The Institute’s Leading Edge Podcast

The Institute’s Leading Edge Podcast is where forward-thinking Automotive Service and Repair Shop Owners come to sharpen their skills, expand their knowledge, and gain an edge in today’s competitive market. Hosted by The Institute’s team of seasoned consultants and leaders with decades of real-world experience, you’ll get direct, actionable advice tailored to the unique challenges of running and growing an auto repair business.

Each episode feels like a one-on-one coaching session. Whether it’s improving profitability, building stronger leadership skills, mastering marketing, developing your team, or planning for long-term success, you’ll find strategies you can implement right away.

Have a question about your shop? Send it in, and we’ll answer it on the show.

Listen on:

170 - Ask Me Anything: Financial Education and What the Numbers Are Really Telling You
November 19, 2025 - 00:55:59

Show Summary:
This AMA with Cecil Bullard, Founder, and Wayne Marshall, CEO, dives deep into the financial realities shop owners face and how to interpret the numbers that drive the business. They open by addressing slow seasons and share practical strategies for building consistent car count long before the dips happen. Cecil and Wayne break down the roles of internet marketing, SMS outreach, community engagement and long-term relationship nurturing so owners stay top of mind when customers need help. They clarify how to build preferred customer programs, how to track ROI across marketing channels, and why added value attracts stronger clients than discounts. The conversation moves into financial structure as they explain proper P&L layout, separating labor categories, and how technician, advisor and admin expenses should flow through the business. From pay plans and KPIs to accrual vs cash accounting, they show how to read trends rather than reacting to one-month swings. They wrap with guidance on staffing, capacity-based sales goals, and why high-performing shops anchor their decisions in clear data rather than assumptions.

Host(s):
Cecil Bullard, Founder of The Institute
Wayne Marshall, CEO & Industry Coach

Show Highlights:
[00:00:00] - Cecil and Wayne kick off the AMA and dive into how shops should prepare for slow seasons long before they arrive.[00:01:27] - Cecil explains how pre-booking appointments and preferred customer programs stabilize car count.[00:03:03] - They discuss using events, community involvement and customer touch points to fill traditionally slow months.[00:05:25] - Wayne covers why consistent marketing beats stop-and-start efforts tied to car count.[00:06:52] - Cecil outlines the two sides of marketing: capturing today’s buyer and staying top of mind for future needs.[00:10:36] - They break down how preferred customer programs increase average repair order and long-term loyalty.[00:15:04] - Cecil explains why online marketing outperforms direct mail and how to watch ROI by channel.[00:20:31] - Wayne and Cecil clarify how to separate labor, parts and advisor costs correctly on a P&L.[00:23:37] - Cecil walks through target margins, expense percentages and the structure of a healthy composite.[00:33:55] - They discuss how to interpret financials using cash or accrual accounting without being misled by timing delays.[00:41:10] - Cecil shares staffing ratios, when to add admin roles and how to calculate their impact on labor rate and capacity.[00:43:20] - Cecil explains the daily KPIs he watches and why certain metrics should only be reviewed weekly or monthly.[00:52:14] - They address phone scripts, objection handling and how structured communication builds higher sales consistency.

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/SZO3CTzcSoY?si=VCKqrUPSlAEeDBlV

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:
Cecil Bullard: Welcome to the Institute's Ask Me Anything. My name is Cecil Bullard, founder of the Institute for Automotive Business Excellence and coach Presenter. And today we have with us Wayne Marshall, who is our relatively new CEO. And he does coaching with us. Also started out as a coach and then we.
Cecil Bullard: Needed his help in some other areas, and so he got I, I don't know if I'd call it a promotion. It might be a demotion actually to.
Wayne Marshall: Level of service. It's just a level of service.
Cecil Bullard: If you are with us online we appreciate you being here. Please put your questions in the chat. I will do my best to pay attention, but we actually have a couple of people off site off camera that are looking at that, and they'll be popping those questions up as we, we need those.
Cecil Bullard: I've got a few questions that were asked to start. Quick tips for when times are slow. I think marketing is always a bit of a challenge, Wayne and right now, I think because of the government slowdown, there was a period where, you know, about a month where things were a little slower. I'm gonna tell you, first of all, don't wait for times to be slow, to be marketing.
Cecil Bullard: 'cause it's too late at that point in time. There are things that you can do if you have a good customer base. Number one book the appointment. Book the next appointment. You're the professional, you're the one that knows be like the dentist start booking your customer's next appointments, and if you want, give them a reason to do that.
Cecil Bullard: At my shops, we had a preferred customer program and part of the preferred customer program was booking their next appointment when they needed to have the car in for service. We had a 6,000 mile. Six month service schedule for our clients. And so number one, start now booking the next appointment.
Cecil Bullard: And if you do that, we had we had six to seven appointments booked per day and a 92% show up rate of our clients under that circumstance. I think there are some things you can do if you're already out there in social media or if you are. Regularly hitting your clients with some type of an email that they are looking at or opening or you're setting, sending some messaging through their texting.
Cecil Bullard: I know that we looked at our pattern. So when were we traditionally slow? November had traditional October, November had traditionally been a slow time for our shops. When we looked at that, we. Looked at events that were going on. The city had a pretty big event in October and we supported that event.
Cecil Bullard: We participated in that event and we actually did a shop where we had the event. We brought the event into our shop. And so we ended up having between three and 400 people in our shop in mid-October for an event between the Chamber and the BNI group that we belong to. And that made our Novembers our, that finished our Octobers out really strong and made our Novembers very strong.
