think. Yeah.
Michael Smith: Thank you. Thank you for sharing that.
Kent Bullard: How long did you see, 'cause obviously you went to multiple locations and you put this focus on, well now deconstructing and putting the business back together to, to see how it worked.
Kent Bullard: How long did you play in that realm of just the single location and did you think that there was, like, that was gonna be it or were you always kind of planning that there was gonna be more than just the one location?
Jason Brennan: At first. When I wrote a I wrote a business plan when I applied for a loan early on in, in our business.
Jason Brennan: And it, it did include a a mission statement that included multiple locations. But I think that was more for, at the time I wasn't sure if I'm not sure I was being ho honest with that mission statement. I put that I wanted to have multiple locations, but I'm not sure if I had the confidence that a that I'd actually be able to do it.
Jason Brennan: I thought it'd be nice, but I wasn't sure if it was gonna happen.
Kent Bullard: It's funny, what we tend to write down tends to come true. Right. So he hadn't intended it.
Michael Smith: See what you did to
Jason Brennan: yourself.
Michael Smith: Right.
Jason Brennan: Maybe it just happened because I wrote it down. I'm not sure, but there you
Michael Smith: go.
Jason Brennan: I forgot what your question was, but,
Kent Bullard: it was, how did, was there a point in time or how long? Oh, because obviously you're working in the one location. Yeah. How long was that your world, like, perspective wise? 18. 18 years. 18 years.
Michael Smith: And what happened to make the second shop momentum start to move? What, what shifted? Now it's time. Now I can do it.
Michael Smith: Right.
Jason Brennan: So I hadn't known anybody who owned multiple locations. And I was in a, in the in the gear performance group, used to be called Bottom Line Impact Group. I was in, in the, in my business group with the institute. And I started some of my colleagues already had multiple locations and some of them had opened a second or third or whatever more locations since I met them.
Jason Brennan: And as I. As I got to learn more about how they, you know, kinda walk with them on that path, so to speak. I kind of, I realized that that, you know, it gave me confidence that I could do it, and it gave me some ideas about how to do it. I was involved in the m and a group with Michael Smith for a while, and I got to see about a lot about how that goes from growth to all the way to exit strategy and everything.
Jason Brennan: That was pretty cool to be able to see that. And anyway, so, so I just kind of observed I observed some of my colleagues doing it and I thought, well, I, there's no reason why I shouldn't do that. And I only had one shop, so I thought and I had gotten it to the point where it ran, for the most part, it could run without me there.
Jason Brennan: I was there most of the time anyway, but. That's just 'cause I like to work, honestly. I, but honestly, I've, those people were so good at doing their jobs that I didn't really need to be there. I almost felt like I was getting in the way sometimes, or I was going to work and just sitting in front of my computer looking for things to do.
Jason Brennan: And I thought, well, you know, it was kinda like I think it's time I knew the general concept of how to do it and I knew it was time to do it because my business could run without me there.
Michael Smith: So you headed southeast from your first location to northwest Indiana, right? What was that? That's a strategic decision.
Michael Smith: What,
Jason Brennan: right.
Michael Smith: How did you process that? How'd you come to that conclusion?
Jason Brennan: Well, the Northwest India, Mar Indiana market has been growing. In the last, I would say the last 10 years it, especially in the last 10 years, the Northwest Indian market has get been getting bigger and population, well, I don't know if it's been getting better population wise, bigger population wise, but I know that the demographics of the people who are moving into Northwest Indiana seem to be the ideal demographics for us.
Jason Brennan: And so I thought, well, it's good demographics. The Northwest Indiana region seems to be generally favorable to, you know, bi business friendly, I should say. They seem to be business friendly over here. So, those are some of the, a couple of the reasons why I chose that area. And, you know, we're in the, where we are in Illinois, we're in Southeastern Cook County.
Jason Brennan: Our Lansing stores in Southeastern Cook County, so we're right in the border. Anyway.
Kent Bullard: I'm curious, just going back to your research, did you work with an a company to find that data to make those decisions? Or was this more of a hunch that you knew the area that you felt as though that's what that area was growing into?
Jason Brennan: I did some research online on my own. I didn't hire any company or anything. Probably would've been a good idea, but I didn't do that. What I did do though was lived in the area for most of my life. So that's, I mean, you know, like I said, we're right in the border. I now live in northwest Indiana.
Jason Brennan: I used to live in Homewood, Illinois. That's just on the other side of the border pretty much. So I had been, I. Just throughout my daily life, you know, I've been, had been around both south suburban Cook County and Northwest Indiana both. And I knew people who had moved there shopped there, you know, all that kind of stuff.
Jason Brennan: So I can kind of kinda get a good feel about what the demographics are in the area by just doing that and then can back, you know, you can back that up with research online.
Kent Bullard: I love that. So was there apprehension? So once you've got the idea in your head, Hey, I think it's time to ex expand and crow things are running really smoothly now, they don't necessarily need me.
Kent Bullard: I think it's time to to move on. What was some of your greatest concerns or fears about taking that next step? Or did you not have any?
Jason Brennan: No, I, it's definitely had some concerns. Anybody that doesn't have any concerns about expanding their business is probably setting themselves up for failure.
Jason Brennan: They, you should always have some concerns, at least, maybe not fears, but, you know, be be careful with it. Yeah, there were financial concerns. I wasn't sure what the, I wasn't sure exactly what the, what how much cash reserves I needed to do it. So I had to put pencil and pencil paper, or I guess keyboard to spreadsheet or whatever you want to say to ed, do some math to figure out what I needed.
Jason Brennan: I had to talk to some other guys in the industry and ask them what they thought I should have in the bank in order to be, in order to not jeopardize my first shop. In the process of expanding in the event that we didn't have the business to make a profit, and, you know how long I basically planned on us losing money for a whole year.
Jason Brennan: I, I could have, I had enough, I'm pretty conservative when it comes to spending and saving and things and the risks I take. So I, you know, I think I had enough cash where I could have lost money for three years at the second store before I decided to pull the trigger on it, just because I wanted to be that stable.
Jason Brennan: I wanted to be very stable. So, because you never know what's gonna happen. So I thought, you know, one of my, one of my concerns or maybe fears, I guess, is well, what happens if we have another recession or something happens in the economy beyond our control and I open my second shop, and then my third, and then my second first store sales and gross profit declines below a level of profitability.
Jason Brennan: Right after I open the second one, I'm losing money at both. That could happen. It didn't happen, thank God, but it could have.
Michael Smith: So you were super well prepared financially and that gave you peace, right. To be able to have mm-hmm. Some of the confidence to do this. You mentioned earlier that the human components, you know, some of your greatest learning has been in that and still kind of the leading edge of what you're building.
Michael Smith: When you made the second acquisition, what were your, what was your thinking going into it with regard to first leadership and team, and second, with regard to customers, and then how did that carry over to further thinking with store three? That unknown human fuzzy stuff, right? How did you handle that?
Jason Brennan: So, so what you're asking is what did I the human aspect things?
Michael Smith: Yeah. Going into it, what you were thinking, then you did it and you learn more. And then what did you take into store three from the second shop that made the third one hopefully a little easier. Yeah, the human stuff, the hard stuff, right?
Michael Smith: The stuff we question, we spent so much time talking about.
Jason Brennan: Well, I knew, yeah, you're right. And I get it. So I knew that it you know, I knew that the, once I knew that once I had a financial formula for success and a business model and SOPs, all that kind of stuff that was repeatable or that should in theory be repeatable in a slightly different market then everything relies on a after that.
Jason Brennan: I think most of the businesses success relies on the ability to attract and retain the people who can execute that business model. So super important. And so knowing that I. Did recruit in advance before I didn't have much time to open the second store. It was a store that was closed for a month already, I believe it was before I, I had found out about it through a friend in the industry and store had been closed for a month already.
Jason Brennan: And I thought, well, it, the value of the bi, the value of the business diminishes. The longer I leave it closed. The more customers who come there and find out it's closed, the less customers I start with. Mm-hmm. When I take over. So
Michael Smith: were there any employees still attached to that closed business or did you have to start from scratch?
Jason Brennan: They, there were none attached. There were no, there was nobody currently working there, but there were two guys who had two technicians who'd already left and found other jobs who really had enjoyed working at the Hobert Indiana shop that I was able to get to come back. And they're still with us.
Jason Brennan: They really liked it. They live in the area. They didn't wanna leave, but the place was closing. So they, you know, they did. And I got 'em both to come back with the help of the old owner. So thanks to Keith Sweeney for that one. He he gave me the connection there and he gave me their phone numbers. I called him, he put in a good word for me.
Jason Brennan: He said, Hey, I think you should talk to this guy. And I got those two guys to come back and they're doing well here. So that was really key. Ha having two good techs to start with was really great. And then I did recruit a store manager and hire a store manager. He accepted my po my offer and we got 'em all onboarded and everything in advance.
Jason Brennan: And then as we were doing facility improvements it took another whole month before we, we actually opened. So, during that month we re, anyway, during that month we recruited him. He didn't show up on his first day of work. So that was something I had experienced before. So it wasn't, you know, I hate to say it, but it wasn't really that shocked.
Jason Brennan: He forgot to
Kent Bullard: mark it on his calendar. That's what, that's really what happened. That didn't set the alarm, didn't have it on his calendar.
Jason Brennan: Yeah. I called him and I said, Hey, where are you? You know, and he goes, well, I decided to stay where I'm at. I forgot to tell you that. Sorry. You know, so, and this guy was a service director at a service manager at a dealership.
Jason Brennan: And they had talked him into staying. Maybe it wasn't the right thing for him. I can't blame him for that, but it would've been nice for me to know that. So anyway, I wrote service and ran the shop for about three months on my own. Before I hired a, before I was able to find a qualified person to come in and train to run the store.
Jason Brennan: And I think, let's see. I ended up having a total of three store managers come in and I had to let him go for various different reasons before I found the guy that is currently our store manager at the Hobert shop. So
Kent Bullard: I have
Jason Brennan: different people issues.
Kent Bullard: I'm curious to know, 'cause I mean it's definitely a different place you're in when you're going, when you're at one location and then moving to three locations.
Kent Bullard: What do you think some of the key mindset shifts you had to make in order to make that happen from just one location to three locations?
Jason Brennan: So one of the key mind mindset shifts I had to make was. Which I believe that I made before I decided to expand beyond one location was that the business needed to not rely on me for, in, in any daily operations aspect.
Jason Brennan: Except maybe phone calls and answering questions. You know, so, so I was just like, I was conservative cash wise to make sure I was prepared. I was also conservative that way. I guess you'd call it conservative too, because I kind of overemphasized that concept and I in the sense that I, you know, proved it to myself by, you know, e even like, like I said earlier, I went to work every day, but then before I opened a second shop and I had already been talking to people, talking to everybody, saying, Hey, I want to, I wanna buy or open a second location if you know anybody look to retire or.
Jason Brennan: Who runs a good shop or whatever let me know send me their number or them my number, connect us. And that was already starting to happen. So before I decided to pull the trigger on anything, I purposely stayed home and worked on house projects, went and did a, you know, even if I was at the store, I might be doing a painting something or fixing a piece of equipment or whatever.
Jason Brennan: And just purposely removing myself from daily operations while keeping the ability to still jump back in if I needed to. And I was actually surprised at how when I conveyed my to my people at the Lansing store, what I was trying to do, I was surprised at their reaction. I shouldn't have been.
Jason Brennan: 'cause they were all really good people. But I thought, well, this is gonna take a while. We're gonna have to work a lot of bugs out. But really, they just stepped up to the plate and did their jobs the best they could. And they had equated to me not it, it didn't take very long. To prove to myself that was, that I was able to not be involved in the daily operation there if I needed to be somewhere else.
Michael Smith: Alright. Thank you for sharing that, that mindset shift, and we've talked about this in this industry over and over about working in versus on the business, and that, that mindset shift you made to put yourself in a position not to be in it and just to be available to work on it, that's a huge cognitive leap given the technical levels that we most come, mostly come into ownership from.
Michael Smith: So thank you for sharing that. That's a huge, that's a huge topic for folks to consider.
Kent Bullard: I think a lot of people don't understand that if you're sitting there, you know, the, being the one that. Cranks the lever. It's really hard to go do that in multiple locations. 'cause now you're not just saying, I've got, okay, I'm just gonna do more.
Kent Bullard: But you literally have to double the amount of work that you're doing at that if you don't change how you're doing it. 'cause your input has to equal a higher output.
Michael Smith: Sure. And it's sort of a compelling, or it's interesting to be the person that they bring all of their, you know, problem solving questions to, Hey boss, can I ask you a question?
Michael Smith: And there's a little ego that goes along with that. Yeah. Why don't you do this? Oh, okay. Thanks. Right. And all of a sudden when you pull yourself out, or, you know, in the process in the middle is, well, what do you think you should do? You know, kind of a thing. All of a sudden you realize they can do it on their own and they actually like doing it on their own and then they're happier doing it on their own.
Michael Smith: And it's like, huh, this worked pretty well. And they're right. You know? Yeah.
Jason Brennan: You're a hundred percent right Michael. And, thinking back. That is something I did. I did ask that question a lot. What do you think we should do here? What do you think the right thing to do is? And that was, that's a good way to, to train people, I think to be more independent is to ask those kinds of questions.
Jason Brennan: And
Michael Smith: the downside to this too, Jason, is later on, they're like, Hey, stop helping me, but I have an idea. Yeah. I don't want to hear it. Right. It's like, okay. Right. That's fine. Just make it work.
Jason Brennan: That could happen. It could, yeah, it could happen too.
Michael Smith: Yeah.
Jason Brennan: I love it.
Michael Smith: I love it.
Jason Brennan: But letting people know there, there was a point in time where I remember I had a, there was a, we had a shop meeting.
Jason Brennan: We were having a shop meeting at the shop in Lansing, and we've been having problems, with that I created with people with technicians thinking I was looking over their shoulder too much and telling 'em how to do their jobs. And they really didn't. They were experienced certified technicians.
Jason Brennan: They didn't need to be told how to do their job. They just needed to be allowed to do their job. But then I felt that I didn't I felt that they didn't want to be held accountable, which was true in some cases. They some of 'em, you know, may maybe didn't want to be held a hundred percent accountable to the outcome of the repairs that they were doing.
Jason Brennan: So I kind of felt like I was stuck. I had it like there was a catch 22 there. I have to get involved because if I don't, then the technician who's doing the repair isn't gonna want to be held accountable to the outcome of the repair. So I just need to make sure it doesn't go wrong. That was the wrong approach.
Jason Brennan: So eventually I figured out what the right approach was, and we had a shop meeting where it was almost like a mutiny, I think, you know, where everybody in the whole shop called me out in public and said you're looking over our shoulder all the time. You're telling us what to do. We don't like that.
Jason Brennan: It's really a, it was almost a toxic environment, I think, because of that kind of thing. And so I, I just said to him, all right, you guys wanna, you know, you're right. I shouldn't be getting involved in these repairs. You know what you're doing. I'm gonna, I'm gonna make you a deal right now. I'm gonna just trust you to do your jobs.
Jason Brennan: But I don't want to be, I don't want to hear I don't want to get any flack about or hear any, you know, I want to hear your opinions, but I don't want to get a bunch of pushback when I try to make a change in the business operationally or growth wise. Or equipment wise or anything that we've already discussed, or maybe it's not your department, so we haven't discussed it, but any of these decisions I make, I just want you guys to trust me to make the right decision.
Jason Brennan: And I'm gonna make mistakes just like you guys do sometimes, but I need you to trust me as your leader to take us to the right direction. And if you can do that for me, then I will trust you to do your jobs and I will hold you accountable to the outcome and you can hold me accountable to the outcome you know, 'cause the outcome.
Jason Brennan: If I don't do things right, I is, you know, outcome. The outcome if you don't do something right, is a, could be a pretty bad situation as far as a car repair goes, or a customer service situation if you're a service advisor. But the outcome. Of, of me making a wrong decision could be really great, or it could be really catastrophic as far as, you know, destroying the whole business or making the business super successful.
Jason Brennan: So believe me, I have a lot, I know that we had that, I have a lot in the line with my decision, so I take 'em seriously. I know you guys too do too. And that's the deal that was the deal we made and that was a turning point in that shop.
Michael Smith: Yeah, I wanna reflect on that, Jason. I don't want that to go by the folks that are listening.
Michael Smith: You made a huge cultural pivot with that meeting. I mean, the idea that you came to conclude that the masters don't want you to tell them what to do, which is absolute psychology, right? It's like we're good at what we do and all we're gonna, when we ask you for help, come give it to us. If we don't leave us alone.
Michael Smith: It's very much of a master's mentality, and the fact that you are willing as a master to give them the grace to have that space and then say to them, this is about trust, and make that a topic culturally. And then they feel trusted and you asked them to give you trust back, and then you developed a brand, you, your relationship pivoted in that meeting.
Michael Smith: You guys adopted a new way of having a relationship together. And I love your reflection. It was a turning point and it's worked out, right? Once you trusted them and they trusted you, they're, they took off and did their jobs and you didn't have to help 'em. You know, the results have shown, right?
Michael Smith: So I, I just didn't want that to go by folks about what a moment that was in the development of your company and what a massively good decision you made to let go boss, right? You let go, you gave it back to him and said, okay, I'm gonna trust you. I will leave you alone. I was trying to help, but I'll leave you alone, let you do your thing.
Michael Smith: And then they ran with it, which is fantastic, right?
Jason Brennan: It's, yeah. Thank you for pointing that out. That 'cause I didn't think of it in terms of mastery back then. I didn't even know anything about that. You know who I can, who I owe that. I had been dealing with those issues for a while, and then it came up in a meeting where I had to deal with it on the spot.
Jason Brennan: But I had been talking to my dad about it. He owned a plumbing company. I helped him build growing up. And and honestly, I, if he's listening, I apologize in advance, dad, if you're listening, but his company had a horrible culture, but it's and it wasn't on purpose. He's a great guy, super nice guy.
Jason Brennan: But it was really a, what we call old school, I guess, you know, and just do your job and I'll do my job and we'll all just be quiet and do our job. That was their cult, their whole entire culture. And that's it. But when I brought to his attention that people had I had the feeling that they were, people were unhappy that I was telling 'em how to do their jobs and get too involved.
Jason Brennan: He said something to me like, well, nobody likes to be told how to do their job. And that. Or guys that are good at what they're doing. Like he was, I think we were talking about plumbers. He said, well, yeah, when I was a plumber, I didn't like people telling me how to do plumbing. That's why I went to code school and all this other stuff.
Jason Brennan: I, I knew what I was doing. Could kind of feel like an insult when you're trying to help somebody. Sometimes to them it could be perceived as an insult.
Michael Smith: Yeah, you're right on. That's exactly what it's perceived as. It's like, don't you, it raises these intuitive natural questions, don't you trust me, first of all, and secondly mm-hmm.
Michael Smith: Do you question my skills? Do you think I can't figure this out if you leave me alone and you're not saying any of that. You're not saying a single one of those things you're actually trying to help. Right. But that's not how it's processed on the receiving end. So gr great conversation and kudos to dad.
Michael Smith: What a great comment. 'cause he is right on Works for plumbers, works for carpenters, works for business people too. I mean, it's white collar, blue collar people. It's human. It's human. Yeah. And it's wonderful story. So thank you for that. That was great. And thanks dad. So
Kent Bullard: I have to commend you on your attention to preparation before you made some of these steps, you know, you you leveraged a lot of your assets, you know, looking at people, looking at the financial aspect of it.
Kent Bullard: What do you think some of your strongest assets were as you were building and expanding, and what were some of the assets you were surprised to discover could be leveraged as you were expanding?
Jason Brennan: Strongest assets and ones I discovered, I guess I would say that honestly the mo, the biggest asset was the people we had in place already because that was what allowed me to even do it at all.
Jason Brennan: I wouldn't be, I wouldn't have been able to expand the business without the people we had there. And I made sure that everybody. That, that, you know, I wouldn't have done it if I didn't feel like everybody who worked for me at the time was somebody I would never wanna replace or lose. And that they would all work as a team to help each other and help me fulfill our mission, you know, or and allow us to expand.
Jason Brennan: So biggest asset, I guess, is the team that we had at the time and still have most of
Jason Brennan: yeah, so, so, and then assets we discovered, I think I had been working since I had been working partially remote before the expansion. Partly outta convenience and partly because, or inefficiency, and partly because I wanted to test my ability to not be there and have the operations run well.
Jason Brennan: I had developed ways of. Ways of not having to be there, ways to work remote. So leveraging technology, you know, zoom like the, like we're doing now, we're on a, we're on an electronic meeting, we're on a Zoom meeting or a podcast, whatever it is. So being able to, you know, being able to work from my car if I had to, or a cell phone or a laptop or whatever remotely.
Jason Brennan: I had sort of already set that up and I didn't realize, I didn't even realize how well that would work until I was at the second store all the time and didn't really need to drive all over the place to bring people, pieces of paper or whatever. So I guess just leveraging the technology that we had in place.
Kent Bullard: I like that you kind of had to think of new ways of doing things and, you know, circumstance. Thankfully kind of pushed you to try some of these new things, but I think it's interesting, you know, as you go to expand, I always talk about input versus output. You know, you wanna be able to change your input so you have a much greater output.
Kent Bullard: Right. And right. That, that is, I think part of the challenge you have to overcome is thinking I'm not gonna, I'm not gonna do two times the work I'm gonna do two times the better choices or better work. So they, you have a much higher outcome. I'm curious to know leveraging those assets and kind of expanding, what was one of the, because you're essentially developing a new way of doing things, right?
Kent Bullard: What was one of the biggest developmental challenges you faced as you shifted into this growth strategy?
Jason Brennan: That's a good one. I guess.
Jason Brennan: Developmental challenges. I don't know if it's a, you know, what you would define as a developmental challenge, but I might just be, I might be developmentally challenged in general. I don't know. But
Kent Bullard: that
is
Kent Bullard: not, I wanna clarify that as now what I'm, then you can go in there if
Michael Smith: you want to, but I wouldn't go there to fire you.
Jason Brennan: Anyway, you know, I went back to work a lot more hours. I had, I'll tell you one thing that was hard, it was that I went from working at one point in my career a hundred hours a week. 'cause I was doing everything the wrong way and had to subsidize my wrong ways of doing things and mistakes with my extra, with extra time personally.
Jason Brennan: And then I then I got used to working like anywhere from like 20 to 30 hours a week. I felt like I was only working 20, 30 hours a week. I was probably working 40 hours a week, but it was not necessarily, you know, not very stressful because I would just make my own schedule and do my own thing and not have a whole lot that I had to commit to.
Jason Brennan: Could have days off whenever I needed to or wanted to without a lot of notice. And then I went back to, for a short period of time, you know, there was like a month of 80 to a hundred hour weeks again.
Michael Smith: Which is interesting too, 'cause you shift, your mindset has shifted away from being in the business, but you make an acquisition and in the case of the way you did the first acquisition or the second shop, right?
Michael Smith: You had to go back into it. You were right back at the front counter again. You're right back into the store management role again, which was, you know.
Jason Brennan: Exactly. And I think the answer to Kent's question is I've never opened a second store and I, it was so long ago that I, that when I started the first one, you know it was kind of a slow organic growth.
Jason Brennan: Thing I started as a tech. It was just me. I had a few piece of equipment and I grew it slowly and it had, I had done that over the course of 18 years, so I didn't have a checklist or anything of what I needed to do. I didn't even remember everything I did. So when I went into opening a second shop, I tried to prepare and make checklists and all that stuff.
Jason Brennan: And I, you know, back to assets, one of the assets I think I biggest assets is colleagues, friends in the business. I got some checklists from them and some advice from them, but I still went, you know, every situation's different though. So when I went into it, you're right, Michael, I was right back into the operation, running the store while I was trying to finish remodeling and stuff.
Jason Brennan: And things didn't go as planned. I wanted to open up right away. I had a really good technician who started before we opened with me. That was an, that was another big asset. He came in and totally, you know, he did, he just, I didn't need to tell him what to do a lot. He just kind of knew how the shop needed to be set up to run for maximum success.
Jason Brennan: So, anyway, him and I were here before we opened and after we opened just nonstop reorganizing facility, improving setting up computer, we were still setting up computers and putting stuff together, you know, after we had already opened. So it was kind of. It was kind of messy the way we did it, but it worked.
Jason Brennan: So,
Michael Smith: yeah you cleaned it up. So let me just go forward now you've got store one, 18 years, store two, intense, quick, open, build it, learn the hard way. Now you go to store three. Just give us a quick overview of was that the best of both worlds? Was did it look like one or two, something brand new? What did you do?
Michael Smith: It was, what did you step in next? Right. So
Jason Brennan: that was, yeah, it was a little it went a little smoother. Okay. It, well, it went a lot smoother actually. Okay. So it was a a purchase from a guy retiring. That one never closed. It's remained open the whole time. That was a little bit of a challenge.
Jason Brennan: That was a different challenge than the one that was already closed. I had a little bit of time to do whatever I could have chosen when to reopen. I was able to choose when to reopen that store. The third one, I came in with better checklists. Better conversations with the current owner and kind of, I felt like I was, I definitely was more prepared.
Jason Brennan: I had a whole plan laid out to how I wanted to do it, but the biggest challenge there was I had never taken over a store that was, you know, running. It's kind of when when people were a would ask me how it was going in the first couple or three weeks or month or whatever, I would say, well, it's it's kinda like trying to change the engine of an airplane that's still in the middle, still in, in the air.
Jason Brennan: You know, it's because it, had they had all paper repair orders. They didn't use computer well, they sort of used computers. They had a secretary that would recreate handwritten repair orders in the computer in Mitchell. So that was kind of weird. The owner would write service in the shop. He had a big long desk in the shop and his desk was standing in front of that desk.
Jason Brennan: That was his job all day in the shop with impact wrenches going and everything. And since we weren't able to close it, or we didn't wanna close it, I should say, for any long period of time, for really any period of time that we, that's how we operated for, you know, I worked with him alongside him and my store manager, myself and my store manager worked alongside him for probably about a month, I would say so.
Jason Brennan: Right. We always, we knew going into it that we're gonna wanna. Implement all of our technology and systems there, but it was almost like we had to run like two systems simultaneously. It was really chaotic because there were repair orders that were all on paper and different, you know, notes highlighted with different colors that we didn't know what they meant and all kinds of crazy stuff.
Jason Brennan: And then we, you know, any new repair orders were started in tech metric. So it was kind of, it was kind of hard because we had all these clipboards with repair orders on 'em, floating around, and we had repair orders in the system, and they are in tech metrics. So we never knew where it was, whether it was, you know, people would, we'd forget.
Jason Brennan: Wa was this one in Tech Metric or is that a handwritten clipboard one and then, or is it maybe both? A little bit of, you know, a little bit of both. Right. It was just. Crazy.
Michael Smith: Did you manage to crazy keep the team through this? Did the team stay? Because that's quite a transition on the fly, right? We did.
Michael Smith: You're changing wings and engines while you're up in the air, and that's stressful on the people that were dialed into the old model too. Right. How'd you do with that? How did, how'd you do it though?
Jason Brennan: It was well, that would've liked to have conversations with the employees before, and I would've pushed harder for that if I had to do it again.
Jason Brennan: If I, or when we do it again before the transaction occurred, right before we bought the place, before we sealed the deal, and a couple things that went wrong, I didn't push hard enough for, 'cause it really would, there would've been no bad effect I don't think if I came in and talked to the employees before the deal was inked and the old owner was afraid to do it.
Jason Brennan: I didn't push him to do it. But I should have pushed a little harder for that. So anyway, how it went is I came in there one day and the owner said, Hey, this is the new owner. I'm selling the place to him, but I'm gonna be around for a while to help make sure transition goes.
Jason Brennan: Okay. And then I met all the guys and talked to him and they were pretty nervous at first, which is to be expected. I think it's understandable. So, I was there every day, so I was able to continually have conversations with them. I made sure I did a, you know, one-on-one intro meeting between me and them.
Jason Brennan: And, so it was, but it was pretty chaotic. 'cause I was doing all that stuff. Trying to answer your question, I kept everybody, we did let one guy go after a while, but we kept everybody from day one. And so,
Michael Smith: so the guy that went was released on your terms? Not them running out the front door.
Michael Smith: Okay. Thank you. Yeah.
Jason Brennan: Right. He was attacked. We used, decided to let 'em go and
Michael Smith: yeah. Not your kind of tech, right? Mm-hmm.
Jason Brennan: Right. Yeah. So, so it so we were dealing with that. I was aware that would be a pretty disastrous if everybody just walked out. Mm-hmm.
Michael Smith: Yeah,
Jason Brennan: somebody, it
Michael Smith: can be
Jason Brennan: somebody else I know in the industry and
Michael Smith: they, I was gonna say, we have a friend that did that Right.
Michael Smith: Day one, nobody was in the shop. It's like, oh, that's not what you all said, but okay. How'd customers move through store two and store three? How did you do both of those transitions? The customer side, you bought an, a dead one that people used to drive by and stop at. Did how, you know, how'd you go back after that market?
Michael Smith: And then how did the owner maybe help you with the second one? What, how did you try to lose as few customers in the third one too? Because this is fascinating case studies, right?
Jason Brennan: It's a good question. So the first acquisition, so our second store, we I drafted a letter kind of an intro letter from me, no, actually it was an intro letter from the old owner.
Jason Brennan: I showed it to him and said, Hey, what do you think about this? And it basically said, Hey thanks for being a customer for, shoot, I think it was 20, 25 years or something. He had the place, maybe 30 even. Thanks for being a customer for years. I just wanna let you introduce you to the new owner. I'm retiring and this the new owner and it had both of our pictures on it.
Jason Brennan: And we used to do some of our own mailers. So that one we did old school, we just, we got the customer list out of the customer out of Mitchell, printed it off put 'em on envelopes and we have a little folding machine. We just printed these things on eight and a half by 11 paper. And it was kind of a, like I said, just an intro, introducing the new owner letter, give him a chance, he's a good guy, blah, blah, blah.
Jason Brennan: And then I had him sign it. He said, yeah, that sounds real good. So he signed it and we folded 'em up, mailed 'em out to all the existing customers and. It worked out really well. We put a coupon in there too. Mm-hmm. You know, so,
Michael Smith: Can I just reflect style wise, that was a very familiar kind of a thing rather than a big old fancy, you know, multicolor shiny advertising looking thing.
Michael Smith: It was a letter, you know, it's a folded letter from the two owners saying, Hey, we care about you guys. Come back, we'll take care of you. Give us a try. I love that. Very familiar. I'm not surprised it worked.
Jason Brennan: Yeah.
Michael Smith: So that's really good.
Jason Brennan: Yeah, it was really well received. People, I was surprised at the response.
Jason Brennan: We didn't track it, but I was here every day and we get a lot of phone calls.
Michael Smith: Fantastic. Fantastic.
Jason Brennan: From that letter.
Michael Smith: Yeah. So the second
Jason Brennan: one, one just, people stopped by. The second one's
Michael Smith: rolling. Oh, I'm sorry, brother. Go ahead. I didn't mean to get in the way, so,
Jason Brennan: yeah. People even stopped by. Yeah. Yeah.
Jason Brennan: They, based on that letter, they came by and said, Hey, I just wanted to meet you. You're the new guy, and. It was kind of cool.
Michael Smith: Yeah,
Jason Brennan: that is cool. So that's, so they just, our normal deployed our normal marketing strategy that we already used at the other store with the same web company. And that took a while to get off the ground.
Jason Brennan: That was something unexpected. I was thinking, well, let's do this, these Google ad words, that's our main new customer acquisition marketing method. And I took it for granted that our Lansing campaign was working real well. And then the guys, they were like, well, congratulations. Yeah, we'll do your campaign for you.
Jason Brennan: But, and then when I asked 'em, well, how long before it. Becomes, you know, reaches max maximum effectiveness. 'cause they had brought up the fact that it takes time to build a Google AdWords campaign. That just doesn't happen overnight. They do research and they do testing and they make changes and then they just repeat that process and they said, oh, well, between three to six months, you know, I'm like, well, I went, oh, that's not good.
Jason Brennan: You know,
Michael Smith: is there
Jason Brennan: any way to make it one to
Michael Smith: two months? Is there,
Jason Brennan: They really did a good job. That's good. That's that. They did, they exceeded expectations. Good. But it did take a while and we did have to do and still are doing mailers. To supplement that. So, and then you're, so go ahead.
Jason Brennan: You were gonna ask a question
Michael Smith: about, oh no, I was just gonna say thank you for all that. That's a rich information base. What did you do differently with the store that was already underway? Now you've got customers that are maybe even the next day driving in to the driveway expecting their carter be repaired by the old owner.
Michael Smith: Right. How'd you, how did you handle that one? It's a different model. So,
Jason Brennan: That one, yeah, it was interesting 'cause there was yeah, the re repairs were in the store never closed. So, you know, I walked in and the secretary, we did have a secretary credit. So I take back what I said earlier. We didn't keep everybody, there was a secretary who actually was kind of becoming the face of the business.
Jason Brennan: She would talk to customers, take their key, receive their keys, give 'em their invoices. The owner would be the one who would talk to about repairs, but she was the one they saw when they came in and picked up their car. So, she decided she didn't like the ownership change and just, I never got to meet her.
Jason Brennan: She just decided she wouldn't come back to work. That's once she found out it was being, well, that's,
Michael Smith: that's tough. That's the face of the business at that point. That's a tough one to lose. So
Jason Brennan: yeah, ki kind of, you know, a lot of the owners or a lot of the customers knew the bill the owner, but a lot of 'em also like the secretary.
Jason Brennan: And so I got a lot of questions about it. Where's the secretary? Where is she? Where is she? And you know, oh, it's too bad she's not here. I like working with her, but I just reassured people, my, myself and the manager I hired to work there, just re reassured people that we would take good care of 'em and.
Michael Smith: Were you sitting at
Jason Brennan: the
Michael Smith: front
Jason Brennan: desk
Michael Smith: at that point? Did you take that role and you were the new face at the front?
Jason Brennan: Well, it was myself and the manager. I hired both and the new manager too.
Michael Smith: Yeah. There you go. Okay.
Jason Brennan: Yeah. Awesome. So,
Michael Smith: yep,
Jason Brennan: we were and he didn't last too long. I ended up but I didn't have to go through four total people, you know, and in Hobert it was, you know, three people, and then the fourth one stuck in the Crown Point store.
Jason Brennan: It was one person, and then the second guy stuck, Hey, the next
Michael Smith: store, it'll be a first time stick. Right? I hope
Jason Brennan: so.
Kent Bullard: I'm curious to know, because a lot of this has to do with managing people, right? So you've got the dynamic of there's people already in existence, they already have relationships with the customers.
Kent Bullard: There, there's also what people do I not have that I do need and I'm curious to know what your thoughts are or what your, needs are when you're looking for people at this point. So you've been through a few different managers. What's one of those, one of the key things you're looking for in a manager as you're expanding and growing?
Kent Bullard: So you're going out to the to the interviewing part of it. What characteristics are you looking for?
Jason Brennan: Well, ideally, that's a good question. I, ideally, I'd like to, you know, unless the fourth store we acquire has a good existing manager, which would be nice if I was gonna have to just hire a new manager, I'd like to promote someone from within my company, one of my assistant managers.
Jason Brennan: I'd like to we run two people on the counter at all of our shops. A manager and an assistant manager. And the assistant managers are supposed to learn to be able to run the store when the manager's not there. So they're. They're gearing up and training to become a manager if they want to.
Jason Brennan: They don't have to, but if they want to and they've gained the skills necessary, then they're able to be promoted. You know, they're definitely gonna be considered for promotion to store manager, either when we acquire a store or somebody else moves to a different store and now they're the manager there.
Jason Brennan: So, you know, that's the first thing I'd do. But if I have to hire if I have to, and I have had to just hire a store manager off the street, that's a good question. I'm not sure if I have the right answer. 'cause it didn't work out in the first shot for me any of the times. But if they've run a store before an auto repair shop before, that'd definitely be a plus.
Jason Brennan: Well,
Kent Bullard: maybe they were, well, I guess so. Another way you could ask this is. What are some of the reasons, and not to get personal, I don't wanna get personal for these people, but what were some of the underlying reasons why that manager didn't work out? Because then you can kind of say, well, okay, that's something I don't want for the next one.
Jason Brennan: I think that some of the reasons they didn't work out is their expectations. Were not, you know, really properly aligned with the reality of the situation. And that could be that could be my fault for not setting the expectation or making them, you know, making it clear to them what the situation was really gonna look like.
Jason Brennan: So the, you know, one guy we had who came in from a dealership had the right personality type, I think, and the right characteristics, but he ultimately I think he expected. This was in the Hobert shop. I, you know, he, I think he expected it to grow a lot faster. He was a little overconfident, I believe, in his ability to grow the store to a level where he'd be making the kind of income that he thought he should make in a short amount of time.
Jason Brennan: And then I think he underestimated just, he just underestimated the amount of work that it was gonna be to help me grow the store from. The level where it was when we bought it, where it needed to be. So,
Michael Smith: got Jason. Jason, can I grab onto a couple things that you said here that are super important.
Michael Smith: Why? And I want to cut some slack for you, for everybody listening to you too. You know, you took the blame, I guess, in a way for expecta expectations setting with him that you could make it more clear what it was really gonna feel like. And I just wanna cut you some slack as your friend, right? And somebody who knows a lot about folks that doing what you're doing, there's more unknown when you buy a new store than you wished.
Michael Smith: There was there, and no matter how prepared you are, how many checklists you have, there's a whole bunch of wrinkles in there that no, no due diligence process can be thorough enough to figure out. And so all of the projections are theoretical. And I'm not trying to, you know, put too much risk in here, but it's not as easy as it looks.
Michael Smith: And, you know, to cut us all some slack, it's difficult to say this is the pathway that we've, you know, we have 90% assurance. It's got you get into it and stuff starts popping and somebody you didn't expect to quits and a whole wave of customers leave for reasons nobody would've ever seen coming and all kinds of crazy stuff like that.
Michael Smith: So I, you know, there's lessons you've learned. I don't want to get by for people. It's in, it's awesome. It's your character that you took the blame for that, but man, is it hard to figure something out that you're doing for the first time with so many moving variables? And that's maybe one of the characteristics I just wanted to catch on the way by was part of the expectations that they might have is that, hey, this is the best we can do.
Michael Smith: To see what we think is gonna happen, but we're gonna have to be flexible. You know, we're gonna have to be resilient and persevere for a few months until we really do figure out how to dial this in. And it may not look like this. Are you okay with that? And if they say yes then at least that you have that door open that they don't get frustrated because it wasn't what I expected it to be.
Michael Smith: Right. Because you kind of set that up in your conversation in the first place. So,
Kent Bullard: and this is where yeah. Humility and grace come into play. You know, Jason, you were talking earlier about the hours that you worked. Right? And just bringing this to this point I wrote, I drew a diagram here.
Kent Bullard: 'cause I was looking at I thought it was interesting you said I worked a hundred hours because I didn't know how to run the, this shop. At that point I didn't have these competencies. And then I finally got it dialed in and I was working less. And then I took on a new challenge and then I ended up working.
Kent Bullard: More again. And I mean, this follows the mastery path, the mastery model a lot. And I think it's the same thing with these managers or the people that you elevate into these positions. You know, if you're hiring from within, is that yeah, there's gonna be things you don't know and it's gonna be difficult and hard and you gotta give some grace to allow for the time and the space to learn those competencies.
Jason Brennan: Yeah. Yeah. Really when we think of what, you know, with what, back to what Michael said for a second actually about setting expectations and the fact that we really don't know we can set, we can set goals or we can talk about a, in an ideal scenario or a likely scenario, but we don't know actually what's gonna happen.
Jason Brennan: Exactly what's gonna happen and how it's gonna look and feel, and, I did do that with the, I did. Now that I think about it, I did tell this guy exactly what you said, you know, or sort of what you said, that we don't know exactly what's gonna happen. It's, you know, might be a little rocky at times.
Jason Brennan: Your base pay is a pay that you told me that you can live on this pay. Well that's good because it might happen for a month, or it might have to be that way for eight months. We don't know how long it's gonna take to grow the store to where you can make more money, you know, your desired pay as opposed to your base pay.
Jason Brennan: And I think this guy was just a little overconfident and, or a little, maybe, just whatever you wanna say. But with that part, one lesson I learned. From that particular guy managing the store was that I, he had been doing well and then he got demotivated when things weren't going the way that he thought they should.
Jason Brennan: We had a really good month and then followed by a really slow month, and that's when he got demotivated. And I actually was, I had been ignoring my Lansing store, which was fine I guess, but really just, they did need me for a few things here and there, and I just couldn't give them any time. So once I got that guy, once that guy got, that manager, got his feet in the ground in her second shop, I ended up, you know, going, once I felt like he had his feet in the ground, I went back to Lansing and spent a bunch of time there repairing some equipment and things like that because I realized we had never, that, I just always did it and we never assigned it to anybody or had any procedures or processes in place for equipment maintenance.
Jason Brennan: And since everybody was. No, nobody wanted to bother me. I found out that I think it was like a, at the six month point of me hardly ever being there, I found out that there's a bunch of broken stuff and that I, that no one was telling me about. So, one of the techs called me, he goes, Hey I hate to bother you, but this thing's broke.
Jason Brennan: I think it was one of the sleds on the alignment rack was broken. And then he said, well, yeah, and by the way, also the tire machine doesn't work right. We have to keep, you know,
Kent Bullard: well
Jason Brennan: we're at it. Here's
Kent Bullard: another thing on list,
Jason Brennan: you know, I was wondering should we call someone to fix this stuff or are you gonna stop by and help us with it or what?
Jason Brennan: And a lot of it just fell apart from lack of maintenance. 'cause I wasn't there and I never put together a shop maintenance checklist or a procedure. So we now have that in all the stores. But I spent like a month. Myself. 'cause I thought I was able to, I really shouldn't have, but I spent like a month fixing and refurbishing replacing stuff and then developing a maintenance checklist and assigning it to people.
Jason Brennan: And then by the time I got back to the hobert shop, the second store, I found out that pretty much the whole time I had been gone, the leadership in the second store, which was the manager, had been super discouraged and even started undermining the company and telling people that he thought, giving people his opinions about where he thought the place was headed, which is nowhere good.
Jason Brennan: And it's not gonna work out here. I don't think this growth plan's gonna work. I'm not, maybe you should. He even told one of my techs that maybe he should start looking for a job elsewhere. This was all happening while I was gone for that mostly gone for that one month period of time. So I walked into it and figured, and luckily I have a part-time guy that works for me who does helps with operations management and recruiting.
Jason Brennan: Max is his name. He's the one who figured he was there more than I was and he clued me in on it and he goes, Hey, when you get back here, we got some problems to deal with. And then one of my techs was already out had already gotten job offers by the time I caught wind that any of this kind of stuff had occurred and we were able to keep 'em.
Jason Brennan: But morale, yeah, close call. Morale was super in the dumpster and I had to come in, myself and Max both had to come in and bring that back up. We had to fire both the manager and the assistant manager. They were kind of cohorts in the, the eing of the shop.
Michael Smith: Mm-hmm.
Jason Brennan: And
Michael Smith: You have so many rich experiences, Jason, and you know a couple, I just wanna catch on the way by.
Michael Smith: As you scaled, you've developed the ability to grow from within. And this idea that people can career path with you and grow and stay and do more and achieve and be recognized and take on more, very much of a human development path that's satisfying to people. And it means that as you do that, you know, the fourth store, the fifth store, the sixth store, you have a capacity not to have to go outside and bring in people that and I'll just say this, don't have the trust in you and the system because they come from the outside.
Michael Smith: And when you groom 'em from the inside and people know your character and trust you in the system and know when something goes wrong that it's gonna get fixed, right? The patience, I mean, the demonstration of this is the patience that your team gave to you in trust, just to not even you know, it's being the beloved type owner that you are.
Michael Smith: They don't wanna let you down. They know you're busy. They don't call. But the other side of that is the fact that, you know, they're not gonna blow their lives up. At some point somebody finally says, okay, maybe we should just call 'em and let 'em know, and then you're running and fix it, right? And again, one more thing is you scale.
Michael Smith: Just these are lessons that you've learned that are magnificent to share. As you continue to scale, you might have somebody other than you as the new store landing receiver, right? Somebody who drops in, who's a super. Internally developed, knows the fine tuned way can go to the new store, make sure the transitions occur, and you're not lost in that system, right?
Michael Smith: Because you're the only guy historically that could do that. But now you have a scalable model where you can have a, an expert follow you through the new transactions. And all of this is just fantastic lessons and stories that you're sharing. And I just wanna catch some of this on the way by you.
Michael Smith: You've really learned a lot in the way you've gone through this. And it's, and thank you for sharing all that. It's great experiences and you've mastered a lot, even in the solutions. The way you've solved them is full of rich culture building concepts too. So thank you for this. Jason. You're, I really like watching you go.
Michael Smith: It's great stuff.
Kent Bullard: So it's, thanks Michael. It's a lot of, evidence of patience and persistence and growth in your leadership. And I think that's where I wanna take the conversation a little bit is to look at, you know, how have you grown as a leader between, you know, your early career and the first location, and then now where you're up to three locations.
Jason Brennan: So could you, I'm sorry, can
Kent Bullard: you repeat that? How has your leader, how do you feel or what are the ways that your leadership has changed or evolved over the years?
Jason Brennan: Oh yeah, man, I'll tell you a lot. It's sometimes I learn by, unfortunately, I'm one of those kind of guys that learns by mistakes a lot.
Jason Brennan: So that's why I have so many of these stories. And I, but you know what when you're a better leader, you make less mistakes like that less of those kinds of mistakes. So I, there was a huge incentive for me to grow as a leader and, one of the, one of the biggest incentives was was just realizing that man when I re, when I realized that a lot of the, a lot of the problems I was having was due to poor, were due to poor leadership.
Jason Brennan: I really wanted to learn. So I started as the kind of, the phases I went through was I started kind of like your traditional old school boss. That was how I viewed leadership. It used to,
Kent Bullard: well,
Jason Brennan: yeah, well, yeah, my dad and people who I'd worked for as a technician, you know, usually, and any of the places I worked, you tried not to talk to the boss.
Jason Brennan: 'cause if you're talking to the boss, that means there was some kind of problem and, you know, it that was the culture I came from. So that was how I led. And it, it used to work. It was just never a good idea. Even if it worked, I don't think it was great. It doesn't work anymore. 'cause we have a technician shortage and for various other reasons, people just they won't put up with that kind of positional leadership mentality anymore and stay working for you.
Jason Brennan: They'll just leave and find somebody else to work for. So I couldn't have continued doing that even if I wanted to, but I'm glad I'm not doing that anymore. So I would just tell people what to do and expect 'em to do it like I would do if I was somebody's employee. And it didn't happen. Then I evolved into more of a, kind of a learning mode and I made a bunch of mistakes there too.
Jason Brennan: I maybe gave people too much slack or became too close friends with 'em, and I was just figuring out how to, how do I. I was thinking to myself, how do I how do I tell people things in a nicer way than just saying, just do this? And I thought that was all it was about was just how I said it to 'em.
Jason Brennan: Maybe they didn't like the way that I said it, or maybe I needed them to ask 'em more nicely or something. And really, that wasn't all that's good to do, but that's not what it was all about either. What it really I think became is, and some of it I went to Michael Smith's leadership intensive a couple of years ago, I think it was, and all the things I'd been experimenting, the style of leadership or style of management that I had been experimenting with, all kind of came together in my mind when I took Michael Smith's class read some books, you know, and among other things.
Jason Brennan: And then kind of understood that people are. People are all different. They might perceive the way that you say things to them in different ways. They're looking for the good employees, or I should say employee ideal employees. They're looking for some kind of career path to mastery. And if we can give that to them and convey that we're giving that to them, and ask them what it, what they, what it is that they actually want out of their career, and align our company's goals with their goals so that we all succeed together, then then they'll, you know, they'll wanna, people want to go to battle for you and do what you need 'em to do when they understand that it's good for everybody.
Jason Brennan: Mm-hmm. Mm-hmm. And,
Michael Smith: and Jason and you and they bring their own energy to it. You're Bri Yeah. They wanna it, they're not, they do it because they wanna do it. Yeah.
Jason Brennan: Not 'cause you told 'em to do
Michael Smith: it. Right. You're not bribing them, you're not threatening them, you're not cajoling them. They come to work with their own motivation because you're all going in the same direction, which is powerful.
Kent Bullard: So I'm cur I wanna know, if you could go back to young Jason before a lot of these challenges and pursuits that you've had what's the one lesson that you would want young Jason to know? Yeah, great question.
Jason Brennan: That's a good question.
Michael Smith: Depends on how far back leadership wise. Yeah. Back in the fifth grade or I'm
Jason Brennan: just, yeah, sorry.
Jason Brennan: If I think back to the beginning of my, the beginning of a business ownership I don't know if there's one, one that I can really. Point to, to say that's the one that would've made my life a lot easier. But there's a few main ones. Don't open a business if you don't, if you don't have any, at least some basic accounting and some business management principles.
Jason Brennan: And don't go into business under capitalize. I would've told myself that, you know, have a business plan, get some industry expertise involved, get some basic basic business management and accounting training that, that, that should have done that first, you know, would've made my life a lot easier.
Jason Brennan: I probably would've shaved I probably realistically could have shaved, you know, seven to 10 years off of the time it's taken to get to the point where we are now. 'cause I think the first seven to 10 years we just spent spinning our wheels and doing the wrong stuff. So,
Kent Bullard: what now at the stage of your personal professional growth, how do you define success?
Jason Brennan: Well, that's, it's a hard one. I I thought about that a lot too recently because I've been thinking, because people always ask me, well, where so you're gonna buy another shop pretty soon or build one? Or, what are you gonna do? And then I tell 'em that my goal is to have 10 by 2030, and still gonna do that.
Jason Brennan: But I, so I start thinking to myself as I'm getting asked these questions, is that my goal is, does that mean I'm successful when I get to 10 stores? Or and am I not successful now because I haven't, you know, in a, I guess the what's that cliche? It's not about the. It's about the journey, not the destination or something.
Jason Brennan: It's kind of a, I've been thinking about that old cliche phrase a lot more lately and thinking that I need to redefine what the, what success means to me. So I'm not exactly sure, but I know it's not, when I hit 10 stores, that's not the definition of success to me anymore. It used to be if you just wanted to say, well, what does it mean to be successful?
Jason Brennan: Well, when I'm done with this plan, then I get to 10 stores, that means I'm successful. Well, that mentality could cause some people to think that they're not successful because they haven't achieved that goal yet. And that's not necessarily the case, probably not the case. But that's the way that I've felt before I, I've had those feelings and I think that comes from.
Jason Brennan: You know, driving myself too hard over the years and maybe being a little too self-critical. So, I'm redefining what success means to me and part of what it means, I know for sure is what I said earlier about facilitating the growth of other people. It's it just makes me happy to see, and I feel successful when I do that.
Jason Brennan: So that's definitely one of the things that defines success in my mind, is that I'm helping other people who achieve their goals and that they are, they're happy to come to work every day. They have a job they like to do, and that's something that I'm helping with, or I'm part a big part of so the number of people I guess I, I guess you could say the more people feel fulfilled in their careers and rise to the top, the more successful I am.
Jason Brennan: That's for sure.
Michael Smith: Great
Kent Bullard: answer.
Michael Smith: Great answer.
Kent Bullard: So I, I want to end with this question. Michael, do you have any other questions?
Michael Smith: No, I was thinking of the last question and how, this is such a segue into that last question.
Kent Bullard: I think we're kind of making our way to this point. You know, what's the legacy that you hope to leave at the end of all of this?
Michael Smith: When all the dust settles, right? Yeah.
Jason Brennan: Well, yeah I've been thinking about that a lot too. When all dust settles and, you know, someday I'm sailing off into the sunset or probably still working on a car, 'cause I like doing that. Whatever I'm doing, whatever that is, whatever it is that I'm doing at the time, I like people to think man, that guy was a really great guy to work for.
Jason Brennan: It's too bad he is not my boss anymore. You know, that's just the general thoughts and feelings I like people to have about me and that. We really built a good thing together and I'd like to see that still continue. I'd like to see that even when I retire someday and pass along the torch to someone else to run the business I'm leaving them with a good, a really good solid foundation for even more growth.
Jason Brennan: And I'd like to see that, that that we don't lose the family aspect, the family feel to our business where, you know, people help each other because they know that's the right thing to do. And by helping each other and helping customers in the process, we make money and everybody's happy.
Jason Brennan: I like to see that kind of thing. Continue.
Michael Smith: Yeah. Let just take
Jason Brennan: Yeah. Pass beyond me.
Michael Smith: Yeah. Follow on question about the company the community legacy impact that the company might leave, what would be a note that you'd like to have the, how does the community see it when you've built it the way you wanted and handed it off to the next steward?
Michael Smith: Right. What would you like them to see when they look at the company?
Jason Brennan: I'd like to see that, I'd like them to view us as a place where they can a place they can trust that they can rely on. And that we're making a positive impact on the community. Not just, we're not just here to be here or to make some money or whatever it is.
Jason Brennan: We're here to that we care about the community. And I would like, so I guess in a nutshell, I would like to leave the. A leave off in a way that. When, let's say whoever takes over for me someday, wants to build a fine tuned auto location in a town that has never had one. They welcome us in with open arms and say, great where do you want to put your shop?
Jason Brennan: That's, we love to have you here. That's how I'd like to be viewed by the community.
Michael Smith: Fantastic. Jason, fantastic. I
Kent Bullard: love that
this
Kent Bullard: has been such a. Phenomenally enriching conversation. Jason, you've shared a ton of experience and I know that there's a lot of people out there listening who have, are either currently dealing with this or they're gonna deal with these issues, thinking about it.
Kent Bullard: And you've given them some reassurance and some insight on how to approach these problems. Thank you so much for being here. Truly. Listeners, if you have questions or comments for us or for Jason, obviously make sure that you join the conversation because we'd love to, to have you a part of this.
Kent Bullard: And ask them down in the comments below. If you enjoyed the content here, please like and share. 'cause it helps the algorithm gets it promoted out there. So again, we spread this information and help uplift the industry. And if you want more information about the institute and what we do you can find that at we are the institute.com.
Kent Bullard: Jason, thank you so much for being here.
Michael Smith: Thank you, Jason. Thank you so much. Thank you guys for having me. It's good to see you, my friend. You're welcome.
 

