The Institute’s Leading Edge Podcast

105 - Progress To Inspiration with Bob Conant

105 - Progress To Inspiration with Bob Conant
September 11th, 2024 - 00:49:28
 
Show Summary:
In this podcast, Bob will shares the story behind his success, including the lessons he's learned from both his triumphs and the mistakes he’s made along the way. He'll be joined by Jimmy Lea from The Institute, offering you an exclusive chance to hear firsthand how to overcome challenges and adopt actionable strategies for your own shop.
Since 1983, Bob Kaiser's Repair has been delivering reliable and trustworthy auto repairs to Hilton, Rochester, Hamlin, and the entire Monroe area. Over the years, Bob has achieved tremendous success by increasing sales, boosting Effective Labor Rate (ELR), and significantly improving both Gross and Net Profits.
The podcast focuses on Bob's experiences as a shop owner, particularly his success stories and the mistakes he's made throughout his journey. Bob shares insights into the practical lessons he's learned, offering valuable advice to other shop owners on what worked for him and, just as importantly, what didn't.
This isn’t just advice—it’s lived experience. Learn from someone who’s been through it all and come out stronger on the other side.
 
Host(s):
Jimmy Lea, VP of Business Development
 
Guest(s):
Bob Conant, Owner of Bob Kaiser's Repair
 
Episode Highlights:
[00:01:34] - Bob shares how he got started at the shop, initially mowing lawns and eventually becoming a technician.
[00:03:00] - Transitioned into service advisor and general manager roles to avoid the physical toll of turning wrenches long-term.
[00:04:44] - Talks about years of waiting for the previous owner to let go and the challenges of delayed succession.
[00:06:00] - Joined a coaching group to grow the business, but couldn’t implement changes due to owner resistance.
[00:08:48] - Finally purchased the business in 2020/2021 after over two decades of dedication.
[00:17:26] - Credits joining a coaching group as crucial for handling the transition and business responsibilities.
[00:21:07] - Emphasizes empowering staff and setting clear goals as key to rapid growth in the first two years of ownership.
[00:26:33] - Talks about creating a fun, supportive shop culture that improves both employee and customer satisfaction.
[00:34:46] - Shares future vision of expanding to five shops in five years and eventually retiring.
[00:44:09] - Advises new shop owners to seek support, stay accountable, and not go it alone - “You don’t know what you don’t know.”
 