Cecil Bullard: So within a year we were able to, because we were aware of the fact that November was a slow month, we were able to do some things that made November a much stronger month for us. And actually November became one of our strongest months. I think if you're, it's like, oh no, I just don't have any cars.
Cecil Bullard: There are things that you can do. We did a, I did a pizza thing once. I just called the, one of the local pizza shops and I said, I wanna buy 10 you know, large pizzas with everything on 'em. What's it gonna cost me? And I sent a message out to my clients, Hey you know, it's February's a little slow for us, so we're gonna do something we don't normally do.
Cecil Bullard: If you make for the first 10 customers that make an appointment they're gonna get a large pizza at Giovanni's Pizza Place. And believe it or not, we made 19 appointments within about an hour. Sending that out. And it was funny 'cause I said 10, and when number 11 came on board, I said congratulations, you're number 10.
Cecil Bullard: And when number, you know, 14 came on board, I said, congratulations, you're number 10. We booked 19 appointments. Now if you're doing stuff like that and you're doing it kind of continuously that you can't make a business on that. You need, a website company that does good, S-E-O-S-E-M good local search et cetera.
Cecil Bullard: And you can't, I love the shops that say, Hey, we're really busy right now, so we're gonna cut our marketing. We don't do that even when we're busy. We don't cut our marketing, and especially when we're not busy, we don't cut our marketing. So, Wayne, do you have anything to add there?
Wayne Marshall: We got a couple questions, but Yes.
Wayne Marshall: On what you just shared, Cecil, you're correct. Consistency. People get busy, they quit marketing or like, Hey, I don't have to do this. I got car counts, I got bookings, you know, out three, four weeks. No, you gotta keep marketing. Be consistent. Keep the message going, stay top of mind, and you know, and as people talk when it comes to what works and what doesn't.
Wayne Marshall: I see one of the questions was internet marketing versus SMS marketing more efficient. Some of that depends, and I always tell people, you know, kind of pay attention to what people are asking. If a customer comes in and it's part of your intake. What's one of the first thing your service advisors are asking?
Wayne Marshall: How do you wanna be communicated with? Do you want me to call you? Do you want me to text you? Do you want me to email you? If you're being told that, well, I like to be text. Make a note of that because that's telling you that SMS marketing or text messaging them and doing other things might be more effective for that particular client over some other things.
Wayne Marshall: So you've gotta look at your data, which you can get within your CRM. But yeah, the biggest thing is the consistency of what you're doing and how you're doing it. And don't stop. Don't stop. And
Cecil Bullard: so I, in that particular question that we just had you know, internet or SMS I'd like to answer that question a little more completely.
Cecil Bullard: There's two types of things that I'm trying to do with marketing. Number one, I want to capture the person that needs auto repair. So that person is going to, if they don't already have a shop, they're gonna go online and they're either gonna go to Google or one of the search engines and they're gonna say, you know, where do I find.
Cecil Bullard: Toyota repair or Toyota service, or how do I find someone to check my check engine light or whatever that is. That's someone that has a problem today, money in their hand, and they're looking for somebody that is internet marketing. And that's one aspect of who I'm trying to find. Right? And so I need to have that.
Cecil Bullard: But I'm, I also. Need to be top of mind. And that is more SMS marketing is more top of mind. So social media is more about getting my name out there so that when you need something, you remember my name, you know who I am. So, you know, if you if you never thought about coaching and you said to yourself, all of a sudden, oh my God, I'm going broke.
Cecil Bullard: I need a coach. And you went online and said, you know, who are the best coaches? You know, I'm going broke. How do I find a coach? I want to show up there. I want the institute to come up there. But I also want you to have seen things about the institute. So our YouTube channel, our our social media stuff that we do our regular emails being a part of our institute group.
Cecil Bullard: Because when you go to look for that coach, I want you to say, oh. Those institute guys, I've heard about them. I know who they are. I feel comfortable with them, and I'm, and that makes you more likely to then select me and show up at my place. So it, marketing is not necessarily one or the other.
Cecil Bullard: Marketing is, you know, I'm probably doing seven or eight things at any given time. So I have a website that's maintained by somebody that knows how to do that. I have sEO, search engine optimization, et cetera. I have social media. I, I book the, my customer's next appointment. I work within the community.
Cecil Bullard: I'm involved with BNI, chamber, rotary things like that. And so I, I also have a CRM that is sending my customer database information routinely. Maybe three, four times a month. Once a week a client will get something from me that reminds me that I, them, that I'm here and it reminds me of their name.
Cecil Bullard: So marketing is. I mean, I believe first of all that most shop owners are not qualified to do their own marketing. We love to, we're do it yourselfers. And I would just tell you, how do you feel when one of your clients who's not qualified to work on their car, works on their car, then brings it to you and says, oh, it won't run, fix it.
Cecil Bullard: Right. And yet we kind of do the same thing. I need to have someone that knows what they're doing, do my marketing, and I believe that marketing is an important part of a long-term successful business that makes a profit consistently. Okay. So, Hey Michael, you got another question for me there, brother?
Cecil Bullard: Eric Se, and by the way, I think that was Cheyenne if I mispronounce your name. Thank you for that question. Cheyenne. We have Eric seven. Hey Eric. Good to hear from you Bob, brother. Can you speak more about preferred customer program? What is the reason what you think most people booked and came back in?
