97 - Double Your Business with Cecil Bullard's Exclusive Blueprint! 💼🚀

97 - Double Your Business with Cecil Bullard's Exclusive Blueprint! 💼🚀

May 23rd, 2024 - 01:05:13

 

Show Summary:

In this value-packed webinar hosted by AutoLeap, industry expert Cecil Bullard dives deep into the financial engine of a successful auto repair business. He shares powerful tools and frameworks to help shop owners go from $1 million to $3 million+ in revenue by understanding labor rates, productivity, margins, and capacity planning. With practical calculators and real-world examples, Cecil shows how to improve effective labor rate, set realistic goals, and optimize team structure. He also emphasizes the importance of building systems, increasing average repair orders, and avoiding common financial pitfalls. This session is a must-watch for shop owners serious about growth and profitability.

 

Host(s):

Amber Wright, AutoLeap

 

Guest(s):

Cecil Bullard, Founder & CEO, The Institute

 

Episode Highlights:

[00:04:15] - Cecil explains there's no silver bullet; growth comes from understanding your numbers and planning with precision.

[00:05:41] - Using a calculator, Cecil breaks down how labor rate, tech count, and effective labor rate determine a shop’s revenue potential.

[00:09:49] - The second calculator helps visualize how margins, car count, and productivity connect to profitability and owner income.

[00:12:58] - Cecil shows how low effective labor rates hurt profitability, often due to discounts, comebacks, or inefficient diagnostic processes.

[00:17:50] - Improving gross profit margin from 42% to 58% drastically lowers sales and car count requirements to hit the same profit target.

[00:20:10] - Raising average repair order through better inspections, sales training, and marketing helps shops serve better customers with fewer cars.

[00:22:25] - Increasing productivity through better processes and scheduling is critical for billing more hours and reaching growth goals.

[00:28:45] - Cecil compares a business to an engine, if it’s underperforming financially, something internal needs fixing.

[00:34:43] - The power of productivity: every additional hour billed beyond fixed costs flows straight to the bottom line.

[00:55:27] - Cecil wraps up with a warning: don’t chase volume through discounts. Strong margins and systems build sustainable 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://www.youtube.com/watch?v=Kk5mzehqZbQ&t=8s

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!

 

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Amber Wright: Hello everyone joining us today. Welcome to the end of May and what feels like only the second webinar in AutoLeap's 2024 history, which I think it actually is. And normally we put these on every single month, but I think between all of the Fall conferences are. Yeah, spring conferences that we've gone through we've been juggling a lot and we wanted to make sure that the next webinar was with our very own Cecil Bullard.

Amber Wright: And so before I get started, and as everybody is joining in, which we appreciate you guys taking the time, I did wanna acknowledge that we apologize, we had to reschedule this. And I'm so glad that we were able to get it back on and see this much interest in this topic. And so, before we dive in, and I mentioned the topic and what we're gonna be focused on today, I did wanna go over some housekeeping notes.

Amber Wright: We are recording this session as we do every single webinar that we have. We will put this online on, on demand. And I wanna kind of point out, 'cause somebody's already mentioned it in the chat. So, previously we used to do surveys at the end of every webinar and we would compensate for the responses that would happen on the surveys because at the end of the day, it's what helps us plan and forecast the topics and speakers that our attendees want to hear.

Amber Wright: At some point along the way, we have had people take advantage of that. And so we will no longer be compensating for the surveys. However, I cannot stress enough that the success of these come from your feedback. And so we would continue to love to have that feedback and where we feel like we can reintroduce compensation, we absolutely will.

Amber Wright: But at this point that will not be moving forward. So unfortunately, I had to start with some barrier of bad news, but since it was flagged already in the channel, I wanted to make sure that I take care of that. So, this session is being recorded again, and we wanna make sure that we create a most interactive session for you.

Amber Wright: Again, we put these on for you as business owners, service advisors, technicians, whoever is joining us today, so that you can continue to evolve as a person and growth. And then also from a business standpoint. And so generally these types of sessions are held by coaching companies like the institute that you don't always have access to direct access.

Amber Wright: So I wanna say thank you to the institute for always being willing to put these on for our attendees because honestly it is, truly valuable that you provide this kind of thought leadership. So love to have you guys let us know where you're joining from. And without further ado, I wanna kind of introduce and align to the topic today.

Amber Wright: And so it's really all about growth and efficiencies from the front of the house and the back of the house. So the topic is unleash the power, double your business from one to one plus to 3 million with our exclusive blueprint. So, super excited for you to dive into this Cecil today and really help us understand the efficiencies that can be run for multi shop operations and how, you know, it's not necessarily the point of sale system, the SOPs and bookkeeping, but really how to create champion leader.

Amber Wright: And teams. And to introduce our speaker today, I think a lot of you guys are very familiar with our very own Cecil Bullard, who is the founder and CEO of the Institute for Business Excellence. Cecil has spent most of his life in the automotive service and repair industry. He's held every position and operated multiple successful shops.

Amber Wright: He now serves as a consultant, trainer, and teacher. He believes that there is an unlimited opportunity and potential in today's shop and that your business should provide you the life that you want. So Cecil, thank you so much for being here. We really appreciate it, and I'll let you take over. 

Cecil Bullard: Ready to go.

Cecil Bullard: Thank you, Amber. Sorry that I had to reschedule this, so I apologize myself to everybody. Lots of events going on and lots of travel and things get messed up. So thank you for being patient with us. Absolutely. We're gonna talk, I hate. The fact that we have people that go, let me show you how to take your business from a million to a million a month or whatever, because there, there aren't any magic tricks, there's no silver bullet.

Cecil Bullard: It's really understanding your business, understanding where your business is, where it needs to be and if you were to run at a certain amount, what does that look like? Really kind of creating the picture for that. So that's kind of, what we're gonna talk about today. So I wanna start, excuse me with a couple of different small calculators that I have put together.

Cecil Bullard: The one that you were looking at the one that's gonna pop up on the slide. This is a sales goal calculator. Now you saw a QR code, which will come back to us and that QR code will allow you to go online and to not only get, a a printout of the PowerPoint that we're using, but also the two different calculators that I'm going to talk about.