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=GUJJSoI_HCU
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Jimmy Lea: Welcome. Good morning, good evening, good afternoon, or good night, depending on when and where you're joining us from today. This is the Institute and these are the leading edge podcasts. As we have discussions talking to you about your awesomeness, your success, your prowess in making your shop the best that you can possibly be super excited to be here today.
Jimmy Lea: My name is Jimmy Lee. I am with the Institute. We are talking to you about your awesomeness, your success, your challenges, your past, your future, your present. Where are you today? As we talk about these things today, the guest is Mr. Bob Conant. Bob, glad to have you with us. We're going to talk about you. So it should be easy for us to talk about Bob.
Jimmy Lea: You can come up on camera now. Hey, how are you? 
Bob Conant: Good. 
Jimmy Lea: Good. 
Jimmy Lea: Good, good, good. How are the bills? 
Bob Conant: Those are good. 
Bob Conant: 1 and 0 
Bob Conant: undefeated. 
Jimmy Lea: They're doing great as of today. 
Bob Conant: As of today. Yes. 
Jimmy Lea: As of today. And how do you think they're going to do going into this weekend with Miami? 
Bob Conant: Tomorrow's going to be a tough game with Miami.
Bob Conant: So we'll, we'll, we'll see. I'm okay either way, but if they win, they get to talk a little more trash. So hopefully they'll win. 
Jimmy Lea: Nice. Yeah. It's amazing how much of a religion football can be. 
Bob Conant: It can be. 
Bob Conant: Yeah. 
Bob Conant: Yeah. We have people every, every Sunday or every game that come over and watch it with us. So it's, it's a, it's a blast.
Jimmy Lea: Oh, it sure is. Sure is. And Bob, you, you I I'd love to jump into your story to talk about who you are and about your history and about your past, where you came from very specifically with Bob's shop, Bob Kaiser's shop. You were a technician in the shop for quite a few years. 
Bob Conant: Yeah, I worked for Bob on and off for years and I came back back in 2000 as a tech and then started to do a little bit more of office work.
Bob Conant: And mainly it was because I saw how. The industry beats up a technician's body. So for me, I said, Hey, let's let's, let's learn a little bit more of the office side and maybe I can expand my career in the industry. 
Jimmy Lea: Well, let's back up a second. That's 24 years ago. You say you came back to Bob Kaiser's.
Jimmy Lea: Does that mean you worked in the 1900s at Bob's place? 
Bob Conant: I felt like, you know, so I, I worked through and through high school and I actually started off cutting his grass at his house. And then worked into cleaning up and, and I've done pretty much every position here between tow truck driver you know, cleanup kit, the whole nine.
Bob Conant: So, and then I kind of transitioned through high school work here and then left, went to a couple of shops in between coming back. And I came back for good back in right about 2000. So. 
Jimmy Lea: Okay. So you've been a technician for a lot of years. You come back in 2000, 24 years ago, you start getting into more of the office work.
Jimmy Lea: Is this like service advisor, general manager or service advisor solely? 
Bob Conant: No, I started off as a tech and service advisor. I did part time tech, part time service advisor. And and then eventually went to full time service advisor and probably the last 10 years was a labeled a general manager. So, yeah.
Jimmy Lea: And at what point, when you came back in 2000, and we're just going to start at that, at what point did you look at this business and say, Hey, you know what? I think I really like this and I think I want to buy this shop. 
Bob Conant: I think that's crazy talk for anybody, but I would say that it's probably 10 years into that it was he was talking about retiring and, or at least thinking about it.
Bob Conant: And so I looked at that point to say, Hey, you know what, this would be a great opportunity. You know, I was in my forties. A little bit more energy than in my fifties and said, Hey, you know, this, this would be a great opportunity. So, we started talking at that point and, you know, you kind of realized that he really wasn't ready to let go and retire.
Jimmy Lea: Oh, dang. 
Bob Conant: So, so from there, I had actually had a, a friend of mine who worked for Bob for 20 something years left and went to the dealer. I bought it back and as a, to be a partner with me, we were planning on purchasing it together. So that went great for, for years. We were all kind of pushing for the same thing.
Bob Conant: And then you kind of saw that Bob was just really not ready to let it go. So, so then it kind of started to change with my partner and then he had medical issues that he had to finally retire from the industry. Which again is why I tried to get into the office because it beats up your body. Yeah.
Bob Conant: So, so he, he left and then there was several years it was several years after that that it, the talk finally came real. But there was, it went a long ways before, you know, you kept having that, that carrot dangling in front of you and Hey, yeah, this is going to happen. This is going to happen. But for an owner, it was really hard for him to let go.
Bob Conant: I mean, this was his life. He literally lived in front of the shop. So his commute was really quick and he worked 25 hours a day, so it didn't really matter, you know, so this was his life. It wasn't just a, a business, it was his life. 
Jimmy Lea: So 
Jimmy Lea: literally he lived. Like 
Jimmy Lea: next door to the shop. 
Bob Conant: So yeah, this is actually, we're, we're actually an old bus garage that's set back off the road.
Bob Conant: So there's two houses in the front and one of the houses, he owned both of them, but the one house he lived in for 30, 33 years, somewhere around there. 
Jimmy Lea: Okay. 
Bob Conant: So, yeah, it was, it was tough for him to, to finally let go. And then, and then when he finally was ready to say, Hey, I'm, I'm, I'm really looking to retire, I wasn't in a mindset and, and to go back, we had so we had finally joined a coaching group years ago and he was, he went to a couple of meetings.
Bob Conant: And then realized it's not for him, right? He was, he was a true technician, but he was not a good people person. So he he didn't want to join the groups. He didn't want to be involved in our groups, but knew that the business needed it. So I was put in the position to represent in the groups. And we were in a group for probably about six years.
Bob Conant: And finally I was kind of like, all right, you know. Every time I go to a meeting, we'd learn a lot, come back with a whole bunch of notes and I'd come back all gung ho, ready to change stuff and get stuff on track and he wasn't willing to change it. No, we can't do this. We can't do that. Customers will never let us do this.
Bob Conant: So, there was a lot, a lot of that going on and, and, you know, we can't do that in our area. So. Finally, after coming back and getting beat up at these meetings a lot without being able to change anything, I said, you know what, if, if nothing changes by the end of the year, I'm going to leave the group because I'm not benefiting anyone there.
Bob Conant: So I, which kind of, which really did stink. I mean, I, I love. the group. I love the guys that were in there. It was a lot of fun, a lot of great information. 
Jimmy Lea: Yeah. 
Bob Conant: So finally I said, all right, nope. At the end of the year I was out and, and that was it. So we went a couple of years after that. It was probably about four years after that before he really seriously started talking about selling and retiring.
Jimmy Lea: Oh 
Jimmy Lea: my gosh. 
Bob Conant: Yeah. So then after that, He was, he was finally said he was ready to sell. I said, yeah, I don't think so. So I went through a couple of years of, you know, screw you. I can't, I'm not, I'm not buying, I'm not, I'm not chasing this carrot again. So, and then finally it looked like he was really serious.
Bob Conant: So I sat down with my wife and said, all right, what should we do? So, you know, I said, I can go somewhere else. There's always McDonald's, so you can always get a job somewhere.
Jimmy Lea: Right? Taco time. McDonalds
Bob Conant: I said, all right, now, you know what? I loved what I do. I love the customer base. I love. The staff here said, all right, let's, let's bite the bullet.
Bob Conant: And, and if he's serious, let's, let's do it. So he was serious and, and everything went through and then I purchased the business and well, actually I started leasing it in May or February of 21. And then finally closed on the, on the purchase of it around August of 21. 
Jimmy Lea: Oh, wow. That's that's, I'm going to say that's fairly quick.
Bob Conant: It felt like it took forever. 
Jimmy Lea: It did take forever. But from the final, okay, February to August, that's the short time period, but it took you 21 years to get to that point. Which, here's the good news, you don't hold the record. I'm sure, I'm sure. But that's also the unfortunate news, that you don't hold the record.
Jimmy Lea: What advice would you give, because I think there's a lot of service advisors, managers that are in that same position that you were in where that carrot kept being dangled, but you just didn't. And it wasn't that you weren't willing. It's that you weren't willing at the same time. Ooh. How do you give somebody hope that it's going to happen eventually?
Bob Conant: So that's a great question. Cause you know, honestly, I looked at it as I should have just bailed out years ago and open my own shop. And, and I'm glad I didn't, but it's, you, you gotta look deep because if I'm sure there's a lot of people out there that are, that are Well, there's a lot of owners out there that are looking to say, Hey, you know what?
Bob Conant: I need to get out. Right. And the problem with it is, is nobody really puts a lot of the, the majority of people don't put things in place to make it happen. And, and for that, you string a lot of people on, like you say, for me, I would have much rather do it in my 40, you know, around 40 than 50. But.
Bob Conant: Honestly, I don't, you really have to look deep at it because again, I didn't think this was ever going to happen. And in reality, to wait that long is kind of crazy if this is what you want to do. So, yeah, I would say they would really have to reevaluate it. Cause I know, I know a handful of guys now that are in the same boat locally that are being held on that, Hey, the owner is going to sell.
Bob Conant: The owner is going to sell. The owner is going to sell. And honestly, it's, it's a lot harder for knowing now, I see it's a lot harder for owners to say, Hey, you know, if, if an owner is involved on a daily basis, it's going to be hard for them to make that decision to say, you know what, I think it's time for me to retire.
Bob Conant: Interesting. So if it is an absentee owner, it's a little bit easier. So if you were to go to these, unless there's two or three guys that are in your town, what advice are you going to give them? Cause each, each situation is unique. And I, I understand that. So this is a very broad brush. What advice would you give them?
Bob Conant: Honestly, I, I'd say don't believe the hype. I mean, you know, actions speak louder than words. So if it's not happening and that's what you want to do, then you've got to make that decision to make the move or you make the decision to hang in and, and, and wait until it does happen. If it does happen. 
Jimmy Lea: Yeah.
Jimmy Lea: Yeah. If you really like that location, if you really like that customer base and you really want to stay there, then you can stay there. I, I think, and, and help me out here on this, Bob, would it, and I don't know if you did this or maybe collectively the both of you did this where you finally drew a line in the sand.
Jimmy Lea: Well, let's call it that a line in the sand and said, okay. This has to happen by the end of the year. 
Bob Conant: Yes. And, and basically it was, it was, it was both of us. I mean, for me it was okay. Is this really going to happen? And I dragged my feet on it a little bit because I was like, I don't, I don't really think he's really serious.
Bob Conant: So I had to wait. I had to see it in his eyes that he was serious. Okay. I want to go. 
Jimmy Lea: Okay. 
Bob Conant: And the funny part with that is. Even after it happened, he didn't really want to go. So, was he still coming in every day? Oh, he was, he was still, yeah, he was still coming in every day and the habit was, it's hard to break.
Jimmy Lea: Yeah, I mean, that was his life. You're back next door. You're, you're the backyard. You, the shop is. Part of his daily routine. 
Bob Conant: It was his life. So, so finally when he was, when he was serious I said, okay, let's move forward. And, and honestly, for me, for this business, you know, and I look at it as it was, it was a good choice for me because He built a really good business.
Bob Conant: I mean, he invested his blood, sweat and tears in it. He worked 25 hours a day, you know, eight days a week. And he had a really good reputation and he did things right. So, and I worked for a couple of shops in between. And you know, you find guys trying to cheat the system and you know, to try to get ahead or make an extra buck and, and it's not worth the, you know, Bob is, was always a very honest guy.
Bob Conant: So I, I was, had the opportunity to learn from a very honest person. a very smart technician. So for me, it was, it was a great situation for the learning aspect of, of what he put into this business and where it was when I was looking to purchase it. It was a, it was a solid company and, and not even number wise, but trust wise, loyalty wise with customers, you know, our retention rates really high.
Bob Conant: So we had a very good customer base that was, was loyal. I mean, when he first moved out here, he was in the city, moved out here in 80 and 86 for his first year, he had 75 percent of his customers that traveled 20 to 25 minutes to come out to Hilton for his repairs from Rochester. Yep. So, I mean, that's, that's type of loyalty that he built with his, his.
Bob Conant: Client. So, they, that made him survive the first year. And then from there you know, the community learned of him and it grew from there. 
Jimmy Lea: And they embraced him finally. 
Bob Conant: Finally. 
Jimmy Lea: Yeah. No, I, with the small towns, you're living in a small town. Hilton's a small town there. You got to break through that good old boy mentality and become part of the community.
Jimmy Lea: And that's sometimes very difficult in a small town. 
Bob Conant: No, it wasn't. And it built a great reputation. And, and like I said, I love the area. I love the customers. So for me, it made sense to make the jump and, and purchase the business. 
Jimmy Lea: Oh, that's beautiful. And that's one of the things I love about the automotive industry too, is that the honesty is.
Jimmy Lea: The integrity is there and I'm using a very broad brush because yes, there are some that aren't, but for the majority, I think the industry is hardworking, super hardworking. They'll put in the time, effort and energy to get the results. And you have done that. So I'm seeing a 21 year time period. Six of those years you were in a group mastermind idea.
Jimmy Lea: Then you dropped out. Then you came back three years ago. You, you finally. Took that big plunge and bought the business. What, what did that look like? I mean, gosh dang, that had to be one of the scariest moments. 
Bob Conant: It was, and for, for many owners that are, are or were technicians it's a, it's a scary thing.
Bob Conant: And for me, you know, I was a tech service advisor and then label as a general manager. And I say that because I really didn't have, I had some of the authority, but not full of the authority. So it was, it was a scary move because I didn't know the backend, right? I knew how to run the shop, deal with the employees, handle the customers, things like that.
Bob Conant: But I didn't know all the fun that goes on on the backside between bills and taxes and all that stuff. So, yeah, it, it was, it was very scary, which is why when I purchased the business, I already knew that I was going to join back up into a group and, and to have that structure, you know, the discipline and the accountability with it, so, and the resources, I mean, you know, without, without the group and in any group, do you have a lot of, of.
Bob Conant: Board members that you're, you can bounce stuff off and you have a lot of resources to be able to, to, to. figure out problems because we all go through the same thing. The, the industry's, you know, an auto repair shop is an auto repair shop. We all have similar to the same problems. Yes. So to have that counseling, if you will you know, it, it makes a big difference, which is why I knew that I needed, I needed to join a group.
Bob Conant: For me, it was also because I really wasn't sure that I could do it. You know, it's a, it's a big, it's a big load to take on. And it's a lot of responsibilities to have employees that have families that, you know, you're responsible for now, you know, cause my job is, is to keep them with a job and, and keep them stable and, and whatnot.
Bob Conant: So yeah, it was a bit, it was a big leap. It was definitely a little scary. 
Jimmy Lea: It's a humbling experience to finally realize, Oh my gosh, now I have nine mortgages. Now I have nine families to feed and nine families to clothe and nine families or whatever that number is for you. Right. I mean, that's, that's a humbling experience.
Jimmy Lea: So what what did it look like that first year for you? And I understand it's a completely different skill set going from a technician service advisor manager. Owner owner is a different skill set. You went into that group environment from where Bob had built the business. Now you take over, you're in the group.
Jimmy Lea: What is that first year look like? 
Bob Conant: Yeah, it was it was interesting. So for me, I had, I was fortunate enough. So Bob's wife took care of the back end, the bills and whatnot. So I was fortunate enough to have her through my first year to help train me. Right. So, and, and, you know, she was stuck in her ways and she was using QuickBooks desktop.
Bob Conant: So I said, I'm going to use QuickBooks online. So. February 17th, when I started leasing the business, I changed to QuickBooks Online. So she had to learn with me to help me learn. So I, I had some guidance with that. The first year on the backend with handling the books and everything else. The, the employee portion, I mean, we have, you know, everyone has different management styles and whatnot.
Bob Conant: I like to have fun. I'm a, I'm a, I'm a, I'm a sarcastic person as some of the group members that are on here watching know, 
Jimmy Lea: That's your second language. 
Bob Conant: Yes, it is. 
Jimmy Lea: And you're fluent. 
Bob Conant: But you know, I, I like to have fun and, and, and for me, it was great because my employees were, were bought in for me personally, the business, they wanted to work hard for me.
Bob Conant: They knew that. I put everything I had into purchasing the business. So I didn't have a lot of resources on the backend to where things went sideways. So I had, it was, it was awesome to see that my staff worked their butts off to make sure that we were hitting our numbers, hitting our goals. And everything staying on track the way it should.
Bob Conant: So without them, that, that first, I mean, it could, it could have been really bad. And, but no, I, I had a great staff to start with. They were all. on board with, with me taking over. So that worked out. That was, that worked out the best. 
Jimmy Lea: It could have been a mutiny and thank heavens it wasn't. So here's a comment that comes in from Craig, Craig Zale down in Texas.
Jimmy Lea: We can't do it that way here. Our clients won't let us do that. Those are probably some of those things 20 years behind. You know, it's not as progressive. So my question for you is, and this is some old school mindset. What are some of the things that you did in implementing that when you bought the business, you had the staff, you had their buy in, what are some of those things that you did?
Jimmy Lea: to really grow sales, grow profits, to grow the business that first year? 
Bob Conant: Well, the first year, really, honestly, not a lot. It was, it was, I was in, in my head, I was in survival mode, right? I was in don't fail mode. Yes. Yeah. Which is where my staff really picked up. And our sales, I think our first, I think 21, our sales were 15 percent up from the previous year.
Bob Conant: And then the second year we were up 29 percent in sales. So, and honestly, the biggest thing for that was just getting out of my way letting my staff, you know, giving them the expectations, the goals and letting them do what they're paid to do. 
Jimmy Lea: How hard is that to do that, to step back and go, okay, I need you to do that.
Jimmy Lea: It's going to take you a couple hours. I could do it in 35 minutes, but. I need you to do that. 
Bob Conant: All right, Jimmy. So you, I mean, you don't really know me, so I'm not, I'm not a micromanager. Right. So I don't like to be up people's business when they're, when they're doing it. But if you ask my wife I'm not a good teacher with that stuff.
Bob Conant: I'll just do it because it's easier. Right. So it was extremely hard. And, and I, you ask any, anyone in the group that's being told to, you just need to let go yeah, it's, it's scary. I, it's, you know, there's, I guess the good part about it is there's days now that I come in and I'm like, all right, what am I doing here?
Bob Conant: What, what, what, what do I do? Because you don't have that, that normal, I'm working on it. The hardest thing to do is to sit back and look at numbers or look at, you know, anything else and go, all right, how are we doing? How's the staff doing? So, and that was more of the second year of, of giving my staff more responsibility and kind of letting them, you know, do what they're supposed to do.
Bob Conant: And, you know, here's our goal, where we want to be, let's push it there. So I think that was really my, my biggest increase. It was definitely our biggest increase ever here in, in the 41 years we've been open. So, and yeah, it was, it was hard. It's, it's not, it's not the easiest thing. Anyone that says it's easy and I envy you because it's, it's really not.
Bob Conant: It's, it's no fun at times because you, you feel a little bit lost. You, you kind of lose your purpose, but you have to realize that your purpose. Is on a, on a more overlooking, you know, area to say, Hey, you know, I need to keep all this stable and whatnot. It's not that, Hey, I've got to write up a customer, sell this job, fix a car, anything else.
Bob Conant: So it's harder looking from, you know, 30, 000 feet up than, than it is down on ground level. 
Jimmy Lea: Yeah. Yeah. And Tommy gives you a heck yeah, he's sarcastic. And yet. He's a great shop owner and his staff respects him. 
Bob Conant: Yep. They were just here in September. So they got to tear me apart, which was which was great.
Bob Conant: And luckily there wasn't, there wasn't a lot of bleeding. So, but it's, it's, it's it's, it's good information, but yes, no, they, they met my staff and, and I've got a good staff and. And that's the reason why I'm able to sit here with you today. 
Jimmy Lea: Nice. So what, what did you do in those first couple of years?
Jimmy Lea: You grew by 15%, you grew by 29%. What were some of those steps you took to improve that gross profit and that net profit? 
Bob Conant: It honestly, it's, it's, it's the group process. It was a couple of things for me, right? So it was, It was the no, I'm not going to fail. Yes, I can do this. You know, after my first year of, of being a little nervous and going, all right, really, can I, can I, you know, do this?
Bob Conant: It was like, you know what, for anyone who thinks I can't. You know, I'm gonna, I'm gonna do it. And then it was just, it was the group process. Watch your numbers. These are what we do. Give it to your employees. These are the levels we gotta hit. This is where we need to be. This is the customer service that we need to provide.
Bob Conant: You know, and, and it was just a lot of, of monitoring that and, and giving them the tools to be able to do their job. 
Jimmy Lea: Yeah. Yeah, cause I mean, you think of the time wise, you were buying the shop in the middle of COVID. 
Bob Conant: Yeah, at the end of, end of COVID was basically, well, yeah, I mean, we were still, we were still there.
Bob Conant: So yeah, it was, it was scary. And the funny part is, is in 2020, when, when COVID came out at Mars, we had probably our best first two months and we're starting off great in, in March, then I think it shut down on like on the 17th or something like that. And we really didn't miss a beat too much through, we were fortunate that we didn't really, we were off a little bit.
Bob Conant: In 20 and yeah, so that's when I was looking to purchase. So yeah, that was even a little scary, I guess, thinking back on it now, you know, yeah, cause it was all unknown. But in reality for me, I looked at it as, well, you know what, we didn't get killed through COVID. We stayed there. And you know, we're, we were one of these businesses that, you know, was essential and, and, and so I'm like, we're not going anywhere.
Bob Conant: So I said, yeah, let's jump on the train and do it. 
Jimmy Lea: Nice. Nice. So what have you done within your shop? In your culture within your people that keeps that high level customer satisfaction for your clients that keep coming back to you year after year after year. 
Bob Conant: It's pizza parties, right? That's what I see online.
Jimmy Lea: Pizza parties. 
Jimmy Lea: Oh, is that all it takes? 
Bob Conant: That's all it takes. I don't see it. I think it's just me being me. I like to have fun. I want my staff to have fun. I don't want to have to go to work going, man, I got to work with Jimmy again, right? He's going to be in his mood on Monday. The Seahawks lost and you know, and so, I like, I like everyone to have a good time.
Bob Conant: So for me, it's, it's getting my staff to enjoy it. And I'll give you an example. I've got a, I've got a guy that we took from we were able to grab from another shop because his wife reached out to me. there. He was coming about work, did a good jo over 15 years, almost 16 so she reached out to me, we interviewed him, brought him here.
Bob Conant: She says, you know, he is been here oh, two and a half years, almost three years. Yeah, about two and a half years. And you know, we, we do dinners together as a staff. We go out golfing together, that kind of stuff. And she says, you know, he couldn't be happier. I mean, the, the home life has improved because his work life has improved.
Bob Conant: So, yeah, for me, for me, it's, it's. I take what we do serious, and customer service needs to be at the highest it can be, but you have to have fun, you know, and to me, that's the biggest thing for me. I appreciate my staff, they know that I care about them, you know, we've done food, I've cooked garbage plates, and you know, all kinds of burgers and breakfasts, and if you've never had a breakfast baconator, they're pretty good, so.
Jimmy Lea: No, no, no. You, you got me a garbage plate. What? 
Bob Conant: Oh, that's right. I forgot. It's more of a Rasha thing. It's a garbage plate. It's, it's either, it's either burger, cheeseburgers or, or, or hot dogs on max salad and home fries or, or max salad and beans or any kind of combination. Yeah. I forgot. It's more of a Rasha thing.
Jimmy Lea: You call that a garbage plate? 
Bob Conant: It's called a garbage plate. You, you got it. You got to Google it. Check it out. It's. It's really good. You should try one this Sunday for the game. 
Jimmy Lea: Yeah. Well, yeah. Anybody that's watching this is garbage plate. Is that due to me? Does anybody else know this? And is this outside of New York?
Jimmy Lea: Is it just really, is it just a Rochester thing? 
Bob Conant: I think it actually originated in Rochester, I believe. But yes, there was a place called Nick Tahoe's that was here that really was big on garbage plates and and now everyone copies it. And I've seen people that have moved further down south and started selling garbage plates because it's yeah, you're right.
Bob Conant: I, you know, it just came up because that's. That's me. That's our life. But yeah, garbage plates are more of a Rochester, New York type thing than, than I think anywhere else. 
Jimmy Lea: Okay. Well, it has not made it to Long Island. Andrew pipes in. He says, Nope, it's not down here in the Island yet. Yeah, we all need to make a trip now, Andrew.
Jimmy Lea: You got to go get us a garbage plate. Craig says he's never heard of it. All he knows is dirty water, hot dogs. 
Bob Conant: We don't, we don't, we don't put her, I don't put my hot dogs in water. 
Jimmy Lea: Yeah, Craig, no, we got to talk buddy. That's that's not a good idea, especially if you're drinking it afterwards. Oh my gosh.
Jimmy Lea: All right. So what. I mean, Bob, I just have this imagination that everybody's loving working at your shop. They love coming into work every day. You've got technicians now that were miserable for 16 years and in the last two and a half have just really brightened up and really are enjoying coming to work with you at your shop.
Jimmy Lea: What do you think are some of those skills? Beliefs, cultures, thought process that, that are essential for a business owner today to be successful. 
Bob Conant: Yeah, that's honestly, I, you know, I joke around that if I didn't have a sense of humor, I probably hurt people. And honestly, you, I mean, you have to have a sense of humor.
Bob Conant: You have to let people grow. You have to let people make mistakes, right? I worked for, I mean, the previous owner was, he, he was very good at what he did and, You know, you needed to be you needed to be 110 percent correct, 150 percent of the time, which is humanly impossible. So you have to let people make mistakes and learn from their mistakes and, you know, not, not kill them.
Bob Conant: If they do if they're repeated mistakes, then, you know, there's time for a conversation. But for me, yeah, I think it's, if, as for an owner, I don't know, again, you have to have a sense of humor. There's a lot of stuff that would. You know that on your daily basis that would make you very angry. And, and don't get me wrong, I, I have mine almost, you know, every day too.
Bob Conant: But you have to, you have to be able to let some of it go off folders and, you know, it's kinda like when my kids played hockey. It, it's the 24 hour rule, right? So. You know, you got to give it some time. And, and I, I, I had one of those, I had a young kid that literally drove a, a full size pickup truck off the front of my drive on lift and took out my alignment machine.
Bob Conant: And I had, I had to walk away and It wasn't 24 hours. It was a couple hours before I came back and tried to find out what went on and whatnot. So yeah, you know, the downfall is I think is as owners of any business, especially automotive, there is crap that goes on every day that you have to deal with.
Bob Conant: So for me, I've always looked at it as, you know, that it's going to happen. And that's what I try to tell my advisors, right? You know, something's going to happen today. What time, you know, and I would always play a game. All right. What time is going to happen? What's going to fall apart? Wrong parts, something broke, you know, whatever it is, you know, let's, let's pick an hour and see, because the way I've always looked at it is, I mean, I can get upset at a lot of things, but in reality, you know, it's going to happen.
Bob Conant: And it's my job to be able to try to set the ship straight when things go crazy. So, it doesn't help if I lose my head. So, you know, I, I take it with a grain of salt and there's probably times I should get more upset at things, but, you know, in, in reality, it's, it's, to me, it's, it's a part of the business that we're going to have problems.
Bob Conant: And my job is just to figure them out and move past it and make sure that the customer is taken care of and whatnot. So. 
Jimmy Lea: Yeah. I love that idea. I love that aspect of your business where, you know, something's going to go wrong. So now you're taking bets on it. And my, my money's on 2 35 PM, just so you're aware.
Jimmy Lea: All right. I love them. 235. So you, you know, it's going to happen. You know, that's going to, and when it does, Hey guys, it's, it's okay. Who was the closest? Okay. Johnny, you won today. 
Bob Conant: You know, what's going to happen. 
Jimmy Lea: It's going to happen. Perfection is not a thing. You're not going to be perfect, but we are going to build this plane as we're falling out of the sky and it's going to be getting us there.
Jimmy Lea: We're going to, we're going to make it. It's going to be okay. 
Bob Conant: No, because it stresses everybody out. You get an advisor, you know, Mrs. Jones needs her car, her car by four o'clock and you know, you're finding out at 3 30 that the pads and rotors are wrong and you're like, all right, well now you just got to panic.
Bob Conant: No, you don't have to panic. Let's just figure it out. Yeah. What's, what's, what's our options to try to make it happen if you can, if not, you know, you put her in a loaner vehicle or, you know, a lot of people, if you ask them really, when they say I need it back by four o'clock, you find out that, well, no, they really didn't.
Bob Conant: It just. That was your only time for a ride, right? So then you're like, okay, well, we'll pick them up. So yeah, it's about, it's about solving the problem, not because you tweak out on it and you're just, you're, you're amping everybody else up and, and it just makes for a bad situation, right? So, 
Jimmy Lea: Oh, that's beautiful, man.
Jimmy Lea: That's beautiful. Well, if there's any questions from our audience that is listening, go ahead and type them into the Q and a Bob, I I'd love to look forward down the road, three years, five years, eight years, 10 years. 15 years. What does the future look like for Bob Conant? 
Bob Conant: Yeah, well, ideally for me, I would love to say that, Hey once this shop's all up on its own and running and moving you know, my goal would be five shops in five years, retire in 10.
Bob Conant: Right. So, however that looks, that's, that's the that's a penciled in, you know, Projection. So, one step at a time, you know, I'm, I'm close with, with the one, if I can keep this one on track without, you know, having to hold hands at all, then then that would be the, that would be the next step. 
Jimmy Lea: Yes.
Jimmy Lea: Yes. When you find that you've gone from, and we talked about this for a brief moment, when you find that you've gone from being the fireman to being the head cheerleader, to being the observer from the outside, now you know that you're ready for the expansion. You're ready for the five from five. 
Bob Conant: Yeah.
Bob Conant: Yeah. And that's yeah. And that's the goal, but it's, it's, and it's, it's a, it's a, it's a long, long process. I mean, it's, I guess it doesn't have to be, but it's, it's a long, it's a long process and it's a lot of, it's a lot of, of letting go, which is, you know, is what we're told you need to let go, let staff do it and whatnot, but it is also one of the hardest things to do.
Bob Conant: So, and, and honestly, I miss it. You know, you go from working on cars was, was fun. Until it wasn't right. But in, you know, they frustrate you, but it was easy. The cars don't talk back. Right. My favorite part were customers. You get to know them, you get to talk to them. You get to help them. So that was my fun part.
Bob Conant: You know, the owner portion of it really isn't that much fun. So, I mean, it is, but yeah, it's not as fun. I, I miss, I miss doing a lot of the other stuff. 
Jimmy Lea: You miss wrenching. 
Bob Conant: I do. Well, I'm just mentioning that I miss actually dealing with the customers, shuttling customers, you know, you get to know him, you get to talk to him, you build relationships which is really all it's about.
Bob Conant: And, you know, so for me, I missed that part, but, but so the hardest part when you transition from, you know, a technician or service writer or anywhere in between. there to a owner, it comes with a whole other level of responsibilities that you really don't look at. And, or maybe you didn't know you know, what your purpose and what your job is at that.
Bob Conant: It's a lot harder at the higher level. You know, Which it should be. So there's a lot more responsibility into it than a lot of people think. It's not just, Hey, you know, I can, I can, you know, put gas in my car on the company card or whatever it is. It's, it's you know, it comes with responsibilities and, and, and, you know, it's a lot of good.
Bob Conant: I mean, actually seeing your staff grow and be able to handle situations that they wouldn't in the past. You know. That they're training, they're listening, they're, they're learning. Yeah, that's that, it's like, it's like watching your, your little kid grow up, right? It's, it's, it's, it's a little bit of an accomplishment to go, okay, hey, they did it.
Bob Conant: It's only to do something stupid and then you're like, really, didn't we just talk about this? 
Jimmy Lea: Hey, that happens to everybody. We all have dummy moments. And Tommy says thank you, by the way. Wow. Five shops in five years. He's going to hold you to that now. I know he will. He'll hold you to that commitment, which is good.
Jimmy Lea: It's as good that this. So are there shops in the crosshairs? Is there something that you are looking at that might possibly expand the kingdom? 
Bob Conant: There are. And, and, you know, I think the good and the bad part is you're seeing. I mean, I've got a lot of, I don't have a lot of shops in my area. If you really look at where we're at, it's, you know, there's, I mean, there's shops within three miles and five miles and whatnot, but there are a lot of, there are a lot of older owners probably without plans and I know one of them that's looking to, that's looking to retire and his plan was his technician and his technician said, nope, you retire, I'm out too.
Bob Conant: So, there's, there's a, there's a handful of shops in the area with, with owners that don't have. You know, a contingency plan to move forward and move out. So I think there's a lot of availability, which isn't a good and a bad thing. I mean, you're still losing a lot of, a lot of knowledge with, with you know, cause the older guys are leaving the business and what's a hurt because the younger guys don't really want to invest.
Bob Conant: In themselves as much as what we had to so you're not, you're not seeing that, you know, nowadays you have to train and learn on company time where, you know, you go back years ago and not to date myself, but you know, you would, you would do that on your own time to better yourself to learn and whatnot.
Bob Conant: So, but there are a lot of shops in here that you can see that in talking to tool guys and, and, and, you know, parts delivery guys, there's a lot of people out there that are looking to get out because it's not getting any easier. 
Bob Conant: This industry is, it's not a glamor industry, you know, you don't get a lot of pats on the back.
Bob Conant: I mean, you do, but not really. You know, if, if you, if you need a pat on the back, this is a tough industry to be in because people really don't appreciate you as much as, as. The effort that you put in. 
Jimmy Lea: Yeah. They, they don't understand what it takes to repair the vehicle, the computer science behind it all, the coding that's in there, the amount of diag it takes to find what's wrong.
Bob Conant: Yeah. Yeah. And to keep staff happy and motivated and give the customer service. Cause we've all been to those restaurants or convenience stores or anything else where you can tell that person really loves their job and they don't, but So that's, that's the hardest part. That's, it's to get your, get your staff to, you know, and, and the example I have is the old owner and I, and I've heard a lot of other business owners talk about it where, you know, there's something on the floor and the owner's like, Hey, I've, you know, I've walked past that for three days.
Bob Conant: Everyone else has walked past it. Nobody's picked it up. And I said, you know, have you ever asked yourself what do you have to do to make them want to pick it up? Right? Because that's the key. If you can make, because no one's going to have the same passion and drive as the owner does, but how do you make somebody buy in and want to do part of what the owner is in the owner's head of what they do?
Bob Conant: Right? So how do you make them want to do it? How do you make them want to pick that up? How do you make them want to make sure they go the extra mile for the customer? You know, those are, those are the kinds of things that I think we need to ask ourselves more because You can tell somebody 20 times to do something and every time it needs to get done you can say, Hey, Jimmy, can you go over here and take care of that for me?
Bob Conant: Right. But how do you make somebody want to go, Oh, you know what? It's Tuesday. I gotta go, I gotta go take care of that. You know? So yeah, I think that's the, that's the magic question and, and I don't have the magic answer, but I can tell you that it definitely starts with caring for your staff, treating correctly and you know, having a sense of humor, have a fun day.
Jimmy Lea: Oh, yeah. Having fun. It's definitely goes a long way. And I think where you are is building that company, that culture, that process, that procedure, that mindset where they do want to pick it up. One of my favorite pictures was, is, is being able to see Walt Disney at Disneyland picking up trash in the street.
Jimmy Lea: Yeah, I think it was on Main Street. 
Bob Conant: It was Steve Jobs that said everyone sweeps the floor. You know, it was something like that. So, you know, in reality, I mean, for me, I'm a lead by example. I'm not going to have you do anything that I won't. You know, my wife's always like, why are you still getting to work at quarter to seven?
Bob Conant: I said, well, because that's what I like to do. And that's, you know, I like to be here early. I like to be here before everyone. And Yeah, I don't know. It's, it's, you know, cause in part that I, I, I would miss it. I mean, yes, there's, there's times I need to work from home, but otherwise, yeah, I, I like the, I like the chaos that goes along on a daily basis.
Bob Conant: So, 
Jimmy Lea: Well, so let's see, you went from the fireman to the cheerleader, the head cheerleader, and now you're the chaos coordinator. 
Bob Conant: Yeah, that's a title. I'll get a shirt made with it because it's a, yeah, honestly, it really is. It's, it's controlled chaos though, right? It's somewhat controlled. Yeah, no, it's, I think, I think if you look at my LinkedIn, I was, I probably should change it because I haven't changed it in like 10 years or more, but I think it was firefighter, babysitter policeman, referee, counselor.
Bob Conant: Yeah. Yeah. That's, that's that's the fun part, but you gotta take some of it with a grain of salt. And again, you gotta laugh with it. And cause again, if you don't laugh, you'll get mad and you know, somebody might get hurt. 
Jimmy Lea: Yeah. And that's the last thing we need to do is Be behind bars because somebody got hurt.
Jimmy Lea: So laugh with it. I love that. What last and final question we can land this plane here. What advice would you give to shop owners that are starting their shops today? You bought your shop three years ago. So this is somewhat new, but also relevant and, and, and very close and near and dear to you.
Jimmy Lea: What, what advice would you give? Guys or gals that are starting a shop today? 
Bob Conant: Jokingly. I would say don't do it, but honestly Get support join a group. Yeah, you know Because you don't know what you don't know and I tell you you can you see a lot of owners that are you know? You're only working through here.
Bob Conant: I'm only seeing this Right. So you don't know, and sometimes it's, it's, you know, misery loves company, right? So you, you, you see all the shops that go through the ups and downs and, and, you know, Hey, I'm having an employee problem. I'm having an employee problem. You know, you kind of, you kind of, okay, well, we're all dealing with the same thing.
Bob Conant: Right. So, but yeah, you don't know what you don't know. So a group to keep you accountable. To have your board of directors, to have, you know, people to lean on that honesty. And that's why I looked at it when, when I was taking over that I said, all right, well, I'm, I'm going to, I have to join a group because I know that I need that.
Bob Conant: I need the support. I need the knowledge too, because like I said, you know, initially I wasn't very confident that I had the skills to do it. And, you know, without that support and accountability. You know, I, I, I wouldn't it's so easy to get off track and go wrong directions and you still do when you're in a group, but you have more people to help bring you back in.
Bob Conant: I mean, for me, if, you know, I love the group I'm in and not just because some of them are on the call here, but, you know, it's just a great support system. And, and again, with, it makes you look at things and think of things in a different way, where if you're not doing that you don't know. And I can tell you, I met a guy, I was out, he recently, recently purchased a shop.
Bob Conant: And some of the stuff he was, we were talking about, he was doing it. I'm like, what are you crazy? I mean, you're. You know, no, I mean, so anyways, I, and I gave him a business card and said, Hey, look, if you need any help, you know, give me a call. I'm not that I know at all, but you know, I can help you, you know, with whatever I can help you with.
Bob Conant: And, and and I think that's where, you know, if you don't, if you're not in a, in a networking group locally with shops or, you know, in a larger group with the Institute or any of the other ones, you're, you're, you're missing out because again, you've got blinders on and you're only seeing what you see and what you think.
Jimmy Lea: Yeah, yeah, that's true. So there's going to be a mad rush. Everybody wants to join Bob's group. That's group number two. Let me tell you that there's a lot of groups with the Institute. So those of you who are interested that are hearing this. Yes, absolutely. You are welcome. We invite you to come and join us in the group environment.
Jimmy Lea: Bob will be there. A lot of other shop owners will be there. So if you need a healthy dose of accountability and direction, or maybe you're like a Tracy Holt that you just really need to fine tune a couple of things here and there. Tracy 7 percent net profit up to, I think he's at a 28 percent net profit now.
Jimmy Lea: That's pretty dang awesome. Yeah, pretty dang awesome. So, the groups are awesome. Thank you. Yeah, that everybody's chatting and saying how awesome the groups are. So thank you to that, Bob. With that, we're going to land this plane. Thank you. Thank you for joining me this morning. I really appreciate you being here.
Jimmy Lea: We've got coming up here in the very near future, the five day service advisor intensive. October 8th through the 12th. Everybody needs to get your service advisors out to Ogden. This is life changing training for your service advisors. So definitely be out there for that. Coming up here in February is the summit put on by the Institute with three, four days where you can work on your business and not in your business.
Jimmy Lea: We're going to provide some awesome information, some awesome inspiration to help you take those next steps in your shop and in your business. So let's see Leadership Intensive is one of the last things to talk about. Leadership Intensive is in November. Where is that in November? Is that in Ogden?
Jimmy Lea: Stewart? He's typing quickly. Dallas, Texas! Craig, we're planning on you being there. Leadership Intensive, this is talking about the human centric side of why people think the way people think. Bob, I invite you to a Leadership Intensive. Have you been to one yet? 
Bob Conant: I have not. No. 
Jimmy Lea: No. There you go. Now you can come to Texas in November and enjoy that Thanksgiving short sleeve weather.
Bob Conant: Sure. 
Bob Conant: Maybe not today. France is coming through. Don't you? 
Jimmy Lea: Yeah. Yeah. Oh, Craig did go to the one in Denver a few months back and everyone needs to go. Craig is saying everyone needs to go. So there you go, Bob. You've got a recommendation there as well. That's right. All right. Well, thank you very much.
Jimmy Lea: Appreciate you. And to your success and your continued success, keep pushing forward and know that you're not going to fail. You guys are awesome. Thank you very much. 
Bob Conant: Thanks Jimmy. Take care guys.
 