188 - How Your Auto Repair Shop Can Use AI to Turbo Charge Your Business

188 - How Your Auto Repair Shop Can Use AI to Turbo Charge Your Business
January 21, 2026 - 00:59:31
Show Summary:
Brand strategist Ernie Harker shows auto repair shop owners how AI can quickly produce professional marketing content without expensive designers or long turnaround times. He explains how large language models and image generation work, then demonstrates building a custom GPT trained to match a shop’s brand voice and customer tone. The session also covers AI video avatars that turn photos or short recordings into usable on camera style videos for social posts, FAQs, and internal updates. He stresses responsible use with human review, transparency, and avoiding fabricated testimonials. The main message is that consistent content creation is now faster and easier, giving early adopters a competitive edge.
 
Host(s):
Jimmy Lea, VP of Business Development
 
Guest(s):
Ernie Harker, Branding & Keynote Speaker
Show Highlights:
[00:02:00] – Audience self rates AI experience from beginner to advanced[00:03:00] – AI speeds up marketing collateral without relying on designers[00:05:00] – Creative professionals feel threatened but shops can benefit immediately[00:08:00] – AI makes high quality visuals possible without creative skill[00:10:00] – Clear explanation of how GPT uses context and probability to write[00:12:00] – Quick demo turning a sketch into a usable logo concept[00:14:00] – Photo to video avatars create spokesperson content in minutes[00:18:00] – The hamburger method prompt AI then review and polish[00:24:00] – Live walkthrough building a custom GPT for a shop brand voice[00:40:00] – Avatar workflow in HeyGen upload photo choose voice paste script generate video
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/-9vqJmoF7lU
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
Jimmy Lea: Good morning, good evening, good afternoon, or goodnight depending on when and where you are joining us from today. It is a gorgeous day. Thank you for being here, my friend. I am so excited for this conversation that we are gonna have. My guest today is Ernie Harker. Ernie is er Burn. He is the voice and the power behind the brands that you know and love the brand that we know and love as Maverick.
Jimmy Lea: Maverick is my favorite convenience store. Ernie, thank you for all you've done to make the adventure starts here. Ernie is also a member of the north not the Northwest NSA National Speakers Association. We are members together in the Utah chapter called the Mountain West Chapter. And from the first day of meeting Ernie, man, we've been tight, good friends.
Jimmy Lea: So excited to have you here with us, Ernie, as we're talking about artificial intelligence, and not only artificial intelligence, but what can a shop owner do in their shop that utilizes artificial intelligence? We're gonna talk about the good, the bad, and the ugly.
Jimmy Lea: This is, these are things that you can do.
Jimmy Lea: These are things that you should do, and this is probably something you might wanna hire somebody to help you to do.
Jimmy Lea: And so with that also, those of you who are listening, Ernie has written a book. The book is. Your brand sucks straight and to the point. Ernie, thank you for doing
Ernie Harker: this. It's not accusation, it's a probability.
Jimmy Lea: Chances are your brand sucks. The beauty of this book is it goes into all the things that you can do to change your brand so that your brand becomes that recognizable source of truth that everybody wants to participate with. Oh. One more shout out right before we get started. My good friend, my good brother, my good friend Sean Tipton, St.
Jimmy Lea: Augustine, Florida. Sean, it is good to see you, brother. I'm gonna call you when the webinar's done. It's been a long time. We need to talk. All right. With that, Ernie, I'm gonna turn it over to you. Let's talk about those things that shop owners can use
Jimmy Lea: AI in their business. What can we do?
Ernie Harker: Absolutely. Let me first start, I wanna get a sense of like, how many of you have some experience with AI chat, GBT, grok, whatever it is. So in the chat, I want you to rate your current familiarity, how you'd rate yourself in in AI kind of savvy. Zero is, I totally suck. 10 is I totally rock.
Ernie Harker: Don't even know why I'm listening to this guy. And five, as I've used it, gimme like a range from zero to 10. I just wanna get a sense from like where you are. Let's see.
Jimmy Lea: Jimmy's at a seven. Tyler's a 7.5. Evan is at a five. Heather's a five. Mike is a zero curb is a six, a five, a 7.5. Sean thinks he's better than me.
Ernie Harker: We've got some familiarity and we've got a handful of people who are like, gosh, you know what, I'm starting from scratch. Let me kinda show you some real quick things that I think are pretty interesting. So last time I'm going, okay, how quickly can I create some marketing materials for the industry that, that look pretty professional?
Ernie Harker: 'cause one of the challenges we face as small business owners is. We depend on creative people. I'm gonna say creative people, marketing people to produce the marketing content that we need. Oftentimes that is either expensive or it's time consuming or it's frustrating. I've dealt with creative people my whole life and I know that creative people can tend to be a little bit fickle.
Ernie Harker: They want to be, they wanna do things that are cute and pretty and not necessarily driving the bottom line. So what I wanna do is show you I wanna explain to you first, y you can actually create agents level, industry leading marketing collateral just in a flash with ai. And here's some things one of the things I did real quickly is I created like for a Valentine's Day thing, some of us love our cars. Let's talk about like how much we love our cars. Let's give our cars a gift for Valentine's Day. So I quickly created this item. I wanted to convert that to a Instagram post. I wanted to create a billboard. Look at that, skip the flowers, skip the chocolates, give me something that lasts and I created my own company.
Ernie Harker: Earnings Automotive. I also wanna could I create a TD commercial? Let's see if I can take, create a TD commercial. Here's the image I created. And I actually made it come alive,
Jimmy Lea: Ernie. That is an amazing commercial where we can see her mouth moving. We don't hear anything coming through at the moment.
Ernie Harker: Oh, man, it's too bad because man, she's toxin such a sultry voice. I want to buy her shocks that I know that's what she needs and wants
Jimmy Lea: right.
Ernie Harker: Let's see if I can, I wanna make sure I can like my audio.
Ernie Harker: Can you guys hear my audio okay? My
Jimmy Lea: voice right? Yeah. Yeah. Your audio's coming through nine by nine. Okay. I think it's just this video. You might need to optimize it for the video setting or something like that.
Ernie Harker: Okay. Okay. Lemme give you a little bit of background. Why would you even listen to me?
Ernie Harker: When I was 11 years old, my parents got rid of the tv. They carried out their threat. We're gonna get rid of that stupid idiot box my mom called it. So I spent my free time drawing. I got. Pretty good. Now. I still suck when I was a teenager, that Sweet Dragon and Ninja, but I got better and better.
Ernie Harker: This was a painting I did for a wedding gift that is not hanging anywhere. It's atrocious. Just to show you, I did suck bad, but my teachers told me to focus on drawing heads and hands and bodies because if I could draw those really well, then I could pretty much draw anything. So I spent a tremendous amount of time instead of watching tv.
Ernie Harker: Drawing faces and hands and heads from magazines. My first job out of college was working for an ad agency where I was doing storyboards like this. I would do hundreds of these frames outta my head to represent a scenario in a TV commercial or doing mockups like this that would represent a photograph that the photographer would then use as a reference to make a real photo.
Ernie Harker: So this is the kind of stuff I did, and this is for fun. I'm like, I'm gonna do pinups. This is using Adobe Illustrator. I learned how to use Photoshop, Conti, cran watercolors, acrylic paints. Gosh, every freaking medium. I had to learn anatomy. I had to learn composition and textures and all the vocabulary that comes with art.
Ernie Harker: So I spent a tremendous amount of time getting really good. These are three of I did portraits of my daughters when they were younger and what's really sad is I spent 30 years drawing and learning to draw and getting really good at drawing. These were some of the I was in, I was at a podcast one time and the host asked me, like my background.
Ernie Harker: I told him I was an illustrator. Then he asked if I was any good, so I sketched a picture of him after the event, after my podcast sent it to him. He freaks out. He says, you gotta do this every time. So since that time I've drawn, portraits of people to get their attention or to express my gratitude.
Ernie Harker: And about a couple years ago, I've done like hundreds of these. About a couple years ago people started asking me if ai, if I used AI for this. And I'm like, please man, AI can't do this. Do you know how much time and effort I spend getting good at this? And then I realized, holy crap, AI can totally do this.
Ernie Harker: The one on the right is me. You may recognize the guy on the left. That's Jimmy. And I'm like, that actually looks what I would do, and it did it in seconds and mine took hours. I'm screwed. And I think a lot of times people look at AI and go, man, I'm, I feel threatened by it. Creative people do.
Ernie Harker: They felt threatened by it. And so you're creative people, you're designers, your marketing people. They're the probably the most resistant to using AI tools. But what I want you to think about is get the, this idea that AI has leveled the playing field, where you no longer have to be talented, creatively talented to produce marketing content, promotional content.
Ernie Harker: You don't have to have a camera, you don't have to have lights. You don't have to have years of experience learning how to draw or anything like that. You can actually. Do this stuff and if you can do it, man, your marketing people can crush it with this stuff. So first of all, what is generative ai and then how can you use it?
Ernie Harker: I'm gonna talk about large language models and just kinda give you a brief intro to what they are and how they work. We'll talk about image generation and also some video generation. Large language models. You see these Claude Gemini, grok, and there's more. There's lots more. And basically what they do is they're trained to speak and understand human language and just give you a background like how they work so you can use them.
Ernie Harker: Imagine a generative AI program being trained to watch a text conversation. One conversation is not gonna give them enough information to be able to come up with to understand context, to understand the meaning behind those words. Because computers can identify words and then have a de a dictionary definition of those words, but it really doesn't understand context.
Ernie Harker: But if you multiply the training to include like gazillions of conversations now the AI model. The program can start to see patterns and can start to infer meaning behind words. G GPT stands for generative pre-trained transformer. Generative means supposed to be creative, which means oftentimes. You can get frustrated if you're trying to get something out of it that you're being very explicit about and it's not giving you what you want.
Ernie Harker: It's trying to be creative, and if you want something that's to change a little bit, but it changes everything. It's meant to be creative, so it won't be giving you the same thing every time. Pre-trained means it's been trained for a specific amount of time, the model's released, and then it's no longer learning.
Ernie Harker: In the meantime, the developers are working on the next model to be trained. Then transformer basically means that every word needs to be converted or transformed into a number. So when you say mouse, how does the GPT know? If you're talking about a rodent or a peripheral a computer device, based on context, it will take that word and turn it into a the right number to mean the right thing. So that's what large language models are. And so when I ask like, how are you doing? It'll respond with a, it'll respond with a with copy. That is the next word is a mathematical probability. I am, it thinks of all the English language. What's the likelihood of the next word being octopus?
Ernie Harker: I'm octopus. How many times it seen that? None times I am probably doing is probably the next best word I am doing. And then there's probably some other word that follows that because in its learning, it's never seen I am doing, and then that's the it and that's the end. So that's what image generation is.
Ernie Harker: That's what large language models are. I'm gonna just jump right into like image generation. It learns the same way we do by looking at lots and lots of pictures. It starts to see the similarities and then it gets really good at seeing those those similarities. And then it will, it can create phenomenal images based on all the things that it's seen and been trained to do.
Ernie Harker: So if I wanted to surprise kitten with blue eyes playing with yarn. It could totally give me what I want because it's researched so much an image. When an image is generated, it's not finding something and modifying it. It's not like an image search, it's actually creating something for real. Okay. What I wanna do too to make sure that you guys get the most out of this time is I wanna focus a little bit on like how to use like a video avatar, because I think there's a ton of ways that you guys might be able to do that.
Ernie Harker: So video. The same way. If you wanna create an image, oh, I wanna show this to you too. You don't have to be a great artist, to be a great designer. Like I doodled out this little logo I uploaded to Chad, GBT, and I had a little prompt that said, create a logo out of this. This is what it looks like.
Ernie Harker: Freaking awesome. I don't have to be a great designer. I can get me most of the way there. I can also use images as a prompt. To describe something that I want, upload this image, and I said, ACHI, I says, describe this image in a way that I can create a new one, but using a bald, handsome guy wearing a red suit, so I get this instead.
Ernie Harker: Now, the reason I showed this to you is because oftentimes really creative ideas can be expensive to produce. You have to have hiring models and locations and stuff like that. Generative AI makes it so you don't have to spend money or time finding models looking for locations and things like that.
Ernie Harker: So you can be specific about the type of like car or automotive part by typing in the name or model number of that part, and you'll get an image of that. About a year or more ago, you wouldn't be able to do that, but today the AI is so good, you can get very specific content. So you, many of you saw the video of Cecil.
Ernie Harker: Hopefully you did. You're not gonna be able to hear him speak. I don't think so, unfortunately. Let's see.
AI Cecil Bullard: Hey, shop owners.
Ernie Harker: You don't hear 'em, do you?
Cecil
AI Cecil Bullard: Bullard?
Jimmy Lea: Yeah. It's coming through. It's in the background.
Ernie Harker: Okay.
AI Cecil Bullard: Slightly mess. Grumpy version of Cecil. Learn how to create videos for social media and training and stuff just like this one in a matter of minutes.
AI Cecil Bullard: You'll learn from Ernie Harker, one of the smartest minds in branding and AI for local businesses. He is gonna show you how shops are using AI right now to get more cars in the bays, more calls on the phone, and more money in the bank without hiring more staff. It's Wednesday, January 21st from 11 to 12 Mountain Time, and it's completely free.
AI Cecil Bullard: Just head over to we are the institute.com/upcoming events and click join us.
Ernie Harker: Okay. So what you saw is I just took a picture from the internet. I uploaded that picture of Cecil, and then I, import it into a video generating software, and it created that video. He didn't have to be on camera. I'm not, I'm gonna, what, Jimmy, what are you thinking?
Jimmy Lea: So a comment just came up and this is true. Everybody on this call knows exactly what Cecil sounds like, and that didn't sound like Cecil. Why?
Ernie Harker: Because I didn't have a voice sample to use to train the model.
Jimmy Lea: So you could make my voice come across as a sultry female. Absolutely. You could make Cecil be a sultry female.
Jimmy Lea: You could. You could make Cecil speak Cantonese.
Ernie Harker: Yes. I can have him speak probably from one of 127 different languages. So
Jimmy Lea: mind blown.
Ernie Harker: But in order to if you wanna do a clone of yourself,
Jimmy Lea: yeah,
Ernie Harker: you'd have to record yourself speaking. For about three minutes and then you upload that. I didn't have any samples of Cecil, but that's how easy it really is.
Jimmy Lea: Yeah. Big deal. That's easy.
Ernie Harker: Which is what's awesome about it, is that if you have a video of yourself, 'cause I'm not sure, let me see if I can move on a little bit. Can you guys see me? Where you're not seeing my slide, right? You're seeing me?
Jimmy Lea: We see a slide. It's got Cecil and two Nies on there.
Ernie Harker: Okay. Cut. Cut to me. Okay. 'cause here's the deal. If you guys have ever tried to do like a selfie video, and this is kinda, we're gonna go into a real case study of this, of using this process, using the videos here's what typically happens. You go, okay, I've got this cool thing I wanna say on social media, or I got this training idea, or whatever.
Ernie Harker: And what you do is you have someone to hold your phone. You go, Hey, hold my phone. Okay, here's what I'm gonna say. And you go, okay. Hey everybody, I just, okay, hold on. Let me get this, I'll get this. Just gimme a second. Are you rolling? Yeah. Rolling. Okay. Okay. Hey everybody. Ernie Harker.
Ernie Harker: I just wanted to give you a, oh, I forgot what I was gonna say. Dang it. Okay. You know what, we'll just edit this later and you guys, it's a freaking dumpster fire. And then you end up after five minutes of this and you go, screw it. We're not doing videos anymore.
Jimmy Lea: I, I think every shop owner is feeling the same pain as what you're saying because we'll set up a tripod.
Jimmy Lea: Hit record, and then it's oh my gosh, after 12 attempts, I finally got it right. But it took me an hour to get there.
Ernie Harker: Yep. And you're going, this is not, the juice is not worth the squeeze. Yeah. It's just not. And so I'm gonna, I'm gonna see if I can skip through.
AI Cecil Bullard: Hello. CRN
Ernie Harker: I'm Okay. I'm gonna get through those.
Ernie Harker: What I've learned is that I'm using generative AI and I'm saving at least two to three hours a day for marketing communications. Now, this is not gonna turn wrenches, it's not gonna talk to people, but use, using generative AI and generative AI can help you reach more customers with messages that you want them to hear because you're able to produce marketing content and collateral.
Ernie Harker: Faster and easier than ever. Your website, your social media, your flyers, your your handouts, your counter signs, your posters, all that kind of stuff you're doing. You can do it in like a fraction of the time and you don't need to pay some expensive graphic designer or wait so long to get it. So how do you do that?
Ernie Harker: I'm gonna make sure that if you guys will send me this email, ernie@ernburn.com and in the subject put five ways. I've got a PDF that shows you, first of all, how to train your brand to create your own GPT, which we'll do in just a second. And also five ways you can use, a clone your avatar.
Ernie Harker: So send me an email, ernie@erburn.com, and then I'll just say five ways and I'll send this to you. So when you think about ai, I want you to think of using it responsibly in a sandwich, a hamburger. You're the human bun, okay? You do the initial prompt. AI does the content, and then you have to finish it off.
Ernie Harker: You have to review it, you have to approve it. It's saving you a ton of time, so make sure that you make sure that the content that it provides to you is accurate or on brand. So let's do this demo. Okay. I wanna show you, I'm gonna use chat, GPT. Can you guys see my screen okay?
Jimmy Lea: Yep. Where should we begin?
Ernie Harker: Okay, so where should we begin? I've created a prompt, and that prompt is in the PDF. I'm gonna copy this prompt. I'm gonna pace it right in here and I'm gonna personalize it a little bit. Can you let me zoom in a little bit? Yep,
Jimmy Lea: we can see it.
Ernie Harker: Okay. So here's, I'm gonna, I created this prompt that will become the mastermind brand assistant for all my marketing content.
Ernie Harker: Okay? I will use this prompt every time. And you can do this in just a single, a chat thread, or you can create your own GPT. I'm just gonna a chat thread for now. Okay. 'cause you can always go back to this thread and have it help you produce marketing content. So here's my prompt. I'd like your help producing marketing content for my auto repair business that is consistent with the tone, personality, and reputation of my shop.
Ernie Harker: My business is called Ernie's Autocare. We're an automotive repair and maintenance shop that serves busy working families and commuters who depend on their vehicles every day. That gives them context. What do we do and what's the name of my company? We specialize in keeping cars safe, reliable, and road ready by servicing tires.
Ernie Harker: This is what I do. This is the product I provide them with. Okay? I do tires, windshield wipers, shocks, and struts. This is where you would put your stuff, what you do. Okay? My brand can be described as here's what I want what do I want people, my customers, to describe my brand? How do I want them to describe it?
Ernie Harker: Honest, blue collar, friendly, no nonsense, dependable. Now, one of the things I would suggest is to create some descriptions that are not common in your industry. Okay? Otherwise, your GPT is gonna sound like Bills shops. Okay? I would put something like fun professional premium, maybe it's a little, maybe I do a lot of work for the construction world. Tons of work for the construction world. And so I'm gonna be a little bit off color and masculine be a little funny. I like to tell jokes. Okay. Now I want my customers to feel, how do I want my customers to feel? I want them to feel.
Ernie Harker: Happy, relieved, and well taken care of. That's going to, that's going to give the chat, GBTA goal or target to create language around that will be on brand the way you want your customers to feel. Because 95% of all purchase decisions are emotionally driven. Let's give them a target emotion. To get to my brand uses words and phrases like, we've got your back, we'll get you back on the road.
Ernie Harker: No surprises. Treat you like family, we've got you. I use words and phrases like badass. I hope it's okay for me to say that. And awesome. Okay. Those are words that I use and I wanna use that in my brand. So then I'll just say really simply, do you understand? The reason I do that is otherwise if I don't, it's gonna start just throwing ideas at me.
Ernie Harker: I don't want it to gimme ideas right now. I just want to understand, 'cause I have some ideas here. Here's what it tells me. Now imagine you taking that same paragraph, dropping into chat, chat GBT, and then personalizing it to your brand. Okay? Any questions so far? We doing okay?
Jimmy Lea: Yeah. Yeah. Ernie, we're doing great.
Jimmy Lea: This is some really good information. One of the questions is when we're putting this information into chat, GPT, who owns the results? Who owns the interaction?
Ernie Harker: Awesome. If you have a paid, if you have a license or a, an account, you don't even have to have a paid license. If you have an account, you're not just using free.
Ernie Harker: The stuff that you put on is your stuff. It's not being shared. Okay. That's what they say. Do I believe it?
Jimmy Lea: I want
Ernie Harker: to. I'm having a hard time. I have a hard time saying, people say we don't share your information with anybody. And I get emails from some random financial shop, so don't put anything on here like pricing or.
Ernie Harker: Coca-Cola should not put their ingredients and their recipe in here, but branding and marketing stuff is totally fine. 'cause even if I knew that your shop says things like badass and awesome in your language what's that gonna do for me? I don't care.
Jimmy Lea: Yeah.
Ernie Harker: So make sure that the content you put up here is something that you would be okay with if somebody found it.
Ernie Harker: All right. But they are supposed to keep this private onto your account
Jimmy Lea: because you have the paid account.
Ernie Harker: Either you have a paid account or a you have a license. Okay. Okay. And I just use you guys. I have the plus account. I don't even have a pro account. I spend like less than 30 bucks a month on this stuff.
Ernie Harker: And I use it every day, all day long. Okay. So you don't need to pro, does that answer your question? Oh, by the way, yeah. One other thing there's gonna be some inherent biases into ai. It just, it is because it was developed by people and the way it learns is from people develop content and people are biased naturally.
Ernie Harker: So you're gonna get some biases. Any other questions?
Jimmy Lea: Oh, this is great information. Yeah. Keep going into this because I I'm super excited for you to get into the part where we're able to create our own GPT.
Ernie Harker: Yes.
Jimmy Lea: Yeah.
Ernie Harker: Yes. So here's in fact, gosh, you guys, I'm gonna do this instead.
Ernie Harker: I'm gonna take this same paragraph that I just did, and I will show you how to make your own GPT super easy. On the left hand side because what you, the reason you want to have a GPT is that you have a locked and loaded version of chat, GPT, that is trained to speak in your voice every time. So over here in GPTs, I'll scroll down to the bottom.
Ernie Harker: I got a ton of GPTs, but right here, there's an Explore gpt. Click on explore GBTs, click Create. If you don't have. A a subscription. You won't see this Okay. On the left hand side.
Jimmy Lea: To do this, you've gotta have the paid account.
Ernie Harker: Yeah, just, yeah. Just use your plus account cheap.
Jimmy Lea: Okay?
Ernie Harker: Easy.
Ernie Harker: Okay. Your interface is divided in half. On the right hand side is kind like your lab to test your GPT on the left hand side. You've got two different ways to create your GPT. We're gonna start with create, and I want you to think about using create as. If you're talking to a developer, speaks human language, you're just gonna tell you, tell it what you want, and it's gonna respond back like a person.
Ernie Harker: It's going to, it's going to write down the programming notes and configure. We'll see both. So here's what I'm do. I'm gonna paste in that paragraph that we just did. I'd like your help producing marketing content, my business. Okay. It's called earnings auto care, blah, blah, blah, blah, blah. And I'm just gonna hit send.
Ernie Harker: What it's gonna do, it's gonna go, okay. I'm gonna start to take notes. I'm gonna figure this out. I need to, we need to name this thing. We need to come up with an icon for it so that it's easy for me to find it in my GPT library.
Ernie Harker: Come on. Come on computer.
Jimmy Lea: So the icon that you're using, that's just for you, it's not for anybody else. It's not correct. I wanna use my company logo or anything?
Ernie Harker: Yep. Correct. This is not the only way you'd, the only person you'd wanna share this with is anybody that helps you produce marketing content for your company.
Ernie Harker: Okay? So if you have a few executives or people that want to use this, just share it with them and I'll show you how to do that. This says, Hey let's lock in a name for this GPT Ernie's Auto Care Marketing Assistant. Fine. I'm gonna say great.
Ernie Harker: I don't care what it's named 'cause it's, I'm the only one that's gonna be using this right now. It's gonna come up with an image for me.
Ernie Harker: And that image. You can change it if you want, but I don't care. Oh, cool. There's Ernie. The guy should be bald, but I don't care. I'm gonna say this is great.
Ernie Harker: Okay. At this point in time, I can just hit create here. 'cause right now it's not saved. Okay, I'm gonna hit create and that basically saves it. Here's my options to share it. Do I want only me to have access to this? Can I share it with anybody with the link or do I wanna publish to the GPT store that the whole world can access?
Ernie Harker: Don't do that. Just use anyone with the link. Right now I'm the only one with the link, so I'm gonna hit save there. What it's doing now is it's taking the conversation that I just had. Putting that information into configure. Here's the name, here's the description, here's my instructions. I can open this up.
Ernie Harker: And based on the paragraph that I gave it, this is what it understands. I can go into this anytime and edit it, change it if I wanted to. In fact, one of the things I'd like to do in here is I'd say my brand personality can be described.
Ernie Harker: As a mix between Bob Ross, the artist, Bob Ross, and the Dose Eckes most interesting man in the world. Okay. If you have a, if you feel like there's a personality that's a celebrity, that would be an awesome, like type of person for your brand voice, put it in here. Like Matthew McConaughey, Ryan Reynolds, they all have their own personality and you can get a little of that taste from this GPT.
Ernie Harker: Okay. I close. Now on the right hand side, I'm gonna hit update real quick on the right hand side. I can now test it. Okay. I can say write a short social media post for windshield wipers as a gift for Valentine's Day.
Ernie Harker: Okay. Now it's gonna use my branded voice, my branded tone. Okay. Rosa Red vs. Blue. But nothing says I love you like windshield wipers that actually work this Valentine's Day. Skip the chocolates and give a gift that keeps them safe, drying, seen clearly rain, sleet, or surprise puddles included. New wipers equals better, better visibility.
Ernie Harker: Safe drives, and one less thing to worry about. That's real love Swing by Ernie's Autocare. We've got you and your Valentine covered. See, we've got you covered was one of the things that I have in my language here. Okay. No surprise. Just smooth streak free romance. Awesome. Now I can say create an image to accompany this post.
Ernie Harker: Now I could let's do this. Now I can even give it a little more. If I have an idea of what I really want, I can put it in here. Green Image company. This post of bouquet, bouquet of windshield wipers
Ernie Harker: wrapped in a red bow. Okay, but just describe whatever you want or no description at all and it will know what your concept is about because you just wrote that and it will come up with an image for you now. Now, right? Right now I'm just in the preview mode. When you do something in preview mode, it doesn't remember, so I'm just testing it.
Ernie Harker: This is my testing lab. When I exit this GPT creation, all this stuff will be gone. Okay,
Jimmy Lea: so let's you, and let you do what, how do you, how do, so if you click on the update button, does that take everything that you've done so far and save it?
Ernie Harker: It saves the GPT, but not the images.
Jimmy Lea: Got it.
Ernie Harker: Not this, anything in this preview area that goes away.
Ernie Harker: So if I really like this stuff, I'm gonna go, man, that was awesome. I'm just gonna, I'm gonna grab all this. Copy it, paste it into a Word document or whatever, and then I can download this image right here. Just hit that's how pretty that is, and then you save this, save that image.
Jimmy Lea: Yeah.
Jimmy Lea: Okay.
Ernie Harker: But what I'm gonna do now is IM gonna hit update. Let me show you how to access this. I'm gonna leave. The GPT, it's going to be, it's gonna be in my GPT listing here in my library. If you don't see anything, it's because this little arrow is closed. Click this little arrow and you'll scroll down.
Ernie Harker: Scroll down and you'll find your, ah, here it is, Autocare. I click on that. Now I can create content that will stay on my account. Any information that I create will stay on my account. So one of the things I might do is,
Jimmy Lea: so's an So you copied that previous paragraph. If you paste it in here, it becomes part of the full program.
Ernie Harker: Yes. I can say, hey so I could do is I just take the same the same question I had, write a social media post. But if I don't need to paste in here 'cause I don't think of your GPT as a library of content use. Use chat, GBT or other AI tools to create content that you save somewhere else, okay?
Ernie Harker: Because what I, the last thing I wanna have happen is have Chad g Bt come up and say, we have a new, we have a new model. Boom, everything you had is gone. And I don't want, it's not intended to be like a hard drive. Okay? So copy your stuff that you like and put it into a hard drive. So what?
Ernie Harker: Let, hey Jimmy, let's pretend you have a shop and now you have this brand.
Jimmy Lea: Yep.
Ernie Harker: What kind of content would you want to create?
Jimmy Lea: Let's see, let's let's,
Ernie Harker: Let's do it, let's do a video. Let's do a video. Okay.
Jimmy Lea: Okay. We're gonna do a video and it's gonna be about uncle Cecil's oil service.
Ernie Harker: Okay. I've got, let's use Ernie's Autocare because I've got his brand name.
Jimmy Lea: Uncle Ernie's Oil Service.
Ernie Harker: Oil service. Okay. Yeah,
Jimmy Lea: And what's specific about this, Ernie, is you're typing this out, is we're not just gonna do a lube oil filter. We're not just gonna do an oil change. This is an oil service, and so it includes more things than just.
Jimmy Lea: Changing the oil.
Ernie Harker: Okay, so let's take a look at this. Who is our audience? Who are we gonna target?
Jimmy Lea: We are gonna target the soccer moms.
Ernie Harker: Okay. Soccer
Jimmy Lea: moms bands.
Ernie Harker: Okay. I'm thinking soccer mom.
Jimmy Lea: Any
Ernie Harker: soccer mom want to listen to or watch a video of a woman her age, or a sexy man?
Jimmy Lea: She'd probably wanna see a sexy man.
Ernie Harker: Okay. Who does this guy look like?
Jimmy Lea: This guy looks like somewhere between George Clooney and Matt Damon.
Ernie Harker: Okay, cool. Okay, so now I know the t type of personality. I want. The first thing I'm gonna do now is write a script for Ernie's Otto in the voice of this person. It's not gonna be Ernie, okay.
Ernie Harker: It's going to be a, maybe it's a mechanic that kind of looks like a guy that works for me that. That will be like, all the girls want to come and see this guy. Now I know there's people listening, going, we have a dude like that. We have a George and all the guy, all the ladies want to come and watch George turn ranges.
Ernie Harker: So let's do this. I'm gonna create a script first. So write a short script to introduce or to invite women with children.
Ernie Harker: To come in for a, what do you call, an oil service?
Jimmy Lea: Oil service, yeah. Earnings oil service.
Ernie Harker: That includes, what does it include?
Jimmy Lea: It includes a full digital vehicle inspection, topping off all fluids,
Ernie Harker: fluid, top off,
Jimmy Lea: Filter. Yeah.
Ernie Harker: Oil.
Jimmy Lea: Huh. Conventional oil.
Ernie Harker: Do we wanna have a price point on that or no?
Jimmy Lea: No. I guess we could because that's a quick, simple, easy
Ernie Harker: Yeah.
Jimmy Lea: Service. Our oils, this one is gonna be $129.
Ernie Harker: Okay. One $29. And that's let's do something like it's a spring break, like prep for spring break.
Jimmy Lea: Yep. Okay. To prepare you for all those sporting events happening this spring.
Ernie Harker: Okay. What's cool is I didn't spend time polishing this, okay? But it already knows my language and tone for Ernie's Auto Care. Let's hit submit and see what happens.
Ernie Harker: Hey, moms Spring is coming in hot between practices, tournaments, road trips, and spring break plans. Your car is basically part of the family. Nice. Ooh, that's great. At Ernie's Autocare, we've got $129 oil service designed to keep you moving without the stress. We'll get conventional oil, a new filter, full fluid, top off, and a complete digital vehicle inspection with photos and notes sent straight to your phone.
Ernie Harker: Now I'm, I didn't know.
Jimmy Lea: Correct.
Ernie Harker: That would be great.
Jimmy Lea: That does happen. That's a DVI digital vehicle
Ernie Harker: inspection. Okay. Awesome. Okay. It know what is, no surprises ever. It's quick, it's transparent. It's one less thing on your plate before the mile. Stack up the spring, come see us. We'll take care of your car.
Ernie Harker: Here's what I wanna do. I'm gonna say make this shorter and add a little flirt. For the actor to read this script. Okay.
Ernie Harker: Hey, moms Spring's, packed games, road trips, spring breaks. You're basically run a logistics for a small army. Bring your car to Erie's Auto Care and let us spoil it a little. Our 1 29 Well service includes blah, blah, blah. You handle the kids, we'll, handle the car swing by before spring break, we promise to treat you right.
Ernie Harker: Okay, great. I'm gonna grab this script. Okay, I'm just gonna copy it now. I need an image. I need an image of this person and I'm, if I don't need it to be branded, I won't use Ernie's Auto Care GPT. Okay. The only reason I wanna use Ernie's Auto Care, GPT is for branded marketing materials for me, so I'm just gonna create a new chat.
Ernie Harker: Just a brand new chat here that has nothing to do with Ernie's Automotive, and I'm gonna say please create a professional photograph of a auto, of a very handsome and rugged auto mechanic inside a garage. Okay. Is there a specific. Like description that you would say as an auto garage?
Ernie Harker: Is it like a repair shop or auto garage? What would you say?
Jimmy Lea: Yeah, it's an automotive repair shop.
Ernie Harker: Okay.
Jimmy Lea: Inside of a, inside of the bay of an automotive repair shop,
Ernie Harker: because I don't want to think, oh, it's in some dude's garage.
Jimmy Lea: Yeah. No. You want it in the bay. You want to have rotary lift in the background and a huge snap-on toolbox
Ernie Harker: inside of an, of a lar, I'll say a large.
Ernie Harker: Professional.
Jimmy Lea: Yep.
Ernie Harker: Automotive repair shop. Okay. Create a handsome, professional, handsome, rugged he's smiling
Ernie Harker: at the camera, holding a shop towel in his hands. Okay. Handsome. Okay. What I'm gonna do is I'm based, hopefully this image will turn out really good and I've still, I'm still in chat, GPT by the way. I haven't gone to some other platform while this is baking. Okay. And it takes just a second. I'm gonna introduce you to the software that we'll use to create the video.
Ernie Harker: Okay? It's called Hey, Jen. You can do this for free for one avatar, but it's you guys. This is so crazy simple. I'm gonna click over here on this avatars and click plus I'm gonna create a virtual character, upload a photo, go back to my dude. Look at this handsome devil. There he is. I'm gonna download this dude.
Ernie Harker: And I could actually put a logo on his chest if I wanted to. So I'm gonna say this is, mechanic dude. And I'm going to put him, just gimme a second here. Desktop. Go back over here. Upload desktop mechanic. Dude, where are you? Mechanic three up. There we are. My eyesight is total crap. And I'm gonna go upload.
Ernie Harker: It's pretty dang quick. Continue. So I got this dude, I'm gonna name him. This is Jim.
Jimmy Lea: Oh, it's Jim. Okay. Jim's good.
Ernie Harker: Jim's good. He is early middle age. He's a man. He is a white guy. This is just, you don't have to do any of this stuff, but it just knows. And now I need a voice for Jim. There's you guys, there's like a ton of voices that you can choose from gobs of them.
Ernie Harker: Just listen to him like but I want to use, I've got a guy named Ben in here that I kinda like.
Jimmy Lea: Ben's voice One.
Ernie Harker: He's a little southern. I'm gonna grab Ben's voice here.
Ernie Harker: Come on. Ben's voice.
Ernie Harker: Where was he? There it is. Sorry guys. Ben's voice. Save that voice. Now. Ben's voice is locked into Jim. Let's create a video with Jim.
Ernie Harker: Okay. Awesome. Awesome.
Jimmy Lea: So a, as a shop, I can create this for my shop as a single or free in Hey gen. I can do it for one avatar.
Ernie Harker: Yeah.
Jimmy Lea: So I can have one gym, whether it's Jim or it could be me. So if Sean could be like his avatar, it could be him. And this is free just for him being the one single avatar?
Ernie Harker: Yes. Yep.
Jimmy Lea: Okay.
Ernie Harker: Yep. For one. They can change that anytime, by the way.
Jimmy Lea: So we can come back and change it to yeah. To Ben or Doug or Tyler
Ernie Harker: Or, my concern is that Hey, Jen will go, oh, by the way, no more freebies, no more
Jimmy Lea: free for you.
Ernie Harker: Yeah.
Jimmy Lea: They become the soup guys,
Ernie Harker: I'm gonna go here. I'm gonna paste that script.
Ernie Harker: Hey, moms Springs, packed games, road trips. Let's hear what it sounds like. Okay. Let me just. I gotta,
Jimmy Lea: is it your play button?
Ernie Harker: Here we go. If this generate that says Go for it. And I don't want to go for it yet, so I'm going to ch make this. Sorry. I've got it so zoomed in. I can't even see anything. So let's hit let's hear it.
Ernie Harker: It won't show the video, but it should show the audio.
Ernie Harker: Hold on a second. Doing
Ernie Harker: S voice. Good,
Ernie Harker: good good.
Jimmy Lea: Not seeing the play is it In the bottom left hand corner? Right above the small thumbnail icon.
Ernie Harker: Usually it's right up here.
Jimmy Lea: Go down to the right one inch. There's a play button right next to a series zero, zero. Yeah. Is that it?
Ernie Harker: That plays this thing? Let's try
Jimmy Lea: this. Okay.
Jimmy Lea: So if you can hear it on your end, we're not hearing it on this end. Okay.
Ernie Harker: I can hear it. I can hear, but basically it reads this in that guy's voice and I just hit generate right here. I'm gonna call this Jim Mechanic, submit that. And the shorter it is, the faster it goes. But what's crazy, like even this one right here, this started with the photograph, but the animation.
Jimmy Lea: The animation's pretty dang good. We can't hear what she's saying, but that looks quite natural.
Ernie Harker: Yeah. So the que, while this is baking, let me just kinda describe some of the ways you could use this character. First of all, if I were you, if I was a business owner, one of the biggest things that employees want, they wanna know what's going on with the company and you don't have time to produce videos that you know are updates.
Ernie Harker: It would be great for you to create a clone of yourself, and all you have to do is spend about two minutes getting in front of a camera, and it doesn't matter what you say you're basically giving content for, hey, Jen, to create a virtual model for you. And so what I would do is I'd get in front of a camera, I'd say, this is me talking.
Ernie Harker: I'm really not saying anything in particular. I'm just talking. Maybe I just talk to a friend that's right in front of me, because even the words I'm saying right now doesn't even matter. But what it's doing is it's capturing my voice print, it's capturing my behavior, it's capturing my expressions. So really you just talk like this for two minutes, and then you've got the video footage, it has your voice and it has your actions.
Ernie Harker: You upload that and it takes a little bit longer because it's more than just a photo that it's using as your character, your information. Then you have a version of you. Then I would get chat, GPT, my GPT to say, Hey, will you write a short script for my clone to read? That gives like a address.
Ernie Harker: I'm like, things we need to remember around the shop, or we've hit this goal last month and next month it's gonna be this, or whatever it is. It will write the script for you so that you can go through it and go, oh, I'm gonna just modify it, change it. Remember the hamburger bun, you do the prompt, it does the script for you, and then you let and go, oh, this is good.
Ernie Harker: This work. I'm gonna just copy this, paste it into my, Hey, gen clone, edit it just to touch and hit send. You could be in the freaking Bahamas. Sip, sip, and pina coladas when you do this, it doesn't matter but here's my only thing I would suggest is when you do that. There are some times when it's, when your audience can see that they know you really well.
Ernie Harker: This isn't really him. So what I would do is I would suggest that you have that clone in the script. Say, Hey, the real Jim's not here, but he's asked me to share some really important information with you. So now it's like I'm being transparent about that. I'm not really Jim, but the content is really important.
Ernie Harker: And that's what's, that's what's, that's what's important. So be transparent about using this content. For your ai your,
Jimmy Lea: your avatar.
Ernie Harker: Yeah, for your avatar. But another thing don't don't create testimonials that didn't exist. That's morally wrong. Okay? Man, Ernie's Auto Shop is the best. I've searched everywhere and nobody treats me better than Ernie.
Ernie Harker: It's don't do that. But what you can do is get a real quote from people. Put it into an avatar and then just you can ev easily put I'll show you this real quick. You can easily add text to it. Go. I just want add text to it right here. And this is this Jimmy, this is Jimmy Brown's testimonial, but, the AI generated image, real testimonial, but AI generated image that make sense? So it's
Jimmy Lea: oh yeah,
Ernie Harker: we're being transparent. This is a real testimony, but we're being transparent about, the image that we're using. Really easy ways to use this tool for social media. You have a special, nobody cares that girl is not real.
Ernie Harker: Nobody cares. You don't have to have a disclaimer and say, this girl isn't really real because. We're used to getting talent on TV commercials and radio commercials that are not employees of the company. We get
Ernie Harker: Paid actor. This is basically a paid actor that you don't have to pay.
Ernie Harker: And I use it for HR videos. You guys, oftentimes we'll use HR videos, either canned videos that somebody else provides us with that are like really boring. Or you create your own avatar, you put the logo on the chest, have somebody in Photoshop just drop a logo on the chest. Or even have Chad, GPT, put a logo on the chest.
Ernie Harker: That person works 24 hours a day for you. Doesn't charge you any money, delivers it perfectly almost every time. And you don't need to edit. It's 'cause one, one of the things that happens in HR videos is Susie, the lady that did the video, she ends up leaving. And starts working for the competitor. And then you got Suzy as your HR video.
Ernie Harker: No thank you. Let's just man do promotional videos, do HR videos. I've got in my, the PDF that I promised to send you, it has five different suggestions on how to use it. Gosh, one of my favorites is like FAQs, do FAQs. Hey. Just do one little FAQ for each video and you have a little graphic that says, Hey, here's the how, when do I not need to know my tires need rotated, or, and it's super, super easy in here to add a scene and then just grab some other footage and put it in here so you don't have to like, be a great editor, just add another scene and add more videos.
Ernie Harker: It's just so easy you guys. Anyway.
Jimmy Lea: Okay, so we're all dying to see what Jim, the mechanic
Ernie Harker: said. Should we take a look? Let's see what Jim looks like.
Ernie Harker: And I'm gonna turn it up really loud.
Jimmy Lea: Can't hear it.
Ernie Harker: You can't hear it?
Jimmy Lea: No. Dang it. Can't hear it.
Ernie Harker: I can hear it. Great. I turned it up like crazy.
Jimmy Lea: Sorry.
Ernie Harker: You know I'm, do, lemme do this, I'm gonna share this, copy the link and I'm gonna paste it into the comment and everybody can watch it at their leisure.
Jimmy Lea: There you go.
Ernie Harker: Everybody take a quick second and check this out.
Jimmy Lea: Ernie, we've got, we've, that's gonna be awesome. I, everybody's gonna be clicking on this and watching this. This is wonderful information. So much knowledge that we're sharing here with the automotive industry. This is stuff that a shop owner can do to sit down to get comfortable with it. And now within a few moments, you can have an entire month's worth of oh, marketing content.
Ernie Harker: Yeah.
Ernie Harker: And use your GPT when you want creative marketing content, go back to your GPT and just type in this really quick prompt. Hey give me some social media ideas every day for
Jimmy Lea: March. 'cause it's St. Patrick's Day.
Ernie Harker: Perfect. And then it's gonna come up with all these different ideas. Okay. Now that I have that scr that, that content grab a little piece and say, will you write a video script for Jimmy to use?
Ernie Harker: So create a social media post. So use that same structure to create marketing pieces that you can get out there. Because the problem today is that it's getting more and more difficult to compete with this ocean of content if you are not producing content too,
Jimmy Lea: right?
Ernie Harker: You've gotta do it, otherwise you will be lost.
Ernie Harker: And lemme close by saying this, you guys several years ago I wanted to learn how to surf. I surf behind a boat all the freaking time in Utah. There's no oceans here. I know how to surf. So I went to the ocean, rented a surfboard and nearly killed myself for three hours. Could not stand up. So the next day I hired a surf coach and he basically told me where to stand on the board.
Ernie Harker: I'm like, oh, I wasn't standing on the board the right way and where to put my body when I'm paddling and when to paddle and like how to pop up. And I'm like. Oh my gosh, I didn't realize all these things. It was easy to do once I had the information. All you need is the information. You can do this.
Ernie Harker: You just saw me do it. The more you practice like the piano, the better you'll get the difference between the piano and ai. Piano takes forever to learn to play music. Anybody can s sell the keyboard and make mu make noise. But it takes a little bit of instruction to turn that noise into music and you guys will crush it with generative ai 'cause your competitors are not doing this.
Jimmy Lea: Oh, I love it. I love it. Thank you Ernie. Such valuable information and I agree. Yeah. The more we get familiar, the more we play with this, the better it's gonna be. For my friends that are listening, what do you think is this valuable information, something that is immediately actionable for you and for your shop, for your marketing?
Jimmy Lea: Is this something you can do? Put a comment and let us know. Should we have Ernie back for another? Presentation. Should we have 'em back for another webinar? Gosh, Ernie, we've only scratched the surface here.
Ernie Harker: I know.
Jimmy Lea: And Doug's saying Doug's saying session. When's the second session with Ernie?
Jimmy Lea: Is it tomorrow? Can we do it next week? Please? Thank you, Doug. Appreciate that.
Ernie Harker: Hey and Brad said that the link didn't work correctly for him. Does anybody else have a problem with the link? If it, if you did, we can probably put, I can download it and send it in a, like a Dropbox so that you guys can send it later.
Jimmy Lea: Okay. Yeah. Brad says, give us more. Sean says, extremely helpful. Angie says It's pretty interesting. Definitely something I'd like to try out. Wonderful. Thank you so much. We, at the institute, we work really hard to be able to bring to you my friends in the automotive aftermarket valuable information that helps you as a business to build your business.
Jimmy Lea: Our mantra is better business, better life, better industry. We're gonna lock arms together. We're gonna weather this storm because not every ship is created equal. And this storm, some of the ships are gonna sink. If we lock arms together, we can survive this storm, better business, better life, better industry.
Jimmy Lea: My name is Jim Jimmy Lee. I'm with the Institute for Automotive Business Excellence. My guest today, Ernie Harker. Thank you very much, Ernie. Appreciate you being here, brother.
Ernie Harker: My pleasure, bro.
Jimmy Lea: Oh, phenomenal. And yes I think we need to plan our second round to come back around and dig a little bit deeper.
Jimmy Lea: Because Doug's, we already know Doug's gonna be up all night playing with his new toy.
Ernie Harker: Awesome. Awesome. Thanks so much for having me, bro. It was awesome. It was super fun.
Jimmy Lea: Nice, nice. Awesome. Thank you very much everybody. We'll see you again next week. We'll have another webinar together very soon.
Jimmy Lea: Thank you so much.

187 - Standing at the Crossroads featuring Eric Henley, H-Tek Auto

187 - Standing at the Crossroads featuring Eric Henley, H-Tek Auto
January 17, 2025 - 01:40:22
 
Show Summary:
Built on relationships, accountability, and a deep respect for people, Eric Henley, owner of H Tech Auto Care in Tennessee, shares how his lifelong passion for the automotive industry evolved into a purpose-driven business and culture. From dealership master technician to shop owner, Eric reflects on the decisions that shaped his leadership, his team, and his approach to growth.
This episode of Leading Edge: Standing at the Crossroads dives into people-first leadership, building trust through communication, developing technicians and service advisors, and why culture and performance are inseparable. Eric explains how mentorship, integrity, and active listening have helped him create a workplace where people grow and customers feel genuinely cared for.
If you are thinking about the legacy you are building as a shop owner or leader, this conversation offers practical insight and honest reflection.
Want guidance on building a people-centered culture and long-term leadership legacy? Meet with Michael Smith for a leadership and legacy strategy conversation: https://theinstitute.zohobookings.com/#/Executive-Owner-Strategy-Session
 
Host(s):
Kent Bullard, COO of The Institute
Michael Smith, Chief Strategy Officer at The Institute
 
Guest(s):
Eric Henley, owner of H-Tek Auto
 
Show Highlights:
[00:01:53] - Eric traces his start in the trade back to fixing things with his grandfather and dad.
[00:04:15] - He says better communication makes you more impactful than just being “good at cars.”
[00:05:30] - A dealership owner’s personal leadership style became Eric’s blueprint.
[00:07:34] - After 18 years, Eric still maintains relationships with nearly every former employee.
[00:09:22] - High Performance Group helped him tighten accountability without losing kindness.
[00:15:51] - Eric uses a “three strikes” process to give people a real path to redemption.
[00:18:10] - Weekly Friday lunches create a safe forum to surface issues and improve fast.
[00:21:22] - He sees attitude, not skill, as the biggest separator in technician performance.
[00:35:24] - His delegation test is simple: fewer “Ask Eric” moments means real traction.
[01:29:16] - Eric wants to redeem the industry’s reputation by building trust-driven people.
 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/ggxEcghxTz0
 