Cecil Bullard: Here's a calculator that I put together just to say, okay, what's my labor rate? What's my effective labor rate? How many people do I have in my shop? What should I be doing? Be? And there's a few different calculations in this little calculator, excuse me. They keep changing the size of things on me.

Cecil Bullard: So we have a shop that has an hourly rate of one 50. Typically, whatever your posted rate is there's only about maybe six to 10% of shops that actually hit their posted rate. And so you have this thing called an effective labor rate. That's when you add the discounts and the warranties and the things you give away along with whatever your labor rate is.

Cecil Bullard: Then you have a specific labor rate. So we've gotta shop here with a $150 labor rate. Let's say it's $145 effective labor rate. 'cause they're pretty good at managing it with six technicians and two service advisors. The sales goal should be 3.1 million for the company for the year. So if you want to know how to go from one to say three, if you're at 1 million now, how many people do you have?

Cecil Bullard: What's your effective labor rate? Parts to labor ratio, what's my hour worth? We're gonna get into that a little bit. And and so what I want to do is I want to create a picture of what 3 million looks like. Well, 3 million in this shop with a $145 effective labor rate and six technicians.

Cecil Bullard: I would need six technicians. I could play around and say, well, what if I raise my labor rate? Let's say that we moved the lab rate up to say one 70 and we got our effective labor rate up to one 60. What could I do with say, five technicians? I don't I've got a seven bay shop or an eight bay shop, so I don't think I can fit six technicians in well with five techs.

Cecil Bullard: Which would also take two service advisors. The rule of thumb for me is for about every two technicians, two and a half technicians, I want to have a service advisor. And that's about having the time to write the ticket up, build the value for the client get the job done, help the technician be productive.

Cecil Bullard: We'll talk about that a little bit, but in, in a shop with five techs at $160 an hour, effectively I need I would do about 2.8 million. And and so, we have goals for the company. We have goals for each technician, and we have goals for the service advisors. So it really starts with creating whatever the picture is.

Cecil Bullard: So if I'm doing 1 million and I want to do more what's my maximum capacity? If I walked into your shop and I saw a three bay shop, I would say, okay, well we probably can't have more than three technicians. And we have had three bay shops that did two and a half million dollars. But it's difficult to do because of the space limitations that we have.

Cecil Bullard: I mean, if my hourly rate is right and my effective labor rate is correct, and my parts to labor ratios, I'm getting my parts margins correct, then yeah, I could probably do two, 2.2, 2.5 million with three techs. Just not what I plan on. It's not. Easiest way to do it. So, this is a little calculator that you can get in here and say, mess around with the number of texts the effective labor rate, et cetera.

Cecil Bullard: And it'll kind of spit out the numbers for you. There's another calculator here that I really want you to see. This is this is kind of my main calculator, and it helps owners and managers understand the relationships between margins, average repair order, car count, people, sales, et cetera.

Cecil Bullard: So in this business here, we have an owner that wants to make $150,000 a year in a paycheck. They want to have 300,000 in net profit at the end of the year. Additional profit owners get paid in two ways. One is I get a check for what I do in my company. If I'm a manager, if I'm a tech, if I'm a service advisor, I get paid for those roles.

Cecil Bullard: Then I also get paid for the risk that I have. That's my net profit. I only wanna work you know, I want to take four weeks vacation. I only wanna work four days a week in this particular shop I'm gonna need a service manager because I don't want to be there every day. So I need somebody that can take that responsibility.

Cecil Bullard: We're gonna pay that person about a hundred grand a year, and we have about $450,000 worth of rent, utilities, banking costs, vehicle cost, et cetera. Insurance, you name it. And and so this calculator will then tell us what we need to do based on our gross profit margin car count effective labor rate, average repair order and productivity.

Cecil Bullard: So we have a shop with 42% gross profit margin. I use 42% and I've used it for many years because we we bring in. 20, approximately 20 new clients a month as a company right now. And out of the 20 18, 17, 18 of them have 42%, 43%, 44% as their gross profit margin. Because they're unaware of those things.

Cecil Bullard: They're not paying enough attention to those things. And so that's why I use that number. I still see it every single day when we're talking. In fact, we were talking to a brand new shop this morning. I was meeting with in our program, and they had a 42% gross profit margin. You know, that's not what we want it to be.

Cecil Bullard: We want it to be 62, but 42 is starting point. They have a posted labor rate here of about 140, but their effective labor rate is only 110. So they're doing oil changes at $80 an hour. They've got some comebacks where it's $0 an hour. They're having their technicians do dvs and they're paying their techs, you know, three-tenths or five tenths to do the DVI, but they're not charging anything.

Cecil Bullard: And they also have probably an issue with diagnostic where they're starting out with an hour and their technician might be taking two or three. And so the tech is getting paid for that because it's an hourly person, but they're not billing for that. So their effective labor rate is lower than they're posted.

Cecil Bullard: They currently have an effective labor rate of $110, even though they're posted is one 40. And we see this all the time. A current average repair order is three 90. This might be a little low but for the industry last year, I think on one of the surveys that even Auto Leap did, the average repair order was about 3 56.

Cecil Bullard: So three 90 is not out of the realm. Most of our shops, if your general repair are gonna be around seven 50 to about 900. If your German car we're gonna be somewhere between about 1,320 200 for an average repair order and or for our diesel shops, their average repair orders are in the 3000 to $4,000 range.

Cecil Bullard: So this shop would be a general repair shop might do 20% tires, whatever. And they have a $390 average repair order which is 1.8 hours a car with $110 effective labor rate. We're assuming you look over here on the right, that the parts of labor ratio is 45% parts, 55% labor, and that would be of a hundred percent of what we sell.

Cecil Bullard: How much of that is parts, how much is of that, is labor? They have four technicians in this shop. It's probably a seven eight bay shop and they have 72% productivity. And the reason I use 72% productivity is 'cause that's where we are as an industry. A lot of the shops we work with are doing a hundred, 110.

Cecil Bullard: Many of the shops are at 90%, but as a industry we're about 72%. And now that's, this calculator will also tell me, okay, this, if this is what you want to earn, and this is where your business is at, in order for you to earn what you want, you gotta do $2.4 million in sales, approximately, which is a little over $9,200 a day.