104 - Leveraging AI & Adapting Your Marketing Strategy with Dan Vance, Founder & CEO of Shop Dog Marketing

104 - Leveraging AI & Adapting Your Marketing Strategy with Dan Vance, Founder & CEO of Shop Dog Marketing
September 4th, 2024 - 00:56:17
 
Show Summary:
In this podcast, we'll explore the transformative impact of AI on digital marketing with Dan Vance, Founder and CEO of Shop Dog Marketing. AI is here to stay and is revolutionizing how we approach everything from content creation to customer engagement. In a world where AI can act as a personal assistant—virtually an expert on any topic—how can you ensure your business stays ahead?
Dan will also discuss the latest industry trends, including navigating the ongoing changes in social media and SEO, especially with Google's recent updates downranking AI-generated content. With shifts in the automotive industry, it's crucial to stay prepared.
This is your opportunity to gain actionable insights and ensure your marketing strategy is ready to meet the challenges and opportunities.
What You’ll Learn:
Maximizing AI for Your Auto Shop: Discover how AI can revolutionize your marketing, from crafting compelling content to engaging your customers, helping your shop stay ahead in the competitive automotive industry.
Adapting to SEO and Social Media Shifts: Learn the latest strategies to keep your shop visible online, including how to respond to Google's updates and navigate potential changes in social media, such as a TikTok ban.
Strengthening Your Shop's Marketing for the Remainder of the Year: Get actionable insights to refine your marketing strategy, ensuring your shop is prepared to tackle challenges and capitalize on opportunities as the year progresses.
At The Institute, we help shop owners build thriving businesses that supports both their team and long-term goals. Regardless of where you are in your automotive journey, whether you're just starting your first shop or you're a MSO, we have something for your shop! Please reach out!
 
Host(s):
Jimmy Lea, VP of Business Development
 
Guest(s):
Dan Vance, Founder and CEO of Shop Dog Marketing
 
Episode Highlights:
[00:01:41] - Your website should tell your shop’s full story- community involvement, partnerships, and personality.
[00:04:00] - Google is your website’s biggest visitor and evaluates your authority through content.
[00:05:41] - Understand and apply Google’s E-E-A-T: Experience, Expertise, Authority, and Trust.
[00:07:03] - Shop owners must stay involved to build trust and improve website engagement.
[00:10:36] - Use AI to analyze your reviews and uncover hidden emotional trends and weaknesses.
[00:13:30] - Even with a high review score, negative sentiment like “rude” can hurt your ranking.
[00:21:02] - Images are becoming increasingly important—humans process visuals faster than text.
[00:31:34] - Take intentional, high-quality photos of your actual shop to support transactional search queries.
[00:42:17] - Use AI for seasonal marketing planning by analyzing customer data and trends by zip code.
[00:48:49] - Reviews are more than stars—they’re powerful tools for social proof and keyword relevance.
 
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=E0YEpFYXDCk
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
 