Cecil Bullard: Our preferred customer program gave our client two car washes a year, two loaner cars a year. We did a windshield treatment as part of a preferred customer program, and we did bring the price of our minor service, which at the time 12 years ago, 14 years ago, was $165 down by $25 as a preferred customer.
Cecil Bullard: And the reason why. Was because we knew when preferred customers came in that their average apparator was a few hundred dollars higher than our normal, average appar of 800, whatever it was at the time. And so we were able to say if I gave them $25 as part of that program I asked everyone at the counter, if you wanna be a preferred customer my.
Cecil Bullard: Service advisors asked every single person, Hey would you like to become a preferred customer? We'd like to hear about that program. I think we even had some buttons printed that said, ask us about our preferred customer program, et cetera. And so then they said, well, okay, what is it? And we said, well, we give you to loaner cars and to car washes.
Cecil Bullard: So when your car comes in, we wash it. When you leave it, you have a clean car, which by the way. We did anyway, so all by putting it into a preferred customer program, we made it more formalized and we printed a card out for them that was a punch card that they had. And frankly, if you didn't bring your punch card, I'd still give you a loaner car or whatever if you were a preferred customer because you were gonna spend $1,100 on your car every time you came in.
Cecil Bullard: And so by creating a preferred customer program, I was also during that conversation, able to say and preferred customers book and keep their next appointment within, you know, 30 days. So, you know, we're gonna schedule an appointment for you six months from now. We don't, we know you don't know what you're doing and so, we're gonna send you a message three weeks before and three days before we're gonna call you.
Cecil Bullard: And if we need to reschedule, it's not a problem. We just need to know that three days before so we can plan our schedule and then we just reschedule 'em. And and so that was our preferred customer program and I think it was a really good, thing, no, I did not incentivize, I did not incentivize my service advisors to book future appointments or reward them part of their pay plan.
Cecil Bullard: I mean, my service advisors, you know, again, 14 years ago, were making 150,000 a year. They were getting paid exceptionally well. So, you know, there are things I'm an old guy. You can tell the white hair et cetera, and, you know, I just. Sometimes feel like it's your job, right? And so we book our customer's next appointment and we had an expectation of that and that was part of the job and it became a process and a habit that we did all the time with our clients.
Cecil Bullard: So thank you again, Eric, for the follow up. Anything else to add there, Wayne?
Wayne Marshall: No. But I agree with you. It's their job. And they get incentivized by selling the service, the work on top of what they're already doing. So it's about building it for everybody. Everybody wins type of thing, but that's part of their job.
Cecil Bullard: The other. The other part of that is, is preferred customers are more likely to buy. Their easy, easier to handle. You already have trust with them, so they're better for the service advisor. It's just easier to deal with that particular person all the way through. So if you don't have a preferred customer program, man, I would certainly think about that as part of what I do.
Cecil Bullard: Let's throw another one in. So this is if I mispronounce your name, just ignore it. I'm sorry. I apologize. I'm gonna say Isa Tola, how often do you send out mailers and how often do you send text blasts? We use shop Genie and Tech Metric. I don't, I'm not a big mailer fan. And so today I look at return on investment on mailers and return on investment on dollars spent online.
Cecil Bullard: And I was just looking at with a client yesterday. I think online we have a. Almost a five to one return on investment. On our lowest and on our highest, we have about an 18 to one return on investment on our online marketing dollars spent on our direct mail or mailers. We have like a half a percent, like a one to one ROI, maybe a one and a half to one ROI.
Cecil Bullard: So if I have a thousand dollars or $2,000 and I can spend it here and get $3,000 back, or I can spend it. Over here and get $5,000 back. I'm always gonna spend it where I can get $5,000 back. If you are gonna do text messaging or emails to your client base, one of the things you have to be concerned with is I don't want to send so many emails that they take me out of the system.
Cecil Bullard: And I would tell you that if you're sending probably more than two a week. That's probably too many and you're gonna get pulled from the system. So, you know, I kinda like maybe four a month, one a week. And sometimes that's difficult from our end because we'll have, you know, our normal stuff. Then we'll have some special thing like we're gonna do this event and that.
Cecil Bullard: And we'll have a class at the same time. So you might see two or three from the institute in a week, but you're not gonna see two or three from the institute in a day. 'cause we know you're gonna X this out. So you wanna be careful about how mu often you hit your clients and you don't want to overload that.
Cecil Bullard: You also don't want to, primarily if I'm going to use discounts as a way to bring people in. I don't wanna use discounts with the customers I already have because they're the ones that are most likely to spend the most money. I want to use discounts if I'm going to with the customers. I don't have as a reason for someone to come in and try us out.
Cecil Bullard: And I still, even though if I'm gonna do that, I'm still talking about added value. Things like loaner cars and rental cars and great warranties and things like that, both on my website and in anything I'm gonna do. Wayne, back to you, brother. Yeah,
Wayne Marshall: I guess the thing I would say, as we all know, if I'm sending an email or a text.
Wayne Marshall: You have to give people the option to opt out. So pay attention to your data. If you're sending out with frequency and you're not, you're seeing low opt-outs, you're probably okay. But if all of a sudden your frequency goes up and you start seeing a lot more people drop out, that's telling you, look, they're opting out because they're getting too much.