Cecil Bullard: And you're gonna need 23 cars 23.7. So let's say 24 cars in your shop every day. And you're gonna need 7.3 technicians to get the work done because of your productivity. And if you need another 11 cars a day because you don't have 'em, and you spend $69 to bring a new customer in, it's gonna cost you another $201,000 to to market and bring the right number of customers in.

Cecil Bullard: No matter what you do because your tech is $33 an hour and you have a load of about 30% on the tech FA few to workers' comp, it really costs you 42.9. But with the productivity of 72%, your cost per hour is $59 and 58 cents. So for every average hour that you bill out to a customer or you, your real cost for that hour is $59 and 58 cents.

Cecil Bullard: And so you don't have the margin you need. Down here it's telling us that if we really had a hundred percent productivity, that we could be $107 an hour and 25 cents. But with our current productivity, we need to be $149 an hour effectively. So we got some work to do. We kind of know now, hey, I can increase our.

Cecil Bullard: Our effective labor rate. I can pay attention to some of those things. Bring that up and it will lower my cost and put more money in the bank. The other thing that we're seeing here is that we're gonna lose about $138,000, almost 139 to productivity. Meaning I've got these techs, these four guys, and they're supposed to be billing eight hours a day.

Cecil Bullard: So I should be billing 32 hours out every day. But because we're only 72 percent productive, we're only billing about what would that be, 21, 22 hours. So we're not billing enough hours out and our cost for labor has gone up, which is hurting us. So now I'm gonna fix some things 'cause I want to do 3 million or I wanna at least make the money that I wanna make here.

Cecil Bullard: So I've gotta go in and fix gross profit margin. There are multiple ways to do that. I can raise my labor rate, I think, every consultant in the world is gonna look at your labor rate and say, let's bring that up. Some I can work with my staff and create more effectiveness in when we're charging our labor rate and what we're charging.

Cecil Bullard: I could go through my can jobs, bring those up a little bit. I could get my parts matrix in place bring my parts margins up. Cecil wants 62% with loaded labor. We're gonna put 58 here. It's 42 right now, so we're gonna fix a few things. Get to 58% when we're at 58%. What's cool now is now we only have to do 1.7 two 4 million or about $6,700 a day instead of a little over 9,000.

Cecil Bullard: And I only need five cars, so I don't have to spend 200,000. I can spend $88,000. To bring those extra five cars in. And I don't need seven techs, I only need 5.3. I'm not done because I'm still losing $138,000 to productivity. I'm not done here because the business is I've gotta go hire techs and I've gotta bring cars in and I don't wanna spend that money.

Cecil Bullard: So what I am gonna do is I'm gonna work on my effective labor rate. I'm gonna I'm gonna maybe lower what I'm paying the technicians for the DVI. We're gonna work on the speed, get it down faster. I'm going to look at my can jobs, make some minor adjustments there. I'm gonna be very careful about diagnostics or testing.

Cecil Bullard: I'm gonna have three different levels. So, we're not always gonna start with an hour and we're certainly not gonna stay with an hour. I'm gonna teach my techs that when they've spent an hour on the car and run some tests. Stop. Tell me what else you need to do and how much more time so we can get to our customers and sell that additional time.

Cecil Bullard: We're gonna move our effective labor rate up. We're not gonna change our posted rate of one 40. We're just gonna move our effective labor rate. We're gonna come up to say, 1 35. At 1 35. I still need five cars, but now I only need a third of a tech. So I don't need five techs. I don't need seven techs.

Cecil Bullard: I'm starting to get to a point where my techs can do the job. Now the other thing we're gonna do is we're going to increase our average repair order. We're gonna do it in multiple ways. We're gonna do it by bringing better customers in. We're gonna change our marketing a little bit. We're going to do it by building better relationships.

Cecil Bullard: We're going to do it by helping train our service advisors to be able to sell better. So we're gonna raise our average repair. Now, I said. If you're a general repair shop and you're working with us, we're kind of setting the target around seven 50 ish. We're not gonna go to seven 50 here. We're just gonna bring it up to, let's say we bring it up to say, five 80.

Cecil Bullard: So, you know, we're gonna sell one more thing on every other car that comes in. If we go to five 80, how many more cars do I need? Now, the cool thing here is now I can be a little more selective and I'm not spending anything more on marketing than I'm currently spending because I don't need to bring more clients in.

Cecil Bullard: In fact, you know what? I want to have more flexibility 'cause I don't wanna work on anything that's more than, say, 15 years old. So I'm gonna bring that average Appar up to six 20 instead and now. I can be even more selective on the cars that I'm actually going to work on. And by being a little bit selective, it's actually gonna help me move some other things up because I'm going, I'm not gonna work with the guy that wants to bring his own parts in, or the guy that's gonna argue or fight with me about everything.

Cecil Bullard: I'm gonna work with a little better customer. I'm gonna be a little more selective about the cars I bring in. And I think if you're a shop owner, you understand that, you know, no matter what, every once in a while the wrong customer gets in. But sometimes when you're desperate, 'cause you don't have enough work, you take in things that end up biting you.

Cecil Bullard: And they're not they're hard. The customers are hard to deal with and ultimately they're not profitable for us. So we're gonna work on that. And by having a higher average repair order doing a little better inspections doing a little better sales bringing a little bit better customer into our business.

Cecil Bullard: Now it's gonna give us this flexibility. I still don't like the fact I'm losing $138,000. So we're gonna, we're gonna fix that. But before I do if you have questions about this, I want you to ask them Amber's keeping an eye on that for us. And certainly at the end, we will get to all the questions that we can in the time allotted.

Cecil Bullard: A lot of people wanna make sure we get through the material, so we're gonna hold off a little bit on questions. And if she gets a really great one, she'll probably ask me. We're gonna increase our productivity. Now, part of that might be pricing. Part of that will be in our, by fixing our effective labor rate.

Cecil Bullard: Part of that will be by having multiple labor rates. Part of that will be by fixing our processes in our business and making sure that our our estimating process is. Faster and more accurate by making sure that our scheduling process is better. By creating better flow through the shop.