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
Kent Bullard: Hi everybody. Welcome to the Institute's leading Edge, the Crossroads Podcast, where we examine the crucial decisions professionals make that define careers that shape industries that inspire thought leadership and that build lasting legacies. I'm Kent Bullard and I'm joined by my esteemed colleague Michael Smith.
Kent Bullard: And today we have the privilege of speaking with Eric Henley the owner of H Tech Auto Outta Tennessee. Our guest today is a lifelong automotive enthusiast whose journey began with an early fascination for cars, inspired by his father's project vehicles, after earning an associate's degree in automotive service technology from Northeast State.
Kent Bullard: He honed his skills working in dealerships from 1988 to 2005. In July, 2006, he took a leap of faith, starting his own business with a HELOC and a prayer. Over the past 18 years, he's navigated the challenge of entrepreneurship with determination and passion. A pivotal moment came in 2016 when he joined the Institute's twenties group, a decision he calls the best move he ever made for his business and personal growth.
Kent Bullard: Eric is also an active participant in the Institute's High performance group, and this year he was named Alumni of the Year by Northeast State, a testament to his impact on the industry and his community. We're excited to have him share his incredible journey and insights with us today. Welcome to the Institute's Leading Edge, the Crossroads Podcast.
Kent Bullard: Those of you who are listening I'd like to just let you know that you can ask questions in the comments below. If you enjoy the content that we're gonna cover today, please like and share and you can find more information about us at We are the institute.com. Eric, thank you for joining us today.
Eric Henley: Oh, thank you. Appreciate the invitation. 
Kent Bullard: So I'd love to start. And kind of go back, I know I gave you an introduction, but I'd love to start with what originally drew you into the industry and what inspired you to commit to it? 
Eric Henley: I, well, it, like I said, the background you heard the background, mechanical, I mean, it started off with bicycles and lawnmowers with my grandfather, and then it turned into cars with my dad.
Eric Henley: And then from there, it's just it just fit. I honestly tried one year of college thinking about something else and decided that wasn't it. And so we, so I went into this field just with, you know, an honest, know-how and how things could come apart, go together. And so, enjoyed cars. It was a good time with my dad.
Eric Henley: And so from there I thought, well, I can make a living doing this. And so that's what I chose to do. And so, and I'll have to say I always wanted to know more. I always wanted to learn more about. How I could be a better technician. So I was always looking to improve. If they gave me an opportunity to go train, I would spent 15 years with Honda and they would send me to the training center in Alpharetta.
Eric Henley: And anytime they asked me, I was, yes. Anytime they asked me if there was something else I could take, I was, yes. So, yeah, I just wanna be the best technician I could be. And the end result with that was a lot more build hours, a lot more income. And I was a master tech at my trade for most of that time.
Michael Smith: Eric, you know, we love stories and we talk about stories a lot. What maybe is one thing that you could think of as a legacy that your dad left with you, that you've carried into where you are today? 
Eric Henley: Well, one of the things is just his even though he was a plant worker, he had a knack for a person just being personal with people he could find something in common with anyone and value conversations with people.
Eric Henley: So I think that's really helped me to always think about other people and to find things in common, to build relationships. So, yeah, that, that was probably one of the things that I would say that stands out to me. Mm-hmm. 
Michael Smith: That's a great takeaway. Thank you. 
Kent Bullard: What do you think what do you think drove you to seek more knowledge, to gain more skills to develop yourself?
Kent Bullard: What, where does that come from? 
Eric Henley: Well, I've always, like I mentioned earlier, I've always had that built in. Personally I took classes outside of outside of the trade and read books like all of us have to improve myself. But I think the better you are at communicating with people, the more impactful you can be in their lives.
Eric Henley: And so you could, I mean, you could touch lives, I guess is what I'm trying to say. And it's not always about just making money. It's about people and also learning to listen, actively listen to people, not just being the one, dominating the conversation and make sure they're heard that they know you're hurt, that they were heard, that you're not talking over them.
Eric Henley: So, it it's pushed me. To develop my communication skills more intently. 
Kent Bullard: Why do you think it's important that you invest in these people the way that you're talking about, to build that bridge of communication to understand them? Why do you, why is that so important? 
Eric Henley: Well, it's a, I mean, for me and I learned this in the dealership life as well.
Eric Henley: The owner there was very active in our lives, and he would come and talk. I mean, he wasn't some guy that was disconnected from them, from us. He smoked. This was back when smoking was popular. So he would come back into the bays, talked to us about our families, talked to us about whatever job we were working on.
Eric Henley: He would give us congrats. He actually hand signed every paycheck with a, some sort of encouragement on it. If he had a really great week. So I, you know, he kinda mentored me in that. So when I started my own business, that was the same, that was what I took with me. It was like, okay, this guy, you know, I thought very highly of him and his encouragement helped push me along.
Eric Henley: So I'm gonna do the same thing in the way I treat the people who work for me. And to be sure that, you know, I'm not just all about the hours or the sales. I care about what's going on in your family, what your hobby is, what, you know, how was fishing last week? So I've always tried to make that stroll through the shop.
Eric Henley: Even when I was in the shop as a technician, still working in my business, before I started working on it, I'd spend time talking to the guys who worked with me alongside me, and we did things together. You know, we did life together. And so I just felt like it it made work, not. As much work, if that makes sense.
Michael Smith: Oh, it makes total sense. And I'm gonna, I'm gonna say you, we, we talk about this, you are blessed to have had that platform of leadership at the beginning in a positive way. 'cause a lot of us see leadership that we don't wanna replicate in the world that we live in with our first and second and third bosses.
Michael Smith: And the fact that you had somebody that walked around and felt that positive impact and chose to hold onto that is a great legacy that, that owner left for you. And it makes a big difference. The walk around recognition, the walk around relationship, that actual genuine caring is, that was a great start that you had from that perspective.
Michael Smith: And it's great to hear you carrying it forward. 
Eric Henley: Yes. Mm-hmm. It's been an asset for. For me and my business. Yeah those relationships. I'll just say I don't know if this is an appropriate time you can edit out, if not, but I'll tell you that I only have one former employee. So over 18 years we've turned over.
Eric Henley: I forget now how many we've turned over. It's not a lot. But out of the ones that have left, I only have one that was with me three weeks that I don't have a good relationship with host working for me. So, we've managed to forgive our differences if we had any or whatever the reason was that they left and still maintain friendships and relationships.
Eric Henley: And we actually do some things together. And some of them left under tense, you know, situations one, one in particular last year and he and I still meet and have lunch together. We text often and share in football's successes and. Whatever their interests are. So, I'll say even if they don't stay with me, I want to have a relationship that I made a difference in their life in some way even if they're not working for me.
Eric Henley: Absolutely. 
Michael Smith: So, and we talk quite a bit about whether we're drive for performance, so whether we drive for relationships, and obviously that's great testament to the fact that your drive for genuine relationships results in high performance, but also results in relationships that last, which is a fantastic testimony.
Michael Smith: So thank you for sharing that. That's great. 
Kent Bullard: Is can you go into, you know, what inspired you to focus on high performance and people driven, people development as a core part of your business strategy? I mean, you've talked a little bit about the why for you but what was the inspiration for bringing it in as a core function of your business?
Eric Henley: So I started noticing culture. Culture became a lot more important to me. And I knew that I'd done okay, but I knew I could do much better. And I'm long suffering by nature. So I'll tolerate some things that I don't necessarily like because I wanna see somebody redeemable or get better. So I was struggling with that.
Eric Henley: And we all face, you know, technician shortages, sales staff shortages. There's a lot of things that happen when you turn somebody over. You don't just get someone right away. So that the High Performance group, what it's done for me is to help shape that culture and also I guess temper me a little bit to where I'll hold somebody more accountable for a cultural thing.
Eric Henley: A vi a culture, a core value violation. And I mean, and say it. And the other thing, I know it's given me the ability to say it in a kind way that it's corrective, but it's it's in a positive sense, it's firm, but with feeling. And so, I think that has probably helped me. And one of the reasons I got into high performance groups for that, we had our numbers.
Eric Henley: We had the GPG and you know, we knew our numbers well, but this is next level stuff is the way we talked about it. And from now with all the legwork we've done with the vision, the mission, the core values and operating principles, all those exercises we've gone through, I can just see this kind of coalescing and gelling into it just equals a better relationship at work, a better and more production for those that buy in to it, the ones that don't.
Eric Henley: Well, you can see the difference. The ones that sort of, they agree to it and they'll nod to it, but it even affects how much they make. And it is the hierarchy that, that you talk about a lot, Michael, is the, is it sounds like Woo. And several years ago I would've said, eh, you know, I've worked around guys.
Eric Henley: They can be jerks. They still work. Well, that's not necessarily the case. There's a lot higher level things. Your culture. And so I guess if that's a long answer to why I'm in the high performance group. 
Michael Smith: Well, I kind of wanna unpack one thought a little bit further. You mentioned being long suffering.
Michael Smith: Yes. And then having a sort of an accelerating thought process about dealing with toxicity, dealing with issues that manifest themselves as countercultural. Can you just give us a couple more thoughts on that, go a little bit deeper about how your thinking has been developing along those lines? 
Eric Henley: Yeah. So I guess just to be practical.
Eric Henley: So for instance, maybe a technician who is not bought in. So we pull 'em aside and have a conversation, say, okay, we talk about all the positives the things they're doing great. And then we go into, and here are some things that we see that are holding you back. And the only reason they're holding you back is because of it is the guy in the mirror.
Eric Henley: You have every opportunity, like the others who are bought into culture and you can see the end result. And because they've got a scoreboard, they can see what each other's hours are built for the week. So we use examples like that. We use it in the way we train our service advisors and the way they interact with people.
Eric Henley: That latest thing we've been talking about at HPG with customer experience, it's changed the way our sales staff talks to people when they take the, when they take the information from the customer, from the time they accept it online or in person. There's a deeper thought of each one is important.
Eric Henley: Each person is important. And so it's changed the way we treat people. We're not just trying to get information out of 'em quickly and move on to the next one. We spend a little extra time, but I think our reviews reflect this change the, especially the most recent ones within the last couple of months.
Eric Henley: I don't know if that answers your question. 
Michael Smith: Absolutely. No that's fantastic. Thank you. Thank you for that reflection. 
Kent Bullard: I had another thought that I wanted to get back to. You mentioned redemption. I love, you know, having a path to redeem themselves. Do you think that the practice of redemption is important or plays an important role in running a high performing team?
Eric Henley: Yeah. Yes, because I mean, let's just face it, none of the three of us have it all figured out. We all have our weaknesses and we continue to work on ourselves because, we'll, we're imperfect. So, but we have, you know, if you have a drive to improve. Why would you not have that same desire for the person that you've maybe somebody that's been there for a while and now they're trying to buy into this new concept of how we're gonna operate.
Eric Henley: This these are declared things we live by. This is how we conduct ourselves. This is how we think about ourselves, and this is what we want our everything that we face the public with to be a reflection of that. I mean, that's what that's what our customers. So, I think giving someone a chance, that's the long suffering part.
Eric Henley: Personality is more that I'll work on somebody for a while instead of just I want it done or get out. There's other personalities that, that's the way they think of things. So I've always just, I try to put myself in their shoes and think of it from their perspective. Before I come out and talk to 'em about it.
Eric Henley: So it's just a, it's a self-evaluation of trying to think how that person is looking at their job each day. 
Michael Smith: So when do you, Eric, sort of make that shift in your mind? And it's gonna be different in every scenario I know, but what sort of causes you to eventually turn the corner from redemption as a model to a more remedial approach?
Michael Smith: What generally, what happens in your thought process that takes you to the point of having to deal with the unresolved toxic issue at that point? 
Eric Henley: So mine, mine is usually, I mean, you basically, you could come down and say it, basically it's three strikes. So if we've had a two conversations over the same issue the third time is the ultimatum.
Eric Henley: And from that point, that usually means they'll. They'll either change or they'll move on. 
Michael Smith: Yeah. Or not. 
Eric Henley: And so that's, I mean, I like to give people time to change. And the only things I would say that would be an immediate remedial thing is, you know, something criminal. You know, they're stealing from the customer in some way, or they're stealing from us or something dishonest, you know, a repair that was intentionally, you know, half done and those would be the things.
Eric Henley: Or someone in supervision who went outside of anything that you, I mean, that's what happened last year with with one of my managers. He didn't run something by me before he actually had the meeting. And had he we would've probably said it a little differently. I think he was defending me well with and making some corrections.
Eric Henley: But I think it is just the manner which it was delivered. You can say things a lot of different ways and you can still get your point across without, you know, coming across in a very abrupt, sharp direction. So, but usually three strikes and you're out. That's been my 'cause. Your first one's verbal.
Eric Henley: The second one's verbal with written, and the final one is a verbal with a written, and this is it. And, you know, they either straighten up or they move on. And so that's how I've, that's how I've made my decisions for the file straw, I guess is what you're asking. 
Kent Bullard: So your process for correction is really coming in and.
Kent Bullard: Helping them define a path towards redemption, not necessarily disciplinary to say, you know, here's all the things you've done incorrect. You know, I'm punishing you in these ways, but more so, hey, let's work together to look at a plan to help you achieve your best potential. 
Eric Henley: Mm-hmm. Yeah. So we, another thing we'll do is we'll have an issues stay.
Eric Henley: Like I, we do Friday lunches with all our employees each Friday. Some of them are in-house in the shop, catered in, and other ones are out to eat. Those are usually just for fun, but we'll have each person just around the table come up with an issue maybe they faced this week that we can improve a process or change something on the digital vehicle inspection, or add something or take something away, or maybe a parts issue we need to solve.
Eric Henley: So we're always troubleshooting. We don't think we've got everything. So, so every person and I usually say, listen guys, you've heard me say this a hundred times. I'm not the smartest guy around the table here. Each of you have something to add to what we do, and we value what you have to say.
Eric Henley: That's not to say that we'll always apply everything mentioned here but if we've thought it through and this is a good change for everyone, then let's make it, it makes us all better. And so that's kind of how we deal with issues and would not let things fester. We give 'em a forum to bring it up.
Michael Smith: Well, and the collaborative conversation is one of the big pillars in a high performance culture is that ongoing, genuine collaboration, the fact that they bring it up and you welcome it and then you solve the problem as a group is wonderful. It's great foundational stuff. 
Kent Bullard: There's such, you know, I say it.
Kent Bullard: All the time. But there's such profound value in breaking bread with people, sharing a meal and being able to have that open dialogue over, over good food with one another. It kind of puts you in a setting that's a little more even keeled. We all, we're all human. We all eat. And so this is a, you know, I commend you to do that.
Kent Bullard: And anybody who's listening, I mean, I would highly recommend that you have some kind of regular meal that you share with your team. 
Michael Smith: Especially the ones where you go out to a restaurant, you don't do any business. You guys just hang out together. That's fantastic. For fun. Yeah, just for fun.
Eric Henley: Yeah. It will increase your you usually book that as a training expense. 'cause you're all, you're talking about things to improve the business, but it'll increase your training expense. But for me it's a small price to pay, to not have issues that are really small issues that grow into something that's like a festered wound that you should have dressed a long time ago.
Eric Henley: It's better to head it off early when it's small. And then let it go. And I, that's a lesson I've learned in the past too. I've let things go too long. I guess any shop owner sometimes just sit back and hopes for the best, and that never happens. 
Kent Bullard: Well, it's kind of uncomfortable having, having the thought of, well, I now have to go have a conflict over this issue.
Kent Bullard: And it's like, most often, if you just get it done quickly, it's a lot less of a hill to cross than if you let it continue on. 
Eric Henley: No, you're right. I was wrong in that way. I'll do better still. What, after all these months, now you really bring this up, you know, that kind of thing. So, 
Kent Bullard: yeah. 
Eric Henley: Anyway, 
Kent Bullard: So I, I want to go and talk.
Kent Bullard: I'd love for you to tell us about your experience with getting your team involved, especially with your, you know, your commitment to human centricity. How did the team take that? 
Eric Henley: Y for the most part, except for, I think I have two. Have semi bought in. And those are ones that I'm still not positive. They're, they may be getting close to the three strikes, but all the rest of 'em were like, after they started.
Eric Henley: I mean, and we had to talk about it a lot 'cause it took, you know, they have to understand where you're coming from here. 'cause a lot of shops, a lot of guys are gonna think, oh, this is woo, what are we doing? This is the latest thing. What are you bringing in? That kind of thing. But after we had some good conversations about it and what does this mean?
Eric Henley: How does this affect us? They were like, yeah, this is, I agree. And so, you know, we sent a couple of 'em to, to the leadership intensive. And they came back with my son for one as really turned into a self development fiend. He loves to read things to improve himself. We are actually having to coach him, not to spend all of his time reading, spend time with his wife doing some fun things.
Eric Henley: And then the other, the latest one Alex is coming back with some some changes. And that's still, he's still digesting it but they they want to the ones that are bought in two technicians for instance, they want to train, they want to be masters of their trade. They want to get better.
Eric Henley: They'll come ask me for training instead of just waiting for the latest, you know, Napa training or whatever that comes up. Well, they'll ask me to go to the Charlotte I can't think of the, which name you, you were probably at it, but at any rate, he asked to go. And so we put, we sent him and he learned a lot of great things and brought those back and shared them across the other technicians there.
Eric Henley: So. They just, they see how it affects what they're doing. And the other thing is to see these two technicians who are producing way more hours than the other two. And they all do the same quality DVI, you can look across any of their D vs. There's good pictures, there's good comments. They're all, there's no really shortcuts.
Eric Henley: They're not pencil whipped. And the difference is the attitude 
Kent Bullard: about what they do every day. These two come in with an overcoming attitude. These two come in with like, 
Eric Henley: You know, they're we're gonna, we're technicians and that kind of thing. So it affects it affects them, but I can see a partial buy-in with them.
Eric Henley: That's the reason I still think there might be some room there that the sales staff was like a media, even my newest employee, which is our courtesy maintenance shuttle driver. His desire is to become a technician someday. He's like, I've never worked for a place like this. And he is from, he's from coming from California and came out of the grocery store industry and he's like, this kind of culture is just, I've never seen anything like this.
Eric Henley: So, it's made that kind of impact on what we're doing now. 
Michael Smith: Yeah. And that, and I wanted to throw that in there. We talk in this industry unique, competitive advantage is hard to come by. And you were mentioning earlier, maybe also the two technicians that are slowly buying in, if we can be optimistic about it, are come out of backgrounds where they were abused, used and abused.
Michael Smith: And so the concept that you stand up and say, I actually care about you as a person. They're like, eh maybe not. Let me see what happens here. Maybe they're slow sales. They're slow. They're slow to buy in. Maybe they'll never get there. You know, if they don't ever get there, that's then a truth tape problem.
Michael Smith: Right? What's, what their belief structure looks like, and if this conflicts with that, they don't change their structure, then we all know they won't eventually get with it. But the attitude you were talking about's a symptom. That's a symptom of what they believe, a symptom of their history. So I thank you for the testimonial here.
Michael Smith: It's great discussion too about what happens when you bring something powerful to the group that's different. Some people change quick, some people don't. Right? Some people take a little more thinking, a little more buy-in, and it's just a, it's a great story that you told. Thank you for that. Thanks for unpacking it.
Michael Smith: Mm-hmm. 
Kent Bullard: I think there's something to be said. You know, I've spoken with a lot of shop owners who have an apprehension about introducing this kind of stuff to their team. They're not gonna be interested in this. This is what did you say? Woo kind of stuff. Yeah. And everybody's looking for that buy-in at the same time.
Kent Bullard: So one, they're apprehensive about this, but two, they also want their team to buy in. They want, how do I get my guys to say, I wanna go to training, I wanna develop, I wanna grow myself. What strategies or philosophies have you found to be most effective in developing and nurturing that talent and that drive within your team?
Eric Henley: Well, yeah. We do a weekly sales training on Wednesday at lunch with my service advisors. And so with them, I just use practical application. I think I've kind of paired some of what we've done 
Michael Smith: with 
Eric Henley: the the old book Adele Carnegie, how to Win Friends and Influence People. And so it, it changes their thought process and how they present.
Eric Henley: They, they own stewardship of the customer's vehicle and. They also on intake, this is something Seth really picked up on, is what do people want? You gotta ask them what they want. So you empower them and you guide them in their decision making process about whatever they need. And so with them, they can see directly and I intend to show them with the the thing that inbound offers with the conversation temperature of a, the AI on that is to show the difference and what, when they really are presenting in that manner, what that sounds like and what, how the customer reacts to it.
Eric Henley: You can see a marked difference in the responses. The guard is down, there's more trust, and that's one thing our industry needs is to be trusted. And so with them, I think it's easier on the front. The back the technicians, and I don't like using front and back, we're a team, but that's a common term used in our industry, the front and the back.
Eric Henley: Is that okay guys? Every bit of information you collect and the diligence you go to reveal as much about the vehicle's condition in a clear manner helps our customer make the best decision as well. And then the other thing is to be willing to collaborate with the, with your service advisor on what the best estimate is for this, what the best steps are there gonna be other steps unknown?
Eric Henley: Make sure they're aware of that. And so they're thinking ahead, okay this is the first step. And that's how the verbiage reads. And the say, say it's the initial concern for the day, whatever the customer came in for. This will be the first step in this process. And this could resolve it, but there may be other things.
Eric Henley: And so that, that helps the other, it helps the service advisor when he has to make the second call, 'cause he is already, he's already prepped. And so they think about it in a way that's okay, this is not just about me selling a bunch of hours to bill more hours for me. We're looking out for a customer's best interest, their safety and to communicate very clearly to them what they need and what they can wait on.
Eric Henley: So in the back that's I would say the technicians that have bought into more of that's more of the communication. You can see a little more robust, richer communication between them and service advisors, both in text on the DBI and in conversation when they go up front to expound on what they've.
Eric Henley: Said mm-hmm. 
Michael Smith: And then e Eric, intellectually, emotionally, the concept of stewardship that you mentioned and the fact that done right over time builds loyal brand ambassador customers the best kind. How have you discussed that internally to get that connection? It's a little bit different in our industry.
Michael Smith: How have you gotten that, how have you handled that internally to have your people start to understand it and make the connection and make it a part of real life talk? Tell us a little bit about the process, if you will. 
Eric Henley: So one of the things we do, just to show them what a great experience is if we get the review it's shared across the service advisor and the technician.
Eric Henley: And then we've also thought about sharing it across the whole shop. Maybe at one of the lunch and learns we do with all the staff around the table. Just to show what a great how a great experience, what that does. So that's one of the ways we talk about it. And then there's just a there's that pat on the back, the walk through the shop.
Eric Henley: Matt has our service manager has really started practicing that a lot. If it's been a very challenging repair he'll go back and congratulate the technician for success in that. And if it's been a challenging one, he will grad congratulate them for persevering through it. And that's been something I've tried to leave as an example.
Eric Henley: We have a very challenging repair on a Toyota right now. And this technician is very, you know, he is very technical. He follows the process like, I mean, he's one of the best. Unfortunately, something didn't go right and. The engine's still out of the vehicle. So, but I'm like, listen, you know, you're a great technician and just like, I'm not a perfect person.
Eric Henley: You're not a perfect person either. And things happen. This is not a perfect world, but we'll get through this and we'll succeed and we'll over, we'll adapt and overcome. And so that's, I guess in the from a technician's perspective, that was one of the conversations we had right before I left. This morning I was stopped by to visit for a bit.
Eric Henley: And it's like, you know, you guys, you have that. We're gonna get this we're gonna overcome these challenges. And and with that, we're gonna offer the customer. Something that most shops don't offer is integrity and honesty. That we own our mistakes. We eat our mistakes, and we're very transparent about, we don't try to cover 'em up.
Eric Henley: There's many ways to deceive people in this industry. It's been done. But our commitment is that absolute integrity. So if you make a mistake, do not feel shame that you have to admit it. Even if we lose money on it, we'll gain in the long run. And we know what we've done. We don't have to remember what we told 'cause we know it's honest.
Michael Smith: Yeah. On, well, you've mentioned integrity and that's fabulous. There's humility, right? Involved in admitting that it didn't go right or mistakes were made or whatever. And grace, you ask for grace from the customer, you give grace to each other. You're giving grace to the master technician who is stuck at this point.
Michael Smith: And it's like we all get there at one point. That's a beautiful triad. Tho those three ideas, integrity, humility, and grace. What a great stool culturally. To stand your relationships on. That's fantastic. Eric, 
Kent Bullard: I wanna go back to one thing and Michael, I'm interested to know your perspective on this from the psych psychological aspect.
Kent Bullard: You know, we talk about getting the buy-in and all that. Eric, you had mentioned their decision making capabilities, their ownership, their own personal choices that they're able to make. I think what prevents a lot of growth in teams is that leadership is too restrictive in the sense that if you're gonna develop somebody, you have to have I mean you mentioned stewardship, you have to give them the freedom to own their area of accountability.
Kent Bullard: And Michael, what do you think prevents. That type of, or I mean, what causes that restriction? 
Michael Smith: Sure. I, Eric, we've talked about this in the high performance group together a lot. It's a trust platform that's rocky. And so the an owner will give responsibility away. Maybe they give authority away, maybe not really, sort of, but not really.
Michael Smith: And then accountability is a little fuzzy because the owner's a little nervous to see if it's gonna work or not. And they want to give a person a chance to work it out and something doesn't work out. Right. So that beautiful three-legged stool responsibility, accountability, and authority is not fully established in this relationship with the person who's taking on a new task.
Michael Smith: Right. And this is the issue that Eric, we've talked about the path to mastery and stepping over the comfort zone into the unknown and falling on your face. That's where mastery is developed. You don't become a master by doing the same thing. You know how to do over and over with no risk. So when they step over the wall, they are gonna fall down.
Michael Smith: You kind of want 'em to, 'cause it's part of the experience. You don't want to catch 'em before they hit the ground. You want 'em to hit the ground and learn and get back up again. Then they build a resolve and a resilience to go do it. And if we don't fully transfer. Responsibility and authority and accountability.
Michael Smith: That's, it's a rocky, big, soft ground. And then somebody stumbles and maybe we reach out and catch 'em. Maybe we try to turn away and hope they don't fall down and don't know what to say. And it's that, it's all comes back to trust. Yeah, exactly. Right. And it all comes back to trust. It comes back to trust.
Michael Smith: They trust you, you trust them. It gets stronger in the culture. You say, I want you to try something. They're like, you know what? I fell down twice. Eric picked me back up again. I didn't get judged and penalized for it. I'm gonna try this third bigger thing. And now you've got a culture of mastery. Now you have a high performance culture of individuals developing and it's, it takes a little while to get that trust bill.
Michael Smith: 'cause again, we don't come from an industry that's trust rich, either internally or externally. So yeah, there's a wants, wants traction. I mean, tell us and detraction, right, traction's happening in your place. So can you tell us a little bit about that traction and some of the things you see that is evidence to you that it's building?
Eric Henley: Yeah, so one of the simple gauges I use, this is easy for almost any shop owner who's facing trying to let go. Is that your name? How many times is your name? Ask Eric, what do you think? Eric? Eric, what do you think? So anytime you hear that it, I mean, you might, if you hear it once, that's not necessarily a bad thing, but it's a good gauge of how your business will operate without you being present.
Eric Henley: And so I usually, if they ask me a question, I'll ask them what they think should be the next step, and then they'll tell me what they think it is. And if I have nothing to add, I'll think, okay, that sounds fair to me. And why don't you go with that. I trust you on that decision, or, that's a great, that's a great decision.
Eric Henley: I might add one thing that you might. Consider going into this, but I want you to own the decision and whatever the consequences are of it just for instance, taking in an older car, that's gonna be a challenging repair. I used it for a lesson for my son recently. He wanted to help someone who was an older gentleman, had a sick son with cancer, and the car had been setting for a long time.
Eric Henley: And Seth asked me about it and I said, well, what do you think? And he's like, well, I really wanna help the guy. And he said, it could be a challenging repair. I said, yes. And so then I went on to tell him, I said, so this is an older vehicle could be a challenge to find parts. There's lots of things that may not be available anymore.
Eric Henley: But I'm gonna let you make that decision. And and I didn't try to gloat over it. I was ripe, but. I say, okay, you know, going forward, this is a lesson, pick yourself back up and going forward, you'll know what to do. And I'm not opposed to doing the right thing. I'll donate labor to people and if we're, if it's a good cause.
Eric Henley: That's what we do. I mean, 
Michael Smith: see Eric, your model hits on a very important mastery journey component. And that is that the high level journey people and the masters are the first ones that are gonna feel micromanaged. If they say, Eric, what do you think? And you give them the answer, the people in the lower levels of development will be grateful for that answer.
Michael Smith: Mm-hmm. If it's a cultural tenant to ask Eric the question, the minute you start to answer the masters are either gonna be not listening or gonna be angry that you gave him the solution. 'cause masters like to figure it out for themselves. And your very model helps both the apprentice level people like, well, what do you think?
Michael Smith: And instead of relying on you to give them an answer, and you know, having tried to learn another language, if I ask the person who knows the language, the answer to that word, and they just give it to me, I don't remember it. But if they go look it up, or you go figure it out and I have to go figure it out, it sticks in there better.
Michael Smith: And so your model takes it all the way from apprentice out through master to help them to learn to stand on their own. And that's a really powerful thing that you exercise. I wanted to catch that on the way by that's great leadership practice that you have 
Eric Henley: and speak and the traction of that too.
Eric Henley: So not, was this car a bad decision for us to take on? Yeah, probably from a financial perspective, but one of the high culture technicians who was working on it and desired to finally fix it for the guy, he knew the story. Seth had told him he came in on a Saturday and donated nine hours of his time.
Eric Henley: Unbuilt not clocked on anything, researching and doing tests to, to resolve the issue for this customer. So you just. Well, I mean, what flat rate technician does that? That's you don't, most of 'em are not wired like that. I don't know that I would've been at that age mid thirties. I've only been like, yeah, but that's the type of cult, that's the type of people you attract.
Eric Henley: Anyway, I interviewed this guy. This is before I had HPG. I could just tell. I, that is one of the things I guess I, I meant to mention earlier in the conversation is that dad's influence on me made me kind of discern certain people there, and I could just tell I look people in the eyes and I watch body language and I saw a genuine person here.
Eric Henley: So some of that's just, you know, thankfully built in. But there's a lot of this I've learned on to layer on top of that. It just makes it better. The things I'm wearing for y'all through this is. It's I never would've thought I'd been where we're at now with this. It's just, I, it's a blur.
Kent Bullard: Well, Eric I've gotta commend you for giving your people the space, you know, just to recap, asking them what do they think?
Kent Bullard: Either, either recognizing, hey, that is a good decision, you made a good choice. Also if you do need to add something, hey, I've got something to add to that, to your already good choice. I think in society today we've forgot how mentorship works in the sense that information is so easily attained through phones, through the internet.
Kent Bullard: You know, a lot of the youth don't necessarily get look upward. And at this point, it's a lot easier to allow the youth to go just to the internet versus having a relationship of mentorship. And I say that meaning, kind of to summarize, go back. Think about the mentors that you had going, you know, as you were becoming a tech.
Kent Bullard: So the listeners out there, as you were becoming a master you had mentors that probably gave you the space to fail. And I think because a lot of businesses or teams are in a position of desperation where they're just trying to make it work. They don't allow that space to make mistakes, to grow and to develop.
Kent Bullard: And I think you, you absolutely have to have that flexibility to understand that this person is not at my level and I need to meet them where they're at and allow them that opportunity to try and to fail and to learn. 'cause that's ultimately how they develop and grow. And eventually they're gonna be somebody who is either at my level or even beyond that.
Kent Bullard: And so I just want to commend you for allowing that to happen. 
Eric Henley: That reminds, that just brought to back a memory of my early days when I first came to Honda. Before the internet, we had the old manuals on the shelf and you didn't have a phone or a computer to look at. And I had been there about a couple days and I was trying to solve a problem on a car, and I went over to ask another technician beside of me and he said, have you looked in the repair manual yet?
Eric Henley: And I was like, well, no. He's like, all right, you go look in this chapter and they'll, that gets you in the range where you need to be to figure out how to do this job. And if you can't solve that problem, then I'd be happy to come over and help you. So to me, that was a lesson problem solving that you put back on the person that, that needs to learn something because you can tell somebody anything, but if they don't know how to practice it, if you're always the guy bailing them out, well then guess what?
Eric Henley: You got a lot of hay. Erics, 
Michael Smith: It's a beautiful story though, because instead of leaving them. Looking in the universe for an answer. You sort of turn their head toward this and say, okay, now go there and come back if you have more questions. And it's a beautiful way of doing it. You do bring your expertise, but you don't do it in the way of solving the problem for It's a great story.
Michael Smith: You'll find the 
Kent Bullard: answer to your question at the top of the mountain. 
Michael Smith: Yeah, right. This mountain. Just climb the mountain. That 
Kent Bullard: one or that one? 
Michael Smith: Lemme go. 
Kent Bullard: I love that. Love. 
Michael Smith: It's great. 
Kent Bullard: I wanna shift the conversation here because you had leaned in and you said I saw in his eyes. So not only developing the people that you have, but how do you attract the people that are come?
Kent Bullard: Like what are you looking for at the people that are coming in? What are some of the unique how do you approach hiring for a high performance team? How do you approach screening the right people into your team? 
Eric Henley: I usually, the first thing I'll look for is humility. If I have a chest beater I have, I could tell you the technicians I've had in the past that I've hired on their proclamation of their skill and how they configure things out has always come with a poor culture fit.
Eric Henley: Now, I will say that you can't just hire on culture. There has to be some skill and some abilities. There are people that are not built to work on, you know, do the mechanical side. There's people not built to talk to people on the sales side. But generally it is I'll read the personality first, just my discernment of them.
Eric Henley: I don't, I haven't implemented a disc assessment. I just usually meet them. I'll meet 'em usually in the evening or on a weekend when no one's there. Walk them through the shop and just talk to them and kind of get a feeling of a couple hours with that person. If they've made it, you know, to me if they're just online or that kind of thing, I, it's hard to determine, you know, you can only get so much and a lot of 'em wanna text and there's a lack of, you can't really get a genuine feel of someone.
Eric Henley: So I generally like to see someone face to face or hear their voice. The first interview I had that was really outside of the norm was my hire from Washington State. He was he sought us out off career forms on our website and he sent the career form in. One of my staff brought it to me, and I normally would not look at that very long and then file it because it's somebody from across the, you know, and I didn't, at that point, I didn't really need someone, it's part of the funnel. You know, you keep your funnel of people to as you're recruiting. But there was something different about the tone the way he spoke to me. And then I invited him out so I could meet them in person. And they were open to that before they ever decided to move here. And took him around, drove him around, showing him the area took him to the shop.
Eric Henley: His husband, I mean, his wife came with him. And so we we just got to know him personally, what their likes were, what their interests were, and from there I could tell that it was gonna be a fit. So that's generally how I start off. I don't look for the skill or the certifications right off the bat.
Eric Henley: They'll tell me about 'em, you know, 'cause that's part of the career form. But then from there it's just a it's a really, just a personal interaction, a conversation. 
Michael Smith: Well, just to punctuate that point, I love the order that you put it in. If it's not a cultural fit, you're not interested in whether they have the technical skills or not.
Michael Smith: And it's easier to find technical skills online than it is cultural fit online. So I just to validate your model, very smart way to do it. Don't waste your time Having technical validation and then finding it's not a culture fit. Right. The rarer thing is the culture fit. 
Kent Bullard: I think it also kind of points to, I know this person has the right attitude.
Kent Bullard: I know they have the right perspective, and if they're missing or having a few gaps in their technical competency, we can make up with training and we can teach them those skills. If there's somebody that's worth investing in terms of our team dynamic. 
Eric Henley: Mm-hmm. And they'll want to, 
Kent Bullard: and that they want to.
Kent Bullard: Yeah, 
Eric Henley: they'll want to, they'll come ask you to go to Charlotte for a weekend to learn about something. That they're interested in or they'll bring up online courses, or they'll be the one in today's class that is leading the pack. Their daily studies. So,
Michael Smith: well and I'll say this right in technical skills is an intellectual learn and it goes in emotionally, you know, approved as another thing that will help my personal success.