Wayne Marshall: The other thing when it comes to frequency of, and what you're doing, be it direct mail or anything. The reason certain things work better over others sometimes just comes down to what the offer is. And so again, pay attention to what the data's telling you. If I offer X and I see this return and I offer Y and I don't see as good and I offer Z and it's really bad, well obviously don't do Z again, but think about what's working and what responses you're getting.
Wayne Marshall: Same with direct mail. You know, I tell people if you send a direct mail. Piece on anything. It doesn't have a good call to action that you can see that card, you know, bring this card in for X and they don't bring the card back in. You're still gonna honor it, but, you know, get good data of what's working and what's not.
Wayne Marshall: Too many people just throw it out there and then don't track it. And that's the biggest thing of, you know, if you're gonna do it, track it, get the data, understand what's working and what's not.
Cecil Bullard: And I think you get the excuse, I've heard the excuse. Well, it's kinda hard to tell if they came online. And so anyone that came to me and said, Hey, I found you on the web, I ask a second question.
Cecil Bullard: Do you mind, you know, if I ask you another question, what. Specifically directed you to us. And that helps me determine, and then I get the best data I can and I make the best decisions. Wayne is talking about like AB testing, meaning that I have two messages that I send out and then I see what the return is.
Cecil Bullard: So this is one offer, this is another. And when we're talking offers, an offer can be a lot of things. It doesn't have to be a discount or a. You know, $25 off or something like that. It can be you know, if you come in off of this, you get a pizza, it can be if you come in off of this, you're gonna get a extended warranty on your card added value services.
Cecil Bullard: And I always believed, and I think the data supports that customers that are attracted to added value services are better customers that will spend more money on their car than per se customers that are attracted by discounts. Okay. I don't know what the next question is, Wayne, but why don't you let's see.
Wayne Marshall: Well, Levi, I've good to see you're with us. Levi had the privilege to talk to you and Sally I'm a firm believer and I think Cecil, you will agree, you need to separate those out on your p and l because your tech pay is part of what you're doing when it comes to the services being offered. And that's gotta be part of that cost when we're looking at our gp.
Wayne Marshall: The other costs that you have for advisors, that's an expense that's part of your overall operating expense. So when we start talking about those ratios of trying to get to 63 to 65% gp, your tech pay is in that top with the parts, what the revenue was minus these things. So you can see where. That return is coming and the advisors, yeah, I wanna show them separate.
Wayne Marshall: That's the cost of doing business as part of your overall overhead and expense of operation. Wanna
Cecil Bullard: add? They also, yeah, they also have different margins. So my, my. And I also want to measure my business based on, you know, parts and labor and based on sales expense and marketing expense. Even. I look at my banking expense cost separately than all the other exp expense.
Cecil Bullard: I don't just put that in the fixed expense pile because I want to know that I'm not paying, you know, three and a half percent for my credit cards. I want to know that I'm paying. 1.8 because there are companies that will get me 1.8 and if I'm gonna run a million dollars through credit cards, you know, 1.2, that's a substantial amount of additional profit for my company.
Cecil Bullard: Let me draw this out. We kind of got a new thing so. I'm going to draw this out with my unsteady hand. One sec here
Wayne Marshall: with this is on, it's been a pay plan for service advisors, so you could probably do a little of this at the same time.
Cecil Bullard: Right. So I have parts in labor here, and I want parts to be about 18% of my sales.
Cecil Bullard: And I want a margin on my parts of about 50 8%. If I don't break it out, I can't tell what the margins are and I also don't know what percentage of sales it is. My labor cost, which is my tax, and we'll call that a loaded labor. My tech cost is gonna be about 20% of my sales and I want my margin on my tax loaded FICA feta workers' comp to be about 64%.
Cecil Bullard: And then also my parts should be about 45% of what I sell, and my labor should be about 55%, and that would give me a cost of goods of 38%. I'm sorry. If my writing's a little sloppy and an overall margin gross profit of about 62%. Now, by the way, that's 62% with my labor cost in there. That's not 62%.
Cecil Bullard: Only with parts cost and no labor cost. And then under here, then I have marketing, I break marketing out so I can measure it better. That's marketing, by the way, if you're online, let's see here. Let me let me see if I can't make that a little clearer for you.
Cecil Bullard: Yeah, that's marketing and I want that to be somewhere between six and 9% of sales. I have my sales cost, my service advisors, whoever's selling, and that's a loaded cost also. And I want that between eight and 10% of. My sales and then fixed expenses, which I will break up if you're one of our clients, will break up into about 12 categories.
Cecil Bullard: Fixed expenses would be 25% of my sales, which would leave me a net of just about 20% to about 24. And so that's the breakdown of what we're trying to accomplish. All right, so, we had the, another question, I think about pay plans. Yep. Where'd Wayne go? There you are. So, why don't you take the next question here, Wayne, while I try to erase the board and so it might be ready for another use here.
Wayne Marshall: The, well, the question was what's good incentive pay plan for service advisor? And I'm gonna default back to you, you're the master of, and I know pay
Cecil Bullard: plans,
Wayne Marshall: we'll explain it quicker, faster than I would be able to.
Cecil Bullard: So, you know, there's a bunch of theory behind how you pay people and you want pay plans that are motivational, et cetera.
Cecil Bullard: I think if you're watching online and you're looking at changing the industry podcast or in that you're hearing about, a lot of techs complain about things like flat rate or and you're hearing maybe owners complain about hourly. Because hourly has no motivation to do more. Because if I do more, I'm still paid whatever I'm paid.