Cecil Bullard: We're going to be able to increase productivity in the shop. So we're gonna work on those processes. If you really want to run a very successful $4 million shop, that's not hard to do. It certainly isn't easy 'cause not many people do it, but if you understand your processes, if you look at the flow through your business and you create more productivity, then you're gonna bill out more hours and you're going to do higher numbers, which is going to kind of improve everything.

Cecil Bullard: Now we're not gonna go above a hundred percent. However, I do have shops. That are using a labor matrix at 1.2 or 1.3, meaning they're marking up book time labor by 1.2 or 1.3. There are other things that we could certainly talk, we could do a whole series of webinars on how we charge for labor and what we do and how we do it.

Cecil Bullard: So I, I do have shops that are doing that and they are getting more than a hundred percent productivity, meaning a tech works eight hours at the shop and is actually able to bill out 10. My shop ran at 119% over the six years that the last shop that I ran. So we're gonna move that to a hundred percent by working on our processes and working on you know, how we do this and what we charge and getting our margins and fixing these little issues, we're gonna be able to move our productivity up when we do.

Cecil Bullard: I now. Can do it with with four techs. In fact, in this shop I can actually do 1.7 with 3.1 techs. Well, I don't know what a 0.1 tech is. So, you know what? Let's move our productivity up a little more. Let's get to 105% and at 105 I can do it with three techs. So now I can run a business with three technicians.

Cecil Bullard: I probably have one and a half service advisors. I can do 1.7 million in sales and I can get everything I want out of my business. Now this calculator is yours to play with. We're gonna go back now. Amber, is there any specific questions on the calculator here? 

Amber Wright: So can you elaborate?

Amber Wright: There is, thank you so much and I appreciate you guys reposting the QR code 'cause I think some have had a hard time reading this. So the QR code, 

Cecil Bullard: It's gonna come right back up. 

Amber Wright: Yep, it's up right now. So the QR code, for those of you who have been asking this will take you to the calculator that is shown on the screen.

Amber Wright: So, can you elaborate on how you calculate effective labor rate? 

Cecil Bullard: Effective labor rate is a combination of all of my different labor rates. So during the day let's say that I do, I'm $140 an hour as my normal labor rate. So when I do a water pump I'm billing that out at $140 an hour. When I do an oil change, however, I I bill that out at $80 an hour.

Cecil Bullard: So maybe I charge $40 and pay the tech five tenths 'cause I want to keep my oil change price lower to be competitive. Then I also have comebacks. So I could have a two hour comeback today where I have a technician spend two hours on the car redoing the job, not their fault. But I don't get any money for that.

Cecil Bullard: So that's a zero labor rate. And so when I combine all of those things together that will give me whatever my effective labor rate is. So what I do in my point of sale, it's kind of important. So in Auto Leap, whenever I sell a job, I have time on that job and a labor rate. So let's say that I'm doing a warranty.

Cecil Bullard: Well, I have two hours, but zero labor rate. That's how I write the ticket up. I'm doing an oil change. I have my $40 and my five tenths. That's going to my technician which is an $80 an hour oil change. If I'm doing, maybe I have a higher dag rate, maybe I have $165 diet rate. So I've got. Three hours of diagnostic today at 165.

Cecil Bullard: And what I do is I run the report that shows me how many hours were billed out and how many dollars that is. And I take the dollars and I divide them by the hours and they'll tell me what my effective labor rate is. And I'm pretty sure I was looking at Auto Leap yesterday with one of my clients. I'm pretty sure that Auto Leap in their normal report has effective labor rate right there.

Cecil Bullard: Yeah. It'll tell you what that is. So, and most, many of the point of sales today, not all of them, but most of them will have on your financial report that you'll run for the day or the week or the month, it will have an effective labor rate. And what it's doing is just taking the dollars that you brought in for labor and dividing by the hours that were billed out.

Cecil Bullard: Okay. So, I'm gonna move ahead. Otherwise Amber's gonna shoot me, so, we're gonna come back here. I'm going to move this up a little so I can get her going. We just, I would never shoot you. What's that? 

Amber Wright: We would never shoot, you never just slap you around a little bit. How about that?

Cecil Bullard: Maybe? Yeah. It's all in the math guys. It really is about the math and you need to really understand your business in a financial way. Because it's a, it's an engine for all intent purposes. It's built to give a certain amount of horsepower and a certain amount of torque.

Cecil Bullard: And if it's not giving that kind of horsepower and torque in the case of a business, if it's not creating the work that you can sell and the profits that you should make, horsepower and torque, then there's a problem. There's something wrong with the engine. And so when you understand it financially.

Cecil Bullard: You can look at those financials and a good coach or a good coaching company will be able to help you understand those things, which can literally make you tens of thousands of dollars. It's my experience over the last 24, 25 years as a coaching consultant that the average shop is probably losing somewhere around 140 to $200,000.

Cecil Bullard: 'cause they just don't understand the financial machine. So they've got a vehicle that's moving down the road. It's just not giving them the torque and the the high the horsepower that it really can or should. So, I in, in the terms of understanding my business and I'm not sure we're seeing what we're seeing here 'cause my screen is kind of giving me weird stuff.

Cecil Bullard: So in the terms of seeing my business. I have a shop here that's $120 an hour. They have a parts labor ratio of 45 to 55, 40 5% of what they sell as parts. 55% is labor. And they have three technicians that can do 24 hours a day for 1,960 hours a year. There are 2080 hours if MyTech works every single day that we're open on a five day shop.

Cecil Bullard: But I know that we're gonna have holidays. I know that we're gonna have vacations and other things. I'm good now. Thank you Michael. And so I calculate 1,960 hours, which gives my person three weeks off for holidays and vacation and whatever else. So if we do that, we're gonna do 1.24 million.

Cecil Bullard: That's the number. And in a good shop. That follows a parts matrix. And this is not a matrix class, so I just, let me say, if you don't know what a matrix is, you need to go online and find out. We certainly have some great stuff on that. And I know we've done at least one webinar with auto lead where we've discussed that.

Cecil Bullard: My parts expense of the 101.24 million that I'm going to bring in, I've got 18% of the money that's gonna go out for parts, which will give me about a 58% parts margin. I'm gonna pay my technicians about 20% of that, about 2.48 $248,000. That's what the three techs will earn in the shop, which will gimme a 64% labor margin and the cost of goods.