Michael Smith: Cultural stuff comes out of the heart, comes off the truth, tapes comes outta history, comes outta fear, comes outta prior success comes out of security and insecurity and esteem and all that. And so, you know, you can change technical skills at the intellectual level, a hell of a lot easier than you can change deep felt emotion based cultural tenets, right?
Michael Smith: So PE people can change anything they want to change, but culture is a bigger stretch for an individual to go deep, scarier, harder to do. And so I again validates the approach that you take very smart right to to do the technical stuff at the end. So, 
Eric Henley: but it takes a little longer. Because there, there's a whole lot of guys out there that you don't want.
Michael Smith: Yes. 
Eric Henley: And once you get them, it takes a while to get rid of them. 
Michael Smith: Right. 
Eric Henley: And they poison your culture 
Michael Smith: well. So your model is you kiss a lot of toads. Right. And the s and princesses show up at that point, so, yeah. Yeah. Got it. Yep. 
Kent Bullard: So as you're building your team and you're building your culture how do you approach the balance between driving for business results?
Kent Bullard: 'cause obviously you need that to sustain the business to again, sustain the people and maintaining a supportive, human-centric environment. 
Eric Henley: They you're speaking of KPIs, measurables who we created a scoreboard that is digital for the technicians to view each week. And it's updated each Monday from the previous week.
Eric Henley: So they can actually see a lot of the things that we ask 'em to do. You know, you know, hours, perro, a RO, a car count pictures per inspection, all that proficiency, efficiency and productivity. So they can see that the service advisors have the reports and the point of sale we use to view their numbers.
Eric Henley: But one of the things I started to implement more recently is an actual, just a little scorecard of a index card for them. 'cause I felt like there was something, we talked about one of our meetings about ink and pen and paper being more impactful and just having a digital thing that they look at.
Eric Henley: So, so we talk about measurables. They are, they have to be measured. I mean, you don't know where you're at if you have no, you know, no measure. But see those are. Yeah, but the culture side of it is just like, you know, like, for instance, the technicians who are more bought in, look at your numbers.
Eric Henley: Look at what you're doing. This is what's, I mean, this is what's driving this. And I think there's, the two of 'em are starting to get it. The other ones I'm not sure yet. The, again, these are the two that I'm thinking may or may not. So it, it's just a matter of, Hey guys, when we practice these things we've talked about and we live them out in the way we conduct ourselves here, as, as strange as this sounds, it just works out.
Eric Henley: It's, I don't know that you could really give a direct description of how culture causes better production, but when you got it. It just does. 
Michael Smith: It does. And I'll validate that, right? If you're chasing performance culture may or may not happen. But if you're killing the culture, performance happens because the people who are there are into what you believe in.
Michael Smith: The meaning drives them from within. They want the KPIs to prove to themselves and the team around them that they're contributing to the success of the championship team you built. It really is driven. It's both. It's not either or. It's both culture and KPIs. Right? It's beautiful. 
Eric Henley: We, we were just for instance, last week, we were two, two days out from the end of the month and 'cause we were closed Thursday and Friday and they had a ton of sold work and we had one out sick.
Eric Henley: And so we asked the two, well they asked all the techs, but two of them, the two better culture fits that we have, they asked 'em to stay over and knock some work out after hours. So they were gonna sacrifice some of their time. We offered their supper, you know, or their dinner at, to buy 'em something to eat and to support them anyway.
Eric Henley: And the service advisor stayed over to be sure that they, if they ran into a parks problem. So these guys were like, okay, but you're trying to finish your month out and it's important to you because of sales and we, this will be good for both because we'll bill more hours. And so it was reciprocal between the two of 'em.
Eric Henley: It was, this is not the front and the back. This is us trying to hit our numbers and trying to serve our customers by getting the vehicle back to them before Thanksgiving day weekend, you know, where they might be needed to travel or extra car for something. And so there was several reasons that they did it.
Eric Henley: The other one was sick. He couldn't help that. It was, but the other one chose not to. That was just a good indication to me. Like, okay, I can see the difference. This is a culture thing right here. He doesn't really care about anybody but himself and in this particular situation. So, I dunno if that answers your question, but, or if I got sidetracked 
Kent Bullard: to, to kind, no.
Kent Bullard: To kind of summarize this, you know, 'cause I'm thinking there's gonna be shop owners or there's gonna be professionals out there listening to the podcast that go, well, I'm nervous to put a scorecard up or a leaderboard up because I'm afraid that it's gonna breed com competition amongst my team.
Kent Bullard: And it might create some divisiveness. But I think, Michael, you kind of hit the nail on the head by saying the right team is gonna look at that and compare it to their contribution to the team, not their contribution to their ego. 
Michael Smith: Yeah I'll build on this, Eric. And we, and people are free to have different opinions about it.
Michael Smith: I believe if you have a broken culture where people are competing against each other internally, having a scoreboard that's shared is a, that's a problem. If I had that, if I bought a shop and I found that I would pull that board down, I would go to individual conversations about personal performance and personal development on their individual paths to mastery.
Michael Smith: Once I got the culture healed and grown. The fact that they're actually positive people working together. They're starting to act like a team. They're helping each other doing exactly what you talked about. Then I'd put the board back up again because at that point it's not like, oh Eric, you know, you got a better job than I did.
Michael Smith: And they always do that. You know how things can go sideways in a bad culture. Once I believe in you and you believe in me, and you stayed over once to help me and I ran to the parts store when I was supposed to go home and brought it to you so you could finish your job. Once we get to that point, I want this stuff on the board because then I'm pushing you, you're pushing me, I'm encouraging you, you're encouraging me.
Michael Smith: And at that point, the board is nothing but helpful in a toxic environment. The board is toxic. In a healthy environment, the board is healthy. Mm-hmm. And in between the transitions, little pieces of paper and little private conversations until you feel like it turned a corner. So it's a very interesting thing, right?
Kent Bullard: You're 
Michael Smith: kind, the board itself is not the issue. 
Kent Bullard: You're kind of pulling it back 'cause you're like, Hey, you kind of have a skewed perspective on why we're doing this. So I'm gonna, I'm gonna pull back the curtains. I'm gonna try to re. Focus you in a different area so you can actually see the reason why we have these, reset those foundations.
Kent Bullard: I love that. 
Eric Henley: But, and that was one of the, when we rolled out vision, mission, values and principles, we said this is all about us serving our customer at a higher level. This is what all of this is about. And it's not about how many hours you build, it's not about primarily or about how many how much sales you produce that month.
Eric Henley: Those will come if you care more about the customer's interest than how many hours you bill or how many sales you make, or how, what your average RO is. When that, when the primary driver is this, that we've agreed upon and we've collaborated and agreed upon this, then anything less than that is a violation of this.
Eric Henley: And if you can't live by these things, then there's, I don't think you're gonna be satisfied here. And you will find that on the board, 
Michael Smith: which is a great perspective, right? I'm not satisfied here. And the answer is then I would really encourage you to go find a place where you know, your you desire and the fit there is a better fit for you.
Michael Smith: And then when they go, we always talk about putting a more culturally aligned person back in the slot, which is great. Yeah. Yeah. 
Kent Bullard: So I wanna shift here. You know, we've been talking a lot about the culture, the values. How do you feel that your focus on those things has impacted your marketing or your brand identity to your customers and your community?
Eric Henley: Oh, huge. I just, after we we did that exercise and I pretty much had it. We had it nailed down with a few edits. I went and my. My web content on the page is all different. It's gradually getting rolled out. It's not all like I want it yet. 'cause they, it, there's apparently a Google algorithm.
Eric Henley: If you roll too much out, it can if you don't have a website, it's not a big deal. But if you've got a website that's ranking, then it can affect it. So, so we spent some money significant money making sure that our website communicates that in all the stuff that's written. So we had a very personal interview with the lady who wrote my content about, I want this in here.
Eric Henley: I want that in there. The here's what we're, here's what we wanna communicate across every vehicle that they read about on our website or everything that's in on our website. We want these things woven into that. And so that's been. One of the ways that we've that we, that it's affected our marketing and branding and it's still going forward.
Eric Henley: I'm still working on those things. As we learn more about it, of different ways our, the way I speak with people our referral group meetings is different. The way my service advisors, again it's been amazing, the effect it's made on the way they talk with each person. So that that re that that was one of our marketing goals the last two years.
Eric Henley: Is that the best customer experience? That is, that is a marketing tool because those people will go tell other people and asking for the reviews. And when you're acting like you're supposed to, those reviews reflect it too. You'll see it in the. The way the customer replies in it, if they leave comments.
Kent Bullard: Can I, 
Eric Henley: our direct, go ahead. 
Kent Bullard: Oh, I was gonna say, can I ask just for clarity, for the people who are listening to this, you were saying that your communication is different. The way you talk about it is different. The way that you're gonna, this up on your website is gonna be different. Can you give an example of what that would look like for the listener so that they understand why it's different?
Eric Henley: Y yeah, because it's not just stating you know, we work on accuracy and we're the best. It's like, okay, this is your second largest investment. And we value the fact that this is, I'm not sure if I'm saying this correctly, but we want to be sure that this is safe for you and reliable. We want, we know that you're gonna be going to ball games.
Eric Henley: And taking your family places. So the reason we do this thorough digital vehicle inspection is so that you have a clear picture of what's, I mean, just things like that, very personal details. And some of the things that Michael has talked about recently is that feeling you want to have that feel.
Eric Henley: It's a story rather than you're just bragging about what you can do with each vehicle. Just in the content there, the About Us page, it talks about, you know, these things the vision, mission, values, and and I think we're we're even talking about doing the H Tech way thing that a couple from, I think Idaho mentioned and having that on there too.
Eric Henley: It's just a, it's a more conversational way of communicating with people rather than just those canned content that we do this, we offer this, we do 3 36, all that, all the things that we all use. In our industry. It's weaving all that into it. And I guess I have to, there's so much of it. I forget how many pages we had of this, but each one she asked me a specific question, how do you wanna say that?
Eric Henley: How do you want say So it's, and it'll be different for each owner because they'll want it said different ways. But I would encourage them not just to trust someone just to come up with it. You need to talk to that person, whoever it is, or persons who write your content and make that you what you want.
Eric Henley: Said what your team once said and not just something that's universal to everybody else in the industry. 
Michael Smith: Well, we grew up 
Eric Henley: does that 
Michael Smith: Oh yeah. We grew up as a transactional industry and the leading edge thinking. Up to this point has been, well, what if we talked in committed terms with our customers and we talked about our value proposition and our differentiation in the market, as if that takes it up a notch, which it does, we cross that third line into the meaning.
Michael Smith: That's important to the customer. And now you've gone into this long-term covenant relationship building opportunity where the literally where the loyal brand ambassadors wanna live. And in a way, Eric, it's back to that unique competitive advantage. When you write this into your website, your marketing materials, and we've talked about this, it serves a dual purpose, not just to attract the loyal brand ambassadors, but it also det attracts, or dist attracts, or however you wanna think about it.
Michael Smith: Dissuade it's dissuades, it's less attractive to the transactional customer who opens it up. Where's my coupon? Where's my cheap oil change? Where's my free component on my break job? Or whatever. And then all of a sudden they're like, meaning, mm-hmm There's stuff about meaning in here and life and safety.
Michael Smith: And it's like, I just wanna know how much this thing's gonna cost me. And in a way you dissuade them. The other kind of customer from finding you to be the most attractive in their options too. It starts with dual purpose, which I think is really powerful. So 
Eric Henley: for those, just for those that go to the website to look and see what we've done it's still in process so everything's not up.
Eric Henley: So they'll, we'll work better right now. It's not all rolled out yet, so it's a 
Michael Smith: work in progress there. Everybody. Give 
Kent Bullard: Eric some grace here. Yeah. 
Michael Smith: Give that right 
Eric Henley: it. It's a process. Yeah. I thought you had all in there. Not yet. Not So it's still profit, 
Kent Bullard: Eric, you kinda have to balance because you know, on one hand, yeah, you wanna express the value and the culture and those virtue points and all of that.
Kent Bullard: At the same time, Google has laws and rules and in order to sustain your SEO there's some, it's a delicate process to interweave those things. So, I mean, yeah, it should take time instead of just a. 
Michael Smith: Well, and kudos to your provider too, that number one understands the shift potential for disaster from your provider of services.
Michael Smith: But the second thing is being able to listen and willing to listen and trying to come to understand what are you talking about, right? How would you say this here? How would you say that there we come from a standardized industry, right? Here's your transactional website, but I wanna put meaning in here.
Michael Smith: And it's like, what you wanna do? What? And the fact that your provider of service is listening and working with you and asking in your opinion and thinking it through. And, you know, there's hope here that maybe they'll take some of this wisdom to our other industry peer group too and start to, to have this be new industry standards, which I think you guys are leading in this, right?
Michael Smith: So 
Eric Henley: yeah that's, and then, yeah, I think, I mean, not to beat, but I think we are one of the premier shops in the area. But the the other thing I learned from this, and this is just learning about Google Analytics and some of those things, is that it needs to be that way. Affect your local market. Otherwise you'd, you're like anybody else that's doing the same thing around you.
Eric Henley: So if you're communicating these things across there, people are gonna feel it. They like the Subaru car commercial we talked about most recently. When the dad looks back at the crash car and the kids beside of them and they're safe because Subaru built a great vehicle that kept him from being hurt.
Eric Henley: And he looks back and there's that feeling on his face that you can see like, man, I'm grateful. And so you want them as, as weird for our industry as that sounds. You want them to feel something different about you. You know, they remembered my dog was sick the last time I was in, they remembered that I just lost my dad, or, you know, they were.
Eric Henley: They pull the car up for you and make sure it's warmed up. You know, just different things. So when they leave your shop, they don't leave any other shop that does, here's the key to your car somewhere out there. Have a nice day. Appreciate it. They don't get that. We thank you for being a guest with us.
Eric Henley: Is there anything you don't understand about the repair that I can go more in depth with you? Are there any things that we recommended for the future that you don't understand why you need them? If you don't, if you don't have time now that just call me later if you need to discuss 'em further.
Eric Henley: Maybe they didn't get back with you in time to go over the estimate. You know, just different things like that. It's that's the marketing and we don't do direct mail anymore except to retention, you know, to some of our customers at once a quarter. So, we're not using that for a traction.
Eric Henley: We're using SEO and our, and just basically a better website. To draw people in. And so that's really framing a lot of what we that's our marketing, I guess, is try to answer your question in a real roundabout way. 
Kent Bullard: On a psychological standpoint, how does that communication or that authenticity come through in branding, how does that affect the clients that are looking at the shop?
Michael Smith: You know, the words themselves, we talk about this in the leadership intensive, is less than 10% impact on recollection and the way it sticks in the brain, you had a motion to it. It's 35%. More so the concept is you start talking about feelings. You start talking about safety. You get up into the meaning zone where people are drawing their own pictures in their head about this.
Michael Smith: You're approaching 90, a hundred percent retention impact on the brand of the marketing messaging. So, you know, we go to this transactional thing, here's some words, here's a coupon. It has no meaning to it. It has no emotion to it. It's just a simple transaction. It's not very memorable from a branding standpoint either.
Michael Smith: So the emotion really builds into then the relational component, which gets you close to a hundred percent. And this is the thing, right? In our industry, you wanna be top of mind in any moment. Yes, for maintenance, but also for the break. Something breaks in your car, the what you want them to do is instantly think of your brand and how can I get the car to them?
Michael Smith: Oh, I'm a long way away. I don't care. How much does it cost to get the tow over there, a couple hundred bucks, that's my shop. Drive it over there right now. That's a long way. There's closer shops. I don't care. I'm coming to Eric, I'm coming to hd, whatever. And that's what you're building and that's what this meaning, and that's what this emotion adds to our transactional industry.
Michael Smith: And it makes a big difference. 
Eric Henley: Yeah. One of the things that I'm gonna push for too is that we all have our CRM and those a lot of times are stale and just kind of, you know, businessy, i'm gonna ask for some more customization of that and how we talk to when we send that out, how that is said to the customer.
Eric Henley: I want it said in a way that represents us and not just a canned way that everybody does. A warm breathing. Oh, yeah. We were 30 days out from the last recommended services, you know, and just some things about why and what and and things that we can edit. And they're listening to me.
Eric Henley: They're making a few changes here and there. I think we've got an interview with them next week. It's with you all and us and me and know. I'm not sure who else, but but just to make sure the CRM matches what we want too. And then the old fashioned way, I guess the only other thing I can think of we do the old fashioned way, is handwritten.
Eric Henley: Thank you. Cards. We actually pay a lady to do it, but she gets the repair order, writes about the vehicle, and then puts a h Tech buck in there for dollars off. So that's another way that we do a personal touch an old school way. And we do see those come in a lot. They used to have my picture on it.
Eric Henley: They call 'em Merris bucks. Now I finally took that off. It just has our logo on it. But anyway, that it's, that's another way we do it. 
Kent Bullard: So, so it's safe to say over this journey, your the way you communicate has changed over time. Now, you know, what do you, what's different about your communication practices, both externally with your, you know, the vendors or your customers and internally with yourself and your team?
Kent Bullard: What do you think is different now? 
Eric Henley: I think as far as internally, it's just more depth to it. I mean, I've always been big on the relationship, but I think I'm looking more into act. I would've said that I've not been an active listener as we all in our culture generally like to have the next idea.
Eric Henley: And we're trying to talk over each other. And Zoom's made it hard 'cause there's the lag, and sometimes you can't, it's hard to overcome that. Or to pause. Tommy Nicholson, a guy in the industry he taught me a good lesson one time. We read a book, never split the difference. And he was my composite partner.
Eric Henley: And I noticed that when he was talking to somebody, he would, when they replied, there was a long pause, a long, a awkward pause until he spoke. That taught me a lesson about listening and it helped me, and that I'm gradually learning more things. My wife will say that I'm a much better listener after 30 years than I was early in our life.
Eric Henley: Congratulations, by the way. So personally it helps on the personal side and it just helps them alive. So be an active listener that'll develop your culture a lot. When people feel like they're heard they feel valued outward facing, the same way the way we present. Make sure the customer feels like they're heard, that, that you have listened actively to get as much information from them to make sure you address what they, and then be honest if you didn't, if you lo if you lost it somewhere, maybe we got the wrong noise.
Eric Henley: Yeah. That happens, you know? Okay. I'm sorry, Mrs. Jones. We thought for sure that the strut about the fallout from under your vehicle was the noise, but apparently there's a noise that we didn't understand that you meant, you know. So we'd love for you to come back in. This is our second opportunity to get this right and we'd love to ride with you and to be sure we understand exactly what you're talking about.
Eric Henley: And so we can make this right for you and you might make anyway. 
Kent Bullard: So for, sorry. I was gonna say, so for those who as I interrupt you as we're talking about communication, I apologize. It's 
Eric Henley: okay. Okay. 
Kent Bullard: For those out there who have heard the term active listening and still don't quite understand it, what does something, what does active listening look like in, and I'll open this to both of you guys.
Kent Bullard: What does acting look like in practice? 
Eric Henley: Michael? 
Michael Smith: You want me to go first? I really, 
Eric Henley: really appreciate. 
Michael Smith: Yeah. It's yeah it's a style of communication where you're, I think we talk about in the leadership intensive communication that's one way is perceived by everybody involved as being a lower level of affect than communication is perceived as being two-way.
Michael Smith: So from the standpoint that this quiet time, this silence, this moment, number one, people who have a lot to say and haven't finished yet, you give 'em a little extra silence and they'll jam a little more in the gap and then they'll jam a little more in the gap. And you let that go a little bit and you'll learn more than you learned before.
Michael Smith: But it's that being able to pause and actually listen and have real communication. The root we talked about is the of communication is union. The word is union. So you're making a union between two people and coming to an understanding and active listening is just positioning yourself. Not you know, here's us, right?
Michael Smith: We come from a position of sharing lots of industry wisdom with our clients, and we have fun sharing it. It'd be really easy to sit back and just spill wisdom all over everybody that comes from the general field, from outside of this industry, et cetera, and not listen to a thing our clients say and what really matters is what's happening in their life and how it comes home.
Michael Smith: And so having that relationship of a real genuine, it's almost a friendship. Of caring and listening and understanding and under getting into the mind of the person that you're talking to and letting them share what's important to them. And again, they have their needs. They'll walk up and go, I need you to do this.
Michael Smith: And what you talked about very effectively earlier, we then try to get into the wants. It's like, well, let's talk about what you want for this vehicle. Lead you into that stewardship relationship, lead you into that real genuine two-way flow. And when you do that, then the communication, you slow it down.
Michael Smith: You ask a lot of questions. You listen. You don't have automatic answers. You come to conclusions together. When you do both sides buy into it. It's just a different way of, it's a win-win in the end, right? Not a you win and they may lose, but as long as you get your a RO and your credit card, you know, check out of it you're good.
Michael Smith: This model is very much of a two-way flow and a win-win that they walk away and they go, I like that place. They listened to me. They cared about me. They did, we, they helped me figure this out. And that's a big thing in our industry too, and I'll stop talking at this point, but there's a lot of mystery about, you know, lift the hood and look underneath it.
Michael Smith: Most of us, me included, I couldn't begin to tell you what's under there. I wouldn't even lift it. I'd bring it to you. And so that idea that I don't know what I don't know. And so I, if you'll be patient with me and you'll ask me questions and you'll walk me through what you're seeing and explain to me what's happening.
Michael Smith: I don't need to know how to repair an engine, but it really makes me feel good that you would give that grace to me and give me that time. And it makes me trust you and it makes me want to come back and work with you. My second biggest investment that you talked about, which is absolutely right, we all know people walk in and they wanna spend the least amount of money they can to keep that depreciating asset rolling.
Michael Smith: That's what is in the back of people's minds. So they walk in and the older the car gets, the more the repair potential looks like. And it's like that's not a place that most people wanna be in that moment. And so how do we bridge that gap? And what you're talking about is. Being with them, stewarding it with them, thinking through it with them, you sharing openly.
Michael Smith: They trust you. They ask your advice. They're not feeling guarded. They, you know, okay, go ahead and do that. Should I wait? I wouldn't if I were you. But we can, here's my thought. Okay, go ahead and do it right. And even if it's a stretch at that point, it's a win-win, trust based, long-term, loyal brand ambassador building relationship.
Michael Smith: And that you can't get there if you don't have two-way active listening communication. You just can't get there. You'll never get there. 
Eric Henley: One of the things I would say, just a practical application we've learned, and this is through through the never split, the difference is the mirror. So if you don't understand the person, what they've described to you, use the last three words, three to five words of what they said, an upward inflection and then listen.
Eric Henley: 'cause they'll bring out more. And then when you're done, just to make sure you understood, you do the label, you label what they said. Okay, Mrs. Jones sounds like, seems like this is what you're describing. Is that correct? And if she says That's right, then you know you've got it. If not, she, people love to correct and they will correct you and say, no, actually it means this.
Eric Henley: And then the only other thing I would add is the mirror can also be used to diffuse a situation. If you use a more of a downward deflection instead of going up, if they go high. And, you know, say you've got someone who's becoming all right and they don't feel like you're hearing them, just use the mirror in a downward tone very calmly, and then listen and pause.
Eric Henley: Use the pregnant, pause and listen. So there, there's some things we've learned about just very practical ways to communicate with people. 
Kent Bullard: I love that. You know, throughout this morning we've talked about developing, high performing team, how we're hiring the myriad of benefits of all these things.
Kent Bullard: I'd love to take a different approach here and ask, you know, what are some of the challenges that you've faced in creating this culture of continuous improvement and how have you overcome them? 
Eric Henley: So that's, so if you come from a very critical say a critical raring of your parents, maybe had a father or a mother that was always finding something like, okay, so you're never satisfied with it.
Eric Henley: And so some people might have that baggage. I offer, one can say that I came up that way with my dad. He was a very dominant and he would, even though I love my dad, he had his. Little things, 
Kent Bullard: Eric, I think we have a lot in common. 
Eric Henley: Yes. 
Michael Smith: All delivered because they wanted you to grow up quickly and efficiently and help you.
Michael Smith: Right? So I'm gonna criticize you right. To excellence, right? 
Eric Henley: They're very similar things about, and I could appreciate that too, but not, I'm not downing you, Cecil, I promise. But the so the thing you'd have to overcome is that, okay, we can always get better and that has to be okay. We can always improve.
Eric Henley: It's not, I'm cri criticizing you to show you where you're wrong and you didn't do as well. The tone is that I just like, I want to improve myself. I am not where I need to be. I want you to improve as well and become a better person, better, better husband to your wife, better leader in your community and your church, or whatever it is you do outside of here.
Eric Henley: Not just within here. This makes you a whole person better. So I wanna encourage you to grow and always look for ways to improve and don't think of it as a negative. It's not. So I guess just thinking off the top of my head, that's the way I would communicate across continuous improvement.
Kent Bullard: I, I mean, you said that so succinctly and so perfectly.
Kent Bullard: I love that answer. You have to be comfortable. You have to be okay with, we can always be better. And I can see that, you know, e even in my own personal journey of like, man, I'm not done yet. I thought I was done. I want to be done. And it hurts to go through that process of admitting, yeah, I probably have some things to learn and it's painful, but I mean, it's a practice, you know?
Kent Bullard: You said that perfectly. This is a great answer. I love that. 
Eric Henley: Yeah. I probably borrowed it from somebody, but.
Eric Henley: We all don't we all? There's nothing, 
Michael Smith: nothing new under the sun. I heard. 
Eric Henley: Right. There you go. So it's all 
Michael Smith: that's 
Kent Bullard: come around somewhere before. So, so Eric, do you have a, do you have a special person or a specific person whose personal growth journey has been particularly meaningful to you? 
Eric Henley: Oh gosh. Yeah.
Eric Henley: My son I guess some of the motivation for all of this is that I'm gonna tee it off for him to have the best experience growing himself. And he desires to succeed me in this. So he doesn't face some of the things I just kind of cobbled my way through. So I've watched him like I said, he's become a self to the point where I've had to say, listen, son I want you to stop at eight o'clock and talk to your wife and his wife, Alyssa.
Eric Henley: Alyssa. And I've said, and her presence, she says, yes, Seth. Stop reading so much. So, he's got his little study now. I actually helped him carry a desk that Lisa's dad made for him is a handmade desk. Carried it up several flights of stairs to their condominium. And he is got his own little study in their spare bedroom now.
Eric Henley: And he is budgeting. He, his time, he's journaling. And he was my messy son that wouldn't keep his clothes off the floor and his bed made. And he was, when he was at home, he was the mess. But now he's this organized kid. His desk is organized at the shop. His, all of his Ros are organized.
Eric Henley: It's just watching him develop is, has probably been, you know, it is your son. So, I mean, there's always that, you know, you can't not, when you see your son doing something, well, you won't be proud of him. But just I just know this is gonna be something going forward that will make him, he will not have to go through all these struggles.
Eric Henley: And maybe, I mean, he'll probably make a few band of hires. Somebody will slip through the cracks. There may be a desperate moment, but he'll know what to look for and he'll know how to handle it and work his way out of it, or through it or over it. And then watching my I te my one, my newest technician, Cole, I just mentioned him by name.
Eric Henley: Not that my other one, Dakota's not growing in that. But Cole's desire to improve himself. He and Seth are having deep conversations of the Theo Theological things, biblical things. They're having interpersonal relationships. And Cole and I will have those at times too when I make my stroll through the shop.
Eric Henley: Just to talk to the guys. I say What's going on with you, and he'll tell me a struggle he is having and we'll personally and we'll. We talk these things through. So seeing that change in him is rewarding. For me, I think it's more rewarding to see somebody improve themselves than it is to have a good sales month or a good, you know, build hours, whatever.
Eric Henley: If I see a difference in the person that's a celebration to 
Michael Smith: have. Yeah. You know, you know, the science says that we're all wired to grow. To find meaning in life. And that's the most satisfying life. And you're facilitating that. Your son, your technician, you're making a pathway for them and a culture and an encouragement for them to grow and to grow fearlessly and tackle lots of things very, as I always talk about Da Vinci style, right?
Michael Smith: Master something until you're satisfied and pick up something completely different and master that too. And at the end of it, you're a master of mastery, right? Which is a phenomenal gift to give that you're giving legacy wise. So, yep. 
Eric Henley: Sorry. 
Michael Smith: No, go ahead. Yeah, 
Eric Henley: it's the infectious thing too. You see it starting to spread across the front and the relationships he is got with the other two guys.
Eric Henley: And one of 'em is, I mean, I've got the, Matt's my service manager. I didn't wanna put my son in a position of leadership just because he is Aze boy, you know? So he has got somebody over him and they're all infecting each other in positive ways and affecting technicians in the back, in the way they deal with 'em.
Eric Henley: So this type of. Culture is it sort of goes out into the shop and those that don't wanna be involved with it will get uncomfortable with it. And those that do those get even better.
Kent Bullard: I think being a high performer or being in a high performance culture is all about living in the space of mentorship, both being a mentor to someone and also seeking mentorship for whatever your pursuit looks like.
Kent Bullard: So living in both spaces is where you kind of get in the flow of development, of mastery. Your focus on human development how has that changed you as a leader?
Eric Henley: Good question. It's given me confidence in, i'm equipping my people, which has given me freedom to do other things that I wanna do to help others. It's given the opportunity to serve in my church in the capacity I haven't been able to. It's given me opportunities to do work in the community that I would've been, had it have been a ic type of environment at the shop then I wouldn't have had that freedom.
Eric Henley: And so now I can do a lot of things that I otherwise couldn't. It has made it a little uncomfortable adjusting to not being needed. And so, so for those that not are not at that point yet, you almost feel guilty for not being there. But they actually do better and they'll ask you, what are you doing here today?
Eric Henley: You know, you were just here yesterday. We don't need you. Here, 
Kent Bullard: go home. 
Michael Smith: Let us do it ourselves. Really? Oh, can I help somehow? No, we're fine. Really? Is there nothing I can 
Kent Bullard: do? I think, not to interrupt, but I think when you're at a point where your team is telling you, Hey, it's okay, we don't need you.
Kent Bullard: That's them. Admit, that's them almost saying, I want to prove to you that you've done a good job in stewarding me. I wanna show you that your investment in me, I isn't fruitless. 
Eric Henley: Yep. For a technician will something, 'cause I'm a technician, you know, I've been one, been in the trade 30, 80 years. Hard to believe.
Eric Henley: But the technician will come to me sometimes when I'm making a stroll through the shop, and he'll ask me about a particular problem he is having with one. And I'm like, what's going on with it? And then again, I'll do the same thing. Well, what do you think? And he'll tell me and. Most of the time, I'm like, you know, you'll just I can see how something went wrong here, but you're a great technician.
Eric Henley: Something just unfortunate happened has happened to me many times. When you can relate to them in that way that you're in a place I mean, I've been in your shoes and I made it through it, and so will you, 'cause you are a good technician. You'll overcome this. Don't beat yourself down.
Eric Henley: Mistake is a good way to learn something to move on to something better the next time. So, it's just a, it's, it frees them, frees you, and tell you personal relationships too. I mean, like I told you, 30 years married to the same lady. She knows all the little faults I've had through the past and and she can see improvement.
Eric Henley: It's commented on those things that actually listen to her now. And and that value her her opinion about things where normally I would've said, I've got this figured out now I'm gonna do that. And you know, me, I'm not a dominant type, I'm not a real domineering type person. That's not my personality.
Eric Henley: But I still have those things where I like, okay, I've got my opinion about it, and that's it. And nobody else is right. I've learned that there are other people that are right. And I, and I can have a, I can have relationships with somebody. I either, either whatever their church is or whatever their politics are.
Eric Henley: I can have a relationship with people. Now I will say that's another area I've learned that I can actually talk to people I don't necessarily agree with on a particular subject and still have a relationship with 'em. We don't have to agree on everything to lock each other and spend time together.
Eric Henley: So it, it'll help you in that sense too. 
Michael Smith: Society needs more of that nowadays. So it's like 
Kent Bullard: what a novel concept. 
Michael Smith: Yeah. What an idea. Right. You have a different way of thinking. And I can still be your friend, 
Eric Henley: huh? 
Michael Smith: It's okay. It's okay. 
Kent Bullard: So Eric what advice would you give to the leaders out there who are listening to this, that are aiming to create a workplace that prioritizes growth, that, you know, invests in the wellbeing of their people and is pushing for high performance?
Kent Bullard: What would you tell them? 
Eric Henley: Yeah, so you're gonna need accountability and you're gonna need somebody push you along. 'cause we don't want change some comfortable even if you've got, say your numbers are great and you're pushing production to the shop and your sales are great and your culture stinks, it's awful.
Eric Henley: If you don't have other peers around you and frequently around you. Or a phone call away, you won't change. So making the investment into this group, the high performance group, well, for that matter, that you all aspects of what you guys offer will move you in a direction that will make you better.
Eric Henley: And you wouldn't, you would not believe the change. You will look back, like I said, it was a blur. You will look back and think, well, wow, that's a long way from where I was at, and I didn't realize where I was at. That you've got, now you've got a place to measure from, and then you see what changes it's made in you.
Eric Henley: So I would encourage you to get involved in this group. And it'll be well worthwhile, your time and your, and whatever it costs you to be involved in it and your organization and your business will be better for it and your life for that matter. So I'm just that, I guess that. Is that concise enough?
Eric Henley: Does that make sense? 
Kent Bullard: I find it interesting that we are both reluctant to change. Change is painful, but at the same time, humans are wired to change and grow and develop. You know, from a psychological standpoint we're, we seek that, that development, that growth. 
Michael Smith: We're happier when we do, 
Kent Bullard: right.
Michael Smith: When we cut loose and just let ourselves do that. We find more satisfaction in life than when we don't. 
Eric Henley: Mm-hmm. Life is short, 
Michael Smith: but it's risky. It's risky because you might realize you don't know something you thought you did or you might change your mind. It's like uhoh, 
Kent Bullard: it's like, I'm quite comfortable with my world.
Michael Smith: I like now I like being broken and I'm fine. Don't stir me up. Right. Don't disturb me. 
Kent Bullard: I got one final question to ask as we wrap up. This has been such a wonderful morning, Eric. Thank you so much for being here and walking us through your experience and your time. I've got one final question for you.
Kent Bullard: What legacy do you hope your focus on human development will leave within your organization and your community? 
Eric Henley: Yeah, that's, and it's personal too because I have a son who's in it, you know, as I mentioned before. So one of our things in the, I think it's in our vision, it's probably interlacing some of the other ones right now, just trying to think through, but that we want to redeem the negative opinion that people have about our industry.
Eric Henley: We want it to be one that, okay, these people are different and this is why they're different. And we want our guys to and our ladies for that matter to think about that in terms of the way they do their job every day when they come in. You're moving the needle away from what we've been painted as unethical.
Eric Henley: Can't be trusted industry to someone who sets the standard for that, that we wanna be though that shining beacon, I guess, that people look at and like, that's different there. And so I want, as Seth decides to develop and as you know, even if our. Even if the team that we have now moves on to something else, I want them to be to look back at what they've learned with us and and make a difference in the world.
Eric Henley: Whatever way they are occupied with at that time. You know, whether it's in their families, whether they go to a different, say they go to financial investing we want 'em to be the best they can be in that. And they can and they can maybe look back, not for us to beat our chest, but hey, if I haven't worked for them and learned these things culturally of how they interact with people and what's really important in life then I would not be as successful at what I'm doing now.
Eric Henley: So, whether they stay with us or not, we make a, we're making an investment in people's lives. We're gonna change the industry we're in, but we're gonna try to change the world too in the way we live out. Or with people around us, what they see in us. So 
Michael Smith: can I just grab a piece of what you said? A legacy of raising up legacy levers.
Michael Smith: It's a multiplication model, right? It's not just your legacy. You're raising up people who know how to leave legacies to go leave their legacies, which will ultimately raise up legacy levers, which I, it is just, it's a profound thing you're working on. Thank you for sharing that. That's really powerful.
Michael Smith: Really powerful. 
Eric Henley: It's still in process. 
Michael Smith: The website's not quite done yet. Right? So 
Kent Bullard: You mentioned redeeming the image of the industry. I always go back. I've underlined encircled redemption a few times throughout this conversation. I think it's just such a beautiful sentiment.
Kent Bullard: Eric, thank you so much for being here. Listeners, if you have any questions or comments about what we covered today, please comment down in the comment section below. Eric Henley, h Tech Auto Care outta Tennessee. Thank you so much for your time today. This has been such a treat. 
Michael Smith: Yeah, it's a pleasure to know you
Eric Henley: to visit with you guys.
 