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Jimmy Lea: Jimmy Lea here with the Institute. Super excited for it to see you, my friends, as we are starting another day in the life of you as a shop owner and the things that you can should and must be doing in your shop to be the best that you can possibly be. My name is Jimmy Lee. I'm with the Institute. I'm super excited to be here with you today as we talk about leveraging artificial intelligence, or maybe it's advanced information or assisted information.
Jimmy Lea: Super excited for the conversation that we're going to have today. And if you don't recognize me on camera, then maybe you recognize the picture. My name is Jimmy Lee. Super excited to be here with you as we talk with my very good friend, Mr. Dan Vance, founder Owner CEO of shop dog marketing. Dan is here with us today.
Jimmy Lea: Dan. Good morning. How are you? 
Dan Vance: Doing great. Glad to be here. 
Jimmy Lea: Nice. Thank you and I'm excited for us to talk about websites, to talk about AI, to talk about marketing in the shops because there's so much that can be done. And you and I both know that a lot of shops, they have a website, but they treat it like a tick mark on a, Chart or on a list that has to be checkmarked off almost like in the old days they did with yellow pages.
Jimmy Lea: Yep. I've got a yellow page ad. I've got a yellow page ad, but the website is so much more dynamic than that. Was wondering Dan, if you could talk about the life of a website and what shop owners really should be paying attention to or looking at in their websites. 
Dan Vance: Yeah, well, I think the best place to start is just to remind you that your website is going to be the one place where people can learn more about your business than any other source.
Dan Vance: So, it's a good place for you to really build it out in a way that kind of illustrates all the aspects of your business, why it's unique, the community that you serve as partnerships that you might have, foundations that you participate in, and really just Letting people know, hey, this is this is who we are as a small business and we serve this local area on a more broader sense.
Dan Vance: Do you have a thought? 
Jimmy Lea: Yeah, 
Jimmy Lea: I have an idea. So, those questions or comments or concerns that shop owners get on a daily basis about, you know, who are you and what are you and what do you do? What do you stand for? That is all that information that could go on this. Let's call this your employee that works on the Internet 24 hours a day, seven days a week, never takes a day off, never has any sick leave.
Jimmy Lea: They're constantly out there working for you. All of those things that you just talked about the charities, the community involvement that can all be put on the website. So those that are searching and wanting to discover more about you, that's a go to place for them. 
Dan Vance: Absolutely. And we have social media channels, which support that, but it's a well known fact that the website is the place that people are going to rely on as the main source, they recognize that it comes from you and whatever's there is by you.
Dan Vance: So. I think it's really kind of a missed opportunity by most auto repair shops. And I would love to see, I would love to see more shops really kind of dig into like, let's tell our story, let's be more visible about who we are, what our personalities are, what makes us laugh, those kinds of things. On a more broader spectrum, the website has a function too, to help Google understand the services that you provide in your community, and they're probably going to be your number one customer in terms of like looking at your website, reading all of the content on your website and making assessments about whether you really speak with authority related to your industry.
Dan Vance: Sometimes we miss those two top tier things. We forget about we're part of the community. We should express that. We miss the fact that Google's our number 1 reader of our website, all the content on our website. And then we also forget that our website's a transactional place. People come there to take some kind of action and while there are some that will come to your website looking for information, like, how do I how does a break system work?
Dan Vance: Most are going to come there and look for like, how can I get and get my breaks fixed? Transactional. So, your website really needs to address those transactional things and just know that people are like looking, they don't want to put a lot of time or energy into it. They're just looking for certain things like where do I schedule?
Dan Vance: How do I call? What kind of value things do you offer like a loaner vehicle or warranty or some of those things and all that should be first and foremost on your website. So then you get into design aspects really to help consumers. make transactional decisions when they do get to your website. So who we are.
Jimmy Lea: I have a question. 
Jimmy Lea: Um, and this goes, you struck on something here that it's absolutely Like struck lightning in my brain that Google is our biggest customer. That's looking at our website. And I know that Google has an acronym, the E A T that, and that everybody needs to write that down. If you're listening to this webinar, write down E A T, which stands for.
Jimmy Lea: E is expertise. 
Dan Vance: Experience. There's two E's actually. 
Jimmy Lea: Okay. Experience and expertise. What's the A? 
Dan Vance: Authority. 
Jimmy Lea: Authority. That you are the authority, that your shop is the place to go to, that you are the one that can solve the problems. And then T, what's the T? 
Dan Vance: Trust. 
Jimmy Lea: Trust. Does the public have trust in you? So when you look at a website, Dan of anybody out in the industry, when you look at a website, do you view it from a Google point of view or do you view it from a consumer point of view?
Jimmy Lea: Who, what, how do you analyze? A website. 
Dan Vance: Yeah. The biggest value I can add to shop owners is really to look at it through the eyes of Google. 
Jimmy Lea: Because that's 
Jimmy Lea: the biggest consumer. 
Dan Vance: Yes. Yeah. But auto shop owners, you know, they will, they'll, like you had mentioned earlier, they like check it off and they'll be like, Oh, I handed this off to my agency.
Dan Vance: Um, and then they stopped working it. And, but the ones that don't do that, the ones that are much more proactive about it. So. Adding new pictures and making sure they're telling their story. They have higher engagement rates, which is just another way to say, Google notices that people are taking interest in your website and they'll rank you higher.
Jimmy Lea: Okay. 
Dan Vance: So, That's something that you can do that's really hard for an agency to do, but that's hard for us to do for you. But I can definitely, I have tools, like you have tools in your shop that help me understand what the words on your website say. I have tools that help me understand whether you meet that criteria, that EEAT.
Dan Vance: I have tools to help me understand whether, you know, it meets other compliance rules that Google is looking for. And we can modify and adjust it and resubmit it. and get you to rank higher. And so that's really like, because we're in this industry and we use the toolbox, like you just have to know an agency is this tool and they can do this for me better than anybody else, but it's not the only tool.
Dan Vance: Like I have to know, like I have a role in this. So I think that's a big takeaway for people. 
Dan Vance: Yeah. So as an agency can definitely set up the shop to be the EE, the expert. The go to the expertise, the experience and the authority. But when it comes to the trust, I think that's really where the shop owner has to step up and reply to all the reviews, request the reviews, get the Google reviews.
Dan Vance: That's where the gold is. They've got to help set themselves up as the trusted source. So you, as an agency help with the EA. And then the shop owner can definitely help influence the T, the trust. Yeah. 
Dan Vance: So I'll just share a quick example with you. Like you may notice that sometimes you go to a page on Google's website where it's a policy guideline or something where they're describing like how it works.
Dan Vance: And at the bottom of the article, they have a little button that says, was this helpful? 
Jimmy Lea: Yes. 
Dan Vance: And maybe you've thought about why they do that or why they don't do that. But the reality is that the algorithm or Google's search engine ability to read content on your website and make lots of decisions about what that content is.
Dan Vance: At the end of the day, like this is a roadblock for them. They don't know if it's actually helpful. So I might speak to expertise and authority and trust, but am I really helping a consumer 
Dan Vance: make 
Dan Vance: a decision that's going to benefit them? That's why I'm in business. And so that's a huge takeaway, as I said the trust factor is they're looking for trust factors.
Dan Vance: And the easiest place to find trust factors is in reviews. And we're going to talk more about AI today, but AI is a great place to. Cram your reviews in there and ask AI to help you understand them better from a search engine's perspective, because it'll tell you, this is the way the search engine sees this.
Dan Vance: They understand the emotion, the sentiment, and the attributes like great pricing, great warranty they did the break job right away, they took me right in, so those kind of things, and those are all trust. Those are trust factors and they're all kind of related to this idea of engagement. And yes, I was helpful.
Dan Vance: My website was helpful. 
Jimmy Lea: Okay. Okay. 
Dan Vance: Google loves that. 
Jimmy Lea: Now, wait a second. So what I heard you just say is that I can take all of my reviews, 200, 300, 2000, 3000. I can take all my reviews, put it into a a chat GPT or an AI. And I'm going to ask what question? 
Dan Vance: Yeah. So just, I'll give you the process. This is how you do it.
Jimmy Lea: Okay. 
Dan Vance: You can copy and paste, um, and then put it into an Excel spreadsheet and then go in there and take out your business name. And take out the client's name, the reviewer's 
Dan Vance: name. 
Dan Vance: You can easily do that. You just have to go to Rome and just remove them. It's not important to, because ChatGPT is an open source.
Dan Vance: So, and it's a learning mechanism, so it will take that. It'll give you information back, but then it kind of puts it in their bank. And they'll refer to it. So at this point, we don't know whether it's actually kind of prudent or good idea to like give them that kind of content. 
Jimmy Lea: Okay. So we're going to remove the personal name, personal information.
Dan Vance: Yes. 
Jimmy Lea: But if it's in the review, leave it in the review. 
Dan Vance: Yes. 
Jimmy Lea: Okay. So now we've got.
Dan Vance: Like a service writer or something else, I would leave those. 
Jimmy Lea: Okay. 
Dan Vance: I would leave those. Okay. Because all of this is going to, you can dump this, I just dump it in a spreadsheet, like a Google Sheets or you can use Excel and then save it as a file.
Dan Vance: And then you go into ChatGPT and you open it up and you attach the file. 
Jimmy Lea: Okay. Okay. I follow up. And then you're tracking everything. 
Dan Vance: Yeah. And then you say to AI and prompt engineering is a big deal. So then you give the AI an assignment. So you say something along the lines of, you are, so I'm gonna give it a, I'm gonna give it a persona.
Dan Vance: I'm gonna say to ai, you are, um, a search engine algorithm, and you are going to read these reviews and you're gonna write down the top 10 emotional comments that are made in this reviews as a bulk. And I hit enter and it'll spill out top the top 10 and I'm going to promise you that you better be holding on your hat and your seat because it's going to surprise you because what you see in your reviews and what an algorithm sees in there are not the same.
Dan Vance: So, um, you're going to see some stuff and then from there, you can just go further. Like it, the, that chat process knows in that moment that it's acting as a search engine and it's giving you feedback as a search engine. And so then you can ask it more questions like, what's the top complaint?
Dan Vance: What's the top service related to the top complaints. And I'll give you an example. Like we've tested this and one shop. Um, had good review score. I think it was 4. 7, but he had a bunch of negative reviews and we found out that 25 percent of his reviews had negative sentiment. There weren't negative reviews.
Dan Vance: There were negative sentiment. People were mad. They weren't happy with the experience there, and they were, and as we went through this and we asked questions, the most common emotional statement that was in this bulk of reviews was the word rude. Imagine that's your shop. 
Jimmy Lea: Okay, I'm imagining that's my shop now.
Jimmy Lea: Who is rude? I mean, what do I do with this information now that I know that rude is the word associated with my shop? 
Dan Vance: Yeah. So then you can go through and you can ask, you know, who's mentioned like a service writer or this or that, how did that happen? And it will dig that information out for you. It will tell you what jobs are tied to the emotional statement.
Dan Vance: And in this one that we did in particular, it was brake repair and oil service, which is kind of sad because those are your highest conversion. Those are new opportunities that ran away with a negative experience. And of course, this shop owner had no idea. Like he was as shocked as, you know, anybody would be because he's got a nice review score.
Jimmy Lea: Yeah. 4. 
Dan Vance: 7. But the search engine sees it completely different. 
Jimmy Lea: Yeah. 4. 7. That's solid. That's a good score. That's right in the middle where you want to be. But if 25 percent of all your reviews has a negative sentiment. 
Dan Vance: Yeah. Good score, but a negative review and a negative, a very specific negative, like, you know, around a service or you know, interaction with people in the business.
Jimmy Lea: Okay. Interesting. So again, 
Dan Vance: we talked about trust. Yes. And I think this is a good place to roll back to that and just say, trust is evaluated by Google through reviews. And so Google would look at that and just say, okay, there, we're going to bring them up for break repair because they're doing all this other stuff, right?
Dan Vance: But they're not going to be dominant because we know this shop isn't really providing the best kind of experience. And for us as a search engine to stay in business. We've got to give them the very best shop, which might be the guy down the road that has You know, two people and they're just working away and they don't really have a they have a terrible website like all this stuff That frustrates us about other people, but they've got good review sentiment.
Dan Vance: And so they get more ranking love from google 
Jimmy Lea: Fascinating. Fascinating. Um, for those of you who are listening and watching, what is your Google rate rating right now? Are you a 4. 7, 4. 8, 4. 9? Is anybody brave enough to take their reviews and put it into chat, GBT and share with us. But what I'd love for you to share is what is your ranking right now?
Jimmy Lea: Put that into the chat, into Q and a. I'd love to see where we're ranking here across the country. If you can, if you, and as we go 
Dan Vance: through this, because we're in partnership with the Institute, if the Institute wants to send us people that are interested in having us do that for them, I would run that for them.
Dan Vance: I would do that process for you. Complimentary, because I think it's important that you Start seeing the power of AI in marketing, especially because it's become more complicated in terms of ranking and competing a local business. 
Jimmy Lea: Okay. Jason is a 4. 6. Jason's in North Carolina. Jason, are you going to ASTA here at the end of the month?
Jimmy Lea: Because we're going to be there. Dan, are you going to ASTA? 
Dan Vance: I am, and I'm doing a class on this very thing. So come to my class. 
Jimmy Lea: Jason, you got to be there 
Dan Vance: Saturday morning. Okay, 
Jimmy Lea: cool. So 4. 6, what, where is, where does the shop want to be with their ranking? According to algorithm, not according to Jimmy Lee, not according to Dan, not according to, Hey, I have to have a 5.
Jimmy Lea: 0. What where do we want to Oh. And here's a couple more here. Janice is a 4. 6. Brian is a 4. 6. Wow. We got a lot of 4. 6s. So Dan, where. The number's good, but I think the sentiment goes a little bit further. But is there a number that shops would want to be at? 
Dan Vance: Well, I went to a conference and there was Google people there and they said.
Dan Vance: They said at the conference that the optimal review score is 4. 3. Now I would add that. I think that's not correct for auto repair. I think auto repair is 4. 7. I think that's your optimal score. 
Jimmy Lea: Okay. So they're saying 4. 3 because it's across all. Websites, if we look at automotive 
Dan Vance: restaurants, laundry, bookstores like everybody, but for auto repair, people are looking for something higher.
Jimmy Lea: And I think 4. 
Dan Vance: 7 is a place that's kind of a sweet spot. And especially if you have 300 reviews, you're 4. 7, that's a great place. That's very solid. 
Jimmy Lea: That's very solid. So these couple of shops, these three that have responded with their 4. 6, not bad, that's good. That's good. 
Dan Vance: Yeah. 
Jimmy Lea: We'd love to get you up to a 4.
Jimmy Lea: 7. Now you can go to 
Dan Vance: AI and you can say, Hey, I've given you this list and help me discover some ways that I can improve my score based on the reviews that I'm currently getting. Yeah. And guess what? It will give you good feedback on how to do that and it'll even help you draft a new review request that has more key information in it.
Dan Vance: That will help you improve your score. Now we're an agency and like we could do that, but on an individual basis, that's something like if you empower yourself to really kind of manage that piece, you're going to have better results. And you're going to have a better pulse on really what customers are experiencing in your business.
Dan Vance: Yeah. So, use AI to move yourself forward so you don't have to think real hard about it. Like, it'll help you do the right thing. 
Jimmy Lea: Yes. Alan has a 4. 9723 automotive and diesel reviews on Google. That's 
Dan Vance: superior. 
Jimmy Lea: Solid. You're not telling Alan to go screw things up so he goes to a 4. 7, correct? 
Dan Vance: Correct. 
Jimmy Lea: No, I'm not saying 
Dan Vance: that at all.
Dan Vance: And I knew you weren't. Now if he had, if he was just a straight five, whether it was ten reviews or a hundred reviews or more, that's actually problematic because people don't believe that. 
Jimmy Lea: Well, and here's one from Rudy and this falls right in line with what you're saying, Dan 4. 7 over 1400 reviews for Rudy.
Jimmy Lea: That's solid. 
Dan Vance: That's solid. 
Jimmy Lea: Yeah. I would be interested, Rudy, for you to run the AI. From an algorithm point of view. 
Dan Vance: I was thinking the same thing. I was like, that's a beautiful data set, man. Think of what we could find there. 
Jimmy Lea: Yeah. What's the sentiment according to an, a search engine algorithm.
Jimmy Lea: Yeah, that's just a whole nother level Dan, that you've brought into this. Phenomenal. I love it. Okay. Keep going. Keep going. 
Dan Vance: Yeah. So we started with websites and you can see like, there's just a layer of the trust aspect. There's a whole review thing, which we talked about, but there's more.
Dan Vance: And I'm going to tell you that the more piece that we're definitely seeing is we're going to see a lot more images. In terms of search engine responses. So I do a search for something and I'm going to see more images as a response. And the reason for that is because images, we actually communicate better through images.
Dan Vance: We can see a lot more information faster. I think the number is something like We can? Are you saying we or are you saying algorithms? Human beings. So human beings can read a picture like 400, 000 times faster than text. And because we don't really like to read, like we want a little bullet points, give me the facts, got to make it short, we skim images are going to be more of an engagement.
Dan Vance: Okay. So we like images, they tell us more, there's a bigger story behind those. 
Jimmy Lea: Totally agree. 
Dan Vance: AI is another place that can really help us discover like how to leverage images on our website to express experience. Authority, like why we're authorities in respect to repairing your vehicle, your brand vehicle and trust and the image can do all of that.
Jimmy Lea: So, and I, we have to pause this image because I do have an image question because I need to circle for Jordan. Jordan has a really great question. How do I, Retrieve all of my Google reviews. Is it just simply going through and copy and paste? Or is there a button that I can tap and I get a, an Excel spreadsheet of all my reviews?
Jimmy Lea: You're nodding your head at the copy paste. 
Dan Vance: Yeah. So I have a tool, a right tool to make a big difference. So I can open a tool and it gives me all your reviews from all the sources and I just download it from there. So yeah, easy peasy. Um, why don't you just let me do that for you, or you can go into your Google business listing and just start copying and pasting.
Jimmy Lea: Okay. So the simple way, the DIY do it for yourself, Jordan copy and paste it yourself, phase two. And I think as Jordan says, thank you. I think as shop owners, we know this better than anybody. The tools make all the difference. 
Dan Vance: Dan 
Jimmy Lea: has the tool. Let's talk to Dan here at the end. We're going to give out his contact information so you can reach out.
Jimmy Lea: Dan Jordan says, thank you very much. Um, all right. Too much to image questions, website. I've been shouting this from the rooftops for years and years. Shop owners. You need pictures of your shop. You need live pictures of your people. You need live pictures of your shop. Don't put up stock images of some mechanic from the Netherlands and blue coveralls.
Jimmy Lea: Great picture. Not your shop, 
Dan Vance: you know, the one, right? I know exactly what you're saying. 
Jimmy Lea: Yeah, as a placeholder, it's okay. And a placeholder is a week, two weeks, maybe a month, maybe two months. But if you go three or four and Google has now crawled your website multiple times, thou shalt not, don't put it out there.
Jimmy Lea: Okay, 
Dan Vance: now there is some ins and outs of that we should kind of address. So everybody is at common ground, right? So I would tell you that Google prefers stock images on the level of they know that it's licensed. And licensing with images can be problematic. So where did you get that picture? Did you have that person's permission to publicly profile them on your website?
Dan Vance: You know, those kind of things. So licensing is a factor in stock images that kind of like offset the discoloring of the fact that it's not a great representation. It's the guy in overalls, like I get that. Stock images are really well done, so they're exceptional in lighting, good color tones, the colors are rich.
Dan Vance: And so no matter what kind of device I'm using, I have a great image experience. So, there is kind of like this, um, making sure that the images that you use meets those kind of standards, right? Like I have the right kind of permission, that it is licensed, that I have a written agreement from this employee that he knows, like, this image belongs to the company and we use this on everything and so on and so forth.
Dan Vance: And that you take good pictures with good coloring, good lighting, because it makes a difference in that experience on the website. 
Jimmy Lea: Okay. 
Dan Vance: So, go ahead, I know I, I bet I can see a question. 
Jimmy Lea: Yeah, oh boy, can you see the question? I mean, the gears are just grinding here. Okay, so, stock images are okay. It has to be licensed.
Jimmy Lea: But it's not the best. 
Dan Vance: Correct. 
Jimmy Lea: The next level up from that is taking pictures in your shop, hire a photographer, this is what I'm hearing. Get good lighting, get good imagery, get good quality photographs at a high resolution, but that doesn't necessarily mean that you're going to put a 4k image on your Website because that would just heal your ranking that would kill your page.
Jimmy Lea: Make it 
Dan Vance: really heavy. Yeah, 
Jimmy Lea: okay So they're gonna hire a photographer Um, and here's a little side note wedding photographers are great to hire because they can come in on a wednesday morning They don't shoot anything except for the weekends Yeah, so to have a morning gig during the week. They would love to do it.
Jimmy Lea: Yeah, and they have all the tools They have the tools. They have the equipment and just 
Dan Vance: show up and do it. 
Jimmy Lea: Yeah. And same for videographers to videographers that are doing weddings are great for us in the automotive to hire during the week. They can come in. They've got all the equipment. They can handle it.
Jimmy Lea: Okay. Talk about the images that they take, the pictures that they take or that you take. Cause you taking them on your iPhone or your Android, you've got a good high quality camera in your phone. How do I convince Google that's. My picture. I took it. I own it. 
Dan Vance: Yeah, so there's a place on the image where you can put the licensing.
Dan Vance: So you can put like this property of and, um, license and agreement in place for all aspects of the image. Okay. 
Jimmy Lea: Is that something that I do as a shop owner or I have my website people do because they're my expert? 
Dan Vance: It's not hard to do, but I would have them do it for you. It's easy for them. 
Jimmy Lea: Okay. 
Dan Vance: Easy for them.
Jimmy Lea: Okay. Is there more to talk about here with taking pictures? Yeah, I think 
Dan Vance: there's probably another aspect with AI. That's where I was 
Jimmy Lea: going to go! Yeah. Okay, go. 
Dan Vance: So, um, a few years ago when Google announced that they could read images, which was a huge leap forward because 10 years ago, they couldn't read pictures.
Jimmy Lea: That's right. 
Dan Vance: Now they could read pictures and they had a tool where you could test the picture and it was amazing because it didn't matter what the picture was, but you could put it in there and then it would give you all of these spectrums. So it would tell you like, it's a male. with a beard and he's smiling.
Dan Vance: So it gave you the emotion, how they looked, sex, right? It told you all of that. If they were standing in front of a car, it would tell you the brand of the car, the brand of the tires. If there was a logo in the back, it would identify a business logo. So it picks up all of that and that's just one little picture, right?
Dan Vance: It's got all the information in there. Well, now with AI, um, you can ask yourself, like, I want a picture, just ask yourself, like, if my website on my homepage is transactional, like I want to help people make a decision quickly. 
Jimmy Lea: Yes. 
Dan Vance: What kind of image really helps people do that? And now you can take and take an image either off your phone or you can copy and paste one into AI.
Dan Vance: And you can ask AI, tell me about this picture. What are aspects about this picture? And it'll give you all of that breakdown for you. And then you can start tying it off. You can say, okay, I'm thinking about adding this to my website. My goal is to make it transactional. I want people to make quicker decisions.
Dan Vance: I want them to understand the value of a loaner vehicle. As an example, and it will help you make decisions about that. You can change the pictures till you find the right picture. And then when you put it on your website, the search engine will read that image and know exactly what it is and what its purpose is.
Dan Vance: Because you did the pre work using AI. Now this is something we couldn't do five years ago. 
Jimmy Lea: Right. Probably even two years ago, Dan, this wasn't a 
Dan Vance: thing. Because AI is not even two years old yet. 
Jimmy Lea: Right. 
Dan Vance: So, this is, we're definitely moving to a place where search engines, we're already seeing that. Now, you do a search for whatever, and you're going to see more images on that search results than we've ever seen.
Dan Vance: And this is why, is because Google understands what's in that image, and what the story is telling them. And they know. That image matches up with the query that we put in there for local service. Okay, I um We did a test yesterday. We had a shop that's got a bunch of pictures on their google business profile And then I went over to did a search in images for their zip code And none of the images in their Google business profile actually shows up in the search engine results.
Dan Vance: Why is that? Well, because then they're they're not, um, they don't speak to authority or trust or experience or relevance, right? There's no relevance there. So if I do a search for auto repair in your zip code and I look at the pictures and I don't see your pictures there, that means you don't have pictures on your website or in your Google business listing that represent a tie in to that key search.
Dan Vance: So if I want to rank higher, And I understand that Google's moving to more image related technology. That's a place where I can play around with AI and find images that work better and stick those suckers on my Google business profile and start testing it and seeing if they show up in search, and they do pretty quickly.
Jimmy Lea: But okay wait. Now, so if I'm searching for images and I grab these images, These are images that I don't own. I don't have the licensing for. No, I'm just 
Dan Vance: saying, like, for you to discover and learn, like, Okay, this is how it sees it. 
Jimmy Lea: Okay. So I see what Google wants to see and then I recreate that in my shop and I take that picture.
Dan Vance: Yes. 
Jimmy Lea: And I put that on my Google business profile. Yes. And okay. I follow you now. I follow you now. And 
Dan Vance: I'm glad you asked me to clarify that because this is so amazing and it moves so quickly and sometimes our minds are racing to trying to like figure out like, how do I put all those pieces together?
Jimmy Lea: Yes. 
Dan Vance: And 
Jimmy Lea: so on my Google business profile, how many pictures should I have? 
Dan Vance: Well, I think the better question is like, what do I really want people to know about me and my business? That's going to help them with transactional decisions, like call me or schedule an appointment. So I'm going to have images around oil service and brake repair and engine and check engine light.
Dan Vance: I'm going to have my signage and my storefront so people know what it looks like when they drive up or when they walk into my office. Is there, I don't know if people have sitters or not, but just, I want all of that experience there. 
Jimmy Lea: Oh, waiters sitting in the lobby. Okay. 
Dan Vance: Yeah. 
Jimmy Lea: Well, and I've always said, and maybe I'm wrong, maybe we need to ask AI this question.
Jimmy Lea: I've always said, don't ever put any pictures up of your shop where the parking lot is empty because it shows you have no business. You have, you're nobody, you're not working on cars. Nobody's visiting you. So always, if you have to stage it with cars, have everybody come on a Saturday and you just park their cars there.
Jimmy Lea: But I also have seen, and I have seen this, I used to tell shops, Post up those things that are funny, unique, interesting. Well, then the shop gets flooded with all this unique, one off, crazy, Oh my gosh, I've got to do this Roadrunner repair on this car. But that's not what the, that's not the bread and butter.
Jimmy Lea: So now I'm telling shops, Okay, find out your most profitable vehicle. Yes. If it's the Ford F 150, all of your pictures need to have a Ford F 150 in the picture on your Google business profile. Yes. 
Dan Vance: And your instincts are right. And it's definitely supported by AI giving us feedback about what the search engines are really looking for.
Dan Vance: Okay. But you can also hammer out searches and see what the search engines are providing as a result that reinforces that as well. And we are, I know Jimmy and you've seen this too, like I will look at Google business profile and I'll see images where there's an engine on the floor. And I think that's the worst kind of picture to have in there.
Jimmy Lea: And me personally, I agree with you as well. I think as a technician, you would kind of geek out about that. Yes. Because you could look at it and identify and say, Oh, that's a 5. 0 V8. Yes. Coyote Ford engine right out of that F one 50. I can, I know exactly. In fact, I know what's wrong with that engine.
Jimmy Lea: Okay. Yeah. Technicians do and shop owners do. They do all the time. And it blows my mind that they're able to look and say, Oh, I could tell you exactly what's wrong as a consumer, as the public. I don't want to see the guts of my car all over. Yeah. That doesn't mean 
Dan Vance: they have to take my engine out to fix it.
Dan Vance: That's a question they'll ask. 
Jimmy Lea: Yeah, so it doesn't breathe confidence. I want to see cars that are running well, that are in good condition and people are smiling and happy about it. Okay, I can, you can take tires off and show me things that way. I'm good with that. But man, when it looks like the guts have been spilt.
Dan Vance: Yes. And people that are having, that are in this call, maybe they're doubting whether this is true or not. Take your image. 
Jimmy Lea: Yes. 
Dan Vance: Put it into AI and prompt the AI and just say, this is an image about my business where we do auto repair. Tell me what people would see by looking at this image. 
Jimmy Lea: Yeah. Alan, Rudy, Jordan, Brian, Janice, Emily.
Jimmy Lea: Who's brave enough? Will you take one of your pictures, post it into a chat, and see what the algorithm would return to you as an idea? Now, I have another question for you about AI and using, what about using AI images on your website? 
Dan Vance: So, Good, 
Jimmy Lea: bad, ugly, what? 
Dan Vance: I think you have to do two things. One is you have to have a, some kind of like disclose your statement that this image was produced by AI technology 
Jimmy Lea: and 
Dan Vance: on the website for the user to see that.
Dan Vance: Um, I, um, the other thing I would say is that the images that I'm producing with AI are fun and they're great for my class presentations, but I'm not sure I want to use any of those on my website or in my Google business profile. 
Jimmy Lea: Right. Yet. The dog with six toes and three elbows is kind of hilarious.
Dan Vance: Yes. 
Jimmy Lea: Yeah. And Jason says he doesn't recommend using AI images. 
Dan Vance: I don't think it's going to be like that forever because they're getting much, much better. 
Jimmy Lea: Because that AI image is custom. It's unique. Nobody else has that image. Now, I don't know what a shop owner could show about their shop that would use AI to create that image to make it unique.
Jimmy Lea: I really don't see that being a thing. 
Dan Vance: Not right now. But because we're going to images, it's going to be a bigger piece. 
Jimmy Lea: Yeah, 
Dan Vance: and, um, but I think in anything we have to keep in mind, at least for the moment, because as things change, then we'll probably change this to kind of adjust with that. But right now you want images that help search engine understand better why you're different and how you meet that criteria, but you also want to provide a great experience for the user who's got some kind of a transactional intent.
Dan Vance: So how do I help them make a decision quicker? Yeah. By communicating to them. Oh, they do oil. They're close by. They got great reviews. I'm calling. 
Jimmy Lea: Yeah. Yeah. Those reviews are the word of mouth marketing. That is your best whispered secret. If you've got Wasn't 
Dan Vance: helpful. 
Jimmy Lea: Yeah. Yeah. Well, it's just like who, who was it said 1, 400 reviews.
Jimmy Lea: Rudy has 1, 400 reviews, 4. 7. So there's probably over a thousand people saying this is a five star shop. Dan, you should go there. 
Dan Vance: Yes. And that social proof is a big motivator in terms of how we make decisions. Yeah. Because we don't like to make decisions isolated and the social proof and psychology and all that, but.
Dan Vance: How many of you go to dinner and you always ask the waiter, like, what gets ordered the most? 
Jimmy Lea: That's the only way. I don't even read menus anymore, Dan. I don't! I don't read menus. I ask them, I say, what do you like? What's good here? 
Dan Vance: Yeah. What's your favorite? 
Jimmy Lea: Well, and I do that because I know that they know what's good.
Jimmy Lea: I know that they know what's popular. I know that they know, they're not going to steer me wrong. 
Dan Vance: And you're describing the power of what a review does. 
Jimmy Lea: Yeah. 
Dan Vance: Right? That guy has no interest whether I do business there or not. He's just telling me from his perspective of this is what my experience was like.
Dan Vance: It's exactly like you're describing. Oh yeah. It's so powerful. 
Jimmy Lea: I was in a sushi restaurant and I asked the waiter, I said what's good here? I love sushi. 
Dan Vance: Yeah. 
Jimmy Lea: What's good? What do you like? Oh I don't like sushi. I don't like raw fish. Okay. Can you have the chef come out please? Cause I don't want to talk to you.
Jimmy Lea: And they did it and we had phenomenal dinner, phenomenal sushi. It was amazing. So, getting those recommendations goes a long way. And that's exactly what you're talking about with this EAT is making sure that you have that trust, 
Dan Vance: that 
Jimmy Lea: you are the authority, that you have the expertise. Oh, I love it.
Jimmy Lea: I love it. Okay. What else? 
Dan Vance: Well, I think another thing is like when I roll into Q3 and Q4, like we know we're pushing the end of the year. We want to make sales. We want to reach our numbers. Like, how do we keep summer momentum going? And there's always. There's always a natural incline and search for certain types of things, like in Utah winters, we're going to see more searches for tires and coolant, my heater's not working right windshield wipers, you know, just stuff along those lines.
Dan Vance: Yeah. In other places, they're still doing AC all the time. 
Jimmy Lea: St. George. We're 106. 106 
Dan Vance: degrees.
Dan Vance: That's hot. That's hot. Way hot. So I think you can say, look, this is, and you could do this with AI. You could go into AI and you could say, you're a marketer and I'm looking for some marketing ideas for Q3 and Q4 in this zip code and hit enter. Can you 
Jimmy Lea: hit a couple of zip codes at the same time, Dan?
Jimmy Lea: Totally. Okay. So if I'm in St. George, I've got 8, 9, 8, 4, 8, 0. I could hit all three of those at the same time. Okay. I 
Dan Vance: would definitely do that. And then we'll come back and it'll give you ideas like these are trends we see in Q3. And some of them you're going to be like, Oh, that's obvious. That's obvious.
Dan Vance: And then you're going to, Whoa, hit the brakes. I got something here and it's probably going to be something that other people are doing. And then you can go to the next level and you can say to AI, help me write some kind of promotional thing to put on my website that tells people we're doing this service and it'll describe to you how to do that.
Dan Vance: It'll give you all the pieces. Some of that you can do, or some of that you can be asking your agency. Are you doing this for us? That's something you're looking at, right? 
Jimmy Lea: Yes. 
Dan Vance: Yes. I 
Jimmy Lea: love that. 
Dan Vance: I can, I know as an agency, like the more I use AI, the more I'm just like, I cannot believe how powerful this thing is and the ideas that you get from it and when your mind gets growing and you're brainstorming essentially with something like this, you start thinking about things more creatively and you get other ideas.
Dan Vance: And that little edge is what you need to be competitive in Q3 and Q4. 
Jimmy Lea: Yeah. Well, and we're in the middle of Q3. Yeah. Well, no, we're at the end of Q3. 
Dan Vance: No, we're just starting Q3. 
Jimmy Lea: Three, three started in July. 
Dan Vance: No, June, our first quarter is January through March. Second quarter is through July. Oh, yeah. So August, man, we're marketers.
Jimmy Lea: Welcome. Welcome to the end of Q3, Dan. Glad to have you with us. So here we are at the end of Q3. So the question is for us to ask Everybody's laughing, by the way. I don't know if you saw those. Yeah. Yeah. Hey. Emotions are coming through. Oh, I love it. I love it. I love it. Okay, so here we are. Oh, this is so much fun.
Jimmy Lea: This is too much fun. Gather yourself. Okay, so here we are at the end of Q3. We should be asking questions now for Q4 for my zip codes. And that's where the marketing wants to go. Cause we got to plan ahead. If you're slow today, what you do today is not going to help you tomorrow, even this week, or you might possibly next week, but really the marketing you're doing today is going to help you next month.
Jimmy Lea: So what you're doing today is preparing yourself for Q4, which starts. October 1st. 
Dan Vance: Yes, 
Jimmy Lea: Dan. October 1st. 
Dan Vance: So I would also, and that's a heartbeat away buddy. . Oh man. I'm not gonna look at October 31st. First. First. Okay. First. Okay, so why don't I do something for Q1 along the same lines, right? So repair. Now I can take information outta my CRM and I can scrape the data out so it's clean and safe.
Dan Vance: And then I can put that into AI and I can say, what type of typical orders do I get in January through March? And you can start drafting marketing around those because you know, people are coming in for those services. 
Jimmy Lea: Oh, I love it. I love it. That's phenomenal. Um, question for you, Dan, is there any difference between the free chat GPT and the paid chat GPT?
Jimmy Lea: Do you notice any differences? 
Dan Vance: Yes. Yeah. Um, 
Jimmy Lea: so do you highly recommend the paid? 
Dan Vance: Yes, I use the paid and I don't know what you get with the free, 'cause I use the paid. So when I'm describing like, yeah, I dropped this thing in there, or I do this or I do that, it's all that experience through the paid version.
Jimmy Lea: Yes. So here's the difference I've seen Dan and I, maybe I can articulate this to help you, that the free one gives you free. Basically free advice and it won't do the heavy analysis, the paid. And what's the paid? Was it like 20 bucks, 25, 25 a month. 
Dan Vance: It's 
Jimmy Lea: really not that heavy of a lift. And, but it does do some really good heavy analysis, data analysis, market research, website research, internet search.
Jimmy Lea: So when we're doing this type of stuff that we're talking about, Dan, it's, we're definitely recommending the paid chat GPT. Because it gives, You know that movie, 
Dan Vance: The, I think it's called the right stuff. It's where they go out to the moon and they're coming back and they have problems if their oxygen thing isn't working.
Dan Vance: What's that movie called? 
Jimmy Lea: Well, it's Apollo 13. 
Dan Vance: Yes. Okay, so, right in the movie where they have all the engineers that come into the room and they pour all the stuff out on the table and they say, this is everything that's in the spaceship and we need it to fit this. But here's what we have. And so then they all dig in and they start taking that and they come up with something.
Dan Vance: And that's the way AI works. 
Jimmy Lea: It's 
Dan Vance: like, this is what I need. And then you rely on the power of that machine learning to crush all of that data into some meaningful insights. 
Jimmy Lea: Yeah. 
Dan Vance: And it gives you the thing that works. It'll fit. 
Jimmy Lea: Oh, I love it. 
Dan Vance: 20 a month or 250 a year to me like is a pennies for the value you get out of that computing power.
Jimmy Lea: Okay. This is a great comment. This has come in from Jordan. I've trained ChatGPT to reply to Google reviews as well. It's a huge time saver. Love it. Hate it. 
Dan Vance: I love that idea. Recommendations. And kudos to you for digging in and doing some stuff with it. Yeah. Now, I will tell you that as far as we know, Google doesn't really use review responses of ranking signals, but they do look at it as a way of you engaging with your customers.
Jimmy Lea: Yes. Okay, keep going. 
Dan Vance: So, you definitely want to do it, and it's okay to use AI, you're not going to get penalized from the search engine, because it's a little touchy when I take AI generated content and I plug it into search engines. They are really touchy. That's why we have this whole eat thing is because they're very sensitive to kind of like human real communicated.
Dan Vance: Experiences that you can put out there. So I would not, um, I just would, I would just say to you like that's a really good thing to do and to continue to do that, but don't have an expectation that's going to change your ranking. 
Jimmy Lea: Correct, because there's what Google says and then there's what Google does, because they even say that the reviews don't have any, that they don't, the reviews aren't searchable, those keywords, they say that they're not, but then when I do a search for BMW expert, Google might throw up a review that says, here's somebody that had a good experience at this shop, you might want to check them out.
Dan Vance: Totally. Yeah. And they, there's no question. They look at a review from me about a shop and they'll pull information out of that. And they call those attributes or they call them sentiment, which is where we started. Yeah. And they're definitely doing that. 
Jimmy Lea: Yeah. So the 
Dan Vance: companies, I'm sorry, there's some review companies that you can use that if I come to your website from search engine, I did a search for brake repair and I land on your homepage.
Dan Vance: It will automatically display a review about break repair, because it can identify the source of the search query. It's a real thing, and it happens. Birdseye does it. There's a couple other places. Now, our industry, our review companies that build these tools, they're This is something I'm sure they're working on behind the curtains because this is a big deal like if I'm doing a search for BMW repair, don't I want to see BMW review the first thing I see when I land on that website?
Dan Vance: Totally do. Because it's transactional, it helps me make a decision faster. 
Jimmy Lea: I love it. That's all 
Dan Vance: AI generated stuff. That's the power 
Jimmy Lea: of AI. Okay, so you have seen Geppetto, you have seen the Wizard of Oz, you know where the strings are, and you're helping us to be able to pull those strings as well. Yeah. I love that.
Dan Vance: Yeah, 
Jimmy Lea: this is taking this. I hope everybody 
Dan Vance: realizes to like, from my perspective, like I give you stuff that maybe the others don't. But I do that because I see this as a team effort. Like if you understand what I can do, you can understand better what you can do. And together we do amazing things. 
Jimmy Lea: Oh, so true.
Jimmy Lea: It has 
Dan Vance: to be that way. 
Jimmy Lea: It has to be. I think I'm going to give dad credit for this one. My dad would say. I don't know what you don't, I don't know what you know, and I don't know what you know, but I know together we know more collectively than I do individually. So as a team, let's come together. Let's elevate the industry.
Jimmy Lea: And I love that you're giving this information freely to those of us who are listening. Some will do something with the information. Some won't, some will, some won't. So what? Who's next? Those that are going to do stuff with this. There is even more that Dan could help you to do with your shop and your website.
Jimmy Lea: If you were interested, and some aren't. 
Dan Vance: Well, we want to help you grow as much as anybody else does, but I want you to know, like, there's stuff that we're doing that is just really changing the whole landscape about how we have insights, how we use this data, how we understand the search engines do things differently.
Dan Vance: Um, and a lot of things have changed over time. Like, it used to be, and you would know this, Jimmy, like, you want backlinks, you want right blogs, so you get backlinks to your website. But somebody released a bunch of information from Google. And what we found out in that private data was is that Google will measure engagement.
Dan Vance: Did I come through that backlink and did I do something? Was it helpful? 
Jimmy Lea: Yeah. 
Dan Vance: And I don't care if that backlink was from the New York Times. If I did not do anything, they will downgrade that backlink. In other words, they'll take the value out of it. It's not the same value. So I can have a backlink from.
Dan Vance: the Chamber of Commerce that's not as strong as the New York Times, but it creates engagement on my website and it helps me write better. 
Jimmy Lea: Better than New York Times does. 
Dan Vance: So there's stuff that we know that we didn't know before, and AI is helping us write better stuff to compete on that. 
Jimmy Lea: Oh, man. I love it.
Jimmy Lea: I love it. 
Dan Vance: It's exciting. I think this is about the best time ever to be in digital marketing. The ground feels like it's finally stabilized a little bit because so long. It's just been like what the search engine knows and what the rest of us are guessing. 
Jimmy Lea: Yeah, 
Dan Vance: they know. 
Jimmy Lea: Yeah. 
Dan Vance: But now with AI. The mystery is coming out a little bit, like where the curtains being pulled back and we're going to say like, oh, okay, we see how this works.
Jimmy Lea: Yeah. And be careful, Dan. Cause as soon as you think, you know, what's going on, the rules are going to change, of course, you already know that. Oh, that's awesome. So how do people get in touch with you, Dan? How can we send our shops and our shop owners and those who are interested in learning more about their websites and their local search and their.
Jimmy Lea: algorithms. How can we get people in touch with you? 
Dan Vance: Well, you definitely can reach me through the institute. They know how to reach me, but you can also reach out to me directly. My email is dan and the, and it's the advanced local. com is my preferred email still. So that's what you want to send it to.
Dan Vance: We operate in the auto industry as shopdog marketing, but my email to reach me is dan at advanced. local. com and send me an email. There's no expectations other than how can I help you? I'd love to help you. I want to be a helper in the industry. My role is to give back to the industry and let's see if we can give you a little lift.
Jimmy Lea: Come to 
Dan Vance: my classes. I'm going to be at AST and I'm doing a class on AI and I've just given you like a little glimpse of some of the amazing things we're going to talk about in there. Um, and also we're going to be at Apex in Las Vegas. So come by and see us there. Are you down by Joe's garage? Yeah.
Dan Vance: Joe's garage. Yeah. So, we'd love to meet you if we haven't already. 
Jimmy Lea: Definitely come by. We will see you at the A STA Expo. Yes. We'll see you at Apex in Las Vegas. Yes. And more Good 
Dan Vance: times 
Jimmy Lea: and more. Thank you very much. Thank you to everybody who is online, who's here with us. There's so much more we could still unpack.
Jimmy Lea: Dan, we've definitely gotta get on the books here for our next webinar. Yeah. Everyone is shouting out the thank yous and they'll see you at a STA Expo. Thank you. Thank you. Thank you. Thank you. Thank you Emily. Jason Jordan. Thanks guys. 
Dan Vance: Thank you, 
Jimmy Lea: Dan. Thank you very much. All right. We'll see you guys. See you again soon.
Dan Vance: Bye.