Cecil Bullard: You've heard, if you talk to an accountant and you hear cost of goods, what's it cost me to create my product? My product is parts and labor. So once I pay for the parts and labor at 38% of what the customer is paying me, that leaves me a gross profit of 62% or 62 cents on every dollar. I now take that money and I pay my fixed expenses.

Cecil Bullard: And for if you're working with as a client, we divide that into, I think, 13 different categories. You've got all kinds of, you know, you've got banking costs, you've got debt, you've got leases, you've got you know, what you pay your employees, et cetera, that aren't techs. And so we would divide that up.

Cecil Bullard: For terms of training, I use three categories. One is sales. What am I paying my salespeople that are selling my product, my service advisors, managers, whatever we call them in the shop. I pay eight to 10% of that 1.24 million. What do I pay for marketing for bringing new customers in? I pay six to 9%.

Cecil Bullard: Of that number. So I got 90,000 approximately to spend. And that leaves me 25% of that number to pay the rent, the utilities, the insurance costs, the banking costs, the truck payments, the gasoline, et cetera. And that leaves me a net profit of 20%. One of the secrets when you talk about really running the business well and really making the kind of profit that you wanna make is to run above a hundred percent productivity.

Cecil Bullard: So, and that's hours produced in a timeframe. It's, there's different definitions. So when I talk about productivity, I'm talking about hours produced in a timeframe. So if I have a technician there for eight hours and I'm billing correctly, and I'm I've got good process, I want that technician to bill, bill out 9.6 hours.

Cecil Bullard: That I can sell to customers. And when I get above a hundred percent productivity, then I start to make more money. And when I'm making that money and the reason I'm making that money is 'cause I don't have those fixed expenses. So I've already paid my rent, my utility. So if I can do 1.4 million with three techs, I will net more because I'm not paying that 25% fixed expenses.

Cecil Bullard: That's gone. It's all paid for. And that's when we talk about turbo mode or Turbo, where I can earn 24, 25, 20 6% net. And we actually have shop owners doing that. Now I also have to understand where things go wrong for businesses like mine. So, this is a shop that's gonna be at 75% productivity with their techs.

Cecil Bullard: And they're not really following their parts. They're not marketing their parts up correctly for whatever reason. They're not following their a matrix. The margin on the part is gonna be about 42%, and the cost is gonna be 26%. And the reason why is because we're not following a matrix. And I hear it all the time, Cecil you don't understand because customers are coming in and saying, I can get that part cheaper by going and buying it myself.

Cecil Bullard: And my answer is, yeah I do understand. I've been doing this for, I don't know, 43, 44 years now. And we've always had parts competition. There was always a place for my customer to go and buy the part cheaper than I would sell it to them for. And so, I know there's, it's more, there's more visibility.

Cecil Bullard: Now, I certainly understand that, but also I can go to the grocery store and buy a steak, but my local steakhouse won't cook that for me. So I never, when I'm gonna go out for a steak to a restaurant, I don't think to myself, well, I could bring my own steak. It will save me 10 bucks. And I could go in and argue with the guy in the steakhouse or the gal in the steakhouse and say, wait a minute, I can pay less for this steak if I buy it myself.

Cecil Bullard: And the answer is, yes, you can. But different things come in the steakhouse. You'd never think about that. We in the automotive industry have to understand that the part that we deliver on your car, there's a lot more going on than just if the customer goes and purchases it somewhere, especially online.

Cecil Bullard: There, there's an estimate that there's like 18% of the online parts are counterfeit. So, you know, I've got a one in five chance I'm getting garbage. Now, labor-wise I'm not productive. There's a lot of reasons for lack of productivity. So my margin is lower. My cost is higher, giving me a total cost of goods of 51%.

Cecil Bullard: And on the left here, this is more common. We see this all the time. In shops and giving me a gross profit of 49%, I lost 13% on a million dollar business, 13% is $130,000. So I didn't pay attention to my margins. I was afraid to mark up my parts. I didn't build value for my client. I couldn't sell it for whatever reason, I didn't believe in it.

Cecil Bullard: I didn't have my processes down well it took too long to get cars estimated sold. And so my ticks weren't productive, couldn't be productive. And I lost $130,000 in money that I could use to pay my expenses and and or make profit in this shop because I have four techs now. I ha I need another service advisor.

Cecil Bullard: So my sales expense is going to go up and my marketing expense is gonna come down. I'm not making profit. So what's the first thing we cut? Marketing. What's the second thing? Coaching. Neither a good idea, but happens a lot. And my fixed expenses also go up because every time I hire an employee, I need to get another computer, another desk, another chair.

Cecil Bullard: There has to be more parking, there's more insurance costs et cetera. And so my net profit is about 3%. The average net profit in the automotive industry is about 4% today. And but we really want your shops making 20. Our clients are averaging a little over 19% right now as an average. It's all in the math.

Cecil Bullard: So if I have a shop and I have an effective labor rate of $150 and a parts to labor ratio of 48 to 52, meaning 48% of what I sell is parts, 52% is labor. Then I need to know what my hour is worth. My effective labor rate is 150. The calculation is in order to understand what the value of your hour is, effective labor rate times one plus parts over labor, and that'll give you the value of your hour at one 50 and 48 52.

Cecil Bullard: That's 1.92, which means that when I sell an hour of my time in this shop, it's worth $288. That's what the hour's worth. So I wanna do 3 million in sales. That's what I want to do. And the first thing I have to do is understand, you know, what that looks like, and can I do that? And how many techs do I need, and what does my effective labor rate need to be?

Cecil Bullard: And, you know, what do I need to sell my parts for? So if I divide the 3 million by 2 88, that's what my hours worth. That's 10,417 hours. That I need to do in a year to do 3 million in sales. And if one tech can do 1,960, that's three weeks off for vacations and holidays of production in a year, and that's a hundred percent, then I'm going to need 5.31 texts at a hundred percent or 1,960 hours to do 10,417 hours total and get my 3 million in sales.

Cecil Bullard: Now I don't like the 0.31, so, I'm gonna make a change here in just a second. In order for me to do 3 million, I would need 5.31 text at a hundred percent productivity and an hour that's worth about $288. And then I can do my 3 million. There you go. I got my $3 million in sales and then I need to supporting things behind that.