Cecil Bullard: So a salary or an hourly to me is not motivational to the employee. Flat rate is certainly motivational to the employees that can be motivated by money. But flat rate puts the whole load of the shop whether or not I have cars and work and flow on the shoulder of the technician, which I don't believe is fair.
Cecil Bullard: And so what you need is a blended program where we know that because I'm gonna have 20% of my sales be tech pay loaded, I could say to myself, you know, I'm gonna sell an hour's worth of labor. I happen to be $150, I have $30 an hour to pay that tech under that $150 an hour labor. So, that's all I can have.
Cecil Bullard: So it, I can't, excuse me. Hang on. Go back. There's two different things that we're talking about and I just got 'em mixed up of my. Total sales, 20%. So if I'm $150 an hour and I'm close to 50 50 parts in labor, I'm $300 an hour and I can afford to pay 20% of that out to a technician, which would be $60 an hour loaded.
Cecil Bullard: If I'm $150 an hour as my effective labor rate. I can afford to pay almost 40% of that, about 36. And so that would give me $70 an hour or so to pay a technician. If I hold effective labor rate very close to or above whatever my post-it rate would be at say one 50. So somewhere between, I don't know, $60 and $70 an hour loaded is what I have to pay.
Cecil Bullard: That technician that does that work, that gives me eight hours a day. I want to give my technician you know, Maslow says people that are not worried about food, shelter, things like that, can think about God and science and how to do the job better, et cetera. So I want to give my technician somewhere around 60% of what I can afford to pay them.
Cecil Bullard: So I can afford to pay $60 an hour loaded. Unload that it's somewhere around 50. So I've got a $30 an hour base rate, and I do that particularly on the clock. It's kind of like my minimum guarantee for that person. Now I have another $12, $15 that I can build in. To a bonus plan for my tech. And so what do I want from a tech?
Cecil Bullard: That's what I have to think about. And I would tell you that it doesn't matter what position you're looking at, service advisor, tech manager, parts person just did a shop foreman pay plan. The shop foreman's job is to make sure that the shop is productive and that the techs are getting educated and the problems are being handled, et cetera.
Cecil Bullard: So if I can. Tie in the bonus structure to what I want from a shop foreman that 12, $15 an hour, then I'm gonna get more of the behavior that I want with a technician. I really want three things. I want a technician to be productive so the more hours they put out in a day up to and above eight hours of.
Cecil Bullard: Of time and since we are use, most shops are using a multiplier on book time. We should be able to get, if we're. Eight hours a day there, I should have a decent tech be able to give me 10 that I can bill out because of the 20 to 30% multiplier I'm using on time. And so I'm gonna pay them, you know, based on that's gonna be part of their bonus.
Cecil Bullard: And I usually put three different levels of productivity where it's a dollar, an hour plus another dollar, an hour plus another $2 an hour. And then I want. Quality of work. And for me, quality of work comes from someone that's being educated, has experience, et cetera. So I want certifications either from the manufacturer, the cars that they're working on or from a SC at this point in time.
Cecil Bullard: And I know we could argue about a SC and the validity and what it means, but I think that a guy today that, you know, takes the test, takes the time to take the test and. And seeks that out, is trying to do a better job and is gonna have more knowledge. And I like that. I also have a, so I have a bonus based on maybe being a master tech.
Cecil Bullard: There's a couple dollars an hour, I have a bonus on eight to 12 hours of education per quarter. So if you're getting classes and you're taking them I'm gonna pay you another $2 an hour in your bonus structure. And the, so I might have 12 to $15 an hour built in bonuses for that person. And they get that based on production.
Cecil Bullard: So I could have a guy come in and spend 40 hours on the clock and only produce 30 hours. He's gonna lose six bucks an hour in his bonus structure, but they're still. The potential to earn six, but he's gonna earn six from education and training and, you know, maybe a longevity you've been here for a while or a comeback you know, standard that you put in place.
Cecil Bullard: And but he's gonna earn six on 30 and now the same guy comes back and the next week he produces 50 hours in a 40 hour week. He gets the $6 for productivity. He gets his $30 an hour, he also gets another six for the other bonus stuff, and now he's made 12 times 50. So $600 in a week. As an additional bonus, over and above the $30 an hour, he got paid as a base rate.
Cecil Bullard: And I'm gonna put, so wherever I build pay plans, I'm thinking about what do I want from this person? And the motivational part, which is the bonus structure part, is going to be built around what I need from that particular position. And frankly, you know, someone mentioned to you, bonus, your service advisors for booking appointments.
Cecil Bullard: Well, maybe I do. Maybe that's one of the bonus things that, that's a dollar an hour or that's a percentage of sales. You know, you get 0.05% of your sales based on the fact that you booked 90% of the clients in for a ne their next appointment. Or something like that. And I would also tell you that the rules around pay plans a whole nother class.
Cecil Bullard: We have that online at@gearfreeshops.com, but the rules around pay plans, I have to have a bonus that is enough to motivate and change behaviors. So. Here I am a, you know, a master tech in your shop. You're paying me $40 an hour and, or maybe you're paying me 60, whatever, right? And that's all well and good.
Cecil Bullard: And now you're gonna gimme a bonus. And if I work much harder, you're gonna gimme a dollar an hour. That doesn't motivate me. In fact, that's almost insulting. So you have to have bonuses that are substantial. I need to make it so that a tech could earn another $2,000 a month. If they do what I want.