103 - Succession, Success, Now What?! Featuring Tracy Holt, Owner of Performance Place in South Jordan, UT

103 - Succession, Success, Now What?! Featuring Tracy Holt, Owner of Performance Place in South Jordan, UT
August 28th, 2024 - 00:58:18
 
Show Summary:
Join us for the discussion on two key elements of a successful automotive shop: fostering a supportive, family-like work culture and preparing your business for long-term success across generations. In this webinar, you'll gain actionable tips on creating a positive work environment that keeps your team engaged, while ensuring your shop’s legacy continues for years to come.
About Performance Place: Performance Place has been a staple in South Jordan since 1974, starting as a small 3-bay shop and growing into a 14-bay, 10,000 sq. ft. facility. Now run by Kent Holt’s sons, Tracy and Byran Holt, the business continues to thrive while maintaining its strong family values.
Key Topics Covered:
1. The History of Performance Place:
The evolution of Performance Place and lessons learned along the way.
How Tracy Holt took over the shop from his father while staying true to core values.
Adapting to growth while honoring the past.
2. Creating a Family Atmosphere:
How to promote open communication and mutual respect within your team.
Building strong bonds that keep your team motivated and engaged.
Supporting ongoing learning and personal growth.
3. Building a Legacy: Lessons from Multi-Generational Shops:
Preparing the next generation for leadership roles.
High-commitment to employees leads to high retention and long-term success.
The role of continuous evolution in creating a lasting legacy.
At The Institute, we help shop owners build thriving businesses with a culture that supports both their team and long-term goals. Regardless of where you are in your automotive journey, whether you're just starting your first shop or you're a MSO, we have something for your shop! Please reach out!
 
Host(s):
Jimmy Lea, VP of Business Development
 
Guest(s):
Tracy Holt, Performance Place
 
Episode Highlights:
[00:01:22] - Tracy shares that the shop is celebrating 50 years in business since his father opened it in 1974.
[00:02:54] - The original shop began on half an acre and expanded over time as the city grew around it.
[00:05:21] - Tracy now operates 14 bays and is planning to expand further to support more staff.
[00:07:39] - Tracy recounts growing up in the shop, working his way from sweeping floors to running the business.
[00:09:24] - The transition from father to son was slow, emotional, and full of learning opportunities.
[00:10:41] - Tracy wants to make the next succession plan easier for his son, should he choose to stay in the business.
[00:20:00] - A pivotal moment in planning came after Tracy’s son’s accident, which emphasized the need for long-term security.
[00:26:21] - Tracy joined The Institute, embraced coaching, and saw measurable improvements by implementing pricing strategies.
[00:36:22] - The shop improved from a 5–6% net profit to 21% by refining the parts matrix and labor structure.
[00:55:48] - With the business thriving, Tracy is considering a second location or major expansion for the future.
 
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=7sO8rbBedlI
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
 