Cecil Bullard: Do I have a good estimating process? Do I have good marketing that's gonna bring me the cars that I need? Do I have good techs that are going to be productive et cetera? So I'm gonna ramp it up to six technicians at 110% productivity at a $288 value. That means I could actually do 3.765 million, about 3.8 million in sales which would give me at 20%, $745,000 in net profit, plus whatever wage I'm earning for working in the business.

Cecil Bullard: There are other things that I need to think about here. How many bays do I need? Well, I like two bays protect, but that's not usually gonna happen. So let's say one and a half potentially. So I need probably a, an eight to 10 bay shop to make this happen. To do the work. So now I'm building that picture.

Cecil Bullard: If I wanna do 3 million, this is what I need. I'm if I have a three bay shop, I'm prob probably not gonna do $3.7 million in sales. I have to understand my limitations and decide if I'm gonna live within my limitations or I want to take a risk and go to a bigger shop because I wanna make more sales and I wanna make more profit.

Cecil Bullard: And then I also have the correct systems and process. So I gotta go back and I gotta look at my productivity and I gotta say, are we scheduling properly? You know, most shops that we run into will schedule a hundred percent of their work, but their techs are only 66%. So they feel like they're always behind.

Cecil Bullard: They're not making the sales they need and they feel like their technicians are not getting the job done 'cause they're really not. But in many cases it's because of, I scheduled too many cars. Now we're interrupting a tech and a big job pulling them off for a cheap oil change and they're not getting that big job done.

Cecil Bullard: And then it takes time to get back in the game later. So, I gotta understand my process is, do we have a good estimating process? Obviously having a great point of sale like Auto Leap will help me estimate better and help my technicians get the information that I need to my service advisors in a way that helps my technicians and my service advisors get more work done quicker. So, I gotta look at all my processes and I gotta say, am I doing 110% or am I doing, you know, 80%? And if I'm doing 80%, is it really because I have lazy technicians or is it because I don't have a good estimating process? Or even maybe we're not. Estimating hours and time properly. So in, we're taking time, I wa I see this where we're taking time off the ticket and so instead of charging 2.8 hours, 'cause we're afraid the customer's gonna be mad at us, we end up at 2.4.

Cecil Bullard: And so we have a 2.8 hour job that we really probably should be charging 3.2, but we're charging 2.4 because we're afraid our customer won't love us. Are those things correct? So now I need about 15 cars at 2.78 hours a car which would give me about a $750 average repair order. And we have lots of shops doing 2.8, 2.9, 3.2 hours per car.

Cecil Bullard: Because they have a great inspection process. They have the right customers that are willing to buy and they have service advisors that know how to build value and sell the customers the work that they really need. So I have quite wrap up and we are getting close 'cause I know we have questions.

Cecil Bullard: Amber, do you have a question? 

Amber Wright: Yeah. If we hit before we go on this, I think there was a really good question here that came through. Do you back tires out of your parts margin calculation? 

Cecil Bullard: Yes. In most shops, if it's more than two or 3% of sales, I pull tires out. Tires. We're looking for a 40% margin. Most shops that we would work with would be getting in the mid to high thirties. And if that's 20% of your sales, then that's gonna really screw up your parts margin when you go to look at your parts margins. So we wanna look at tires different because they have different margins. Yeah.

Cecil Bullard: Now if I'm only selling two sets of tires a month, then I'm not pulling it out. It's not gonna change my margin that much. So, our rule of thumb here at the institute is if it's more than about two or 3% of sales, then we'll pull it out. Like if I was selling a ton of batteries I've got a shop in the Santa Cruz area that literally was last year, was selling so many catalytic converters and you have to buy 'em in California from the dealer.

Cecil Bullard: There's nowhere else to buy 'em. So the margins are less. So we pulled catalytic converters out so we could look at our other margins and our catalytic converter margins separately. If you're really paying attention to your business, you probably will say, oh, I can't put that in the pile. I gotta pull that out and look at it differently, because right now that's what I have to do as part of my business.

Cecil Bullard: And so, that way I'm managing properly. Is that the only one? And then we'll go on. I've got one more. 

Amber Wright: I think I've got one more. And that's it. And then we'll go forward. How realistic is it to expect to have a hundred percent productivity every week of the year? It seems unrealistic to assume it. What is a more realistic expectation in your experience?

Cecil Bullard: I ran a shop for six and a half years, the last one that I ran, and we had 119% productivity for six and a half years. I love it because as a tech, I was a master tech and I beat book time all the time. So it, it was a sense of pride. If you talk to good tech today and you go, Hey, what a, you know, can you beat book time?

Cecil Bullard: They'll be like, can kill book time. And yet at the end of the day, they're not producing eight hours for eight hours. And most shops are using a 20 to a 30% multiplier on book time today. So if you're using that 20% multiplier, let's say 20%, and your tech is good at what they do, so let's talk about different texts for a sec.

Cecil Bullard: I got my ctec and and that's my oil changer. And they do brakes occasionally, et cetera. Well, wait a minute. If you've done a hundred oil changes, don't you think at some point you're gonna be faster than you were for the first 10 or 20?

Cecil Bullard: I love allergy season. You'll have to excuse me. If you do break jobs and you've done 20 break jobs, shouldn't you be faster at doing break jobs than you were? And I think, you know, also, do we base the time on our best fastest tech? So we've got shops that'll say, well, yeah, it only takes our good tech eight tenths of an hour to do a break job.

Cecil Bullard: Well, the book time is still 1.8 and but we're gonna charge eight because we want the customer to love us more, and we want to be price competitive. Let's go to the bottom altogether and let's be price competitive and let's charge eight tenths of a percent. The only problem is the only tech that can do it at eight tenths is my best guy, and my C guy can't do it at eight tenths.

Cecil Bullard: So is it realistic? If you don't believe it, then the answer's no. If you believe that you can do it, then the answer is yes. And I have, you know, if you look at the bell curve, a bell curve is how we understand data. And you look at the top front of the bell curve, the top 10% that would be the top 10% of the shops.