Michael Smith: It's a pleasure to know you too, my friend. 
Eric Henley: Likewise. I'll see you soon. 
Michael Smith: Yes you'll, 
Kent Bullard: those of you who want more information about what we do at the institute, you can find more info at. We are the institute.com. Thank you for listening.
 

186 - What Intentional Growth Looks Like in a Real Shop: The Story of LaFlamme’s Auto & Truck Services

186 - What Intentional Growth Looks Like in a Real Shop: The Story of LaFlamme’s Auto & Truck Services
January 14, 2026 - 01:03:10
 
Show Summary:
JR and Sarah LaFlamme share how running a four bay shop with too few hands pushed them to seek coaching and build structure instead of burnout. They walk through the turning points that changed everything including adopting digital vehicle inspections building a real parts and pricing strategy and hiring the right roles in the right order. The conversation highlights how community driven hiring and culture shaped their team and how letting go of emotional pricing protected their value. Parker Branch adds perspective from his own shop journey and explains why coaching accelerates clarity and confidence. The episode ends with practical encouragement for owners who feel too busy or unsure to invest in help.
 
Host(s):
Jimmy Lea, VP of Business Development
Parker Branch, Industry Coach 
Guest(s):
Sarah & JR LaFlamme, Owners of LaFlamme's Auto & Truck Services
Show Highlights:
[00:08:45] – Their breaking point came when the team dropped to just the two of them[00:10:10] – A parts pricing webinar exposed a major blind spot and sparked change[00:12:30] – JR explains what it was like running four bays as the only main tech[00:16:10] – Best hiring results came from community word of mouth not job ads[00:18:40] – Hearing a tech is happier than ever confirmed their culture is working[00:21:10] – Digital vehicle inspections became the biggest game changer for trust and sales[00:23:20] – The 300 percent rule set expectations and created consistency shop wide[00:27:00] – Their ARO jumped from about 300 to over 600 after DVIs and better quoting[00:28:40] – They stopped emotional pricing and protected the value of their work[00:38:10] – JR begins shifting from bottleneck tech to owner leader and trainer
 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/onJEq3WCoTA
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
Jimmy Lea: Good morning, good afternoon, good evening, or good night, depending on when and where you're watching this from. It is a beautiful day outside, no matter where you are. Go outside, breathe some air, stand in some grass. Get grounded. We, and that is what we're gonna do here today. I am so excited for this conversation we're gonna have here today with our guests.
Jimmy Lea: It's going to be amazing. And this is to be an interactive webinar. So those of you who are joining us, we are live on Streamy Yard, we're live on YouTube, we're live on Facebook. Go down into that comment section and comment where it is that you're joining us from today. Love to give a shout out to your shop, to you.
Jimmy Lea: Put in your shop names, city, state, wherever it is that you are joining us from. Would love to give you that shout out because you are here. You're here for the live event, which means you can see all the mistakes, all the mishaps, all of the. Live stuff that happens in a live production. We are here for the live and it, this is so much fun.
Jimmy Lea: I love being here with you, my friend. Love having this conversation. Love having this opportunity to document who and what we are, what makes us awesome and amazing. What helps us to build a better business, a better life, and a better industry. Love that we're all here together. Alright, let's give some shout outs.
Jimmy Lea: Uh, first off to Brad Edwards joining from Plainview, Texas. Brad, thank you for being here. What's the name of your shop? Brad Edwards. Uh, we got Jay McCall. Good morning Forest went good morning. Yes, good morning to all of you. Angie. Deep Creek Auto in ell, Idaho. Did I say that right? Angie? Deep Creek Auto.
Jimmy Lea: That's awesome. ELL, Idaho. My parents have a house in, uh, Idaho Falls. Are you close? Is Buell close? Matt's Import Haven, Whidby Island, Washington. Welcome, Matt. Glad you're here. Jay, with j and v, automobile, Alabama. Jay, how the heck are you, brother? Gotta get down to get some good food from Alabama. Again. My parents also own a home in Pensacola, Florida.
Jimmy Lea: So when we go to visit mom and dad, Jay, I'm gonna have to swing by and say hello. Brad Edwards. Uh, TE Texas. Texas Edwards Auto Service, Rish. Good afternoon. Good afternoon. R oh Rish, you're new with the institute. W what's your shop? Put in your shop here so we can say Hello. Rish. Glad you're here. Dante.
Jimmy Lea: Merv in Walnut Creek, California. Dante. Welcome. Glad you're here, Angie. Yes, I did say it right. Oh, cool. Thank you. Uh, Clint Jones, Concord New New Hampshire met you before events. Long time Kui customer. Clint. Glad you're here, Clint. Thank you, brother. Appreciate you being here. Angie, McCabe, about three hours away.
Jimmy Lea: Oh yeah, that's, that's a little far. Okay. When I go visit mom and dad, we'll have to make a special trip. Kent Bullard. Hey, Jimmy. Hey Kent. How are you? Thanks for tuning in. Kent's in our headquarters in Ogden, Utah, the international headquarters for the Institute for Automotive Business Excellence. Ogden, Utah.
Jimmy Lea: Rish is with Meno. Autoworks in Mississauga, Mississauga, Ontario, Canada. Oh, Rish. I think I've been through there. Uh, I drove up there one time. I went into, uh, Toronto and drove all the way up to Blue Chip. Casino. That was awesome. That was so much fun. Uh, Clint accomplished auto also new with the institute.
Jimmy Lea: Welcome, Clint. Glad you guys are here. Thank you so much. Thank you everybody that's here for this live event. And, and to that comes our guest, our guest here to with us today. Thank you. Uh oh. And Cecil Buller joining from the Institute International Headquarters in Ogden, Utah. Thank you Cecil for being here, brother.
Jimmy Lea: Uh, that's awesome. To our guests joining us today, a facilitator, a coach, a one-on-one phenomenon, a member of the single club, the $1 million Net Club. Parker Branch. Parker, with Parker Auto, Parker Branch, branch Automotive, and Truck. Parker, how are you, brother?
Parker Branch: Doing good. Joining you from Branch Automotive and also representing the institute.
Parker Branch: Thanks for the intro, Jimmy.
Jimmy Lea: Uh, you're welcome. Throw up his, uh, branch Parker Branch, branch Automotive in Highland Ranch, Colorado. I've had the distinct opportunity of spending some time with Parker and his wife at his home. There was one summer that we went up there for a National Speakers Association conference, and Parker was very kind.
Jimmy Lea: Thank you Parker, for extending the, uh, invitation to come and stay with you and your, uh, your family there. That what a beautiful home you have. Thank you.
Parker Branch: Thank you. It was fun having you and Rhonda down at the place.
Jimmy Lea: Yeah, yeah, for sure, for sure. How's the shop doing now that we're into 2026?
Parker Branch: We're, we're doing well, we're, we're starting off the year pretty good.
Parker Branch: Um, excited about January. Taking some direction finally. I know we've all in the industry have noticed last year was a little flatter than a lot of people wanted, but um, still moving in the right direction. Had some positive growth and a good start to the year.
Jimmy Lea: Oh, that's awesome. That's awesome. And congrats on your accomplishments with what you've done there with your shop and, and being the recipient, the one and only single recipient of the $1 million Net Club.
Jimmy Lea: Congrats brother.
Parker Branch: Thank you. That's awesome. Thank you. We're gonna try to do it again and again.
Jimmy Lea: Yeah, absolutely. Please do. Keep doing it and, and, and spread that, spread that mindset, spread that desire to others. Uh, we, we just, just honored to have you as a coach and one of your proteges as, uh, Josh was saying the other day.
Jimmy Lea: He's gonna tune in to hear about your Prodigy with Sarah and JR La Flame with the Flame Auto out of, uh. You guys are in Massachusetts?
Parker Branch: Yep. They're LA Lambs. They're, they're rock stars. They've, they've been great.
Jimmy Lea: Yeah, they, wow. And
Parker Branch: Hi everyone.
Jimmy Lea: Hey. How are you? There you are. Sarah and jr. Oh,
Jr LaFlamme: thanks for having us.
Sarah LaFlamme: We are in Massachusetts. We are in Westfield, Massachusetts, which is on the other side of the state from Boston. So most people just assume Boston, but we're not near there.
Jimmy Lea: You're not from Boston, so we can't expect the Boston accent then at all.
Sarah LaFlamme: I mean, we can fake it. We could
Jr LaFlamme: try that.
Jimmy Lea: We all have to fake it.
Jimmy Lea: Yeah, no, forget about it. Well, that, that's cool. You guys had some pretty good weather here just recently.
Sarah LaFlamme: Yes. We got into the forties. Yeah. Which is like a heat's steady, that's a heat wave in January and New England. So it's been, it's been nice. Went out with just a sweatshirt and a t-shirt yesterday.
Jimmy Lea: I, I had a very humbling experience, so I've just recently moved from the desert to the cold weather.
Jimmy Lea: Uh, I'm a desert rat. I admit it. I fully admit it. I get cold easily. I don't like being cold. I was walking into Costco in my stocking cap and jacket and walking out of Costco was a gentleman in a tank top and shorts.
Sarah LaFlamme: Was it 35 degrees that day?
Jimmy Lea: It was.
Sarah LaFlamme: We would do that too.
Jr LaFlamme: Yeah. We have people out here that shovel snow in shorts.
Jimmy Lea: Oh, yeah. Uh, Wayne, Wayne Marshall talks about all the time he's out in his flip flops, shoveling snow in shorts and a tank top. And it just gets the job done, you know?
Jr LaFlamme: Yep. Yeah. You gotta do what you gotta do.
Jimmy Lea: Oh, that's awesome. Well, the LA Flames, thank you so much. We appreciate you joining us. I've got so many questions for you. Did a deep dive into your notes. Thank you, Parker, for taking copious notes as your coaching with JR. And Sarah, this is awesome. Uh, I, I want to kick this off by asking a question about coaching and training.
Jimmy Lea: What is it, well, when you first started with coaching with Parker, what was the pain that finally pushed you to say, yes, we need help? And, and that's probably before Parker, that's probably going back to when, uh, uh, one of my guys reached out to you from the institute. What was that pain point that said, Ooh, yeah, you know what, we need some help.
Sarah LaFlamme: Yeah. So the, the pain for us, I think, started well in advance of us reaching out to the institute. Um. We were in, I think our second full year. And, um, we had, um, an employee who had to take a leave. So when we went from three of us to just us, that was it. So he became the main technician. I was, became the main service advisor and doing everything else that you need to do to run a business.
Sarah LaFlamme: Um, and so, and we were, it was okay for a little bit and we were trekking through and we were like, we can do this. Yeah. And then, um, we started getting a little bit busier and we started seeing the cracks. There were, you know, we were, you know, not hitting deadlines with cars. I, I was missing deadlines on administrative things.
Sarah LaFlamme: Um, and I was like, we just can't keep running around like chickens with our heads cut off.
Jr LaFlamme: Yeah. I mean, I was working 70, 80 hours a week, like nonstop and it was pretty much burning me out.
Sarah LaFlamme: Yeah.
Jr LaFlamme: Being the only tech and so on and so forth. So.
Sarah LaFlamme: We were taking our work home with us. We are married. Um, so we were working 24 hours a day essentially, because we would leave here, go home, we'd be with our kids, but we'd be talking about work because there's just not enough.
Sarah LaFlamme: There wasn't enough time in the day 'cause we were trying to wear every hat. Um, so when we realized that the kids were, you know, and our home life was suffering, we said enough, we can't do this anymore. Um, and we actually ran into the institute's name by, um, joining a webinar kind of like this. Um, but it was about parts matrix and parts markup.
Sarah LaFlamme: And Cecil actually had done that. He partnered with Parts Tech and it was an such an eye-opening webinar. We learned so much. 'cause before that we just had no idea how to properly price our parts. We were just from the seat of flying from the seat of our pants. So, um. That was such an eyeopening thing and I gained so much confidence based on what he said, that that's why I decided to reach out to the institute when we finally said, okay, this is enough.
Jr LaFlamme: Yeah. And then I believe it's Kent. Um, I saw a webinar that he did about pretty much giving yourself some freedom and, and getting to a certain point. And that's when we had a conversation saying, Hey, you know, maybe it's time to look into this option, you know? Yeah.
Jimmy Lea: Oh, I love it. I love it. And Cecil is listening.
Jimmy Lea: So big shout out to Cecil. Thank you so much. And the parts markup matrix webinar, that, that is a webinar that just keeps on giving and giving and giving. It's, we partnered with tech, parts Tech, wonderful partnership. Just to let you know on numbers, there were like 1200 people that registered. 900 showed up the day of the event.
Jimmy Lea: It's the most we've ever had in a webinar with the institute. The questions were coming through so fast and furious that it was quite literally overwhelming to be on the production side of trying to answer all these questions. Cecil did a phenomenal job, consummate professional. Thank you, Cecil.
Jimmy Lea: Appreciate that. Shout out to you.
Jr LaFlamme: Absolutely.
Jimmy Lea: So into those problems, here you are, you've discovered it. You have, 'cause you guys have four bays, right? You've got the building with three and then the, the outbuilding with the fourth.
Jr LaFlamme: Yes, that's correct.
Jimmy Lea: Are you saying Jr that you were the tech, you were, you were covering all four bays.
Jr LaFlamme: That's correct. That's what was going on. I had, he's the
Sarah LaFlamme: master.
Jr LaFlamme: I was running three bays here and I set up some, a whole stool set up on the other side. Yeah. And nonstop. Sarah was doing service advising and invoicing and estimates why I'm full throttle out here and it just, I'm helping her in between, like with quoting and stuff.
Jr LaFlamme: And that's, and that's pretty much why we're here. Yeah.
Jimmy Lea: So I, you know, I, I, I hear it. And, and you know, we, we, in the automotive industry, we know how to work, we know how to work hard. And you've proven this, you can do the 70, 80 hours. Do you want to? No. But can you Yes. Parker, you are coaching them. I, it had to be like, one of the first things you said was, Hey, we need to hire some techs.
Parker Branch: Yeah. When, when, uh, when I got together with them, they had, um, they had rehired, I think Chris, and, and they had, uh, Tyler. Helping out in the shop as well. And he was able to help get some of the repairs and stuff done. JR was still staying out in front with diagnosis and, and keeping the operation running.
Parker Branch: Sarah was still running the front and it, it was fun to work with him and 'cause so many of us technicians or you know, technician and wife turn business owner decide we're gonna go out and do this on our own. Um, you know, I came through the same channels they did, I had the great idea that I'm gonna go start a shop and it's gonna be me and I'll have the phone in my pocket and the wrench in my hand and I'm gonna do it all.
Jr LaFlamme: Yep.
Parker Branch: And you know, trial and error help. You know, Cecil had a big impact on helping me understand structure and you know, when to add what position, which can be terrifying. Um, but I know, you know, Sarah and JR are go-getters and so. We would talk about some of these changes. Adding, you know, adding a service advisor.
Parker Branch: I, I would love to hear what fears and feelings they had about that. And I just to share with everybody I've heard it. Um, but it's a scary thing. And the difference and the change and the business by adding that position was un you know, was awesome. And then later on we were able to actually add a technician to take some of the pressure off of JR.
Parker Branch: And change some of their roles. So I, I'd love to hear some of, you know, how they felt about that and, and turn it over to you Jimmy, to, to, you know, elicit some of, or, you know, pull some of that out. 'cause it's, it's great help for everybody to hear that, you know, we all come through the same channels.
Jimmy Lea: We we do.
Jimmy Lea: And it's interesting. So similar, the two stories of technicians turned, shop owners, you guys both have the same story I, at which I love. I absolutely love that. And, and interviewing. Is my nemesis, that's my kryptonite, JR. Sarah, you've gotta interview, you've gotta bring in another tech. What do you do? How do you find the right butt to put in the right seat on the bus?
Sarah LaFlamme: So for technicians, you know, we, we tried the traditional ways we, you know, put up an ad online. Um, I even went as far as to put an ad in our local newspaper. Come to find out, nobody reads it anymore. Um,
Jr LaFlamme: whoa. Shucker.
Sarah LaFlamme: Yeah. It was worth a shot. I was, I was, I was drawn at straws. So, um, so we tried the traditional, um, methods first and then, um.
Sarah LaFlamme: We, we got lucky with, um, Tyler. We actually got him through one of our tool skies that came through. He actually recommended him to us, so we got lucky with him. And then, um, and then we've had, we've put other ads out In the meantime, we actually have used, um, a hiring company that Parker recommended to us, which is amazing.
Sarah LaFlamme: Um, and, um, and we, that's worked out well. Um, but we've actually seen a lot of ex, a lot of. The best, um, progress with getting technicians, word of mouth through people. So we're very, we're kind of in a small community. We're very community driven. We live in the town that our business is in. Yeah. So everything we do, um, how we market everything, how we live, how the culture of our business is run is based on community.
Sarah LaFlamme: Um, so that's kind of how we got our last tech, Steve, which is our, he's a master tech. So, um, we actually just being known in the community, happened to be walking in to drop my daughter off at daycare. And one of the employees is like, my husband needs to come work for you. And so, yeah. Amazing. So, oh,
Jimmy Lea: that's awesome.
Sarah LaFlamme: You just never, you would kind of never know where they're gonna come from. I remember, uh, Parker kind of saying one time that it's really, it feels really hard right now, but you're gonna build your shop up to a point where people are going to be willing to come
Jimmy Lea: to
Sarah LaFlamme: you, to come to you. And so that moment when that, that woman said, oh my husband's, he can fix anything, he is a great technician.
Sarah LaFlamme: He, he want him to come work for you, you're in town. Yep. And I was like, this is it. Parker said this would happen.
Jr LaFlamme: Yeah. She said, I, I saw your ad. I think it was on our website or something at
Sarah LaFlamme: Yeah.
Jr LaFlamme: At the time. And she's like, Hey, my husband's been doing this for years. What are you looking for? And we pretty much said, Hey, we're looking for a master tech to alleviate JR a little bit.
Jr LaFlamme: And
Sarah LaFlamme: yeah,
Jr LaFlamme: he came on board and he is been with us since. So
Sarah LaFlamme: yeah. So that was, yeah.
Parker Branch: Yeah. You guys are doing the right things and, and you know, treating people right. Internal customers, external customers doing good work. And that creates attraction to your business. And that's. That's kind of, you know, we talk about that at the institute by, you know, raising everything up and doing such a good job.
Parker Branch: Eventually people, they start realizing that good things are happening at La Flas and we want to be there. And that's part of that attraction that, you know, that's a real compliment to, to what you all have done.
Jr LaFlamme: Yeah.
Sarah LaFlamme: Yeah. Thank you.
Jr LaFlamme: Thank you. Yeah. And I will say, like, his wife stopped us recently and she did make comments to me and Sarah saying.
Jr LaFlamme: I'm so glad my husband made the move to go to you guys. He's very happy. I haven't seen him this happy in years.
Sarah LaFlamme: Yeah,
Jr LaFlamme: so that's a good compliment all the way around.
Sarah LaFlamme: So I make sure to let,
Jr LaFlamme: thank you.
Sarah LaFlamme: I make sure to let him know when I see his wife.
Jimmy Lea: Oh, that is awesome.
Sarah LaFlamme: Your wife said you're so happy here.
Jimmy Lea: Yes, yes, yes. Let me remind you, Steve. Yeah. And Steve is ZZ top right? He's,
Sarah LaFlamme: yeah. No long hair.
Jimmy Lea: He is ZZ top. Tyler. Looks like he just stepped off the high school graduation school.
Sarah LaFlamme: He
Jimmy Lea: kind, but he's not.
Jr LaFlamme: Nope.
Jimmy Lea: Yeah. How did you find Tyler?
Sarah LaFlamme: That Tyler was through, um, our Snap-on dealer.
Jimmy Lea: The Snap-on dealer. Okay.
Sarah LaFlamme: Yeah.
Jimmy Lea: And then you, you said you also hired somebody through, was it through Sarah Fraser?
Sarah LaFlamme: Yes, we did hire technician through Sarah. And that experience was great through um, AIM and um, that technician in the end didn't work out. We had them on for about five minute, five months. Unfortunately, it didn't work out, which was really disappointing for us 'cause they fit our culture so well.
Sarah LaFlamme: And that's so important to us because Absolutely. We're in very tight quarters and we're here so much that it's like. Almost like being at home. So we wanna make sure everyone jives. Uh, so unfortunately that one didn't work out, but, um, we've got, you know, Sarah always on speed dial for all of our needs now.
Jimmy Lea: Oh, that's good. I'm glad you clarified that. It was longer than five minutes.
Sarah LaFlamme: Yeah, sorry.
Parker Branch: I think that was, um, I think that was really a good experience too, because, you know, one of the things that we learned, you know, as I was coaching JR and Sarah, we talked a little bit about EOS. No, we didn't wanna make the whole business into an EOS system, but we talked about, you know, finding the right people and having them fit the culture.
Parker Branch: And so it was a good try with that individual. And in the end we just, we realized it was okay, but it really wasn't great. And when they let go of, okay, that made room for great to show up. Um, so it was a good lesson. Yeah,
Jimmy Lea: absolutely.
Jr LaFlamme: Oh, absolutely.
Jimmy Lea: Hallelujah. Yeah, we learned that in the leadership intensive classes with the institute, that when you're looking for a unicorn, you've got to look where the unicorns are.
Jimmy Lea: You don't go to the middle of the valley, you go where the unicorns are. And, uh, if you've got a shop full of mule deer, that's not unicorns. What, uh, speaking to culture, speaking to, uh, your shop, I have an implementation question. What is, I'm gonna call it the single best. Um, and, and it could be more than one, but what's the single best thing you've implemented from coaching and training with Parker that created that immediate traction in your shop?
Sarah LaFlamme: So I would say it was the dvs doing the digital vehicle inspections. That was, um, such a big game changer. We were really hesitant about doing it. Prior to that. We thought, ah, it's gonna take extra time. It's, that's not really billable time. Um, are people gonna think we're just shady salespeople because we're telling 'em what's wrong with their car?
Sarah LaFlamme: Um, and then Parker just really, you know, gave us the whole story. Like, you know, it's not just about selling, it's about people seeing what's going on with their, their vehicle. The whole health Yeah. Of their health report or their vehicle. And when he put it like that, I thought, yeah, like if I go to the doctor, I want them to give me the whole health report.
Sarah LaFlamme: I don't want them to just give me this one fix. I want everything. You know? Right. So that way people can make informed decisions, which is literally what, like my mantra is now is always we give this so you can make an informed decision. We want everyone to. Make that informed decision. We don't want somebody to pay to replace their transmission when, when their engine's already, we already know their engine's not good.
Jr LaFlamme: Or if their frame's about to fall out and say, Hey, well I just did a brake job, but your frame's about to fall out. Hey, here you go. Anyways,
Sarah LaFlamme: yeah, we're in the rust belt. So we're, you know, um, frames rusting out is very common. So that was probably the biggest thing was doing, was actually implementing it and, and putting it on every single job and making sure that we, um, are very thorough.
Sarah LaFlamme: And that was a lot of training with our technicians to make sure that they were going through and thoroughly and doing this inspection. Um, 'cause you can, you can have 'em just look at it, but if they don't, if they're missing things, you're not giving the customer the full picture for them to make the right decisions.
Jr LaFlamme: Yeah. So, yeah. And, and working with Parker, we, uh. Came up with like kind of a little game I would say for DVI to make sure all technicians and stuff are doing the DS properly and
Sarah LaFlamme: DVI rodeo. Yep.
Jr LaFlamme: DVI rodeo,
Parker Branch: 300% percent
Sarah LaFlamme: and the hundred percent rule. So that was gonna say, yeah, so with that, with that D vs came the 300% rule, which was, you know, 100% of cars get a DVI 100% of cars.
Sarah LaFlamme: Um.
Parker Branch: Findings, a hundred percent of your findings.
Sarah LaFlamme: Findings, right. We're presented, we're quoting 'em all and we're presenting them all. Um, and that kind of, um, at first was really scary for us too because when we first started with Parker, we didn't have a service advisor. It was me. Yep. And I was still wearing all of these hats.
Sarah LaFlamme: I was taking my hat on and off all day long. Calls, customers, payroll bills, everything. And so the idea that I would have to try to find time to carve out, carve out time to do all of the quoting for all of these items, I was like, there's just no way.
Jr LaFlamme: Yeah.
Sarah LaFlamme: And of course Parker, 'cause he is full of good, good information and good ideas that you need a service advisor.
Jr LaFlamme: I mean, even getting to the, even to some of the point where Sarah's like, Hey, I can't quote this out. I need help 'cause I got this, these quotes to do. So I had to stop wrenching to get involved with that aspect too.
Sarah LaFlamme: Right.
Jr LaFlamme: And it was just.
Sarah LaFlamme: We were realize, right. We were realizing that we were just, we were spread too thin in both departments, and there was just no way.
Sarah LaFlamme: So, I mean, there were times where we weren't able to actually even get estimates together for customers, and we lost out on those jobs because we were that busy. Yeah. So, yeah. So service advisor was the next step after we implemented, you know, dbis with, with the 300% rule, and then having somebody who could actually bring that over the finish line.
Sarah LaFlamme: Right. Um, because I unfortunately just couldn't, so, because I just had too many other things that I, I had to get done, so.
Jimmy Lea: Oh,
Parker Branch: yeah. Yeah. So adding that service advisor was a game changer. Absolutely. Uh, to change your guys' roles and it, and it puts you into another gear. Um Yep. And your, and your revenue and, um, giving you time to work on the business For sure.
Jr LaFlamme: Correct. Absolutely.
Jimmy Lea: Yeah. DVI is a drum that's very near and dear to my heart. I, I pounded that drum for four years trying to get shops to implement, take pictures, take pictures, take pictures. It just really educates your customer and educated customer makes better decisions.
Sarah LaFlamme: Absolutely. We get that as feedback often from customers, whether it be through a review or just telling us verbally how much they love getting the videos and the photos that we send them.
Sarah LaFlamme: Yeah. Of their, of their cars.
Jr LaFlamme: A lot of people are visual. You can explain it to you're blue in the face, but a lot of people, if they see it and you explain it to 'em, they're more visual and they're like, okay, I got what you're talking about now and yeah, let's proceed with this, or so on and so forth. Or I'll put it on the back burner for now.
Jr LaFlamme: You know? So.
Parker Branch: Yeah. And that had a huge impact on driving their average written estimate up. And therefore their average repair order came up substantially from that as well. So we saw some, some great changes there.
Jimmy Lea: All right. I have a lot of questions for you about the DVI then, uh, what are you using? Is it integrated with your point of sale?
Jimmy Lea: What did you average repair order go from and to?
Sarah LaFlamme: Oh. Okay, so tech metric is what we're using.
Jimmy Lea: Love
Sarah LaFlamme: it. Um, and fully
Jimmy Lea: integrated, simple
Sarah LaFlamme: using fully integrated
Jimmy Lea: pushes right into it.
Sarah LaFlamme: Yep. Yep. And we text every single, um, DVI right out to the customer. And, um, so it's seamless. They have the link they can go back to and they can keep they, and they can forward it to other people and review it too, which is nice because sometimes, you know, maybe they wanna send it to dad to review, you know?
Sarah LaFlamme: Oh yeah. Maybe they feel uncomfortable making that decision on their own. Um, and our a RO, Ooh, I know I should have that number. And Cecil's somewhere on here. Probably, probably going, she should have these numbers. And Jennifer probably too. Um, um, that's one of the things that I'm working on is, uh,
Jimmy Lea: let's, it's not a, it's, we're not gonna hold your feet to the fire.
Jimmy Lea: This is a, a scientific wild guesstimate on we were somewhere in the. S range and we went to somewhere in this range.
Sarah LaFlamme: Okay. So I would say our, before we were doing the DVI, we were probably in the 300 range.
Jimmy Lea: Yeah.
Sarah LaFlamme: And then we've gone to well over 600 for our aros right now.
Jimmy Lea: Congratulations. Yeah. That's, that's phenomenal.
Jimmy Lea: And, and the result of that is better cars on the road. Yes. Your average repair order went up. Wonderful. Yes. As a business we're able to make it. Okay. And we're profitable. Okay, cool. But the more important thing, our clients, our customers are making better decisions about their vehicles. They're safer on the road, which also means your safer on the road, your family is safer on the road.
Jimmy Lea: And my family is safer on the road because our clients, our customers are making better decisions. I love that. I, that is wonderful. I'll never stop counting that drum. Alright. And the DVI may be the crown jewel in this. But if you can think of something else, we'll talk about something else. If another shop owner could copy just one thing that you've done this last year, what should it be?
Sarah LaFlamme: Uh, so it's funny 'cause we talked about this recently and when it was just JR and I, um, and when you first start your business, um, you relying on friends and family kind of to start you. And so we did a lot of emotional pricing and Cecil talked about it in that webinar we went to. And then I looked at JR.
Sarah LaFlamme: And I was like, are we emo doing emotional pricing? And then like the next time one of our family members, it was like not even a family, it was like a friend of a friend of a friend, uh, you know, and I went, you've distant
Jimmy Lea: too far. Too far.
Sarah LaFlamme: Yeah. And I'm in there because I'm a bleeding heart and I'm like, I don't know.
Sarah LaFlamme: She, I know she doesn't, not a lot of money and, and again, I'm making decisions for her. And, and I said, you know. I think we're making too much emotion, like we're making these emotional pricing. Yeah. You know, pricing and Parker, and we talked to Parker about it when we started with him and he said, yeah, absolutely.
Sarah LaFlamme: You need to get this set and this is what it is. And um, and that actually is kind of like, it all kind of went hand in hand with having that service advisor position in, because now I'm a step back from that. I'm not doing the everyday, um, oper like that part of it. So my service advisor's doing that, so I can't get emotionally involved.
Sarah LaFlamme: Um, because, and he, and he doesn't care because it's not his family or of a friend. Of a friend. Of a friend, right. He's not gonna be emotionally involved in that. So, um, that has really helped us. So I would say, no, don't do emotional pricing. All you're doing is just discounting and
Jr LaFlamme: your, your value.
Sarah LaFlamme: Your value.
Sarah LaFlamme: And I love helping. I love helping people and we'd like to help people as much as we can. But if you're not in a position where you can help people, and we weren't when we were in that. Position. We weren't in that position to help people. We were barely skimming by and, but we were cutting ourselves short because we just wanna help everybody.
Sarah LaFlamme: So, yeah. Um, but so important thing to I think, people to, to learn.
Jr LaFlamme: Yep.
Jimmy Lea: Yeah. That is so true. Parker, what about you? What's one of those things that, uh, uh, another shop owner, if they were to copy one of the things that you have done in your shop over the last year, what would you suggest?
Parker Branch: Um, you know, the first thing that comes to mind was when you presented that question, even to JR and Sarah as that I was thinking about, you know, when I started Branch Automotive and, you know, the end of 2009 actually started functioning in 2010.
Parker Branch: Um, I was a couple years into it, running some fairly decent volume of sales through the shop at $80 an hour. Ooh. And I don't know what my parts margin was because I didn't have a coach, therefore I didn't know.
Jr LaFlamme: Yeah.
Parker Branch: So for me, when I first started to try to get some coaching and was introduced to the institute and actually understanding what the best shops in the industry and, and putting these pieces together, that was a game changer for me.
Parker Branch: And I think, um, Sarah is very sharp with numbers and paying attention to that. And she was frustrated because she wasn't where she wanted to be, but she also didn't know where she should be. And I think that was part of when we first talked, they, they were like, you know, there's a little bit of are we doing the right things?