________________________________________
 
Jimmy Lea: Good morning, good afternoon, good evening, or good night, depending on when and where you're joining us from today. It is a good day, no matter where you're joining us from. Today is a good day. We are talking today about succession plans, succession planning, the success of the plan, and then, and then what?
Jimmy Lea: So now that you've done that, what's next? What do you do? My name is Jimmy Lee. I will be your host today. You've got questions. We've got the answers. Type them into the Q and a and we'll ask Tracy. Who is our guest Tracy, your questions, Tracy joins us from a performance place in South Jordan, Utah. Tracy.
Jimmy Lea: Good to have you on this morning. Good morning. 
Tracy Holt: Good morning. It's great to be here. 
Jimmy Lea: Yeah. And, you know, for us, it's morning, but for Andrew, it's afternoon. Andrew's joining us and, uh, it's probably already after lunch for Andrew. So good afternoon, Andrew Tracy. Uh, thanks for being here, man. I really appreciate it.
Jimmy Lea: I've seen your shop. It's amazing. It's definitely grown over the years. Um, and, and I'd love to start by going back in the way back machine to when pops started the shop when dad started the shop, but 1970 or so? 
Tracy Holt: '74. 
Jimmy Lea: '74. 
Tracy Holt: Yeah. So this, this year marks 50 years in business for us. 
Jimmy Lea: Well, yes. And that's easy math for me.
Jimmy Lea: I was born in 74. So yeah, 50 years. That's a long time, dude. Okay. When, when, when dad started the shop back in the day, what was it that you guys were working on? What was pops working on? 
Tracy Holt: Well, you know, back in South Jordan, the early days in 74. I mean, there was a lot of farm equipment. Um, he had opened a small You know, it was actually a, a six bay shop to begin with, um, right on Redwood Road, the main drag through South Jordan.
Tracy Holt: Um, but he started out pretty much working on anything from cars to trucks to tractors to Whatever I think he could, uh, you know, to help get the business going. So, 
Jimmy Lea: yeah. And, and, and he built the building, right? You have, uh, like three and a half acres there or five acres or 10 acres, or I mean, you've got a lot of land.
Tracy Holt: Yeah. We've got like, uh, almost three acres now, but when he started, um, he was on a half an acre, um, the building took up most of that, um, It's funny, my, my grandma owned the land and basically helped my dad get started way back then. Um, helped her, helped him build the shop. And then through the years as pieces of property.
Tracy Holt: Around us became a, you know, available it, uh, you know, we purchased them over the years piece by piece, you know, and now we're right in downtown South Jordan, and, you know, the, everything is literally just grown up around us. I mean, when we started out, there was a little two lane road up and down in front of the shop and now it's, you know, it's a major metropolitan area now.
Jimmy Lea: Well, yeah, aren't you like a six lane road out there in front of you? 
Tracy Holt: Yeah. Yeah. We, in the beginning, we had actually parking in front of the shop between that and Redwood Road. And now they've expanded Redwood Road where it's six lanes. And I mean, our building's 10 feet off the road. It's, you know, they'd never let us do that today, but you know, we were kind of there before everything else started.
Jimmy Lea: Yeah, I was trying to remember, it felt like the sidewalk was right up against the building. 
Tracy Holt: It is, the sidewalk is literally three feet from the building, you know, but. 
Jimmy Lea: Oh, that's so close. 
Tracy Holt: Yeah, you know, and people are like, how did it be so, you know, end up so close? And I said, well, the road used to be, you know, you know, 30 or 40 feet out from where it is now.
Tracy Holt: And it was just two lanes. 
Jimmy Lea: Yeah, so when Pops started it was all ag and uh, didn't he have like four or six bays or something like that? 
Tracy Holt: Yeah, he had the first initial part of the shop which we're still operating out of, um, six bays. Um, you know, there was enough driveway around it for circle around, not much parking at all.
Tracy Holt: You know, and I'm thankful, you know, as of today that, you know, as stuff popped up around us for sale, he was able to purchase that. You know, um, there's a lot of demand for the land where we're at. So, you know, going forward, you know, we're in a, we're in a great spot. I mean, we've got loyal customers and, you know, there's literally the, the community has grown around us.
Tracy Holt: We, we actually, in the city of South Jordan, we're one of the two oldest still operating businesses that have been going on for this long. 
Jimmy Lea: Wow. Yeah, that is, that's super cool. That's some longevity there. Pops really set up a legacy for you guys. And he also built on the building a couple of times to where now, aren't you like 14 or 20 different bays that you've got available?
Tracy Holt: Yeah, so we've got 14 workable bays right now. Um, there was an addition and an addition and then, uh, just an addition on an addition. Um, yeah, we've got 14 workable bays right now. Um, and actually, we're in, right now, in the design stages of either adding on a new waiting room and possibly, Some more workable bays out of the shop.
Tracy Holt: Um, one of our big Issues right now is our waiting room is still the same waiting room that we started back in the original shop and so now We've got to come up with a plan to get some more service advisors in there to help support More technicians because luckily we have the shop size to support more technicians, but we need to develop More workspace for the front office to support them.
Jimmy Lea: Right. For sure. For sure. And, and I want to paint a picture here for everybody that's listening and watching this. The service advisors are in a hallway. This hallway has been converted into their office, which used to be the parts. Closet, right? 
Tracy Holt: It was. Yeah, it is. As far as having a shop layout for service advisors.
Tracy Holt: Um, it's, it's not ideal, you know, but you think when he started, my dad was fixing the cars, you know, greeting the people at the front counter, you know, back then they didn't even know what a service advisor was. Um, in the beginning, I think there was one or two chairs in a little corner for somebody that was waiting and you know, now the industry's grown, you know, grown into this where you have a support staff in the front office that supports the rear and back and forth.
Tracy Holt: Yeah. And we've just had to adapt and we finally just got to the point where we've outgrown physically what we can do in the front office. 
Jimmy Lea: Yeah, I love it. I love your shop. I love the opportunity. I love the expansion Possibilities that are there for you guys. It's super awesome. Super awesome So question for you as you're going through life, you know here here you you step in and you you start shoot, man You must have been like two year old pushing a broom.
Jimmy Lea: You must have learned to walk in the shop Like you grew up in the shop you bleed 1030 
Tracy Holt: I do. I, I literally, it's the only job I have ever had. Um, I remember being a young kid, empty in the garbage, pushing the shop, you know, pushing brooms. And, you know, all I wanted was my dad to give me the opportunity to pull a tire off or use some kind of a tool as a little kid.
Tracy Holt: You know, and I worked there all. My teenage years up through, you know, where I was a full time technician out in the shop for years and years and then obviously transitioned into the front office, you know, as, as things went on and we grew, but yeah, it's, you know, it's funny. I, we've been in business, um, 50 years and, you know, I was three years old when the shop was opened.
Tracy Holt: So I guess I've been employed more or less. I probably should just retire. You would think by now, I mean, I've put my 50 years in. 
Jimmy Lea: Yeah. After 50 years, you should get a gold watch or something or a plaque on the wall. 
Tracy Holt: Yeah. 
Jimmy Lea: So that progress that you've made through the shop. That's what I want to talk about here for a second, because there's a lot of shops that I go to all over here in North America where it's family.
Jimmy Lea: It's all family. And, uh, the son is out in the shop, they work up through, uh, in the shop, they, they, they've have the scars, they've done the work. Then they come up into the front office, they learn the business of it. At what point with your pops, did you take that active role that he became? semi retired.
Jimmy Lea: Can I say that? What did that look like for you and your pops? 
Tracy Holt: Well, it, it was a long time coming. I mean, and, and it was a slow transition and a lot of discussions. Um, you know, he'd been doing this full time for many years and he was getting burned out on it. 
Tracy Holt: Um, 
Tracy Holt: so I've been, Honestly, up in the office for the last 20 years.
Tracy Holt: Um, and when I say in the office, I was a number of years still fixing cars, assigning the work and kind of running everything day to day. Um, You know, obviously with dad's support and then my brother was there too. And my sister, um, but it, it was, it was an interesting process to end up where we are today, and I look at that.
Tracy Holt: You know, cause I've got kids that are in the shop. I've had all my daughters have worked for me during college. Um, my youngest son is 19. He's out a GS in the shop right now. And, you know, and if he chooses to pursue this long term, um, hopefully I can make it a little easier on him than maybe I had it in that transition going forward.
Tracy Holt: You know, I had to learn a lot and I know that my dad stuck me in places where I needed to learn. Um, but, you know, there was a lot of uncertainty, you know, of how this was all going to play out in the end, and it's taken us a long time to get us to get to this point. 
Jimmy Lea: Oh, for sure. And there's a lot of Rockefeller family dynamic there where he's putting you where you need to learn.
Jimmy Lea: Like everybody in the Rockefeller starts in the mailroom and then they work their way up into the business. 
Tracy Holt: Yeah. 
Jimmy Lea: Sounds like pops did the same for you. And the beauty of what you just said that I'm hearing is you experienced it. So hopefully when you do this transition with your son or your succession plan, because you went through it, you're going to make that work better for.
Jimmy Lea: Whoever's going to take over when you're ready to transition as well. 
Tracy Holt: Yeah, I think the big thing is, is I, I just want whatever the next step is or the next generation is, you know, whether it's family or somebody else, you know, more of a clear cut plan of how. It needs to be laid out and, and, you know, and we had, dad would talk oftentimes, you know, when he was having a really bad day, he would be prepared to turn it all over to me and walk away.
Jimmy Lea: Yeah. 
Jimmy Lea: I'd be like 10 
Jimmy Lea: bucks and here's the keys. I'm done. 
Tracy Holt: Exactly. And then the next day, nothing would change, you know? And so, you know, and as. As things went on and on, I mean, the hard part for dad was that he, this is his baby, you know, this is all he's done. He's had so much, you know, blood, sweat and tears into it.
Tracy Holt: It was hard for him to realize that he didn't need to be here on a daily basis. 
Jimmy Lea: Yeah. Yeah. You know, you've got that same dynamic that it has been all you've done. It is your baby. Yeah. I think you've got a different perspective in that it's not, it's not everything. But it's a lot. 
Tracy Holt: It is. 
Jimmy Lea: And you've got family working there now.
Jimmy Lea: I met your sister. Your sister's there working with you. How does, how do you work with your sister and not kill her? How does she work with you and not kill you? Well, How is it that you're still on this side of the bars? 
Tracy Holt: Let's put it this way. When we go on family vacations, we go our separate ways. Um, yeah, my sister, she runs all the accounting side, the bookkeeping side, the back office.
Tracy Holt: Um, she's awesome. And I mean, she can honestly step in and service, right? She can help people at the counter. She can order parts. I mean, she can literally do anything. Um, but her main focus at this point is keeping track of the numbers and making sure everything's taken care of. Um, my brother is also a service writer and he's been there a long time also.
Tracy Holt: Um, you know, and it's been. 
Jimmy Lea: Who's your brother? 
Tracy Holt: Byron. 
Jimmy Lea: Byron! Yes, yes, I met Byron. Okay. 
Tracy Holt: Yes, 
Tracy Holt: he was there. You know, and so it's, it's been a hard transition because there's times when you have to interact as family. And then there's times where you have to interact as employees and. You know, and it's really hard to separate that.
Tracy Holt: And I think that's probably, it hasn't been easy and we've had our battles, but somehow we've fought through and found some kind of a balance, whether it's a healthy balance, I don't know, but you know, we've all tried to put the best interest of the shop ahead of our own because, you know, the shop not only supports us.
Tracy Holt: You know, we've got all my employees, their families, you know, there's so much more to it that, you know, you have to put the, the, the welfare of the shop, kind of a head of, you know, personal feelings and things like that. And that is so hard to do. 
Jimmy Lea: Oh, it is. It is. Uh, I, my, I tip my hat to you, brother, that that's, that's an awesome dynamic that you're able to work in that.
Jimmy Lea: Uh, I had an opportunity way back in the way back days to work with my dad in construction. And I just thought, you know what, I really need to keep this father son relationship, not the boss employee relationship. So I, uh, I chose to step away and I know it kind of broke my dad's heart that I did that.
Jimmy Lea: But I, it's, it's one of the things you have to really weigh out and the fact that you're able to do it with your daughters and with your son. Bro, congratulations. That's it. 
Tracy Holt: And I  think every personality type is going to play into that. I've got a daughter that worked for me all through college. And then she refers to it as her adult job and you know, that she got after college, you know, they work for me when they need flexible schedule and, and things like that.
Tracy Holt: And, and she, it's funny, you know, I, and she is just. My wife refers her to the female version of me. 
Tracy Holt: I mean, she's a go getter and on top of things. I mean, yeah, you know in the beginning i'm like man She could run this place easily and One day she we were talking about you know What she was going to do now that she'd graduated and leaving me and she says dad for our relationship It's best if I go work somewhere else because we're too much alike So, you know Um, yeah, and I, I'm, I'm, I've never forced my kids into the business.
Tracy Holt: They've all had an opportunity there, but at the end of the day, it's their decision to stay or go and I'm not going to hold it. You know, it doesn't matter to me. I just want them to be happy. 
Jimmy Lea: Oh, that's super cool, man. Yeah, that is, that you have that relationship with them and yet they have that understanding, that dynamic, that's super cool.
Jimmy Lea: So that's, that's where the um, business is today, um, what about the future? Where does it, where, what, are you going to gobble up some more land? Are you going to move? I don't think you can move, dude. I don't know where you'd go. 
Tracy Holt: No, I think with our customer base, where we're at is where we need to be. Um, and, and honestly, if I was to look at starting over again, with the cost of property and where our customer base is, it would be really hard to go start somewhere else.
Tracy Holt: Um, you know, and I, I actually enjoy, you know, I've found a new joy in the business in the last few years. Um, you know, for a lot, a lot of times it was kind of a job that I was just, you know, it was paying the bills and this and that. And, and honestly, I was kind of burned out. Yeah. Um, you know, and after getting my dad to step away.
Tracy Holt: You know, here a few years ago, and 
Jimmy Lea: Wait, wait, wait, wait, wait. A few years ago? 
Tracy Holt: Yeah. 
Jimmy Lea: wait, wait, wait. How many years ago? 
Tracy Holt: So, I purchased the, the bill the, the shop. I don't know what it's been. It's going on three, three or four years now. Outright from dad. 
Jimmy Lea: He really held on for a very, very long time. 
Tracy Holt: He did. Um, he, he, it was, it was hard for him to step away.
Tracy Holt: Yeah. Um, you know, but the shop was also expanding and kind of turned into this thing that he realized he couldn't control and. You know, I was doing my best to kind of control the growth and what we needed, but he still kind of had the mentality of, I don't know, he had struggled so long in the shop that, you know, when it come time to talk about expansion and spending some money on equipment and this and that, you know, he, he didn't see the longterm picture of it. 
Jimmy Lea: Right. Right. 
Tracy Holt: You know, and finally it come down to some long conversations of, you know, dad, if you were to pass away and when you're gone and you don't have this drawn out of what you want to happen to the shop, it may destroy the shop because, you know, everybody's going to have their idea of what maybe dad thought or what dad wanted, you know, but once he's gone, who's going to be there to say one thing or another.
Tracy Holt: And so I said, you know, whether you. Do what you do with it, but make it happen now, you know, don't wait till, you know, it's forced and you have no say because you're not here. 
Jimmy Lea: Right? Don't wait until it's in probate. 
Tracy Holt: Yeah. 
Jimmy Lea: And, and, and then nobody has a voice. Now the, the, the, the court is telling you what's going to happen.
Jimmy Lea: That's not cool. So yeah, kudos to you for talking to your dad like that. And that was a 
Tracy Holt: hard conversation to be like, you know, we've got to make a decision. Good or bad, you know, and, and get the ball rolling now. And, and I mean, when these talks went on, honestly, for years and years and, you know, He's obviously getting older and, you know, I hope he's around for a long time, but you know, you, you start to see, man, we, we've got to get this taken care of because I mean, not only for the livelihood of my family, my brother's family and our family, my employees, you know, I've got, um, I think you maybe met, he's my parts manager at the shop, my son Brady that had been in a severe car accident.
Jimmy Lea: Yeah, yeah, big dude, tall, long hair. 
Tracy Holt: Yes, yes. 
Jimmy Lea: He's a 
Jimmy Lea: funny kid. 
Tracy Holt: He is, 
Tracy Holt: yeah. You know, his accident was about eight years ago and that kind of spurred this whole conversation of like, you know, I've got to be able to provide an opportunity for him. He's an adult, but he's had some, has some disabilities. And I had, you know, I have this awesome opportunity that I can give him a career.
Tracy Holt: Yeah. Something to go to. 
Jimmy Lea: Yeah. A purpose. 
Tracy Holt: He is a purpose. Yeah. So, you know, and, and I just thought to myself, if something happens to the shop, you know, not only all my employees and my family and that. But, you know, that kind of spurred the new me on, yeah, let's make this thing as accessible as we can and the longevity.
Tracy Holt: And so I've really worked hard, you know, the last five years getting it to a point. 
Jimmy Lea: Well, and wait a second. So let's back up here because I'm, I'm hearing the conversation started eight years ago. Son was in the accident five years. So was, was this conversation with pops? Is this a five year conversation that's saying, Hey dad...
Tracy Holt: it's been going on for 10 years.
Tracy Holt: I mean, a long time, but really after his accident, um, you know, he was, he was in a hospital. He was in the hospital for more or less of a year. You know, our family went through a lot after that and it kind of makes you reevaluate, you know, what maybe your long term goals are or where you need to be looking, you know, and not to say that that's the whole reason, but that was a big part of me making a change of like, okay, I've got a, I've got a, you know, I've either got to make this work.
Tracy Holt: And work, whether I'm here or not, or it needs to go away and we got to figure out something else. 
Jimmy Lea: Yeah. Or we got to find the next thing. What's the next thing? Yeah, exactly. Oh, brother. I, uh, congratulations. And, uh, what a blessing that your, your boy Brady is still around and still with us and that you've got an opportunity for him there at the shop.
Jimmy Lea: That's, that's super cool. 
Tracy Holt: Yeah. And there's, there's been a lot of great things that have come from it. You know, it's, it's one of those. Life changing events that you, you wish you never have to go through, but then there's been so much good that's come from it. 
Jimmy Lea: Yeah. Yeah, for sure. I know of a few on this webinar right now that are observing that are in that same situation where POPs is still holding on to the business, but needs to make the plan.
Jimmy Lea: And put that, that next succession into play. Is there any advice that you would give somebody today that's in that situation? How do they exclamation point this conversation to say, Hey pops, we really need to make this plan. 
Tracy Holt: You know, I, it was hard because there was a lot of discussions between me and dad.
Tracy Holt: And he, there was times where he would say, well, you just. Write up whatever you think and I'll agree to it. And I, I never. proposed anything like that to him. I said, no, dad, this needs to be something that comes from you. Um, and so it, it, it seemed like that drug on forever and ever because, you know, there's obviously a lot more family involved and, you know, and I, I just, I felt for what he was trying to do, but I had to give him the space to do it, but kind of, I had to get to the point where it was like, we need to do.
Tracy Holt: We had to have a hard discussion of like, you know, it got to the point where I'm like, Hey, we're going to make this happen and we're going to do it this year. We've got to the end of the year to make this happen. And honestly, it took better part of a year with a deadline and signed the papers in January 1st, I took over the company.
Tracy Holt: You know, um, but I don't think if we would have had that deadline of like him agreeing to it and it kind of forced him to make some decisions. Um, I don't know. It's, it's a hard thing. Cause I'm every situation is going to be different. Um, you know, at this point I'd invested so much time and effort and that into the company, there was days when I just wanted to walk away and be like, this is stupid.
Tracy Holt: I can go do something else. 
Jimmy Lea: Yeah.
Tracy Holt: But you know, it's also my baby, you know, the growth we've experienced and everything I've been through the lean times and the good times and all the cycles 
Jimmy Lea: Yeah, yeah, yeah. In fact, uh, to, to that point, uh, I remember when you hooked up with the Institute and the conversations that you and I had initially, you're like, Hey, look, I, I'm not looking at car count.
Jimmy Lea: I'm not looking at marketing. I've got a good car count. I've got good this and good that I really am looking to fine tune what we're doing. So when, when I, I don't remember, uh, I think it was a seven or an 8 percent net that you had operated over the last three years, but you knew that there was a little bit more, there's just something else that you wanted to do.
Jimmy Lea: And the fine tuning is what you were looking for.
Tracy Holt: You know, in, in the beginning, um, I've, I've. Over the years, we've used a couple different coaching companies. Um, they've all been good. We've got something from every one of them. 
Jimmy Lea: Right. 
Tracy Holt: Um, part of the problem was, is dad would insert me into these coaching companies, but he still had control of everything. So I'd come back and be like, hey, we should do this. Or we should do this. And he, well, you know, I don't know. I don't know. 
Jimmy Lea: Drug his feet. Drug his feet. Drug his feet. 
Tracy Holt: Yeah. And, and so after, you know, the company became mine, I started to look at the financials, um, from an owner's point of view, and we had money to pay the bills every month.
Tracy Holt: You know, there was times obviously when we would stagger what bills go out to what vendors throughout the month so that it would clear the bank, but there was always cash flow coming in. And I'm like, we're working too hard. To have to operate like this, we're doing something that's not right. Um, so I did, I honestly was looking and I can't even remember how I come across the Institute, but I remember thinking, Oh, they're in Ogden, Utah.
Tracy Holt: This will be great training. It's in state, you know, versus, and so I went on and I signed up to the program where you could watch all their videos online, um, Cecil's videos on, you know, The numbers and I, I honestly think I've watched every one of them multiple times before I ever contacted the Institute about coaching.
Tracy Holt: Um, after watching the videos, I started to tweak a few things, you know, on the parts matrix and this and that. And I'm just like, man, I'm tweaking these things and my numbers are starting to move in the right direction. And I'm like, man, what if we could get to this 20 percent that they talk about? You know, and I'm looking at ourselves and figuring 20 percent and I'm like, holy crap, why can't we do that?
Tracy Holt: And so then, you know, obviously I contacted the Institute and said, you know, I need some coaching. Um, the biggest difference was when I contacted the Institute was, I think I was ready for the coaching. I'd already committed that. I'm like, you know what? I'm going to do what they tell me, whether I think it's right or wrong.
Tracy Holt: I'm going to give it six months and. If I follow what they say was what I thought in my mind, and the numbers start to grow, I'm gonna swallow what my pride is, or what I think I know, and just trust the process. So I signed up. I, I ended up with Aaron as my coach. Um, those first couple months, I think if he could reach through the computer and strangled me, he would have, um, because he would say these things and I would agree and I'd be like, Oh, I don't know.
Tracy Holt: I just don't know. And, and so it took a long. You know, when I say a long time over the first few months of tweaking this and tweaking that and kind of like getting Letting me get out of the way of the process And letting people do what i'm paying them to do. 
Jimmy Lea: Yeah 
Tracy Holt: You know the numbers started to move in in the appropriate direction 
Jimmy Lea: Nice.
Tracy Holt: You know. 
Jimmy Lea: So Tracy, how long has it been? When did you sign up? 
Tracy Holt: Um, I think it was June, 
Jimmy Lea: June of last year, 
Tracy Holt: last year. 
Jimmy Lea: So just over a year. 
Tracy Holt: Yes. Just over a year. 
Jimmy Lea: And shout out to your coach Aaron for not killing you. 
Tracy Holt: Yeah. 
Jimmy Lea: And then, uh, So you were with Aaron for quite a while. Um, and then you got into the group environment.
Jimmy Lea: How long were you with Aaron in that one on one coaching environment versus going into the group environment? 
Tracy Holt: So my first group meeting was last November. Um, I got invited as a guest and we went to Denver. And so I ended up going to Denver, you know, and he'd got, we'd got to the point where he's like, I think you could really benefit from the group process.
Tracy Holt: I went to Denver and you sit for, you know, a couple days and evaluate somebody's shop and you go over each other's numbers and I'm like, Oh my gosh, these guys have got it figured out, you know, and The accountability that was being held as the group was honestly, I come back and, and my, I'm telling my sister, I'm like, oh, well, you're gonna have to do this and change this and this.
Tracy Holt: And she, she probably wanted to kill me. I think.
Jimmy Lea: Probably. 
Tracy Holt: yeah, cause I'm like, we're revamping the entire accounting procedure and going to do that this way and this way. And, and, but you know what, after. Words and we've got everything dialed into where we truly understand the numbers and what it takes to be profitable The business isn't that hard once you get it to that point there's still struggles and there's You know, things you're always working on, but, you know, in the beginning, it was like, we've got so many broken pieces in the business.
Tracy Holt: Where do you even start? I mean, so we fixed the, you know, some labor matrix, we fixed a parts matrix. We fixed, you know, and, and I would hyper focus on one aspect until I got it moving in the right direction. And then I would go over here, um, you know, and so. After entering the group process, you know, I've been to two meetings now.
Tracy Holt: Um, there, we were in New York a couple months ago 
Jimmy Lea: With Tom, you went to Tom's place. 
Tracy Holt: Tom's actually my composite. He's my partner. So he's awesome too. Yeah. 
Jimmy Lea: Your  accountability partner. 
Tracy Holt: Yep. Yeah. So you end up with a partner that you look at each other's numbers and goals that you've have written out and you kind of have a, you know, meeting a couple of times a month.
Tracy Holt: And, you know, their job is to hold you accountable and your job is to hold them accountable. 
Jimmy Lea: So, I'm going to say some words here and you can correct me. And, uh, the words are, uh, uh, Has Tom been able to hold you accountable and call you out on your crap? 
Tracy Holt: Oh, absolutely. 
Jimmy Lea: Have you been able to hold Tom accountable and call him out on his crap?
Tracy Holt: You know, Tom's been in it a little longer than I have. So I think it's been more of a one way street towards me, but I do feel like the last couple of meetings we've had where I, I could look at his business now that and say, yeah, where do we need to work on? What are you working on? Um, You know, the first couple of meetings, I'm like, man, it was like another coaching session with Aaron, but with Tom, I'd be like, how do you, how do you do this, you know, and he, and all he kept saying, he says, you know, it's funny a year ago, I was in your shoes, um, where I just felt overwhelmed on.
Tracy Holt: Everything. And he kept saying, Tom keeps saying, you will get there. You will get there. And you know what? Every meeting we have, I feel like I'm getting a little closer. 
Jimmy Lea: Nice. Nice. That's awesome. So you, you, you highly recommend the group. 
Tracy Holt: Absolutely. 
Jimmy Lea: You highly recommend that accountability partner. 
Tracy Holt: Yeah. I didn't know what I was getting into because when I was researching the Institute, I'm like, man, this group process sounds awesome.
Tracy Holt: But, you know, in the beginning I wasn't ready for it. Um, you know, my numbers weren't where they should have been. If I would've got thrown in there from day one, I would have fizzled out because it's too much. 
Tracy Holt: Um, Aaron, we spend a lot of times working on the business to get it to the point to where, you know, you can enter the group process and kind of, you know, everybody's on different levels and, but you're all.
Tracy Holt: You know, kind of on the same level of wanting the same success. 
Jimmy Lea: Yeah. Yeah. Yeah. So, um, uh, the irony here is, uh, cause I'm re I'm remembering the conversations you and I had, you're like, Hey man, I got this. We, I just want to tweak a couple of things. You know, I just want to get in. I want to tweak a couple of things.
Jimmy Lea: I don't need to overhaul. It's not car count. I don't need to charge shop supplies. I'm already doing that kind of stuff. And here, now you get into the group environment and it just takes off to a whole nother level. So let's talk about the whole nother level. Judging by the numbers. Um, let's talk, can we talk net profit?
Jimmy Lea: Absolutely. Can you share that? Cause you were at a 7/ 8%. 
Tracy Holt: Yeah. When we took over, I mean, obviously our first year of me kind of running the business, I think we were at 6%, 5 or 6%. Okay. And you know, it didn't take long to look at those numbers and be like, well, that's why, you know, there's no money in the bank.
Tracy Holt: I mean, the money that's coming in is just going out and there's. You know, and since being in the group process and, and joining with the Institute, um, I think last month I was at 21 percent net profit. So. 
Jimmy Lea: Congratulations. 
Tracy Holt: Yeah. And, and there's still, there's still more to work on. I know that, but it, it, it's pretty awesome.
Tracy Holt: Um, you know, and, and the difference. From a business owner of back when dad was there of like, you know, we'll send this bill out today and this one out next week. My sister just sends them. I, it pays them. I don't, you know, it just goes there. 
Jimmy Lea: It's do pay it. It's do pay it. It just pay it now. 
Tracy Holt: Yeah. I mean, right before this meeting, I was talking with, we're going to buy a new alignment machine.
Tracy Holt: And I just said, yeah, let's just get it. And I just remember the Hunter guy talking to him. He says, well, you want a leash you want to buy? And I'm like, I don't know. We'll probably just write you a check for it. And I remember after I walked away from that, I'm like, man, that feels good to say that because.
Tracy Holt: Five years ago, I would have been like, well, we need it. But how are we going to do this? How are we going to do that? 
Jimmy Lea: Yep. How are we going to finance it? 
Tracy Holt: Yeah.
Jimmy Lea: We, there, there were companies I used to work with way back in the day and she called it, what does she call it? Creative financing. Where I'm going to write this check, I'm going to float it to you.
Jimmy Lea: I know it's going to take a week to get to you in the mail. So hopefully in a week I have had this client pay me and that client pay me so that I can clear that check when it goes through the bank. Creative financing. 
Tracy Holt: And, and, you know, really getting the business where it's profitable. We're charging what we need to, um, you know, I've been able to increase the salaries of my front office.
Tracy Holt: I've been able to increase the salaries of my technicians. Um, do I think as an industry where we are at, where we're need to be to pay technicians? No, I think we're behind, but I, you know, I feel like we're on the right path. You know, if we charge appropriately, do a good job for the customer, you know, everybody can benefit from that.
Jimmy Lea: Yeah. Yeah. Oh, that, that's, that's awesome. Congratulations. I'm, I'm sure that the air breathes different, the sky is bluer, the grass is greener when, when you're not in survival mode, everything changes. 
Tracy Holt: Yeah. You know, and, and you get to a point of like the money side of the business. It's something I don't even worry about anymore.
Tracy Holt: I mean, I, you always worry about it. 
Jimmy Lea: Yeah. 
Tracy Holt: But, you know, when you have your sales tax come out, when your payroll comes out, it just goes out. You don't, you don't stress about did that job get done and, you know, into the bank to, it just, you know, it, we can focus on other things than just cash flow because it seemed like for years and years, that's what the focus was.
Jimmy Lea: Right. Cash flow. Right. Right. For sure. For sure. And if I remember right, you've got some advisors in the advisor program with the Institute and a manager in the manager program or? 
Tracy Holt: Just the advisors 
Tracy Holt: right now. I have. Um, one of my technicians, um, had to transition due to health reasons out of the shop.
Tracy Holt: He's worked for me for over 20 years. 
Jimmy Lea: Oh, wow. 
Tracy Holt: And basically, due to back issues, the doctor said, You need to go find something else to do. That's tough. So, we transitioned him up into the office. Service writing and I stuck him in the advisor group. Um, it's been a big learning curve for him. Um, which has been great because we've been able to work with him, transition him on how we do things, but then he also meets with his, with his coach that gives him, I think, another perspective on how the business works from, you know, that position.
Jimmy Lea: I love it. 
Tracy Holt: You know, 
Tracy Holt: and some of those things are things that we've done for so long. We automatically think that everybody should know, but it's like, yeah, you learn those over a number of years, you know, where he's starting from day one and he's doing awesome. 
Jimmy Lea: And he's got 20 years of experience as a technician, turning a wrench in the bays.
Jimmy Lea: Now skillset, which takes time. But he'll get it, he'll get it, and he'll do it really well. And, you know, Tracy, we've got a, uh, service advisor intensive coming up October 8th through the 12th. You may want to send your advisor there to that five day intensive. Because it's more than just show up, divulge information.
Jimmy Lea: We want to know what their starting point is. Then during the training, we give them tests to see how well they're learning the information. And if they pass, they get a certification at the end. And then we follow up a month after and three months after to see how much of the information is sticking and how to see what their progress is, to see where they're going in that next level of.
Jimmy Lea: retention of the information. How much did they implement? 
Tracy Holt: I think it sounds like a great program. Um, you know, like anything else I've learned through the Institute. 
Jimmy Lea: Yeah. 
Tracy Holt: You know, you can talk about things, but you put things down on paper or in our group process, process, we call it an actionizer. Which are business goals, personal goals, short term, long term.
Tracy Holt: And, you know, that's one thing that you, you know, you just don't talk about it. You know, there's always a follow up on whatever was being taught or whatever to make sure you're doing what you're doing. Um, it sucks sometimes because there's times where you just don't get it done. You know, like a kid in his homework.
Tracy Holt: It's like, well, it's due tomorrow and I haven't done anything. Um, but, you know, the accountability is what I think makes the difference all the processes work.
Jimmy Lea: Cool, cool. That that's some great feedback. I appreciate that. That's very cool. If any of you have questions comments concerns questions for tracy put them into the q and a and we'll definitely address those because um, you know, there's there's a lot of People in this industry.
Jimmy Lea: There's a lot of different dynamics Uh, and I know that there's some people right now that are in that succession plan Cycle where they need to set the date, have the hard conversations to take those next steps because, you know, pops, what is it you want? To have happen? 
Tracy Holt: you know, and I think that was a big turning point where, as I just focused on dad and I'm like, what do you want?
Tracy Holt: You know, 
Tracy Holt: I take away what you think I want, what mom wants, what everybody, you know, what do you want to see happen to your business? 
Jimmy Lea: Yeah. 
Tracy Holt: You know, um, and part of that needs to be, you know, what, where do you want, where do you see it in 20 years from now? 
Jimmy Lea: Yeah. Yeah. I love that you have that perspective. I love that you have that relationship with your dad, that you can have those hard conversations because.
Jimmy Lea: Yeah, take everything away pops. It was just the business in you. What's the next phase? What's the next step? What do you want to have happen? 
Tracy Holt: And, and that it was, it was a long time to get to that point, you know, once we got to that point and we'd set a date, I kind of knew at that Point I needed to just focus on that and not let it go.
Jimmy Lea: Yeah 
Tracy Holt: We've agreed to this Whatever the terms were we agreed that it was going to transition this year or whatever it was And kind of had to work backwards from that point and You know, the terms of our decision and, and our, you know, it changed 20 times during that. 
Jimmy Lea: Easily, right? Every conversation, it changes.
Tracy Holt: Yeah. You, you would come up with an idea. How about this? And it sounds so good. And I'd wake up at three in the morning and go. 
Jimmy Lea: That's a terrible idea. 
Tracy Holt: Yeah. You know, and so you have to, you have to give it enough time to kind of digest all that, try and look at it from every point of view. And, you know, there's not a perfect scenario, but you have to pick the best one.
Jimmy Lea: Right, right. Well, we got a question coming in here from Gary. Gary's question is what. is the one thing and, and, or biggest, his word is biggest. What is the biggest thing you changed in your business to go from 5 percent to 21%? 
Tracy Holt: I think, you know, and every business is different. Um, we're blessed with, we are exceptionally busy.
Tracy Holt: So I wasn't looking for cars, um, to fix. Um, I, we're weeks out on the schedule right now. biggest, honestly, the biggest change that I implemented was fixing my parts matrix. Um, you know, and I, that took a couple months of tweaking this to that and watching the numbers and making sure they were moving in the right direction.
Tracy Holt: Um, the other thing was I implemented a labor matrix, um, where obviously, you know, your, your door rates, you know, our door rates, one 65, but the more. Hire the hours. It's going to creep the door. And that I mean, those two things were probably the biggest, the biggest changes we made that I saw the, you know, a significant jump, um, you know, people always say, well, if you're that busy, you've got to just keep raising your labor rate.
Tracy Holt: Honestly, we're at the for our area. We are. At the top of where we're at. 
Jimmy Lea: Yeah. 
Tracy Holt: Um, do I we need to raise it again? Absolutely I you know, and that's got to be a conversation you have quarterly do we need to bump up five dollars or whatever it may be Um, you know, we went a long time There was one point where we had I look back and we had changed our labor rate For a number of years and we were 125.
Tracy Holt: I jumped at $25 
Jimmy Lea: Oh, wow, 
Tracy Holt: I thought, and this was right after dad and I'm like, if my dad saw me do that, he would kill me. 
Jimmy Lea: Yeah, yeah, yeah. 
Tracy Holt: You know what, I, I bumped my labor rate in one day 25 and. Never heard a word about it. Business went on and nothing changed. 
Jimmy Lea: Well, and if we roll back, because I remember having conversations with my shop here in St.
Jimmy Lea: George, Utah. There were a lot of conversations about getting over 100 per hour. And I have to go back a couple of years to do this conversation. There was a mental block. There was a mental block. They just couldn't do it. I'm sure you and your pops had the same conversations. We just, you know, we just can't charge more than a hundred bucks.
Jimmy Lea: But, um, yeah, 
Tracy Holt: and now we're, we're approaching the 200 an hour rate and we're going to be above that shortly. And we need to be as an industry. 
Jimmy Lea: Oh, absolutely. Absolutely. I know shops in Florida that are over 300 an hour. 
Tracy Holt: Yeah. You know, and, and, and a lot of depends on where you're at and what you're... 
Jimmy Lea: it depends on your business model.
Jimmy Lea: Depends on what you're working on. Depends on what your market can sustain. 
Tracy Holt: Yes. 
Jimmy Lea: Totally agree. A hundred percent on everything. 
Tracy Holt: You know, our, our, your expenses. But you know, the great thing is like working with the Institute, all that stuff's laid out to where, you know, what my expenses are, what, you know, and you can look and be like, Oh, we're off a few percent here and there.
Tracy Holt: And you can deep dive into those and see why it's off or what you need to. 
Jimmy Lea: Chasey, that's a really good point that you're making right here. And I, I want to, uh, uh, uh, put an exclamation on this. Um, let's just use a number at one 65 for some shops that is inappropriately high as a labor rate for some shops.
Jimmy Lea: It's inappropriately low as a labor rate. Absolutely. What's your business? What's your business? And that's where I, the, the coaching and training has come in and really helped you to take it up to that next level. Yeah. 
Tracy Holt: I'm, I mean, that number of 165 or 195, whatever it is, honestly, irrelevant. As long as your percentages.
Tracy Holt: Will support it. 
Jimmy Lea: Yeah. 
Tracy Holt: You know, um, if your percentages won't support it, it probably needs to go up, you know, or your expenses need to come down one or the other. But, you know, it's Cecil's talked about this and, you know, it's a financial balance in your business. 
Jimmy Lea: Totally is. Totally is. 
Tracy Holt: You know, and it's, it, it depends on honestly, and that's where you can say, you know, obviously what we pay here is going to be different than California or whatever.
Jimmy Lea: Oh, are different than Florida for sure. 
Tracy Holt: Absolutely. 
Jimmy Lea: Right. Oh yeah. It's totally different. Okay. So one last question here, um, this is coming in from Andrew and his question is, did you and your father have issues when you wanted to make changes to the business such as increasing the labor rate? 
Tracy Holt: Yes. Um, my dad for years, there's a handful of shops that, you know, you know, in your area.
Tracy Holt: And we talked about the labor rate and he said, well, I'm going to call so and so and so and so and see what they're going to charge. And I'm, and I just now looking back on it and I'm like, okay, maybe that gives you an idea of what's around you, but you have no idea what they're. Expenses are what they're, you know, so you have to look at it I mean, obviously you have to look at the market and what it'll support But you have to look at it from your business and what you need to support your business Um, you know, that was probably after my dad stepped away You know, that was probably one of the biggest things that You know, when we would have the labor rate discussion of what, you know, cause there was times where he'd say, we need to raise it.
Tracy Holt: I'd be like, Oh, I don't know. And then there's times I'm like, we need to raise it. Then, you know, and we would seem like we were never on the same page at the same time. 
Jimmy Lea: Yeah. And, and the, the element that both of you were missing was evaluating the business as a whole to see what does the business need, not just your gut feel of, we need to raise it.
Tracy Holt: Yeah. I mean, you, you can go look at your expenses. You can look at, you know, all your costs. And you can work that number backwards and be like, okay, we're doing X amount of cars per day and, you know, so many hours and whatever you could work that back and say, well, I've obviously got to charge this number, whatever it is.
Tracy Holt: Um, 
Tracy Holt: but the problem is, is we don't look at it from that point. We just look at it as, you know, well, so and so down the street's charging this or that. You know, you've got to look at it from what, what you've got from your business and what it'll support. And and you know what and if all of a sudden it needs to be raised or maybe expenses need to be addressed or there's Things in there, you know, there's there's multiple sides to it But until you really understand the business from the number standpoint Which I kind of understood them but in the last couple years I mean, it's... 
Jimmy Lea: Now you really understand.
Tracy Holt: I 
Tracy Holt: really understand and and you know, i've made this comment You know, it's like, man, if I would have deep dove into this years ago, where would we be today? But you know what, years ago, I wasn't ready for that. 
Jimmy Lea: Right. But you are today. You took the steps. Andrew gives you a big time shout out saying it's very stressful to work with family.
Jimmy Lea: Agreed. 
Tracy Holt: And it is. I mean, I love my family to death. Like I say, we often will go on vacations our separate ways. And you know what, we're okay with that. 
Jimmy Lea: Sure, sure. You're, you're with each other all the time, all day, every day. So to go on vacation, you need a vacation from work. 
Tracy Holt: And the hard part is, is, is family knows when you get together, the discussion is work and that's been a hard transition for me and dad.
Tracy Holt: I'll call him. I call him a couple times a week. He lives down in St. George by you. 
Tracy Holt: Yeah. Yeah. And he, you know, first thing is how's work going and I'll give him a little rundown, but we've had to find other things to talk about. 
Jimmy Lea: Good. 
Tracy Holt: You know, and that's been, you know, because we're 30 years, that's what.
Tracy Holt: our discussions were of. 
Jimmy Lea: Yeah, yeah. 
Tracy Holt: Of the business. 
Jimmy Lea: I'm glad you're able to make that transition brother. That, that's, that's very cool. If anybody is interested, we'd love to work with you. We at the Institute and Tracy, my shout out is to you, brother. Congratulations on all that you have accomplished. with your dad, with the shop, with your siblings, with your nieces and nephews and your, your children, your, your shop is awesome.
Jimmy Lea: It's amazing. And yeah, the, the future is bright. What are you going to do next? What's the future? Where are you going to go now? 
Tracy Holt: You know, it's funny is, is like, I, after being in the group process, you know, if you had asked me. A year or two ago, do I ever think about a second location? And I said, you would have to be absolutely nuts.
Tracy Holt: And now 
Tracy Holt: that's kind of turning in the back of my head, you know, who knows what, I don't know, maybe, maybe it's a second location somewhere, you know, maybe it's a, a major expansion of what we've got, um, it's, I don't know. I, the, the, the future's bright and I look forward to whatever it is. And that's kind of my new challenge in life.
Jimmy Lea: Yeah. 
Tracy Holt: Yeah. What's next? 
Jimmy Lea: What's next? Well, we know that you're definitely going to be getting a new building with a new waiting room soon ish because you got to get out of that hallway. Oh yeah. Yeah. Yeah. Yeah. That's awesome. Uh, Andrew gives you a big shout out and says, congrats on everything. Uh, he hopes to meet you at the summit in February.
Tracy Holt: I'll be there. 
Jimmy Lea: Okay. Very cool. Well, let's, let's get there. Let's get there together. Let's lock arms as an industry and together we can elevate all ships together. We will do this because we can Tracy, any, uh, last words of wisdom. 
Tracy Holt: You know, if, if the one thing I can say is if you're watching this and you see the struggles, um, you know, don't be afraid to ask for help.
Tracy Holt: You know, that's, you know, once you over become that. You know, things, things become easier because there is, there's a whole industry out there that wants to help, whether it's coaching other shop owners, you know, don't be afraid to ask for help. 
Jimmy Lea: Love it. Love it. Yeah. Don't be afraid. Don't, don't be too prideful or so prideful that you're not willing to ask.
Jimmy Lea: Yeah. Be willing to ask. Well, you're awesome, brother. Thank you so much. Thank you. Everybody that was here today. My friends, it's good to see you. Hope all is well with you and your shop. Look forward to seeing you at the next conference trade show. See you at the summit. See you at the service advisor intensive in Ogden, but whenever it is, we look forward to seeing you again soon.
Jimmy Lea: Thank you, Tracy. 
Tracy Holt: Thank you.