Cecil Bullard: And are they doing more than a hundred percent productivity? Yes, they are. Then you look at the average in the middle the other i 67%. Now we're at the 67% mark. That's 67% and they're doing average, which would be six and a half hours a day instead of eight or nine. And then you look at the bottom 10 or 15%, and the bottom 10 or 15% are always the lowest performers, and their techs are doing four hours a day, three and a half.

Cecil Bullard: Well, if the top 10% can do it and they're not doing anything immoral or illegal or unethical than can't I do it? And the answer is 10 to 15% of our shops are constantly over a hundred percent. The rest of our shops are probably running somewhere around 90% to 95%. And if you looked at a hundred percent or a hundred percent of the shops that when they first come in, they're probably running 60, 65, 70%.

Cecil Bullard: I used to argue that you have to do X, y, and ZII, I don't argue a lot. You won't see me online arguing about productivity or parts pricing or anything, because if you believe that your people cannot be productive. They won't. But I can tell you I personally ran a shop for six and a half years where MiTek had 119% productivity starting the first month that I ran the shop because we looked at the processes, we looked at our estimating, we looked at what we were doing, and we fixed the engine so that the engine could give us maximum horsepower and maximum torque.

Cecil Bullard: So, long answer. Sorry. I'm gonna give you a caution and then I'm gonna wrap this up and we'll take a few more questions. Caution is, don't listen to the people that are telling you that it's okay to discount and lower your margins because you have to have margin to have profit. It's I understand gross profit dollars per hour.

Cecil Bullard: If I'm doing enough, I'm making the money. The problem is no margin, no dollars. So we have a shop here that has a sales volume of $65,000. That's what they do. At 60% gross profit. I want you at 62 with loaded labor at 72 to 74 with unloaded labor. Meaning loaded would be with the cost of labor, fica, few to workers' comp, medical, dental, whatever.

Cecil Bullard: I pay for my, you know, 401k unloaded would be without those costs. So at 60% with a loaded labor, I have this shop doing 65,000. They have $39,000 to pay their bills. And with a $500 average of perimeter, that's 130 cars. Now we are gonna go, ah, my guys aren't gonna be as productive. And when they're not as productive, if we're paying them anything any kind of a salary or hourly pay, then my costs are gonna go up and my margins are gonna come down.

Cecil Bullard: We're gonna bring the margin down by 10%. So, we're not gonna hit our margins on our parts. We're gonna, you know, we're gonna be too emotional about that and we're not gonna look at productivity and flow, and we're not gonna fix that. And so at 10% I have the same 65,000 in sales, but I only have $32,500 to pay my bills, leaving me a $6,500 shortfall.

Cecil Bullard: Now that's a month. You could take this by 12 months, and now we're talking about $70,000. Or right around there. If I have a $500 average repair order, now I need 156 cars. That's 26 more cars. So I have to write up 26 more tickets. I have to do 26 more inspections. I have to do 26 more test drives.

Cecil Bullard: And so what happens to my productivity? I. Right. And so now because we're not hitting our margins, we're also not hitting our productivity. And we also have to spend more money on marketing in order to bring another 26 cars in our business. I'm gonna turn it around. We're gonna look at fixed expenses.

Cecil Bullard: We're gonna come down here to this $32,000 mark. I have a shop that has $32,000 monthly fixed expenses, rent, utilities, salaries, truck payments, banking costs software costs et cetera. And they're gonna make 60% net gross profit. So they have to do excuse me, my eyesight's not as good 'cause my allergies $53,000 this month to get the $32,000 to pay their bills.

Cecil Bullard: 'cause that's their bills. And if they have a $500 average repair order, they need 106.7 cars. To do that. Now, that's not making any money, that's just breaking even. And now we're gonna lower our margin by 10%. I still have $32,000 in bills, so now I have to do $64,400 in sales. And my average s gonna come down because I'm not charging as much.

Cecil Bullard: Remember, my margins are coming down, which means that my profits and my average appar is gonna come down. We're gonna go to four 50. And at four 50 I need 35.6 more cars. Again, 35 more test drives, 35 more getting cars on the rack. 35 more digital vehicle inspections 34 of five more times. MyTech has to go out front, chase a car down pull it around back and put it on the rack.

Cecil Bullard: It's a much more difficult company. And here we're only talking about breaking even. Imagine if your margins are in the 45% and you have 32,000 at 45%. I gotta do 71,000 before I ever make a nickel. And if I, my average ER comes down like it will, then I need 61 more cars, 61 more test drives.

Cecil Bullard: So don't listen to the people that tell you lower your price, do discounts. You know, you gotta do that. You gotta be competitive because the guys that are making the most money are the guys that are not discounting their products and are selling value to their clients. Learn that, figure it out.

Cecil Bullard: Understand it, know it, live it, and you will make the most money. We work with a lot of clients. We've worked with well over a thousand clients in my career personally, I've worked with well over a thousand shops. I. The shops that are doing the best have the highest labor rates. They hold the best parts margins, and they are productive because they constantly look at their systems and their processes.

Cecil Bullard: There is no silver bullet. Nobody has it, nobody's found it. It is understanding your business and then working on all the bits. It's like diagnosing a car. I've got a vehicle, doesn't run well, it doesn't have enough power. I pull it in, I put the scanner on it, I find out what's wrong. I put the part in place then I test drive it, and I see did I get the, did I fix it all or is there something else that's wrong?

Cecil Bullard: A business constantly will have something that's not allowing me to get the productivity I need. Well, what is that? Let's figure it out. Get it out of the way, because if I can increase my productivity from seven hours to nine hours, that's gonna make me another 80 to a hundred thousand dollars a year and allow me to pay my technicians a lot more money.

Cecil Bullard: I I hate this idea of, well, somebody's got a magic, magic, you know, there's magic beans. Okay. I don't have any magic beans to sell you. We the grass is not greener on the other side of the fence. And if it is, it's because the person that is managing that grass is watering it, right? Is feeding it right, is fertilizing it, is trimming it.

Cecil Bullard: Because that's why it's greener. They're doing the work. And a good coach or consulting company can help you understand where your vehicle is not running properly and help you get that fixed. Alright, we have a few minutes for questions. Let's do it. 