Cecil Bullard: And then the other thing is the more productive your techs are, the better quality of work. The more flow, the more you sell, the more money I have to pay the tax. And when you overcome a hundred percent productivity and you start to get into the 110 and 120% productivity outta your tax, I have a lot more money than I can pay tax at that point in time.
Cecil Bullard: And that's why we structure those pay plans in that way. Okay. I probably, I hope I answered the question well. If not that we do have a pay plans class online@gearforshops.com. And there's other YouTube stuff that we have at our YouTube channel. That would get you there and give you some more information.
Cecil Bullard: Melissa Velazquez, thank you very much. When looking at your financial information, I find it difficult to navigate the issue of vendor expenses lagging behind a month from the revenue. March vendor bills are being paid in April, so it seems a bit skewed. So I'm gonna make Wayne, this is more, I mean, this is good for you, so I'm gonna let you.
Cecil Bullard: Answer this, and I hope you're gonna talk about cash versus accrual. And if I am doing cash, which is what we're talking about here.
Wayne Marshall: Yes. I
Cecil Bullard: need a, I need a bigger picture, like three months to kind of get the feel of what's really there. So, go ahead Wayne.
Wayne Marshall: Yeah, Melissa, in, in the question, it's looking like what you're lagging.
Wayne Marshall: And so if a bill comes in on March 31st and you've done the service, you've done the work, you've invoiced the customer, so the customer's paid for that part, and then you get the invoice and you know, obviously a few days later from the parts vendor. And then you pay that invoice in April. If you're posting it and you're showing it in April, that's being, you're doing it on your cash flow and you're doing it based on cash basis.
Wayne Marshall: If you're on an accrual, you're, you are accruing that expense. So if you've received the revenue, you're gonna accrue the expense and still show it in March, even though you paid it in April. So it really comes down to how are you setting your books, and if you're setting your books on cash basis. You're right, it will have a lag.
Wayne Marshall: If you're setting your books as accrual. You accrue that expense even though you paid it, it's still gonna go back and show it. It's all part of what you carry as work in process or whip. And then you also have the cost of goods and services once you close out your invoice. So depending on your shop management software that you are using.
Wayne Marshall: You can choose which one you wanna do, which will also change how you choose because of like if you're tied back to QuickBooks, you can decide and you can click it on and off if you want to be cash basis or if you want to be accrual basis. So that question as I read it, and as I think about what you're asking really comes back to how you're setting your books.
Wayne Marshall: And that's what we try to address and try to talk about. So maybe we didn't, it's something for us to go back and look at our material, but it'd be a little more, I guess, specific on the differences and why you would do what you're doing and how that does affect your cash flow.
Cecil Bullard: A lot of shops do an accrual base accounting because they do get a lot of their bills in the next month.
Cecil Bullard: Many shops, however, do a cash basis accounting, so they wait till they get their bills. Then they push that expense back into the previous month so they can get a clearer picture of what really happened in the previous month. And that's a great way to do accounting, frankly. On the other hand, you may say to yourself, wow, that's a lot of work and a lot of trouble.
Cecil Bullard: And so if you're going to run a, an accrual, or excuse me, a cash basis accounting, you don't wanna necessarily look at one month, you wanna look at maybe a three month period as your norms. And that'll help you understand because every month you'll carry parts pricing or you'll carry some of your expenses into the next month.
Cecil Bullard: And if you see a bigger picture, like a quarterly picture, it'll give you a more accurate data to make better decisions. So, and you know, I don't know that accrual or cash basis, some people probably tell you accruals a little more difficult because you are going. You know, f for starting here and moving that back into the previous month.
Cecil Bullard: But once you set it up and once you decide to do it that way. It's really pretty simple and pretty automatic if you have an accounting company or a bookkeeping company that does that for you. All right, Nicole Weller. Thank you. Nicole. What is the best way to know how many admin people you need in your business and how do you calculate their salaries?
Cecil Bullard: How many admin people do I need? I think in my shop we did. 2.6 million with Fourex. This is again, 14 years ago. So, we ha obviously you need someone to do accounting. We had a part-time bookkeeping person on staff that also helped with phones. I had a parts person and with those four techs and I had two service advisors and I was the manager so.
Cecil Bullard: You know, you look at that and you say, wow, that seems like it could be a little top heavy, except we had a very high average repair order and we had 120% productivity. So the four technicians did the work of five. And I think what happens if you have more than two techs per service advisor is that you'll, if you're paying attention, you'll see that your average apparator is starting to drop and customers are starting to be penciled out further and further.
Cecil Bullard: So my car count might even drop in a day. Because my service advisor is overwhelmed and my customer service is going down because I have too many cars for that person to deal with. And so I like one service advisor to two techs. Now I've gotta have accounting people in my business and I think, you know, you might say, well, wait a minute, I'm a really small business.
Cecil Bullard: We only have one tech, and I'm the owner. And so I'm either I'm doing the accounting or my wife's doing the accounting fine. At that point in time, that's what you're gonna do. But there probably is a point in time where you look at yourself and you say to yourself, okay, I've got two service advisors and four technicians in my business, and my two service advisors are having a hard time keeping up with estimating and selling and flow in the shop, which is one of the things that just kills.
Cecil Bullard: Productivity and profitability for automotive shops, and so am I gonna hire another service advisor? Or if I hired a parts person and they took that off the shoulders of my service advisors, would that give me higher average repair orders and higher flow? I, I do know, frankly, that I look at what a shop does and I say, okay, a manager of a shop that's gonna do say 3 million in sales, that's probably someone that's gonna get paid somewhere between one 20 and 200,000 a year, maybe even two 50.