Parker Branch: Where should we be? What do we need to to change? So, you know, uh, I, I don't want to take a whole bunch of credit 'cause I, I give the credit to Cecil and the institute and the pe, Jennifer Holbert, the people that have coached me. Um, and then I'm sharing my journey with them. Through those experiences. Um, having the coach is, it's the biggest game changer there is.
Parker Branch: You don't know what you don't know.
Jr LaFlamme: Absolutely.
Sarah LaFlamme: I would agree. And if I could just jump on that, one of the first things that when we met with Parker at our first meeting was he kind of said like, what is your goal? Like, what do you wanna, where do you wanna be? So that, you know, 'cause from that he started building us kind of our outline, right?
Sarah LaFlamme: Like, think of writing an essay in high school. You kind of start with your outline. And so he kind of start, started helping us build that outline. How can we achieve what we wanted? And for us, all we wanted was work-life balance. Balance. Yep. We don't wanna be wealthy and rich. I mean, it'd be cool if we were, but we wanted to be happy.
Sarah LaFlamme: We wanted to be present for our time with our kids, um, and, and be able to leave work behind, but, and still have it, you know, be successful. Um, and we, you know, and be able to travel. We didn't take a vacation for years.
Years,
Jr LaFlamme: yep. Um.
Sarah LaFlamme: You know, and it's, it's hard because it's not just us, it's also our kids.
Sarah LaFlamme: So to tell them, oh yeah, we can't take another vacation again, and they're like, well, everyone else is taking a vacation.
Jr LaFlamme: Yeah. Or not, you know, or also not being able kids wake up in the morning not being able to see 'em before school.
Sarah LaFlamme: Right. Yeah. Or
Jr LaFlamme: seeing them right before they go to bed.
Sarah LaFlamme: Right. You
Jr LaFlamme: know, I mean, coachings helped out with that tremendously.
Sarah LaFlamme: Yeah. So Parker was able to give us so much data of like where we should be, but in little tiny bites. So it wasn't overwhelming of like, let's start here. Okay, we need to start with let's hire another technician. If maybe we can't get that, maybe we just go to the right service advisor. Maybe that can help.
Sarah LaFlamme: And that actually ended up being the, the better. Um. Process for us was to go service advisor, and then we added more tech after tech. Yep. But, um, yeah, to not know, to know I had these numbers, but is that the right number? Should my parts margin be this, should it be that? Should my labor margin be this? I don't know.
Sarah LaFlamme: I don't know. You know? So for him to give me, am I spending even down to like the, um, the expenses? Am I spending too much on my accountant? Am I spending too little on advertising? Um, these are
Jr LaFlamme: software too much.
Sarah LaFlamme: Yeah. These are things that, I mean, we're still working on these things. Um, and, but it's nice that the institute has gone and done all that work and provided that the, the
Parker Branch: benchmarks Yeah.
Sarah LaFlamme: Yeah. Those references for everyone to, to have. So yeah, it was great.
Parker Branch: Yeah. I think you're, you're gonna be super excited as you continue. Um, you know, there, uh. Sarah and JR are moving into a gear performance group. They're in transition now, and they'll have Jennifer Holbert as their coach. And it's, you know, Sarah had some, some fears and worries about how's this gonna be with the reporting and that, and I, and she is a powerhouse with her numbers, and I was like, you and Jennifer are gonna get along.
Parker Branch: Like, you're gonna be worried at first, but when you get in there and feel what, you know, what we've done with coaching one-on-one, getting some structure and some ideas and having someone to talk to that's been through the same pain points that you are, have tried this, tried that. Um, when you get in there and have 15 to 20 shop owners surrounding you that also have been on that journey and with Jennifer's expertise and, and, and she's just brilliant.
Parker Branch: So you're, you're gonna love that.
Sarah LaFlamme: Yeah. We're really looking forward. Look forward to it. Yeah, we're looking forward to it. Our first in-person meeting is at the end of this month, so in a couple weeks. Um, we're gonna get to meet a whole bunch of other shop owners who are like-minded, and we're really excited about it.
Sarah LaFlamme: Yep. You know, we're happy that we at least had Parker for at least over a year though, because before that you kind of just feel like you're out in the middle of the desert by yourself. You know, we felt like we were drowning. And then when we had Parker, we at least had somebody to bounce ideas off of.
Sarah LaFlamme: Um, and talk about the, the, the losses and the wins, you know what I mean? There was one month we had our best month ever and the very first thing Parker said when he got on the call was, congratulations on your best month ever. And we were like, we go. Oh, was it? We were so, we were, we were so busy, like trying to, we
Jr LaFlamme: didn't even know.
Sarah LaFlamme: We didn't know we had, so we're trying, we're, you know, we were just trying to implement so many things, right? Get our SOPs in place. Another thing that Parker told us to get rolling on, you know, so everyone knows what we're expecting of them. Um, you know, we were trying to get all these things that we weren't even paying attention to that, to the full, to how we were, you know, how I was doing on that.
Sarah LaFlamme: So, um, yeah. But with the service advisor, now I can actually, I'm having so much more time to look at all those numbers and, and, and, and make sure that we're actually on the same path that we wanted to be on.
Parker Branch: Yeah. And Jimmy, they were. They were open-minded because, you know, we, it's not always, we knew, hey, it would be ideal if we could get a technician to replace JR in the shop to free him up.
Parker Branch: And because the business is young and we still don't have an advisor or, you know, we're trying to add to the team to get our structure to free. You know, the owners up a little bit. Um, you know, we went after technician first. We had a, some, some trials and tribulations there. And we, we had talked about it like, hey, you know, there were times I had to go back in the shop and stay there and be the guy in the shop.
Parker Branch: So we switched gears a little bit and we said, Hey, let's see if we can, you know, find that service advisor position. And they did. And, and that made another positive change, um, helped create that vacuum to then attract this technician with a big, fancy beard. And here we go.
Jimmy Lea: Yeah. ZZ top, Steve.
Jr LaFlamme: Yeah, he's the best.
Jimmy Lea: Yeah. That's awesome. Yeah. Parker, I think you're hitting it right on the head. And, and, okay. Now that it's in the room, the nail is up. I've gotta hit it with a hammer. Jr we kept talking about you being this bottleneck by doing the, the, you were the hands-on the heavy duty work.
Jr LaFlamme: Yep.
Jimmy Lea: Um. What did it feel like for you to hear that?
Jimmy Lea: Okay. We need JR to transition from being a technician to being an owner.
Jr LaFlamme: So part of it is when I'm doing the job, you know, it's done your way, so on and so forth. But the Institute and Parker, they've implement the SOPs, getting all that into place, which has helped out a lot. So putting those into place with technicians and guiding the technicians the right way, um, has also helped alleviate that off of me where I could go training these guys and also bringing on Steve and so and so forth, they, it's good to see now I don't have to get so much involved with the technician side.
Jr LaFlamme: Now I have guys out here that I have trust in, um, that can keep the wheels turning and I. Don't have to be in every step.
Sarah LaFlamme: Yeah. It feels like he can almost nurture the technicians a little bit more into, right into like how we do it, the la flam way. Right. How we, how we, what we expect, which is probably pretty similar to most shops, but, um, but yeah, so that's been, um, a big thing.
Jimmy Lea: I love it. I love it. And, and there's a big controversy in, in the social media world right now that says if your coaching company only tells you that you have to work on your business, not in it, they are not a good coaching company and that's not the story. Eventually we want to work you to that position where you can work on it.
Jr LaFlamme: Correct.
Jimmy Lea: And, and here's my question to you, Jr. How long did it take? How long was that transition period? Because you can't do it day one.
Jr LaFlamme: No.
Jimmy Lea: I mean, how long did it take you to make that? And you're probably still not fully transitioned.
Jr LaFlamme: That's correct. And we're still working on it to get me to that point because I need to spend more time on the business instead of.
Jr LaFlamme: In the business, so, um, we'll say ever for a while.
Sarah LaFlamme: Yeah. Yeah. So we've been open, yeah. Just over four years we've been open and I would say, uh, just up until the last, like couple of months.
Jr LaFlamme: Months Yep.
Sarah LaFlamme: Is when he's finally like his numbers. So I, when I run my report, I'm, you know, I'm starting to really see that his numbers for billables is really dwindling.
Sarah LaFlamme: And at first I kind of razed him and I was like, Hey, your billable aren't very good. Um, but they're not supposed to be because we're supposed Yeah. The technicians are supposed to be doing this stuff. So yeah, now he has more time to train them and work with them on
Jr LaFlamme: that, and also do business stuff that I need to do, um, instead of doing it say after hours or in between things here and there.
Jr LaFlamme: So that has helped out tremendously.
Parker Branch: Oh, JR was feeling pretty overwhelmed at times.
Jr LaFlamme: Yep.
Parker Branch: That he was, you know, really carrying the load in the shop. So, yeah.
Jr LaFlamme: And it's very tough when, you know, you have all this work that has to get out of your. Because it's promised to customers and you see 'em out there and you're like, all right, hey, I got a timing belt to do.
Jr LaFlamme: Hey, I got an r and r transmission out there still to do. In between fitting and oil changes and breaks. Yeah.
Sarah LaFlamme: He, there was many times where he said to me, I feel so much stress because everyone's, everyone's paychecks and everyone's livelihood is, is relying on me and my shoulders because, you know what I mean?
Sarah LaFlamme: So it was, and that's a, you know, a feeling that he doesn't say that anymore because we've got these technicians that are Steve who's got, he's excellent, knows what he's doing. We've got Tyler who's working his way up, he's learning a lot. He is absorbing like a sponge. Sponge. Yeah. Which is excellent. Um, and, but JR now has the time to put into Tyler and then, and then eventually into our next technician too.
Sarah LaFlamme: So,
Parker Branch: yeah. And you have, you have Chris carrying his role and his position. That also is, you know, kind of in the background, but pretty important, keeping the state inspection program running and helping cover some of the odds and ends. So definitely some supplemental, you know, employee. Helping carry the load and yeah, they've done a great job of, of knowing that.
Parker Branch: And, and when the business is young, you may still be in and out of the shop some, but you're, you've seen now the difference that can happen with adding the key areas of staff. You've seen what it's like to have that position maybe come and go and what the impact on the business was. Now understand the importance a little differently than you did before.
Jr LaFlamme: Correct. And like you were just saying, having Chris here also, also, um, alleviates me a little bit. 'cause if I'm tied up doing something, everybody. Under like technician, stuff like that. Notice, see Chris if Jr. Right. Or Sarah's busy.
Sarah LaFlamme: I will. Yeah. So that's advice I would give other shop owners too.
Sarah LaFlamme: Eventually when you get to a point where you're wearing too many hats, you, you need to think about getting a, a jack of all trades kind of guy. The guy who can be in the background, which is our, our guy Chris. He has trained in every department and done everything in the shop except for my stuff, right?
Sarah LaFlamme: Like accounting, he's done, he's cross-trained in all of it so he can back us up. And that's what we worked really hard for the last year was to try to get him into that position, um, get him trained up and everything too, so that way we can leave and go meet other shop owners in our gear performance group.
Sarah LaFlamme: Otherwise we wouldn't be able to do that.
Jr LaFlamme: Correct. And they each, like, having somebody there that knows, um, the business, the way, the direction, how things are operational, having people go to somebody else when you're not around is a bonus. Because you don't have the doubt in your mind saying, Hey, is this getting done?
Jr LaFlamme: Well, I know they're gonna go see this individual. Um, they know how we do things. They're the go-to if we're not here. So
Jimmy Lea: that is awesome. That is awesome. It, it sounds like not only have you been able to free up Jr's time to work on the business, but bringing in Chris also allowed you, Sarah to work on the business as well.
Sarah LaFlamme: For sure. Um, you know, the service advisor role and having Chris as our shop, like I said, Jack of all trades, um, has really helped because I have been able to start delegating, which is a big thing. Um, we had to, you know, that's one of the hard things is being a business owner when you start the business is you feel like you don't wanna let go of anything.
Sarah LaFlamme: And that's something that we've been working really hard to actually pry that responsibility off of us and delegate it to someone. And maybe they don't do it exactly how you would do it, but you work with them to try to get them up to that level, you know what I mean? And so it's been, it's been hard, but yeah, it's.
Sarah LaFlamme: Chris has def definitely done that. And then even JR being, um, being less of a bottleneck, right. And being alleviated in the shop has made it so I can actually hand him back some of these duties that I've been doing in addition to all my very, like administrative and operational things like
Jr LaFlamme: marketing,
Sarah LaFlamme: you know what I mean?
Sarah LaFlamme: Like, because I'm doing all the marketing and stuff too. And then, but you know, so now I can hand back some of the, um, management, hr, like a little bit some of these things back to JR as he has more time now, um, which makes it so I can spend more time moving the forward, the business forward, which has been great.
Jimmy Lea: Oh, that, that is really good. That is really good. All right. Now, now we're to a point, uh, this is the section of the interview we're gonna call. The worst or the most, the worst or most embarrassing implementations that you've done in the shop where you thought, well, that didn't quite land the way I imagined.
Jimmy Lea: I thought that might've gone a little bit different. What has been the most embarrassing rollout you attempted that didn't quite land right? I'm not
Jr LaFlamme: really sure.
Sarah LaFlamme: Um, geez, that's hard. I would say the DVI is actually, um, so we were lucky with Steve when he came on more recently that he worked for a place that already did that.
Sarah LaFlamme: But before that, that the text we had did not. And so, um, rolling out the DVI was, you know, a yeah, a they, they gave me, they gave us some pushback, right? Yeah. Like, you know, it's gonna take time and, and you know, and then, um, and then seeing the quality of them coming back in, that was where we were like, oh, that did not land.
Jr LaFlamme: Yeah. Or the consistency, like 1D VI would have all these photos, the next one would be missing half of them.
Sarah LaFlamme: Yeah. Two photos, right? Yeah. So, I mean, and that's something we continue to work on and, you know, each technician almost brings their own. Um, style, don't style to it. Right. Which is great because then we can use that as an example.
Sarah LaFlamme: We see something on A DVI that we really like that Steve did or Tyler did, and we're like, wow, we want everyone to do it this way 'cause this is great for the customer to see and this is easier for them to understand. So, um, but yeah, for sure D vs. Were they were a hard rollout.
Jimmy Lea: Yeah.
Sarah LaFlamme: Yeah. We just do a dbi.
Jimmy Lea: Yeah, that's, it's, a lot of people think it goes that way, but it does and it takes a lot of handholding to implement a, a successful digital vehicle inspection program. It certainly does. Alright, so, uh, most and worst have, tell me about a time that you solved a problem and in doing so, created a new problem.
Sarah LaFlamme: I've got one example. When we hired our service advisor, our very first service advisor, um. Yeah, that was to solve a problem. But it created a big problem, a bigger problem for me because then I had to actually take the time to like be patient and train them. And Parker was all the time, like, Sarah, you gotta sit next to them.
Sarah LaFlamme: You gotta sit next to 'em. Yep. You gotta go like baby, step them through. Um, and so that ended up becoming like a bigger problem. I didn't At at, right? Yeah. At the time I didn't think it was gonna be, I was like, this is a great solution. Here you go. Just put 'em in the seat. And then Parker's like, no, you can't just do that.
Jr LaFlamme: Yeah. And one thing, one thing I add to that is for a service advisor, one thing I would definitely suggest to people is make sure you put your time into 'em and make sure they have your procedures and they know your procedures and processes. So this way here, they're not on the front lines going, I don't know, I'm not really sure what to do.
Jr LaFlamme: Right.
Jr LaFlamme: You know, so make sure you put your time into it with that. And Parker was. Great with that, helping us in that aspect as well. So
Parker Branch: yeah, that, that was a great learning experience. You know, that was, you don't know what you don't know until you get there. And, and the individual that, you know, we got hired and, uh, I, I remember getting on a call and Sarah was like, yeah, you know, they've been here two days and I turned them loose and it's terrible.
Parker Branch: Wait a minute.
Sarah LaFlamme: In my defense, we just have such tight quarters, um, you know, oh,
Parker Branch: it was a space,
Sarah LaFlamme: there wasn't even room for me next to stand next to them. So it was very, it was hard. So, yeah, so
Parker Branch: we reeled it in, we talked about it, about how to, you know, I, I told them in, in my shop, even some of the higher level. People that we've brought in as a, in a mature, you know, business, 10 plus years, we still have, our manager was one of our best advisors and he is joined at the hip with that individual for, if it's a very well experienced advisor, probably still a couple weeks, and if it's not probably a month, and, uh, they reeled it in and, and when they made their changes to the current advisor, um, they did a great job of really setting those expectations.
Parker Branch: And it's just like, you know, we were talking about, you were sharing about the DVI and some of the difficulties there, and I, and I'm thinking there's a couple SOPs, um, setting the expectations with the tax of, hey, this is how many pictures we want and why and, and the good and the bad. So, but they've done a great job of that.
Jr LaFlamme: Thank you.
Sarah LaFlamme: Thank you.
Jimmy Lea: So as you're looking for advisors and you are looking for that advisor. Fit Is there a difference between a, um, a transactional service advisor versus a relationship service advisor?
Jr LaFlamme: Absolutely.
Sarah LaFlamme: Yeah, definitely. And um, like I kind of touched upon before, for us, one of our core values is community.
Sarah LaFlamme: Like that feeling of community and that everyone feels really welcome and that, um, because that's how I wanna feel when I go places and I wanna feel treated like, I want them to say, Hey, Sarah, and know my name, and remember my car, and, and things like that. I can't expect, I know every service advisor to remember every single person's exact, you know, thing.
Sarah LaFlamme: But, um, in the years that I was in the, at the front, that was, that was me. I was doing that. I was very relationship. We were building relationships and those people were our biggest supporters sending in new customers to us. Like all like tenfold. Like one person, one happy customer is sending like 10 people, like their whole family.
Sarah LaFlamme: Um, and so, you know, that was really important to us is to make sure that people feel that there's that relationship and that we're not just so a one-off, oh, we fix your car, take our, take your money, and we never talk to you again. You know? I mean, like I said, we are in this community. We live in this community.
Sarah LaFlamme: Yeah. So the chances that we're going to see them outside of this building is very good. I mean, I can't go to the local grocery store on the weekend without running into my customers. Yeah. So, um, and ask, and then I ask 'em, how's your car running? And things like that. So, um, whereas transactional. That, Hey, just, you know, like JR called it, like being at the, like being at the deli next.
Jr LaFlamme: Yeah.
Sarah LaFlamme: Next, take a number next. And, and we're just not like that. So, um, we've worked really hard with our current, um, service advisor to make sure that he's not like that. Uh, he came from a shop that was a little bit more transactional where he was working and that maybe works for them, but it's not how it works for us in our small town,
Jr LaFlamme: so.
Jr LaFlamme: Correct. And one thing I'll say is a lot of our customers, they really enjoy that. Where they, we see 'em walking in the door, we're like, Hey Joe, how you doing? And they're like, Hey, JR. Sarah, hey, I'm back with for my oil change or something. And they love the fact of the interaction like that. They, it's, it goes a long way.
Jr LaFlamme: And I mean the, the feedback even we hear from that. A lot of customers like that feel, they don't, they don't wanna just feel like they're. Punching a ticket or getting a, a deli ticket or something. Right. You know?
Sarah LaFlamme: Yeah.
Jr LaFlamme: They like the personal,
Sarah LaFlamme: they want it to be fixed properly.
Jr LaFlamme: Correct.
Sarah LaFlamme: For a good price and they want a good relationship.
Sarah LaFlamme: Yeah. We're gonna serve it all up together.
Jimmy Lea: That is, that is so true. It has to all go together. The relationship, the quality. Uh, what did you learn about your own leadership style as you are Hmm. Um, training these service advisors? Finding the misalignments, saying thank you. No, thank you. What did you learn about your own leadership style?
Jr LaFlamme: Well, I mean, for myself, I still, we're still working on it day to day. Um, as far as that goes, it's like everybody can't be you. You can't expect everybody to do it your way or say things exactly how you do it. So, as far as leadership role goes and is pretty much setting expectations of saying. You don't need to necessarily bring it forward this way, but this is the way kind of, um, we would like you to have it go or direction.
Jr LaFlamme: We would like you to have it. And letting go of that aspect.
Sarah LaFlamme: I have sung the song from Frozen to my husband many times. Let It Go. I'm not ashamed to admit it. I, he has come into my office many times, like very frustrated about something and I'm like, let it go. Let it go. There's some things that are just not worth, and, you know, I think Parker can attest to this, that you gotta pick and choose your battles.
Sarah LaFlamme: You know, for me as the person training on the service advisor side, um, I, my managerial style has changed from being very, I used to be a little bit more uptight. Um, and I've just become a little bit more mellow because I'm realizing like. I need this person. They need the job, but I also need them. And I, it needs to be a mutually beneficial relationship.
Sarah LaFlamme: And, um, they, they're not, I'm not gonna get that from them. If I am, if I'm harping on them about stuff and da
da,
Jr LaFlamme: they're coming off like
Sarah LaFlamme: a fair
Jr LaFlamme: or something.
Sarah LaFlamme: Yeah. I, you know, and I'm a very demo, I personally am a very democratic person, right. We have team meetings all the time, and I'm like, Hey, we're thinking about doing this.
Sarah LaFlamme: What does everyone think? Like I ask everybody's opinion, you know, and I take it under advisement, you know, because I wanna see, you know, what do they, what do they, I want them to feel like they're included in this because we really are like a big team.
Jr LaFlamme: Yeah. And the biggest thing, communication.
Parker Branch: You guys have done a good job of letting go of the vine a little bit where you needed to.
Parker Branch: And we definitely work through some of the pers you know, there's gonna be different people in that you're gonna, you know, maybe bring into the business and you might outgrow them. Things will change. You do what you need to, to survive and get by and try to, you know, create ex excellence in those positions.
Parker Branch: Um, I, I know that when you guys were talking about that, I'm thinking leadership intensive will be so good for you guys. I already,
Sarah LaFlamme: I know
Parker Branch: I already,
Sarah LaFlamme: I've already got that. Is it coming up already?
Parker Branch: There's one coming up in March in Ogden.
Jimmy Lea: Oh, geez. Yep, yep. And in fact, there's a holiday bundle right now you can take advantage of, will get you three intensivess, which is normally like 6,000, uh, $6,700 for $5,000.
Jimmy Lea: You get a three day service advisor training, a leadership intensive and a financial intensive or, um, um, the marketing intensive. So all of that bundled together $5,000.
Sarah LaFlamme: Wow, that's a great, that is a great deal right
Jr LaFlamme: there. Absolutely.
Jimmy Lea: Yeah. Yeah. It really is, really is. Now, as we kinda land this plane here, I've got a few questions I wanna ask.
Jimmy Lea: Uh, all of you and, uh, Parker, you get to answer the last one. These are jr. This is to you and Sarah, this is to you. If coaching ended tomorrow, what are some of those non-negotiables that you would keep forever, always implemented Jr. You first,
Jr LaFlamme: I would say the three Cs. Um, that would be one to stick with.
Jr LaFlamme: Um,
Sarah LaFlamme: yeah,
Jimmy Lea: Sarah,
Sarah LaFlamme: that was, that was definitely a big thing, is making sure that people know, you know, what's causing the problem, what's the act, you know, what are we gonna do to fix it and all that. So that's definitely something. Um, I think the 300% rule for me is something that. You know, we will never let go of, um, there's, there's no reason to at this point.
Sarah LaFlamme: We've already implemented it. Why would we go backwards? Correct. You know, um, everyone knows what we expect of them. We've had many meetings about it and said, that's a reminder. 300% rule reminder, 300% rule. And then we're, and then we, you know, like we're school made them, you know, each of them answer what the 300% break, what it breaks down to.
Sarah LaFlamme: So
Jimmy Lea: I love it. I
Sarah LaFlamme: love it. They're on the same page.
Jr LaFlamme: ABIs
Sarah LaFlamme: be
Jimmy Lea: another, they're Sarah. What is something you wish someone had told you in year three of your business that coaching forced you to learn to do?
Sarah LaFlamme: Oh, geez. Um, when we were in, I would say when we were in year three, we thought that the, you, you. To be a business owner, you have to be working in your business, right?
Sarah LaFlamme: Like in it, on the front lines and all that. And that's been something that is not the case. You know? Um, I wish we kind of, and even if somebody told us in year three would we have, would we have, um, drank the Kool-Aid on that? I don't know right away, you know, sometimes it takes a little bit of time for you to get used to it, but we really, you can't be, you can't be working in your business a hundred percent of the time and also working on your business.
Sarah LaFlamme: And that is something that has become so apparent to us in the last year that you, you just can't do it all. And so you have to get the right people into those positions so you can do those things. So you can work on the business. And sometimes we still work in the business JR was just wrenching on a car this morning.
Parker Branch: Yep.
Sarah LaFlamme: You know, I'm answering phone calls sometimes too. Take making appointments and things like that. Backing up our service advisor. 'cause that's what we, that's what you do. You don't leave it behind. And I love that. I actually love working with the customers. So anytime that our service advisor is out, I don't mind running in there taking, I've taken over but.
Jimmy Lea: I totally agree. And you, you step in, you do what you gotta do. The business still has to run, we still have to keep the lights on, the doors open. And so you do what you gotta do to, to make that happen. So Jr Yeah, if you have to pick up a wrench, Sarah, if you've gotta pick up the phone, Parker, if you gotta pick up the phone, you do what you gotta do to keep the business rolling.
Jr LaFlamme: Exactly.
Jimmy Lea: All right. To to JR. And, and Sarah and then, uh, Parker, you can answer this after as well. What would you say to a shop owner who's on the fence because, oh, we're just too busy or, uh, we can't afford coaching or we can't implement it right now. What advice would you give to somebody, uh, a shop owner who said, who's sitting on the fence?
Sarah LaFlamme: We literally said every single one of those things to ourselves, we had this conversation and we're really lucky that there's two of us. We get to bounce off these ideas with each other. Um, but we literally thought the same thing. I'm, we're too busy. How am I gonna find time to, to, you know, meet with my coach in a month?
Sarah LaFlamme: I'm too busy. Yeah.
Jr LaFlamme: How are you gonna afford it?
Sarah LaFlamme: How are we gonna afford it? And all that. And you know what? You just do it. You figure it out. You figure out a way to make it happen. I started looking at the numbers thinking, well, if we just do one more, you know, four wheel brake job, we can, we can pay for this for the month.
Sarah LaFlamme: You know what I mean? Like, if that means the jar has to get out there and do one extra one even on a, on a Saturday, then we're gonna do it. You know? And um, so I, I think it was one of the best decisions. I think it was, um, it was a hard sell, uh, for JR. At first. I was really like an early, yes, let's do this.
Sarah LaFlamme: And he was kind of a little bit more hesitant and
Jr LaFlamme: yeah. And,
Sarah LaFlamme: and a couple months ago,
Jr LaFlamme: and I'll be the first one to sit here, admit it, and reached shop out there. That is in doubt.
Sarah LaFlamme: Yeah,
Jr LaFlamme: I would a hundred percent do it all over
Sarah LaFlamme: couple months ago he
Jr LaFlamme: said and do it again.
Sarah LaFlamme: Yeah. A couple months ago he came to me and said, oh, I'm, maybe I should.
Jr LaFlamme: Yeah. This is a good idea. This was a great idea. I'm glad we did it. Um, yeah. It it puts you, yeah. It, it we're over time and it, it helps you out. Yeah.
Sarah LaFlamme: We're just so much happier now.
Jr LaFlamme: Yeah.
Sarah LaFlamme: We feel so much more calm and happier than we were when Parker first met us. We were frazzled.
Jr LaFlamme: I don't have bags down to here anymore.
Jimmy Lea: Well, and Dylan, Dylan agrees with you. He says you can't afford not to have coaching,
Jr LaFlamme: right? That's correct.
Jimmy Lea: It's something you just have to have Parker to you. What do you say to the shop owner, the coach or the shop owner that's sitting on the fence?
Parker Branch: Um, I mean, it changed my life. Like, you know, I, I was in a two bay shop doing 800,000, two years in a row.
Parker Branch: Charging 80 bucks an hour. I probably should have done almost 2 million those two years. Um, but you know, the, the path, the people I've met through the industry, through the institute and going to the summits and different trade events is it's broadened my network. It's, I've learned so much from the institute and the people they brought me together with that has literally transformed my business and my earning.
Parker Branch: And I mean, if, if you're on the fence, I get it. I, I was there too. I was terrified to spend the money, just like JR and Sarah were saying. One of the things about the institute give it a try. What do you have to lose a month or two? That's one of the things that like, I, I am so proud of Cecil and Kent and Wayne and the institute over that whole strategy of we're not asking you to come here and sign away.
Parker Branch: Give us your mortgage off your house and you're stuck here for five years. Come in and give it a try. If it's not working for you, you know, here we go.
Jimmy Lea: Yeah, if it's not working, you can bounce. Ours is a month to month agreement. Uh, jr. Sarah, thank you so very much for joining us, having the conversation.
Jimmy Lea: Thank you for your success. Thank you for keeping going and keeping at the grindstone Parker, thank you for being their coach and not letting them have excuses that were acceptable. There's no excuses here. It's get the job done. So to both of you, to all of you, thank you very much for joining me today.
Jimmy Lea: Thank you very much.
Jr LaFlamme: Thank you. Thank you very much for having,
Parker Branch: yeah, thanks everybody.
Jimmy Lea: Hey, and if you're listening to this, and this is some information that has resonated with you and with your shop, you figure, oh, I'm in the same position. I've got the same thing happening at my shop. We would love to have a conversation with you.
Jimmy Lea: And that's what it starts with is a conversation. So right as we finish, you're gonna see a QR code pop up. We're here to help you build a better business, which the result is a better life for you. And the net result for us is the institute is a better industry. So let's lock arms together. Let's lock arms together and help improve your shop, your business, and your life.
Jimmy Lea: My name is Jimmy Lee with the Institute for Automotive Business Excellence, and this is the Leading Edge podcast. Talk to you soon. Thank you. 
Jr LaFlamme: Thank you.