102 - 5 Steps to Grow Your Shop Margins and Become More Profitable

102 - 5 Steps to Grow Your Shop Margins and Become More Profitable
August 22nd, 2024 - 01:06:29
 
Show Summary:
In this podcast, Cecil Bullard, CEO of The Institute for Automotive Business Excellence, dives deep into the importance of margins for auto repair shops. Margins are the key to increasing your overall net profit, but many shops struggle to achieve the profits they deserve. Cecil walks you through actionable steps to improve your shop’s labor and parts margins, helping you reach your target profitability.
Key Takeaways:
Understanding the key factors that impact your margins.
Practical techniques to maximize your labor and parts profitability.
Strategies to consistently reach and exceed your financial goals.
Host(s):
Amber Wright, AutoLeap
 
Guest(s):
Cecil Bullard, Founder & CEO, The Institute
 
Episode Highlights:
[00:03:00] - Cecil explains why having solid gross margins is critical to achieving real net profit in your shop.
[00:05:10] - The first easy win: install and follow a legitimate parts matrix to boost parts margins.
[00:08:29] - Labor rates in the automotive industry are far behind – Cecil compares them to other trades and stresses the need to raise them.
[00:10:59] - Cecil shares real-world data showing that raising your labor rate rarely results in losing customers.
[00:19:15] - Labor margin issues often stem from low productivity – Cecil breaks down how to identify and fix it.
[00:22:12] - The “brick wall” analogy helps owners pinpoint company vs. employee roadblocks to productivity.
[00:30:40] - Use a labor multiplier to account for things labor guides don’t cover, like test drives and paperwork.
[00:35:43] - Labor leakage is everywhere – from underquoted diagnostics to free inspections – and must be stopped.
[00:41:48] - Improve estimating and workflow by getting four key pieces of info from techs to speed up the process.
[00:48:07] - Cecil shows how applying all five margin strategies can add up to nearly $400K in additional profit.
 