Cecil Bullard: If the margins are right, the productivity's right, and the profits are right. Again. Now I'm building a pay plan for that manager where 40% of their pay is gonna come from margins and productivity and sales, as opposed to, Hey, you're just there, making sure people do what they're supposed to do. And then, you know, for my techs, like I said technicians 20% of sales were.
Cecil Bullard: You know, about 36% of my effective labor rate for my service advisors. 10% of sales, eight to 10% of sales loaded. And then if I'm gonna have a parts person, it would depend on the size of the business as to what I could or would pay that parts person. And if I did hire a parts person, I would increase my labor rate.
Cecil Bullard: So that I could pay for that parts person and not take that outta my pocket. And so I couldn't hire a parts person at a shop that had one tech and one service advisor because I don't have the money, the flow, or any of it built up to have that. You know, that parts person. So, you know, I want to keep my admin expenses in that 25%.
Cecil Bullard: And by the way, in that 25% of fixed expenses, I also have banking costs, debt costs management costs, my salary for managing the shop and the truck and the insurance and the. Liability insurance and, you know, everything else is in that pile, the building and the equipment and, you know, debt et cetera.
Cecil Bullard: And so I want to have a fairly comprehensive composite. It's not just my p and l, but another way to look at my financials. To help me understand what those percentages are and to manage those percentages. We call that a composite. And all of our clients have one of those, or have the ability to have one of those.
Cecil Bullard: Okay. I, again, I hope I answered that question. Didn't create too much confusion. So, ia Tola, what are the top four KPIs you'd like to see in your operation? And does each KPI pay the team individually? I'll answer the second part of that as not necessarily. And I'll answer the first part of that in, there's more than four KPIs that I want to see.
Cecil Bullard: So there's the daily KPIs that I like to see. What did we sell? What did we close, what did we finish? What, how much money came in? I like to see productivity daily and I like to see opportunity, what did we find on the cars and and what our average repair order is. Those are five KPIs that I look at every single day.
Cecil Bullard: Now you notice I'm not looking at margin daily. And the reason I don't look at margin like parts margin or labor margin daily is because I could have a, an engine that closes today with a 35% parts margin. And I look at that and I go, oh my God, we are, we're not getting our margins, blah, blah, blah. I personally did not look at margins parts margin or labor margin on a daily basis.
Cecil Bullard: I looked at that on a weekly basis and a monthly basis through my composite and through my p and l. And what you hope is that you have processes for estimating in play that will hold your parts margin and will hold your labor margins because of the processes that you've built within the business.
Cecil Bullard: So I gave you my daily five. I would add cell rate into my weekly. What are we selling of the opportunity that we have, what the techs are finding on the cars. I look at that because you know, a bad attitude at the service counter, all of a sudden my average repair order and my cell rate will drop.
Cecil Bullard: And that's just somebody having a bad day or maybe having a bad week. You, you just don't know. We had a cell rate and an A RO drop. And cost us $3,000 in sales a day for three days. First day I didn't worry about it. Can't, you know, short, small amounts of data are not, you don't wanna make tough decisions on small data.
Cecil Bullard: Second day it made me nervous. By the third day it was, I go, we have a problem here. Went to my service advisors, brought 'em in, had conversations with them about selling. One of the service advisors, very defensive. Calmed that down, said, Hey, you know, I just need you to really focus on sales. We gotta bring these things back up.
Cecil Bullard: Sent 'em out of my office. The average apparator went up by $400 and et cetera. And then I found out three months later that the day that our sales dropped. His wife served divorce papers on him. Didn't find out right there. He didn't want to tell me he was whatever, embarrassed, whatever it was I found out later.
Cecil Bullard: But because I'm watching that number and I'm paying attention to that number on a daily basis, I was able to potentially probably save us maybe a hundred thousand in sales during a three month period that I would've dropped if I wasn't paying attention to those KPIs. And then we have a class I hate to keep, you know, but we do have a class.
Cecil Bullard: It's, I think it's called Everything you Need to Know about Numbers and Profit in our gear for shops.com. It's not very expensive. I think it's about four hours, and it's all the formulas, all the KPIs, what you need to look at, et cetera. And that'll give you a much deeper dive than we can do here into that next question there, and I think we got about 10 minutes left, so we probably could do a couple more questions.
Cecil Bullard: Hey Andrew. How you doing brother? Wayne, why don't you why don't you go there? Sure.
Wayne Marshall: I was looking at this question as they're showing up early for us. Andrew, and yes, I always look at it, it depends on, again, if you're building out a budget or a cashflow projection, you gotta work on averages.
Wayne Marshall: The big thing is, and I think this plays into, and it's a little bit of what we got talking about earlier when Cecil was talking about credit card expenses. You know, if you're paying X or Y and you're seeing certain trends and you're looking at that as a percentage back to your overall revenue. Yeah, that's where you want to go.
Wayne Marshall: You know that you're gonna spend somewhere around one point a half to 1.8% in credit card expense. You don't know how much it's gonna be. It's gonna go up one month, depending on how many people charge to them, what people don't charge the next month. So put in the average, do that percentage. Same with utilities.
Wayne Marshall: Look, there's so many different expenses that we have that have variability. So what I would do when I had my own business. I plugged everything in and I said, look, this is what my average is based on. I think sales are gonna be a hundred thousand dollars. I think I'm gonna run one and a half percent for credit card expense, so I'm gonna put 1500 bucks.