185 - Ask Me Anything Webinar The Lie We Tell Ourselves “I’ll Start When I’m Ready”

185 -Ask Me Anything Webinar The Lie We Tell Ourselves “I’ll Start When I’m Ready”
January 07, 2026 - 00:57:29
 
Show Summary:
Wayne Marshall and Cecil Bullard explain why waiting to feel ready keeps shop owners stuck and why coaching should be viewed as an investment with real returns. They share how coaching can quickly reduce stress, improve cash flow, and create more time and quality of life. They also cover technician pay plans that balance a steady base with incentives for quality, training, and production. The episode closes with what it takes to scale into multiple locations through strong processes, training, and teams, plus the reminder that being busy does not always mean being profitable.
 
Host(s):
Cecil Bullard, Founder of The Institute
 
Wayne Marshall, CEO & Industry Coach
 
Show Highlights:
[00:00:00] – Expenses versus investments and focusing on return[00:01:03] – Why waiting until ready delays real business growth[00:02:23] – Common excuses shop owners use to avoid coaching[00:03:23] – Coaching quickly reduces stress and improves cash flow[00:05:04] – Technician pay plans built on stability and performance[00:06:37] – Incentives tied to quality training and production[00:10:43] – Preparing systems and people for multiple shop growth[00:15:29] – Why two shops are harder than one[00:24:50] – Busy shops are not always profitable shops[00:48:30] – Training and mentoring build long term success 
In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.
 
👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/7Cr4H7HOVlI
Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this!
 
Links & Resources: 
Want to learn more? Click Here
Want a complimentary business health report? Click Here
See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
Episode Transcript DisclaimerThis transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.
 