Amber Wright: I love that statement. I think you couldn't have ended the overall presentation on a better note that I think, it all is in the work that you're doing right there, there is no magic wand out there. And I think over time we all are. If you are on market websites and you're looking at social media platforms, a lot of that conversation is going on. But it is the continual work that you look at your business day in and day out and diagnose it and really understand where issues are going wrong.

Amber Wright: So a question we had, why is margin less on dealer parts? 

Cecil Bullard: I don't know. Why is margin less? Because the automotive business is afraid to charge more than the dealer would charge for a part. That's why margins less. Most of the shops we have a matrix that they use on the dealer part. In my shop, routinely we would charge 25 to 40% more than if a customer could go pick that part up at the dealer.

Cecil Bullard: And so I would routinely charge more for the part so that I could hold my margin. Dealers today, I just saw an article from somebody that they got a message from their local dealer that they will no longer discount the parts at all to the shops. So dealers are struggling today for margins and profits, and some of the dealerships are actually now not even allowing a 20% off on a part.

Cecil Bullard: And so I have to make money on parts or I have to raise my labor rate dramatically. So it's either $300 labor rates, or we use a parts matrix and get parts margins. Take your pick. It shouldn't be different. I should be able to make margin on dealer parts and other parts. 

Amber Wright: Yeah. I love that.

Amber Wright: I think this one Ryan, I think would be a great one for you guys, Cecil, to follow up on. But I am gonna mention, and maybe you can high level we have two full-time techs and two owners. Us owners are having to wrench a lot as well as try to keep up. I think that's something we hear often. And on top of that, they're trying to find more texts.

Amber Wright: And we try to focus on handling the diag and pushing repairs to texts. They aren't as strong yet at Heavy Diag diagnostic. How can we, and what do we need to do, restructure this better? And when doing our numbers evaluate evaluation, do we need to include ourselves as a tech as well? 

Cecil Bullard: Number one, I probably wouldn't have both owners working as techs.

Cecil Bullard: I would literally shift one owner to be the tech for a while we found and built our technicians up. I would want the other owner focusing on running the business. Why? Are we, why do we have to be the tech, are we, you know, the other bits and pieces? And so there's a lot in that question. I could probably do a whole three hour webinar on just that one question alone.

Cecil Bullard: The problem is that when I'm trying to be the worker in the business, I can't be the owner and manager of the business. And somebody's gotta look at the systems and processes and how we're estimating and how we're pricing and et cetera. And I understand that the market right now is tough as far as technicians go, and that we gotta grow some of our own.

Cecil Bullard: And maybe as an owner, I have to spend half my time growing and working in, in, in the shop. But I also need to spend half of my time managing that business and understanding it so that I can determine what I need to do and put those changes in place so it gets better and better. And that's one of the things I think you know, a coach or a coaching company can do is help you figure out where to put your best focus to make your best profits.

Amber Wright: Yeah, I think that's really, I think Brian, you started to outline that at the end, that you manage the business sides of things, but being in the shop really takes you away from building and fixing operations. I think that, you know, I love to bring in kind of personal things as well, you know, as a manager or director or managing different operations in a business, right?

Amber Wright: You can only train so much and the moment that you go back and do work for your employees that are supposed to be doing work, you can't handle it all. And there are things and balls that will be dropped. And Cecil, you and I were talking about this earlier, you know, you can't be everything for everyone or your business.

Amber Wright: That is why you hire people to do the job that they are supposed to do. 

Cecil Bullard: And what you would kind of hope is that you would you know, make enough profit or figure out how to do that part. Because then that would allow you to maybe offer more in, you know, we have a hiring, training finding mentoring class.

Cecil Bullard: If I can run a more profitable business, I can do things in my business that make it more attractive for employees that I might hire. And I'm not just talking about pay, I'm talking about working conditions. I'm talking about, you know, whether or not there's air conditioning or heat. I'm talking about tools and education and things.

Cecil Bullard: Plus, I need to have a pretty good training program. If I'm gonna bring this tech in, I really want to have a list of things that I want to get 'em signed off on, that they have these tools and these skill sets. Because the sooner I can get them signed off on those things, then the more I can put on their shoulders and the more I can take off of mine.

Cecil Bullard: So I want to have a plan for. That education because I know I gotta do it, but I want it to be most efficient so that I can spend more time quicker becoming an owner and doing the things that an owner or a manager would do in the company. 

Amber Wright: I love that. I think we can end the note. Lots of people saying great classes, so really appreciate that.

Amber Wright: I wanted to end the note Tucker, I know he's been to these multiple times. I know you guys speak with him as well, but just from being in these classes and you talking about margins and raising your labor rate, he said, I've had no pushback from raising prices and not budging on margins. The good customers understand your kids need to eat too.

Amber Wright: So I think we forget that at the end of the day. 

Cecil Bullard: Tucker's doing well. He's he's doing well. 

Amber Wright: Yeah. Awesome. Well, we really appreciate it. I don't think that there were any other questions. We will be sharing the survey. Nicole, if we can go ahead and put that in the link or in the chat really quick and we'll also send that out.

Amber Wright: Just to recap, guys, the session was recorded. Any questions that I didn't get to, which I think I got to the majority of them we will make sure that they get answered by Cecil or somebody at the institute to help you guys with that. And it looks like they've also just posted a session to meet with them, so definitely check that out.

Amber Wright: We work very closely with the institute and so, if there's any personal introductions that we can make, please feel free to email me since you have my email and I will, include you guys in an email with Cecil. So, Cecil, as always, thank you so much and I appreciate it. I think we've got you on the next month as well.

Cecil Bullard: I'm raring to go. 

Amber Wright: I think we've got you on, so we appreciate it. I think we'll also see you at the end of the month at Tools. So for anybody that is also going to be at Tools, Cecil will be speaking. I think you guys have three sessions, is that correct? 

Cecil Bullard: I'm teaching three classes there. I think Jimmy's teaching one or two also.

Amber Wright: Yeah.

Amber Wright: Yeah. So we will see you guys in Pennsylvania at the end of the month if you are gonna be there. And as always, we really appreciate you being here and for all of the valuable information that you provide. 

Cecil Bullard: Thank you for the opportunity as usual, Amber. 

Amber Wright: Awesome. All right guys. Thank you. Thank you. Have a great day.