Wayne Marshall: It's that easy. Same with your utilities as you. And then when you look at things quarterly, when you run your p and ls balance sheets, those quarterly reports, a lot of that settles out. So those ups and downs that you get from month to month now start settling out. You can see trends, you can see averages, and then really decide what you want do or not do.
Wayne Marshall: If you need to tweak something or change up what your sales goal needs to be and some of the things that are gonna be done, which plays back into a lot of what Cecil was just talking about, of what different KPIs to look at, what are some of the different trends, and this all plays in that if you're seeing something go here or here Yeah, you wanna pay attention, do I need to change it?
Wayne Marshall: Is it just something that happened for those few days? Or do I got a bigger problem that's systemic because we don't have whatever in place that gives us the right checks and balances.
Cecil Bullard: I, I would also add to that sales goals are not necessarily only set on what my expenses are. I mean, that's one portion of it.
Cecil Bullard: I want to set sales goals based on, hey, I came in this business because I want a certain amount of profit. I also want to set sales goals based on my capacity. So if I have three technicians and I'm $200 an hour, and my parts delivery ratio are. You know, 1.8 eight, 8.8 in parts for every hour of sales.
Cecil Bullard: I of labor I sell that's $360 an hour times three guys times, eight hours a day. Times 1,960 days, which is what a average technician will work taking a month off for holidays and vacation. And then I want to know what that number is, which is probably today. Two, two point something, 2.2, 2.3, 2.4 million.
Cecil Bullard: And I wanna set my sales goal based on that because if I'm paying the tech a certain amount of money, a certain percentage of that is going to my tech, but my sales aren't enough. Then all of a sudden my fixed expenses become more as a percentage, my costs become more as a percentage, and I won't make the profit that I need.
Cecil Bullard: And again, I hate to say it, but man, if you really want to understand this and dig deep into it everything you need to know about numbers and profit. I'd take it and watch it five times because I'm setting my goals, not just based on what my expenses are. Obviously I have to cover my expenses and I want them to be 25% without parts labor sales cost or marketing cost.
Cecil Bullard: Because I want that 20% net. But I'm also looking at, well, I've got the capacity to do 2.4. If I only do 1.6, then my margins, my, my labor margin's gonna be very low and I will not make the profit that I wanna make. I have to know what my capacity is, and I have to set the target in sales to hit that capacity at least at a hundred percent.
Cecil Bullard: And I can't say more. It's last question. I think, and then we'll wrap it up. We're gonna do this again next month. Do you phone script, huh? Yes. I think phone scripts are great. We have oh, I hate to say it, but we have a, you know, becoming great on the phones class. That, that is I think a four hour class, very inexpensive on gear for shops.com that will tell you how to do all the phone, you know, how to think on the phone, how to answer the phone, how to book appointments, et cetera.
Cecil Bullard: And I think phone scripts are great. To start. And I think, you know, everybody should have a script. We answer the phone in a very specific way, you know, put a smile on our face which I'm looking at myself and I haven't been smiling much this morning, but I'm gonna answer the phone, so I'm gonna think of a great joke.
Cecil Bullard: Let me do that. Oh yeah, that's funny as heck. Good morning. Thank you for calling Larry Autoworks. This is Cecil. How can I help you today? That's a script. Okay? And that's a script that I want everyone answering the phone to use every single time that way with a smile on their face. I think you need to have scripts for people that you're training so that they understand the basics and so that they could do it.
Cecil Bullard: How do I sell a coolant flush? How do I sell a brake, flush, or brake service? You know, how do I answer? Well, that's too much. Or I can get it cheaper somewhere else. I, that's a script that once I look at the common objections that I have on the phone. Then I write scripts for those common objections, and I teach those to my staff that is gonna be dealing with those things and then they make it their own.
Cecil Bullard: So, for me it's, I want you to use the phone script enough that it's part of who you are. And then I want you to make minor adjustments to that based on your personality or on who I'm talking to. And so we're gonna make some adjustments to those phone scripts. Phone scripts can't be. Well, we're gonna do this a hundred percent of the time every single time.
Cecil Bullard: That's exactly what we're gonna do, except for, and people don't like you gotta be genuine. It's gotta be you. Yeah. So, yes I absolutely love phone scripts, but ultimately I want you to follow the script, 80%. And be genuine and move around a little bit based on who you're talking to and based on your own personality and style.
Cecil Bullard: My style, I'm a much more direct person. I'm always gonna be more direct. Your phone script, if you're a. You know, if you're a supporter or if you're a interpersonal is never gonna fit me completely. And so I have to make adjustments to your phone script to fit my director style. Alright we are gonna do this again next month.
Cecil Bullard: Michael, you're gonna put the date of that up there, I assume. And if you would like to have a business evaluation, business review. No charge, no commitment, et cetera. We're gonna put up a QR code for that. Man, I thank you all for your time today. I thank you for your questions. I think Wayne, you're not gonna be with me next time, but Michael Smith will be here.
Cecil Bullard: It might
Wayne Marshall: three of us,
Cecil Bullard: so yeah. All, all right. That'd be great. Then somebody's never gonna get to talk, that's for sure. So, but yeah, it could be all three of the, of guys from the institute. So thank you very much for your time. Stay tuned for the for the QR code and the date of the next class.
Cecil Bullard: Thank you very much.