Episode Transcript:
Wayne Marshall: Welcome to our session today on Ask V Anything. I'm Wayne Marshall here along with Cecil Bullard. Today we're gonna talk a little bit about expense versus investment. As we all know, there's many things that we do that we invest in, or we have different expenses, but in anything you do, you also wanna be looking at what you're getting for that return on investment and how it works.
Wayne Marshall: Expenses. They're a one time thing. You spend your money, you get it, you get the product, you get the service, and then there's other things you do that have a long-term return on that, and it's an investment that can build and continue to help your business as you move forward. So we're excited to get some of your questions.
Wayne Marshall: As we stated at the beginning, it's ask me Anything. Please submit those things. We would love to have this conversation, help share the knowledge we have. Cecil, you wanna share anything off the top?
Cecil Bullard: I think what we're, at least, what we're starting with here is this this comment that we get a lot of times from shop owners that want to improve their businesses that.
Cecil Bullard: May maybe struggling, and I know it's difficult to look at your business and go, man, I'm, I don't have any money. Three, three types of shop owners that we in general come to coaching. We have the people that are they were in a different industry and they're used to coaching. They understand coaching, they know the value of coaching, and they come in and they say, we just need a coach.
Cecil Bullard: And so what we've done is we've researched the. The automotive industry, and we believe that you guys are the top of the list. So we would like coaching. Those are the easiest people to sell. And frankly, they're also the easiest ones to probably work with in many cases. Because they're just, they're used to having someone there to help them.
Cecil Bullard: Know what they don't know. We also get the largest group is probably shop owners who've been in business for some period of time who have struggled. This idea that I wake up every morning and I say to myself, oh my gosh, I hope that we have enough cars and I hope we have enough work.
Cecil Bullard: Yeah. And I hope that, at the end of the year when I actually have to file my taxes, I'm in the. Black instead of the red. And that's probably the largest portion. And from that group, we get this, we often get this idea that I can't afford coaching or I can't, yeah. I, or I think I heard it in the last couple of weeks.
Cecil Bullard: I heard, I think I've heard it two or three times. I wanna hire a manager first before I get into coaching. Or I want to hire a service advisor first, or I want to whatever, meet this
Wayne Marshall: sure
Cecil Bullard: thing. And what I tell people, to me, that's one of the most frustrating comments because those people never get coaching.
Wayne Marshall: Okay. Yeah.
Cecil Bullard: They just don't.
Wayne Marshall: Yep.
Cecil Bullard: And it's another excuse not to get serious about your business and get your business. And I also think that a lot of people out there think, oh my gosh, there's so much. It's gonna take so much time, so much energy, and so much effort. I will tell you that for most of the people that we have coached.
Cecil Bullard: That within a few sessions we've got it where it's oh, the pressure's off. There's more money in the bank. Now. There are, the job seems to be getting easier for me. And so they're not putting in the kind of time, energy, and effort that they have blown this out to be
Wayne Marshall: correct.
Wayne Marshall: Yeah.
Cecil Bullard: And then why would I do coaching? What's the point? The point is I don't know what, I don't know. Yep. So I have I was telling Wayne here earlier my, I worked for my dad. He had a shop and he would not support financially classes, coaching anything. He just thought we'll figure it out.
Cecil Bullard: And when I was started early in my service advisor career and my manager career, part of this. I went and found coaches and paid for 'em myself. And those thousands of dollars that I spent at the time have literally turned into millions of dollars
Wayne Marshall: In
Cecil Bullard: my increased
Wayne Marshall: revenue And profitability.
Cecil Bullard: Yeah. Over my life. Sure. And opportunity. And I think it also has increased lifespan. Yeah, because
Wayne Marshall: yes,
Cecil Bullard: you know when you're worried about paying the bills or you're, I've just gotta stay late and I know my wife wants me home and I'd like to go to my son's ball game, but I gotta get this car fixed 'cause I gotta pay the bills.
Cecil Bullard: That's the stress. All of that, I think leads to early, early death, or if not death at least. So much time and energy is spent on that frustration that could be spent in other places in your life.
Wayne Marshall: So I see we got a question that's been submitted from Yvette. Thank you. I know we've talked about some of this.
Wayne Marshall: I know you're gonna have a little more insight than I, but one of the things that I would ask that you. Expand on. I guess when it comes to guaranteed pay, it really comes down to what kind of a tech is it? A c tech we know is not gonna be as efficient as a B or an A. So when you talk about guarantee, it could depend on what level of attack and his skills.
Wayne Marshall: And the abilities. So expand a little bit on that, if you would. Cecil.
Cecil Bullard: Yvette, thanks for the question. Yes. There are multiple different ways that. People have been paid in the automotive industry. Right now, the two main ways are flat rate, meaning, I do an hour's worth of work. I get an hour's worth of pay, right?
Cecil Bullard: And then there's
Wayne Marshall: flag,
Cecil Bullard: Flag. No, that's flag. That would be flag. Yeah, that's right.
Wayne Marshall: Yeah.
Cecil Bullard: No piece work. Peace. And then there's salary or or hourly, meaning, I'm here for an hour, I get paid x, right? Or for the week, I'm here for the week and I get paid X for the week.
Cecil Bullard: I don't believe that either one are the best. Frankly. I think flat rate puts the risk
Wayne Marshall: she's asking specifically an yes.
Cecil Bullard: It's got an, yeah.
Cecil Bullard: And an atex. I would still build the same kind of play, pay plan for Nat Tech that I would for a ctec. It would just have different numbers in it. We want to take about 60% of the pay.
Cecil Bullard: What we need to understand is what can I afford to pay that tech? And if you've done coaching and classes and sat through financial stuff, you know that I can afford to pay 20% of sales. To my technicians or I can for afford to pay about 36 to 38% of my labor, effective labor rate to my tech technician.
Cecil Bullard: Correct. Okay. And so we, once we know that I have an effective labor rate of. $150 an hour and I can afford to pay, let's say 40%. So that gives me $60 an hour to pay that technician. And that's gotta include the FICA and the feta and the workers' comp and all that stuff. Yeah. Fully
Wayne Marshall: loaded. Yep.
Cecil Bullard: And so what I would say is you go to Maslow, ma Maslow's hierarchy of needs, and you say people need to understand that.
Cecil Bullard: That their base needs are met. So I can't have someone working for me that worries about whether or not they can pay rent or there's food in their refrigerator, right? So I want to take about 60 to 70% of their pay, and I want to pay for that position, and I wanna pay that to them, either hourly or salary.
Cecil Bullard: This you get 60%. Then I want to take the other 40% and I want to pay it more in a flat rate kind of way. Meaning as you perform, as you do the things that I want you to do, you're gonna get this extra 40%. So for instance, let's say that I had a total of $1,800 after I took out Fcan Food and Workers' Comp, that I could pay somebody per week.
Cecil Bullard: I would probably take somewhere around 1200 of that and create a base. Either an hourly or a salaried base. And then I would take the other 600 and I would say, what do I want from that? A tech? Heck, I want quality of work. It's hard. To define that and you need to have things that you can really define.
Cecil Bullard: So I have to define quality of work, right? And for me, quality of work is no comebacks or a few and I don't believe in no comebacks 'cause it's not possible to be perfect. But if my tech does less than 1% warranty in a defined time period, then I'm gonna pay them per hour. They produce two bucks an hour extra.
Cecil Bullard: Extra. And then I also want. Education. 'cause I think that people that are constantly educating themselves are more forward focused. They're more they're more thoughtful. They're learning, they're growing. I need people like that because the world changes and the industry changes.
Cecil Bullard: And we usually put some form of eight hours in a quarter. 12 hours in a quarter as a training thing. Then they could get another $2 an hour for the hours they produce. And then I also need production. So if I have a tech in a bay that bay can produce 50,000 a month and probably should.
Cecil Bullard: And if I have a tech producing 20,000 outta that bay, then I have a tech that's, 40% productive, which is costing me a lot of money if I'm paying them any kind of base salary. And it's costing me money because that bay is not doing work that brings money in
Wayne Marshall: need throughput.
Cecil Bullard: So I want production and I usually start my bonuses around 35 hours in a week because we're using a labor matrix to 20 to 30% on top of the hours.
Cecil Bullard: To pay for the paperwork and the moving cars and the test drives and things like that. And so what I believe is that if I have a technician in my shop and we have work for them, that, and I'm using a 25% labor matrix on the labor that I can have a tech that can do 10 hours a. Okay.
Cecil Bullard: And of actual work that they can actually sell and bill
Wayne Marshall: hours.
Cecil Bullard: I was, I find it really funny 'cause you talk to techs and I love the texts. You put a bunch of techs in a room and you go, okay. How many of you have beat book time routinely, right? Oh, every, all, every hand. I'm the fastest guy in the world.
Cecil Bullard: And yet we know from the numbers, from the real numbers, from the hundreds of shops that we work with thousands. We've worked with that. The techs are usually 70, 80, 90% productive unless you're really working on your systems, processes, et cetera. And I love the fact that the techs are like, I can, I'm very productive, but ultimately.
Cecil Bullard: Unless we really do some energy and effort into managing that they're just not. Yeah. And and so 35 hours is usually where I start my small bonus for what you produce, and then 40 and 45. Because when you get over 40, then there's more profit in the labor.
Wayne Marshall: Correct.
Cecil Bullard: So I can pay the technician more as they're doing 40, 42, 45 hours.
Cecil Bullard: And so they can earn more, the shop can earn more. And the customer's still very happy and satisfied.
Wayne Marshall: Thank you Taylor. I see we got another question that's come in. What are the biggest problems with owners taking the leap into multis shop ownership Co. What can we do to be better prepared?
Wayne Marshall: I know the standard answer is can you leave your shop for X amount of time and run it the same as if you're there? Is the standard answer I hear. What are more specific issues you guys have seen? I'll start this one. As you look at what it takes, it starts with having good processes and good procedures.
Wayne Marshall: And if you've got everything well, organized so that when you get to a second, third, or a multis shop location, it's easy to take what you're doing at the first shop, apply it to the second, make sure you have the systems processes in place so that. Everybody knows and understands, and if you got the good things there that people can see and understand of what to execute and what the bar of expectation is, it, it makes everything else go very simple and very easy.
Wayne Marshall: And we all know, and I always use, when I talk to someone about this and we start talking about what's next, I start off with the very simple thing. We know that nothing happens in a shop until that phone rings. Or someone drives into the lot and you have an appointment, and the first thing you're gonna do is you're gonna talk to 'em, ask 'em what the problem is, and you're gonna start the inspection process.
Wayne Marshall: And if you've got something that's well done and well organized that. Between your service writer knows what questions to ask, that gives the right information to the tech so the tech can do the right diagnostic that needs to be done to give the right suggestions. That comes back to the service writer who then knows how to put together a good estimate and how to then present that estimate to the customer that at the end of the day.
Wayne Marshall: Gives conversion into an accepted work and all, and you always find delayed maintenance or other things that can turns into additional work. If we can get those things done, that everything starts well and smooth and you've got a good model in shop one, it makes it real easy to go to shop two, shop three and beyond now.
Wayne Marshall: It also gets very important, do we got the right people in the right place on the bus? Everybody's heard about the different scenarios of, and that's where you gotta sit here and start asking the question that they understand what's being asked of them and how to execute and execute at a high level with consistency.
Wayne Marshall: But that all comes back to training and coming up with all the right things. When I talk about. People who are go going in this direction and they're adding people and they're trying to make sure everything's well, I says, it's really a pretty simple thing. There's only three things that can happen when you're managing people and as you're going through the process.
Wayne Marshall: If something goes wrong, first thing, do we have the right processes and procedures in place? And if we say, oh, we don't, we missed this, so let's update, fine, tune, fix, and then retrain. But if you answer the first question that, no, we had all the right things. Then the second question is. Do we have the right training?
Wayne Marshall: Do everybody understand what needs to be done? Oh, we did it. Tom didn't know enough. We need to refresh 'em. We need to go back through it. But if you say yes again, no. We had the right procedure. We did all the right training. The only thing you have left is the person. Do we have the right person in the right position?
Wayne Marshall: And sometimes as hard as it is, as you start to scale, you start to say, maybe I don't have the right person that can take us to the next level. So the best advice I give is around these type of things start at the very fundamental things. Do we even have the right intakes? Can we even just get the car in and get it going?
Wayne Marshall: That we can replicate this process over and over as we look at multiples?
Cecil Bullard: I think it's also, you really have to talk about team. 'cause that's really what it is, right? Do I have a
Wayne Marshall: Exactly.
Cecil Bullard: Do I have a team of people that can carry out. The job and get the job done efficiently and profitably and in a timely way.
Cecil Bullard: Correct. And do I have individuals that can do their job and know how to do their job? And I think most shops that, that I'm gonna go get a second location. I've seen this happen so many times. They have good people here, but they're doing everything. Based on I'm the owner and I'm telling people what to do and I'm managing I'll mention Lucas.
Cecil Bullard: Lucas Underwood. Lucas has struggled a bit because. When he's at the shop, he knows everything intuitively, right? So he can look at what's going on and make the adjustments in the shop for a much more productive, much more profitable business. The problem is that Lucas can't be in two locations at once.
Cecil Bullard: And that's the same thing with every owner. So have I taught my people what their job is and then how to do their job efficiently, productively and profitably. And if I have those people, it also doesn't mean that I'm gonna have those people at the next place, right? No, so true. And we would, don't get me wrong, if you have a really strong team.
Cecil Bullard: And you can go take two weeks off and you come back in the shop, there's no major problems, right? Whatever major problem happened while you were gone, somebody took care of it because they, no one understand how that needs to be done. I'm not necessary here. Now I'm gonna have a second location.
Cecil Bullard: I don't want to take all the good people from there and move to the second location because I'm gonna struggle in my first location. I'm building a team of people that know and understand their job and the job of the business, how it all fits together. And if I do that well and as a coach, or a consultant or whatever you wanna call me trainer, I'd love to see a nice process manual right?
Cecil Bullard: All formed out because I'd like to know that the job is well defined, because I've gotta take that and try to recreate that over here. And I've got whatever's here. Which is the other,
Cecil Bullard: The other thing, understand what you're buying as, as best as you can. And even though you might think you understand what you're buying, you may not really understand what you're buying.
Cecil Bullard: One of the guys bought a shop and paid too much for it, and there was a lot of money being run off the books and that's why they paid too much for it. And I. I told him don't buy it, but he did anyway. And when we got the shop, we had the employees there, but we come to find out all of the employees were being paid under the table.
Cecil Bullard: We can't do that. I'm a professional business person. I'm not willing to go to prison. Et cetera, et cetera. So I can't do that. How do you go to employees and say, I have to start taking taxes and FICA and feta and workers' comp and other stuff outta your pay and have them be happy.
Cecil Bullard: So all of a sudden we've pretty much lost and now we're building a whole new team. Probably a good thing, but that, do I have the energy, the effort, the the money, the bandwidth to, to do that? And if I have a team here that really knows and understands their job, then I can go here and spend time building this team.
Cecil Bullard: Yeah. But if I, now, if I have two teams that don't really know and understand their job or people on those teams that don't know and understand their job. It's gonna be much more difficult. And I will tell you, and I think anybody that's got multiple shops and we have lots of clients that have multiple shops, I think the largest we have right now is 26 or 28 shops.
Cecil Bullard: The, that having two shops. Is three times harder than having one shop. And having three shops is probably four times harder than having one shop. And having four shops is easier than having two or three shops.
Wayne Marshall: Yep.
Cecil Bullard: Because at that point you've worked some of the bugs out. You're getting some middle management, get scalability you can't afford, you're getting scalability.
Wayne Marshall: Yep.
Cecil Bullard: So when do I know well. I don't know, probably half or more of the people that, that go to shop. Number two is shop number three. Really probably aren't ready. The one nice thing about shop owners and is that we're. We're insane. We're crazy. We will do what it takes, which means if I've gotta work, 85 hours this week to, to make it work I will do that.
Cecil Bullard: And I think that's a plus in some ways, but I think it's a negative in other ways because we rely on ourselves to do the stuff where we can't expand our business if that's who we are.
Wayne Marshall: Simple, something I learned. In my business past life, simple question. I would always ask staff as we were growing and scaling and changing, they would come up and I go and we want to do it because there's a serving heart that you have as an owner and as you're building you, you just want to answer the question.
Wayne Marshall: You want to help 'em out. But to really build their knowledge, I would always stop and I'd go what do you think we should do? Tell me how you wanna solve this problem, how do you wanna go about it? And when you start listening to 'em, it's a simple test to know how much they really have studied the manuals and the processes.
Wayne Marshall: But you're gonna see that they can start answering that they really do have knowledge of the content and what we're doing. But the second is that it's an opportunity to give them affirmation and saying, perfect, that's exactly what I would've done too. And then they go away. And pretty soon some of those questions that were.
Wayne Marshall: Taking up a lot of your time and the question as it said earlier about being out of the office and Can I leave, can I not? Now you feel comfortable because you've tested knowledge by just a simple question of what do you think we should do? How do you think we should go about that? It's a way to see where they're at, what they got and what they need to be doing.
Cecil Bullard: And I've seen it over and again where the employees become hobbled.
Wayne Marshall: Yeah.
Cecil Bullard: To use a horse term.
Wayne Marshall: Yes.
Cecil Bullard: And because. The, I was talk, I talk about electricity, where does electricity go? It's to the fastest path to ground.
Wayne Marshall: Yeah.
Cecil Bullard: Every single time. Least resistance, no matter what the path of least resistance.
Wayne Marshall: Yep.
Cecil Bullard: If you become the path of least resistance for your employees, then they're gonna come to you for all the answers, which makes you feel great. Don't get me wrong, I love it when employee comes to me and says, Hey Cecil, what? What do we do? And I can give them the answer and they walk me happy.
Cecil Bullard: And I'm like I still got it. I'm still smart, but. Am I hobbling that employee by giving them the answer? Do I? Don't I really wanna teach people how to come up with their own answers and how to make great decisions?
Wayne Marshall: Yes.
Cecil Bullard: And the more I do that in my business, the more likely I'll be ready for shop number two or shop number three, because I'm not the answer man in my company.
Cecil Bullard: We had a big company meeting yesterday. We brought some of our staffing. We're talking about the future. It's what we do at this time of year and I'm sitting in that meeting and, I've got. Lots of years of experience. I've founded the company, blah, blah, blah. And there's a lot of things that I could just go, okay, that's what we're gonna do.
Cecil Bullard: Or blah, blah. It, just I wanna be the answer guy. I know I wanna have the answers. I
Wayne Marshall: know.
Cecil Bullard: And it's really hard to sit there and go, huh okay, what do you think? Or, you but you have to do that. Otherwise you limit your company. I said it yesterday in our meeting, a company, a million dollar company runs a specific way.
Cecil Bullard: You cannot treat a, $5 million company the same way you treat a million dollar company. And a 10 million. And a 10 million won't run like a 5 million. Nope. Nope. And I would say it's the same thing. You can't, when you have one shop, you treat that in a specific way and you can be there.
Cecil Bullard: To answer questions. And so you can hobble your employees, you can hobble your team, you can make them relying on you. But when you go to two shops, you can't always be there. So you can't run two shops. Like you run one shop, you might get away with it. Frankly, it's gonna probably kill you timewise and energy wise but when you get three, no way.
Cecil Bullard: Yeah. And so you can't run a multi shop operation the same way you run a single shop operation.
Wayne Marshall: That's why they say, the only difference from a company that does this much in business to this much in business to the even higher number of business dollars is just structure in its organization.
Wayne Marshall: We get into, as as we, going back to some of the things we talked about, expense, investment, everything that's going on. We get many clients we talk to and they're like, man, I was so busy. We were just slammed. We're this and that. But then you look at the data and then you look at was it the right kind of business?
Wayne Marshall: Sure you were busy, but were you doing the right things? Were you getting structured correctly that allows you to build off this, just as we talked earlier with a multi shop location that you want to build. So just 'cause you're busy. Doesn't mean you're always gonna be profitable, doesn't mean your financials are gonna look the way you want it to look.
Wayne Marshall: It's about building it out, getting it structured, getting it organized so that you can take those next steps. But also understanding and as we talk about with many clients, also know and understand what are the key KPIs that you want to be looking at so that you can truly see are my trending up. Am I trending flat or maybe, and hopefully not trending negative.
Wayne Marshall: And it's one thing to have a bad day or a bad week, it's another thing to have multiple bad weeks turns into a bad month and a second, and then all of a sudden you're looking at your balance sheet and you're looking at your p and ls and you're losing money.
Cecil Bullard: And in this industry we, we have this idea that busy equals success.
Cecil Bullard: So lots of cars in the bay Yeah. Means we're successful. Lot in the
parking
Cecil Bullard: lot. Wait a minute, the guy on the street's got all these cars in his base. Doesn't mean anything. Is he making money? Is are we creating happy clients that are gonna come back to us? Are we profitable? Had a conversation this morning with one of my clients that I was I work with and he's they got a healthy average repair order.
Cecil Bullard: They're booked out five days. And he's I, we didn't quite hit the numbers we need. Okay. So we have either, we have a problem in this particular case of car count, we have good average repair order. And we have good profit margin. And so now we wanna look at car count and how do we bring in two more cars a day?
Cecil Bullard: But if we're not making profit on the jobs we're doing or if we're not making enough profit on the jobs we're doing, then why would I want to bring more cars in?
Wayne Marshall: Exactly.
Cecil Bullard: So busy is not. Busy is not necessarily success, and I don't really want to be busy. I wanna be consistent.
Wayne Marshall: Yeah,
Cecil Bullard: I wanna have cons.
Cecil Bullard: I wanna be consistently booked out five to seven days and I wanna be consistent. I want to consistently have 13 cars a day because I have four technicians and I wanna consistently do great inspections and sell great work to my clients. And I don't wanna be busy is not.
Cecil Bullard: Necessarily better
Wayne Marshall: if you're not. Yeah you've gotta bring in the efficiency numbers. There's so many different variables and I've seen, I had one just here this week also. Because we're into a new year. We're reflecting, we're doing a review on the 2025 numbers. And you know when you sit there and there was about 500 hours.
Wayne Marshall: That were just lost through some inefficiencies and other things, and as I pointed out to the owner and we started talking about it, it's like, what could you have done with an extra 500 hours billable that got. Through the cracks and it was a bigger shop, big numbers, but still that's big dollars.
Wayne Marshall: We sat down and by the time we got through that was about $80,000 that was left on the table. That turns into real money. Significant money. Yeah. That makes a difference.
Cecil Bullard: Our conversation today was, okay, we do have a good average per but could we move it up a little?
Wayne Marshall: Yeah.
Cecil Bullard: I remember having a conversation with my staff and saying.
Cecil Bullard: What else could we do for our clients? And we decided that we were gonna replace their FOB batteries once a year.
Wayne Marshall: Yeah.
Cecil Bullard: And we did it for free as part of the service as far as labor, but we got, I don't, another $25 for batteries, right? Yeah. And so it moved the average repair order up Yeah.
Cecil Bullard: And created more productivity and more profitability out of the company. Yeah. And it's these kind of conversations that. I don't know if I need to be in the middle of them or I even should, but. I want my team having those conversations, what do we do? And also I have a client that yesterday I was dealing with and he's oh my gosh, we did, they did 260,000 when we started with us, probably about one 30.
Cecil Bullard: So we more than doubled, but supposedly on their p and l they lost 13 grand. Yeah. And I'm looking at it and I'm like, oh my gosh, there's no way that it, and we had a $35,000 property tax payment that they expensed all at once.
Wayne Marshall: Got it. Yeah.
Cecil Bullard: And I'm looking through the p understand your numbers.
Cecil Bullard: 'cause he's paranoid. He's oh my gosh. And no, dude, this was your property tax bill. It's it's not part of the
Wayne Marshall: but you know that, that's where when we look at financials, it's a good reminder.
Cecil Bullard: Yeah.
Wayne Marshall: When you get a one-time expense like that, that you're paying. Don't put it as part of your net operating income because it's a one-time deal, so it's still part of an expense, but put it below into extraordinary expense.
Cecil Bullard: Yeah.
Wayne Marshall: It still shows that it's a negative on the net for the month, but when you look at from an operation standpoint, you still had a profitable month, you still did really well.
Cecil Bullard: Yeah.
Wayne Marshall: As a shop. There's, this is where working with your bookkeeper, your accountant, talking about some of the different things because it can skew it and you miss this, that, no, I'm still doing well because if I didn't have this, which was an extraordinary expense that you've gotta put it on your financials, just don't put it as part of your operation.
Wayne Marshall: Or if you do wanna put it at as an operation, then amortize it over the year or over a time period of what that payment was to cover so it stays flat and even, and it doesn't affect your net
Cecil Bullard: operating. If we amortized it, we correctly we earn 12% now. I don't wanna earn 12%, I don't wanna earn 20. I know.
Cecil Bullard: So there's still work to do.
Wayne Marshall: I know,
Cecil Bullard: but it's not, we lost. 20%. Exactly. Yeah. Understand your finances. I want to, I wanna step backward. Don't have another question at the moment. If you do have a question, please, yes. Put it on. 'cause we're here to answer 'em. But I want to, I wanna go backward to this.
Cecil Bullard: Is it an expense? Yes. Coaching is an expense. You're gonna pay for that, but. If that's going to get you an extra 10,000, if that's gonna make your company more profitable, if that's going to increase your productivity, give you the opportunities to put a team together and build a really functional team Yes.
Cecil Bullard: So that you can expand into number two, number three, and become I don't know. I think I'm necessary here still, right? I think I add a lot. But I'm not necessary to the day-to-day operation. And so as I said, the investment that I've made in training and coaching, I still buy books like crazy and Kent drives me nuts.
Cecil Bullard: He's you bought another book? Yeah. I wanna I, I wanna learn new stuff. That has just it's worth millions. It's been worth millions, and it's been worth being able to spend time and do great things with my family and for my family that I don't know that I could have done that if I had done business the way my father had done.
Cecil Bullard: Business,
Wayne Marshall: When I talk to shop owners and we talk about do I do this, do I invest in that coaching, training and the things that come around it, and the biggest asset. That you have in your business are your people and yourself. And I always tell 'em, it's yeah, you wanna invest in that asset.
Wayne Marshall: But I also tell 'em, I said, if you're ever gonna bet on somebody, bet on yourself. So if you can make yourself better, stronger, and you can work in a different way. That is gonna give you a return on investment. Obviously this in a financial way, but then, as I've also used the analogy, it's we go to the doctor, I wanna be healthy, I wanna live long.
Wayne Marshall: I wanna do these things, doctor. I says, eat, pet, or exercise more, do all the things. So I join a gym, it's an expense. But if I take advantage of the gym, then the gym membership, and I get myself healthier, that's gonna give me better quality of life to go out and do and enjoy the outdoors. Maybe give me longevity of life to have greater experiences with my grandkids and my kids, and whatever you want to do as you get to that point in life.
Wayne Marshall: So it's,
Cecil Bullard: I think it's also,
Wayne Marshall: it just gives back and back.
Cecil Bullard: I think it's also value of life. Yes. Because I just don't want to like, go through this existence, which is
Wayne Marshall: Yeah.
Cecil Bullard: Short enough.
Wayne Marshall: Yes.
Cecil Bullard: And get to the end and go, okay. Yeah. I lived a long time, but I didn't have quality of life, the
Wayne Marshall: value and quality
Cecil Bullard: during that time.
Cecil Bullard: And so the investment in the gym, if you never go to the gym. It isn't an investment, it's an expense. You wasted your money, but
Wayne Marshall: yeah, that's
Cecil Bullard: what I meant. But if you go to the gym and you take care of yourself, then inevitably you will live longer and you'll have better quality of life. I think coaching, it's not necessarily about money.
Cecil Bullard: We have the third type of people that we have come to us. They got plenty of money. Their shop is profitable, but they don't have any time, or they don't have the quality of life they want. Or they have a child that is gonna come take over the business that they want to have quality of life.
Cecil Bullard: Yeah. And so they come to coaching and they ask for coaching so that they can learn those types of things. So for me, coaching in part is about profit. 'cause I want to be profitable. 'cause when you have money in the bank. It's easier. You can take more risk, you can do more things. You're be more calculated, more at peace, et cetera.
Cecil Bullard: But also for me, it's as much about quality of life and being able to say, I got a wild hair up my fanny and went to Vegas last week. I had a couple of days, didn't have much to do, and I was like, I'm gonna go hang out in Vegas. It's warmer. And, being able to do that and know that everything else is gonna happen the way it's supposed to happen.
Cecil Bullard: Yeah. I think it's in, for me, it's invaluable. And I think I'm gonna live a lot longer because of it.
Wayne Marshall: Yeah. E Myth. Great book. And per what? Oh, you read a lot of books.
Cecil Bullard: Yeah. E Myth is in my top 10. There's a, there's another book I'm I'm currently reading. Something hospitality un unbelievable.
Wayne Marshall: Unexpected hospi.
Cecil Bullard: Yeah.
Wayne Marshall: And unexpected hospitality.
Cecil Bullard: No, it's, no,
Wayne Marshall: that's not yet.
Cecil Bullard: It's not, but it's,
Wayne Marshall: I know the book you about, and I apologize to the people out there, but I can't
Cecil Bullard: of
Wayne Marshall: any other,
Cecil Bullard: There's probably, in my top ten's, a top 10 for me, and the E-Myth is everything about system, process, running the business, understanding it.
Cecil Bullard: I don't know that we in the automotive industry have a really good. Financial book for our business because we need to look at our business financially a little different than, the hairdresser down the street or the grocery store. And I'm not sure there's a, that great book, but there's a lot of good financial books out there.
Cecil Bullard: Yeah. To be had that will help you understand that or. There's some great coaches and coaching companies that can help you with that.
Wayne Marshall: We one of the, I, and this has been probably 10 years ago, I read this book and it might even be older than this, but it's just simply the title is Finish and.
Wayne Marshall: The reason I like this book, and I still reference it still to this day, is we as people, especially at the beginning of the new year, everybody starts off with New Year's resolution. Okay, this year I'm gonna get in shape, I'm going to eat better, I'm gonna do this, whatever it is. We have it for our businesses, we have it for our personal lives, so on and so forth.
Wayne Marshall: But the thing about when you start looking about finish, it's about, as you set goals, how do you get to the end? And how do you finish? And one of the things that it brought up, and I thought it was very, 'cause using exercise and getting in shape is an easy one. It's okay, I'm gonna run. I'm gonna go out, I'm gonna run, I'm gonna get in better shape, I'm gonna do this.
Wayne Marshall: But the question we never ask ourselves, do I even like running?
Cecil Bullard: Yeah. What's the end? Where do I want, where do I, what's the end result for me? Is it just about running or,
Wayne Marshall: so for me, I can tell you I hate running and I used to do it when I was younger, but I would, it would drop off 'cause I hate running.
Wayne Marshall: It wasn't, some people love to go out and jog and they love to run. It's their therapy. Me. It wasn't, it was a job, it was a chore. So how do you think I finished? I didn't, I dropped off. I didn't complete my goals, went off to the side. And it's a good book that just starts to really work through is that if I wanna be this and this, do I wanna read, do I even like reading business books as an example?
Wayne Marshall: Some people just like Cecil Devourer and just love getting them. I like it too, but I know other people I've talked to who's yeah, no, I don't wanna read all those books. So how else do I do it? Maybe it's a podcast, maybe it's whatever it is. If there's a place you want to go, decide what fits you first, then forcing you to do something you don't enjoy.
Wayne Marshall: 'cause you'll never finish the goal.
Cecil Bullard: Mark Buckingham has a book out. It's now Consider Your Strengths, I think is the title. It talks about educational theory in a way.
Cecil Bullard: In the past, if you were really good at math, but you were terrible at English. They wanted to spend a lot of time with you in English, right?
Wayne Marshall: Yes.
Cecil Bullard: And this book really says if you're really good at certain things, then those are the things you should be doing, and you should be finding people. Yes. And surrounding yourself with other people in your life or in your company that are good at the things that you are not good at and makes
Wayne Marshall: a great team.
Cecil Bullard: Yeah. And we certainly have that, a lot of that here, which by the way uc, personalities make make us depersonalize a little nuts. But. It that is, I think it's important to say, these are the thi. Not only are these the thi this is the result I want, but these are the different ways that I could get there, and these are the ways that I'm going to enjoy.
Cecil Bullard: Getting there. And there's always gonna be some pain involved. If you've gotta lose weight, it's, there's gonna be some pain involved. You're not gonna probably eat as much. You're gonna exercise a little more. You're gonna change some of your habits. You want to be more successful in your business.
Cecil Bullard: There's gonna be a little pain involved. You're gonna have to learn some things that you currently don't know. And that can be
Wayne Marshall: adapt a little.
Cecil Bullard: It can be painful.
Wayne Marshall: It can.
Cecil Bullard: But yeah. I think it's a fantastic book. And I think. The E-Myth, obviously it's in my top 10. I'm not sure that now consider your strengths would be in my top 10, but might be in my top 50.
Cecil Bullard: Understanding what you do well and then doing it well and bringing other people in for the things that you don't do well. That's a hell of an investment.
Wayne Marshall: It, it is. I always, we both play sports and, grew up on those things, and it was in team scenarios, and there was roles I could fill very well in the football field or basketball court.
Wayne Marshall: If coach asked me to go guard the seven foot center, I'd give it my best, but my odds of success went way down. So it's also in those scenarios of understanding your team. Put him in the best position of success. That's why I like to talk about sports analogies when I talk to customers and clients. Yeah, no, and I, you get it on the team.
Cecil Bullard: I think sometimes you gotta guard the seven foot center. Because that's it. You're the, you're it, right? Yeah. And I did that. Sometimes you do. And it wasn't as successful. But we got through the game,
Wayne Marshall: I always loved telling the story that when I played football growing up, yeah, I'd go up against a guy across the line.
Wayne Marshall: He was bigger, stronger, but at least he knew I was there 'cause I was gonna just beat on him as much as I could. So I. I will let you read this
Cecil Bullard: one. Bill Murphy. Thank you for the question. Bill, do you recommend first training on profitable services? IE alignments breaks after giving them the knowledge putting a spiff together to increase bay and tech profitability.
Cecil Bullard: As long as you have the right tools to perform those services with the most productive ways, alignment machines can complete a 20 minute alignment compared to a machine that takes 40 to 50 minutes to complete. Invest in your equipment that will deliver them the best. I would tell you that I think our thought process in this particular area is flawed.
Cecil Bullard: I need to make everything in my shop profitable, so I understand that I might have a guy that's really great on alignments who can do a 20 minute alignment and we can charge $170 for whatever. And are. Gross profit on that is gonna be pretty good. But I think if you start looking at gross profit on jobs, you're gonna find that your alignment jobs are not necessarily the most profitable jobs that you're doing.
Cecil Bullard: I'm not saying they're not profitable. And that's not the point I'm making. I love the comment that I get now we're our least profitable jobs are diagnostics. Whoa. Wait a minute. I'm using my most expensive guy and my most expensive equipment and I'm the guy I'm gonna pay the most money.
Cecil Bullard: Yeah. And yet we're not profitable on that job because we're not estimating it properly. We're not accounting for the time properly, et cetera. And why not? Why are we not profitable as profitable when we do diagnostics, as when we do alignments? It's a management function. It's not
Wayne Marshall: right.
Cecil Bullard: It's not well, the customer refuses to pay for diag. We have lots of shops that earn, just as much money on diagnostics as they do on alignments. Yeah. And more frankly. Yes. And yes, I agree with you. If I've got somebody in my shop who's really good on alignments I probably don't want 'em out doing diagnostics if they're not good on diagnostics.
Cecil Bullard: For me, one of the, one of the cardinal rules of dispatch is never give a technician a job they're not qualified for, because what happens is three days later, the tech is frustrated. The owner of the car is frustrated and the service advisor, shop manager, whatever, is frustrated. We, everybody's frustrated and nobody's made any money.
Wayne Marshall: Yep,
Cecil Bullard: yep. And the customer's unhappy. So I don't, that's not what I'm talking about. I certainly don't want to dispatch jobs to people, but I, in my business, when I set my business up, I wanna make sure that when we are doing diag, that there's a profitability that I want to, and can and should get out of that I don't wanna do the job.
Cecil Bullard: If it's not gonna be profitable, then go do it somewhere else. I have to make every job in my business be profitable. And we know that some jobs are gonna be more profitable, there's gonna be more gross profit per hour and certain jobs than there are others. Throw a set of tires on in, 35 minutes and you're, you may make four or $500 and do a break job in 35 minutes, and you might make $200, depending on how you're estimating, et cetera.
Cecil Bullard: And it is a blend. That's the other factor here. I've got to take care of my client because I'm fearful, right? I'm very fearful my whole life I've been fearful Yeah. That somebody will try somebody else and they'll go I like him more than I like Cecil. And, or, they treated me better over here.
Cecil Bullard: I feel better. It's closer to my house, whatever. And so I don't want my client going somewhere else. For anything, frankly, once you're here and you love us I wanna supply what you need, right?
Wayne Marshall: Amen.
Cecil Bullard: And I want to do that profitably in my company, if at all possible, which also means that I've got an investment in tools and education, technical training with my people so that they know what to do and how to do the job and what to do when.
Cecil Bullard: I don't know what to do. Yeah. I, that's a question I usually ask in an interview. You've done everything, you've, you went through the book, you read everything. You did everything it told you, and you got to the end and the car's still not fixed. Now what do you do?
Wayne Marshall: Yeah.
Cecil Bullard: And what I don't want to hear is, oh I'll spend another three days. Working on this car, I'll get it figured out. No. What's the next step? Oh,
Cecil Bullard: I'm gonna call my friends and ask anybody, does anybody know a, I don't know, a Chrysler specialist on this stuff? Yeah, I can weeks, not a week goes by that I don't get a call or a message from one of our clients that says, Hey, we've got this price learner shop.
Cecil Bullard: We've got this Toyota, we've got this. This Mercedes, and we're having a struggle. Does anybody know of a really great Mercedes? Here's the best Mercedes guy I know, right? Yeah. Let's call that guy and have a conversation.
Wayne Marshall: Yeah.
Cecil Bullard: Because I don't want my tech digging in and spending three days on it that we can't get paid for.
Cecil Bullard: So I think. As the business changes and AI's gonna change us a bit the technology that we have is changing our industry. Yeah. The fact that we have these private equity companies coming in trying to buy up the industry is changing our business. That we have to get smarter and better about how we do business and how we're profitable.
Cecil Bullard: And as we do that, we create more value and we create more life. It that great question. Certainly if I have a a really good guy doing certain jobs I want to try to give them, but, every once in a while I probably have somebody else that needs to learn alignments. That might take two hours to do that alignment, but every once in a while I might. Need to funnel that alignment to that guy with the right mentor trainer in place to help him learn how to do those alignments and take 20 minutes instead of four hours.
Wayne Marshall: Gotta play the game. It's like sports.
Cecil Bullard: Yeah.
Wayne Marshall: Practice. But until you do it,
Cecil Bullard: sometimes you gotta put your bench on to, to
Wayne Marshall: yeah.
Cecil Bullard: Give you bench, see what they experience, and see what they see, what they have got.
Wayne Marshall: See what they can do. A little bit of that stress test. Is it,
Cecil Bullard: I used to bring, I used to bring service managers in when I was growing my, my, my shops.
Cecil Bullard: And I would train 'em for two weeks. I would, or they'd have a trainer
Wayne Marshall: Yeah,
Cecil Bullard: mentor that literally, they were side by side for two weeks and then I'd call in and I'd just, the, in the morning I'd say, oh, geez, I'm really sorry. Something came up. I won't be in. So now the manager's there by himself.
Cecil Bullard: Yeah. And I'd come in around one o'clock, hey, and I didn't do anything. Sat home,
Wayne Marshall: just,
Cecil Bullard: Just chilled out. You wanna see what would, because you can't kill my business in four hours, it is not gonna happen. And I remember one time I came in and the new service advisor manager was so excited.
Cecil Bullard: He is I sold this engine for $16,000 and this is back when engines were. Seven or eight. And I was like, wow, that's great. And the customer bought it. Yeah. And I looked at the estimate and they had tripled the cost of the engine. So the engine itself, we paid, I dunno, three grand for, yeah. And they sold it for 12.
Cecil Bullard: And I was like, oh, that's, ah, that's really great. Then I called the lady up that, that, that bought it and I said, good news. He overpriced the engine because he's relatively new.
Wayne Marshall: Yeah.
Cecil Bullard: So it's gonna cost you about six grand less. And she was happy and I get to see what they can do.
Cecil Bullard: We have to stress test our people something. Yes. And see what happens.
Wayne Marshall: Yes.
Cecil Bullard: And I don't even know, I think when you're stress testing, you don't even want to be there. You really want. Them to have to rely on their own knowledge and decision making. And you never do that in a place where it's gonna, greatly.
Cecil Bullard: Where it could ruin your business. But yeah, I love to, I said
Wayne Marshall: four hours.
Cecil Bullard: Yeah, four hours. Yeah.
Wayne Marshall: You find out what you got,
Cecil Bullard: you pick up the pieces. Then another two weeks of training, then I would take a day off. Yeah. And then another two weeks of training and that's I love that. I love. I like putting people in positions where they need to think and they need to come up with solutions because they may not solve the problem the way that I would solve the problem, but if they can solve the problem and get to the same result and conclusion, and I think that's another thing about the difference between being a really good leader manager.
Cecil Bullard: And or a really good, I'm a great sales guy or I'm a great tech, is that I'm able to help other people learn how to solve problems themselves. And I'm looking at results and not at how they do the job. My dad was teaching me how to pull a radiator and he crawled under the car and put up. A bucket under it and pulled the pitcock.
Cecil Bullard: And then we stood there for 25 minutes and and then the next time I had to do a radiator, I was like, I'm not standing here for 25 minutes. So I put the bucket under, I pulled the lower radiator hose and my dad was like, you can't do it that way. You, that's not how we do it. We use the pitcock.
Cecil Bullard: And I was like, not me buddy. And by the way, I got the job done 25 minutes faster than you did, I think sometimes we need to be open to that in initiative. Are we getting the right result, the same result? And if we haven't defined the results we want, that might be one of the problems that we have.
Cecil Bullard: 'cause our team doesn't know what that is.
Wayne Marshall: I know I shared this on a previous short little lessons I was putting out on leadership, and one of the things I say is, sometimes we need to be listening and really working with our team because not all the best answers and solutions come from the front office, and we sometimes have a tendency to think that we gotta do.
Wayne Marshall: And if we listen and work with our team, you're gonna get great answers, great suggestions, and great things that can be done. Coming from the shop floor. Just as we talk about team, have those communications, build those things
Cecil Bullard: well and what, when we talk about having a great team, part of that is about communication and people won't plan a team where they don't feel like they have value or they can have input.
Cecil Bullard: They just won't, over time they'll completely lose interest and they won't be involved. And so we talk about having these communications and having team meetings and blah, blah, blah. And the owner's nobody will participate. Yeah, if you're gonna knock 'em every time they have an idea, if you're gonna say no or no, we gotta do it my way, or
Wayne Marshall: they
Cecil Bullard: quit
Wayne Marshall: talking.
Cecil Bullard: I, I would tell you that we need to sometimes actually do something that we know. Failed 10 years ago. We did it 10 years ago and it failed. Sometimes we need to let our team try it again because sometimes it works now. And even if it doesn't, they at least learn the lesson that it didn't, isn't gonna work.
Cecil Bullard: Yeah. Instead of saying, no, we won't do that. 'cause I tried it 10 years ago.
Wayne Marshall: Bill, thank you for our last question of the day. What time do you dedicate in training programs, mentorship for each employee, monthly, front and back shop staff? Is there a hard rule to follow? And any recommendations we have?
Wayne Marshall: I would tell you there is no hard rule to follow. Anything you do is gonna be better than doing nothing. And I think every employee's gonna be a little different. And I know when I had my staff, I would try to when I was at a different company and the old company I owned before I joined the institute.
Wayne Marshall: I would always encourage them to at least have a one hour every other week time with somebody in the industry or in a business that could help them with some of their own growth. I always tried to do it with someone that was outside and we all know people, and I know when I looked at some of the different people on my staff, I ended up talking to some of our different clients even who would then come back and I said, one of the guy happened to be a senior VP at Advance Auto, and I said, would you be willing to do this? And this is a program I wanna run. He goes, oh my God, I would love to give back a little to your company. So the biggest thing is just do something. Don't do nothing. Whatever you're gonna do, help do what needs to be done.
Cecil Bullard: I think too, you as part of the way that we pay technicians and or service size, literally anybody in the company. Part of that is we're trying to incentivize education, training and Right. And knowledge building. And in most of the pay plans that I would put together for shops, the technicians will have an eight to 12 hour a quarter training, meaning they're probably sitting in eight to 12 hour worth of training in any given quarter.
Cecil Bullard: Given 48 hours a year. A, a good week's worth of really good training and keeps them knowledgeable and growing and et cetera. Even for service advisors in their pay plans, I want to have some training as part of, if you get this training, if you. Learn new things, you're gonna get paid more money.
Cecil Bullard: 'cause I can do that.
Wayne Marshall: You're making yourself more valuable to the company.
Cecil Bullard: And I also say when you're talking about training and mentoring you're almost talking about two different things, right? Yes. If you're mentoring, you're, there's a training aspect to it.
Cecil Bullard: But training in and of itself doesn't necessarily include mentoring. If I hired a brand new, a tech that's, 55 years old and been in the industry for 30 years they're still gonna come in my company and have a mentor for a minimum of 30 days. Someone that they can go to ask questions, someone's gonna show 'em, where the bathroom is, where's the toilet paper if it'ss not in the bathroom, how do you have things?
Cecil Bullard: How do you clock in and out? Just the yes. The thing, oh, that's a machine I've never used. Can you show me how to use that machine? I wanna have someone that's their go-to and I used part of the pay that I would pay the employee, so I didn't pay 'em quite as much as I would until they were done with mentoring.
Cecil Bullard: So I always withheld two to $4 of their initial pay per hour and said, when you sign off on these things as sign off. Yeah. With your mentor, the two of you signed it off, then that money is currently going to the mentor. It now comes to you. There's your 30 day raise. Your 90 day raise because you've shown that you can do these things.
Cecil Bullard: And so I bel I believe that we should have mentoring and I believe that we should have a mentoring program and plan that's well thought out in our companies. For those positions, especially if we want to have two shops, three shops, four shops, or Oh
Wayne Marshall: my god,
Cecil Bullard: Build the,
Wayne Marshall: very much so
Cecil Bullard: The multi shop thing.
Cecil Bullard: So yeah.
Wayne Marshall: Guys, we want to thank and girls, sorry folks. We want to thank you for joining us today for Ask Us Anything. Look forward to seeing you again in the near future. Keep the questions coming. As you saw, if you've got something that we didn't address or you think of something after the fact, go ahead and email us at info at we are the institute.com.
Wayne Marshall: We'd be happy to follow up, share anything we can that can help and make this a better industry as we tell everybody we want to do. Thank you.
Cecil Bullard: Thank you for your time.