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=ed6KkS6Rgrw&t=1s
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: 
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________________________________________
 
Amber Wright: Hello, everyone. Thank you for joining us. It is a hot summer day here in Atlanta. And we're glad to be back with our webinar series. We did take a little time off, but we are kicking it back in full swing and we are super excited to have our very own expert Cecil Bullard with the Institute here with us today.
Amber Wright: Before we get started, as always, we're going to kick off with some housekeeping notes. We are recording this session, so if for any reason you need to drop off, you get busy, or for whatever reason your internet fails you today, please do not worry. We always send out the recording no later than Monday. Of the following week, and then we also always post the recording on our website under the resources tab on autoleap.com. So, to kick it off, I do want to also say we are on webinar, so you guys are not on video, you do not have voice. But you do have functionalities so that you are able to enter in your questions depending on how the session is going, I will leave them in for Cecil will do a few here and there during the session, but if not, we'll kind of leave the majority to the end so that we can make sure that we get through the content and you guys really get the full scope of this expert session.
Amber Wright: So today we're going to talk about the five steps to grow out. Your margin and being more profitable. Why are margins so important? Well, they basically help you become more profitable. So, again, today we have Cesar Bullard, the CEO of the Institute of Automotive Business Excellence. And Ogden, Utah.
Amber Wright: And really the things that we're going to take away from this is understanding your margins, improving your labor margins and reaching target margins. So Cecil, I'm going to pass it over to you. And once again, we really appreciate your time and being here with us today. 
Cecil Bullard: All right. Thank you. Thank you.
Cecil Bullard: Thank you for the opportunity to be here. I was going to ask ask you if you would pay attention to the questions, but you already answered that. So, we do like questions especially if they're about the material. So, don't feel free to ask. And I would see there are no dumb questions, really.
Cecil Bullard: But there probably are a couple, but most of them are not. So, you know, do your best. What you're seeing right now, there's a QR code there. There is a simplified workbook. It's really just the slide set with some notes. There is a parts margin and there are there's a calculator there that you can get ahold of if you fill that out.
Cecil Bullard: So you'll see that a couple of times throughout the thing. And then again, at the end why are margins important? Let's kind of start with that. If you're doing, I don't know, a a million dollars in business and your gross profit margin, which should be somewhere in the neighborhood of say 62% if you're loading your labor loaded labor means I'm taking into account all the cost.
Cecil Bullard: Like a few to workers comp. If you're not loading your labor, you probably want to be closer to 74 percent on your gross margin, maybe even 80 percent on your gross margin. If you are not hitting your gross margin, then It comes out of your net margin. So if I lose 10 points because I don't charge enough for my parts or I discount stuff, or my technicians are not efficient and productive, then instead of on a million dollars making a hundred thousand excuse me, instead of making 200, 000, I make a hundred thousand dollars.
Cecil Bullard: So, and there are coaching companies that will tell you it's okay. You know, not to worry too much about your margins to worry more about gross profit per hour. And there is something to that, but if you don't have margin, you don't have profit. And so I may have a decent gross profit margin per hour for a few hours because I did some jobs that are low margin, but when I add it with everything it might get me in trouble financially.
Cecil Bullard: So, what should my business earn me? I think that's, we need to kind of start begin with the end in mind Stephen Covey. I want to make about 20 percent net profit and that's not my salary. So I make money as an owner in two different ways. I make a net profit. That's about my risk and my investment and et cetera.
Cecil Bullard: And then I also make a wage based on what I do for the business. So if I'm a manager. I make a manager's wage. If I'm writing service, I make a service advisor's wage. If I'm a tech in my business, then I make a tech's wage. Excuse me. And if I'm doing all those things, then I make a higher wage because now I'm making bits and pieces from each of those areas.
Cecil Bullard: So I think we need to keep that in mind. I mean, this is my goal. This is my target. So, what's the easiest thing? The easiest thing there's two easy things. We're going to talk about them. Not going to spend a ton of time here. Because I've done so many webinars and we have so much on our YouTube channel about these first two things that I'm just going to go quickly here, install and follow a legitimate parts matrix.
Cecil Bullard: In other words, I have a methodology for charging parts and I stick to that methodology. And I know that some people are going to call me and say, I want to bring their own parts. That's a no, I don't do that. I also know that Sometimes I'm going to look at a part. I'm going to say, wow, that's really expensive.
Cecil Bullard: And the good news is it's not coming out of my pocket. So I'm not paying the bill. The customer is paying the bill. And frankly, if you're not willing to make let, allow me to make a profit, then I don't know that I want you as a customer. So you want to hold your margin on your parts and therefore you need.
Cecil Bullard: methodology. And the best methodology is to have a parts matrix. So if you're a shop doing, say, 600, 000, now you may be a shop doing a million and a half. I mean, we have some shops that do 10 million in a year or more, but let's say you're doing 600, 000 and you actually have a parts margin that isn't 58%.
Cecil Bullard: Let's say you're currently doing 38%, which is not That's fairly typical when we see a shop that really hasn't had coaching, etc. And you just raise your parts margin by 10%. So you go from 38 to 48. It's not 58, but it's still more. That gives you an additional 2, 250 in parts profit each month. You know, assuming that about 45 percent of your sales is Parts and about 55 percent is labor, which would be fairly typical.
Cecil Bullard: And that's 27, 000 a year just for being paying a little more attention to your parts holding the line a little bit, making sure that your parts margins are correct. And you know, why am I in business? Well, I'm in business cause I love helping shops and I'm in business because I love what I do and I love coaching and I love doing webinars, but you know, I'm also couldn't be in business if I didn't make a profit and couldn't take care of my family.
Cecil Bullard: So you deserve to make a fair profit, decide what that is, and then stick to your parts matrix. Here's an example of a parts matrix. And again, if you go to the QR code. You can get that parts matrix and a matrix. It's just a methodology that basically says when I get a cheap part or an inexpensive part, my cost, I might mark it up times 3.
Cecil Bullard: 8 or even four times. So I take a 2 part. I charge 8 for it. And that would give me a 75% margin on that part. And so when I'm doing 75 percent or even 80 percent on a small part. Then when I'm doing a big part, like an engine or I don't know, a control module, and I'm only getting 40 percent when that all balances out, I end up with the 55, 58 percent that is the goal and the target to get our parts margin.
Cecil Bullard: And again, if you have questions, please ask questions. If you go to our YouTube channel. I believe that's a gear for shops dot com. There's more material on that. So that's all that I'm going to say there. I wouldn't be a coach or really care about the industry if I didn't say raise your labor rate.
Cecil Bullard: Our labor rates at this point are not enough. They're not enough to pay the technicians what we need. They're not enough to buy the equipment we need and get the training we need. And frankly, this industry is way behind in labor rates. So what does a plumber charge? Well, here in Utah anyway, from about 300 an hour for a cheap plumber, all the way up to about 500 an hour for a great plumber.
Cecil Bullard: Electrician, my electrician who is a friend of mine works for about 300 an hour when they come and do work, but his company charges four or 500 an hour for the work that he does. Working for his company. HVAC, they're 300 to 500 an hour. I just had some HVAC work done on my house, and it was about 450 an hour.
Cecil Bullard: And that's by the way what they charged me. If you look at the time they spent on the job and what they charged for labor, they were probably closer to 650 an hour. In the automotive aftermarket auto leap did a survey. I think we're about a year out from that survey. And the average, I think on that survey was 128.
Cecil Bullard: There's a couple other companies that have done surveys. 128 would be kind of normal right now for the industry, but. It should be much higher. I mean, I think we, I used to talk about us needing to be two 50 an hour. And now I think we really need to be talking about three to three 50 an hour as a automotive businesses because of the complexity, the education, the equipment, and the other things that I need, and then we can't even talk about lawyers and doctors and dentists dentists make oh my gosh, I, I don't even know, but dentists are the highest paid.
Cecil Bullard: Many doctors depends on which field you have are also paid over a thousand dollars an hour. And I know they have medical insurance and all of that, but I have liability insurance. I have other things that I have to pay for. So, raise your labor rate. I've been doing this for 24, 25 years now as a coach, I've been in the industry for about 44 years, getting old.
Cecil Bullard: And if, I've told people all along to raise their labor rate and we have a lot of shops that will go home and raise their labor rate from a class or a webinar by 10 an hour. And they don't get any complaints from their customers, clients, et cetera. Or if they have anybody complain, it's really just the five worst customers that you have that you're trying to maybe not work on their car.
Cecil Bullard: Anyway, I did a calculator on the. The average labor rate from 1980, because I was, I owned a shop and was running shops in 1980. And I just raised the labor rate 3 percent a year for the cost of inflation. And that would have got us over 250 an hour as an industry, if I just raised my labor rate 3%.
Cecil Bullard: And of course you know, we're certainly our our inflation is much more than 3 percent today. I don't care what they tell us. All right. So raise your rate. What if I increase my rate by 10 an hour? If I was a shop with three techs with the average productivity that we have of 72%, that's 362.
Cecil Bullard: 9 hours a month that my technicians would do based on like a 21 day month, which most months are actually 4. 3 weeks or about 21 days. If I raise my labor rate by 10 an hour that would give me an extra 3, 629 in labor margins, labor profits which is about 43, 000, a little over 43, 000 a year.
Cecil Bullard: So, you know, I also have to tell you that I, having talked about this for, you know, 23, 24 years in the industry. I don't think I've ever had somebody go, I went home, I want to raise my labor rate by 10 bucks an hour, and my customers left me. In fact, in almost every class that I do when I'm teaching service advisors or owners and we're talking about margin, we talk about labor rate.
Cecil Bullard: I ask people, you know, have you ever attended a class? Have you ever went home and raised your labor rate? And most of the class will raise their hand and say, yes, I have. And then I asked them a second question, which is how many of your customers left you? And almost everyone in the class says none, zero, nada.
Cecil Bullard: So, you know, if you're not making the profit you need, the two easiest things, put a parts matrix in place, follow it. Don't get emotional about it. Number two, raise your labor rate. Even if you lost 20 customers because of it, the bottom 5 percent of your company that average 500 repair order show up 1.
Cecil Bullard: 2 times a year. I would still earn 31, 000 more per year in profit by raising my labor rate 10 an hour. And there's a place where your labor rate probably is too high. I don't know what that is because I've got clients right now that have effective labor rates well over 200 an hour. I have some clients that have posted rates well over 2 50 an hour and in my, all the clients that I have in the company, the Institute the ones that are doing the best, the ones that have the most consistent businesses.
Cecil Bullard: Are the ones that are the most expensive. They have the highest labor rates. They have a more consistent business. They're able to buy nice things. They're able to provide for great technicians great employees, et cetera. So raise your labor rate. If there are any questions, please feel free to ask them.
Cecil Bullard: I know that Amber is paying attention to that 
Amber Wright: I was going to say yes. I think there's a really good comment to kind of just like, discuss and. There has been some really good advice in the chat. So, aftermarket parts and accessories generally have a set advertised price that we generally have to try and stay within.
Amber Wright: Otherwise, they think we're overpriced as they have the set retail price. And so some of the suggestions is just increase your labor rate to compensate the loss of revenue on parts. 
Cecil Bullard: I would argue the point about aftermarket parts. There's a cheap place to get parts. We all know that if my client goes online and they go to Amazon or any of the rock auto online auto parts, they can probably buy them cheaper.
Cecil Bullard: Something I believe I saw a statistic that 20 percent of the parts that are online are what do they call them when they're faked. You know, they're not real. They don't, they're not coming from where you said they were coming from. So they're they're not. They're not good parts 20%.
Cecil Bullard: Number two I've been dealing with parts pricing for 43 plus years, because when I started in business and I was a young tech, young service advisor in my shops or the shops I was working for we had parts houses and my client can go into any parts house and get a price. We have dealerships and I think some people believe that the dealership price.
Cecil Bullard: Is the price. There's a manufactured list. Well, if you call three dealerships on a certain part today, call three Ford dealerships, three BMW dealerships for the same part, today you're likely to get three different prices. And by the way, if I don't earn enough profit on those parts then I still make the money I need.
Cecil Bullard: So even a dealer list for me doesn't mean a thing. And I've run shops. And had shops and been a service advisor and been an owner and a manager. And I've been pricing my parts based on a matrix, which often is more than the dealership might for, I don't know, since the mid eighties. And we have a lot of shops that earn 58 percent margin on their parts.
Cecil Bullard: And which means that they're pricing dealership parts higher than maybe the dealership would. I think you have to understand that in sales it's about creating value. I think that if I talk about going to McDonald's and getting a hamburger, that's different than going to five guys and getting a hamburger and they're different prices, and it's different than going to a really nice restaurant in town and getting a hamburger, all three different prices.
Cecil Bullard: But wait a minute, doesn't McDonald's set the price on hamburgers? They're four bucks a piece or used to be two. People go to places and do business with places more about how they feel about the place and what they believe the value is of what they get then about what the price is. And you know, as the economy tightens, yeah, we probably have more people that are paying a little more attention to prices, but.
Cecil Bullard: Do they like our service? Do they enjoy what we do? Do we give great warranties? Do we do a great job on their vehicle? Is their experience a great experience? That allows me to price myself where I need to. And when you've worked with over 3, 000 shops, and you've seen that a good 20 30 percent of those shops the top producers, Are routinely charging matrix price parts, which are more than they could buy somewhere else maybe.
Cecil Bullard: And their and their clients are fine with it. I think it, that, that argument goes out the window and yeah. Now there's an idea of I'll just charge more for labor and less for parts. Cause people are more paying more attention on parts. I'm not so sure that's true. When I teach classes. In a class of you know, 200 clients and shop owners and potential clients, non clients.
Cecil Bullard: And I ask in your neighborhood, in your area, are people more focused on parts pricing or labor pricing? It's usually almost split down the middle where 50 percent are saying, well, it's labor and 50 percent are saying, well, it's parts. And it's your mentality. I have two shops in a major city in the United States.
Cecil Bullard: They both are really good shops. They both do really well. One of them believes that you can't get more than 50 percent parts margin in their area. So they're routinely around 47, 48%. The other shop believes you can get 58 and routinely gets 57, 56, 58 percent on their parts, same neighborhood, same parts, same places.
Cecil Bullard: Why does one person get more than the other? I think it's about. Do you believe in your product? Do you believe that the value of your product? Can you build that value for your client? What's your marketing? There's so many variables. And I can tell you from having taught, I don't know, 20, 000 service advisors in the past 20 years, maybe even more than that.
Cecil Bullard: The service advisors that believe in their pricing can build value for their clients are always going to get more margin and their clients are going to buy more at a higher price. I don't know if that helps, doesn't help, but there it is. I really want to spend some time on this idea of increasing your productivity because there's really two types of margin that we have.
Cecil Bullard: We have parts margin and we have labor margin and most labor margin problems are not. Our productivity problems, not pricing problems, really. Although again, you could probably raise your rates a little and nobody's going to pay attention or really care that much. So, so I want to kind of go through several things that are productivity related or productivity issued because the more hours that my hourly or salary detect can do.
Cecil Bullard: In an eight hour day that I can sell to a customer, the higher my labor margin, the higher my profit. So, in my shop over the six and a half year period, the last shop I ran personally we had 119 percent productivity out of our techs because we did a lot of these things exceptionally well. So I'm going to talk about those.
Cecil Bullard: And again, if you have questions. Please feel free to ask them. Currently the average productivity in the United States about 72%. It's from surveys and stuff over the last, I don't know, five or six years that we have seen you know, in any given year it might be 73% or 74%, or it could even be 70%.
Cecil Bullard: That number's been very consistent for a long time. In our industry, the shops that we work with. Probably are much closer to a hundred percent. I would tell you, we're probably in the very high nineties for many of the shops that we work with, if not most of the shops that we work with or above and it's about these things.
Cecil Bullard: So if you take a three tech shop, I've got three techs, I'm 128 an hour. And I have a 45 to 55 percent partial labor ratio and you look at what they're actually doing. I should be doing 1, 369, 805 in sales, but I'm actually doing 986, 259. So there's a very big difference between what I'm actually doing and what I'm doing.
Cecil Bullard: And by the way, if I'm paying hourly or salary to my employee. When I'm doing 986, 000, I might be paying out 250, 000 to my tax. And when I'm doing a 1. 36 million, 1. 37 million, I'm still paying the same amount out to my tax. So when I'm doing more, I have a much higher labor margin. So, costing this shop.
Cecil Bullard: Because of their productivity, 383, 000 in annual sales and 76, 000 in profit. If you look at a 20%, a net profit. So what do I do to fix that? You know, we talk a lot about management. I want, I have this visual, I'm a very visual person, so. I'm looking at this particular visual, and it's a wall. So, I'm looking at a wall that's made up of bricks, and there are two types of bricks in my wall.
Cecil Bullard: So, in my business, there are walls that we come up against, and our employees come up against them. We, as a company, come up against the wall. And there are two types of bricks in this wall. One is a company brick, and the other is an employee brick. So, if we looked at bricks you know, there, here's a wall with bricks in it and as a manager or an owner, I want to get rid of the bricks because I want to get on the other side of the wall.
Cecil Bullard: And bricks for company bricks would be things like scheduling. If you're not scheduling properly, your technician shows up at eight, they don't have cars. If you're not you know, like, they get done with their car at 10, but I don't have another car scheduled till noon. Then they don't have work to do.
Cecil Bullard: That's a scheduling problem. If you're have waiters and you're pulling your tech off of a 6, 000 job. And you know, for a waiter in a way that's a scheduling problem. So you're doing a waiter oil change where you're really not making money and pulling them off of a 3, 000, 5, 000 job. And then they have to get back to that job.
Cecil Bullard: They have to get caught up. That will cause inefficiency and productivity loss tools in education. Do you have the right tools? Are they in the right place in the shop? Are the, can the techs diagnose or. Do the job in a reasonable amount of time. Again, you know, we're going to talk a little bit about book time before we're done today.
Cecil Bullard: You know, can they beat. Book time in doing a normal job, we have a lot of shops where we have texts that are probably under qualified, trying to do diagnosis on a vehicle where we've told the customer, it's going to be 150, a hundred dollars, whatever, and the tech is taking three, four, and five hours to do that diagnostic, that's a brick that's in my wall, that's keeping me from being profitable and keeping my tech from being productive.
Cecil Bullard: And that brick is it's an education brick. You know, how do they know enough? Have we taught them enough? Have they taken enough classes? Dispatch is a company brick. Are we dispatching properly? I would tell you to dispatch all the cars, get them all in the morning for the day, dispatch them all, and then manage your flow throughout the day as opposed to scheduling customers all throughout the day.
Cecil Bullard: And the reason why is when your technician has three cars, Instead of one sitting here, if they have one sitting here and it's a two hour job there's a law, can't remember the name, Tony's law or whatever it is. It's not Pareto's law. It's a different one, but it basically says that a technician will make the available amount of work fit the available amount of time and my history.
Cecil Bullard: My experience is that's true, but give a tech a two hour job and they think they don't have anything for the next three hours they'll fill in and that job will take three hours. If I give a tech you know, a six hour job with maybe five hours of time to do it, my techs would get the job done in five hours or maybe even less.
Cecil Bullard: And if the tech has one job that's a two hour job and another job that's a six hour job, they start the two hour job, they know they have the six hour job, they'll work at a different pace, they'll get the two hour job done faster because they have another job lined up that they know needs to be done and should be done today.
Cecil Bullard: Estimating, are you estimating the proper amounts of time? We'll talk about that a little more. Parts. Are we getting parts in a timely fashion? Are we getting good parts? Are we matching those parts up? Or do we wait until, you know, two days later when the car gets pulled in to check the part and see if it's the right part and then we find out it's not the right part.
Cecil Bullard: So, parts can be a brick. Culture. We have a culture of laziness. We have a culture of, well, it doesn't really matter what we get done. Or do we have a culture of, we want to produce you know, 120%, 9. 6 hours per day. What's the culture of the business. Those are company breaks. And unfortunately, when I look at poor productivity in shops, and I've been doing this for a very long time, and I've probably personally been in over 2000 reviewing their stuff, their work orders, their productivity, their processes you have a lot of employees that are underproducing because the company has not removed.
Cecil Bullard: The bricks has not solved these problems. You have employee bricks what are employee bricks organization employees, not organized. They don't keep their tools. They spend 10 minutes looking for a 10 millimeter socket because. They can't remember because they don't have a structure and organization about how they, you know, how they take care of their tools or even how they work teaching kind of a work process.
Cecil Bullard: You know, you get a car in, it's got a check engine light on, what do you do first? Right? For me, it's like research, you know, run the code but kind of do a little history on the car. Take a look at the car, research the code. What's the code about? Etcetera. Because if I do that, I spend that time there, I can be more organized in my approach.
Cecil Bullard: And if I have an organized approach, I'm probably going to be more efficient and more productive tools. Do they have the right tools themselves? Do they know how to use them? Skills? Do they have the right skills? You notice I said education in the top company brick. Are we educating our people in the bottom?
Cecil Bullard: I said skills for the employees. My employees may have lack of skills in certain areas. And it is up to me as a company to educate them. But it's also up to my employee to keep their skill sets up work ethic attitude. You know, we, I've had employees work for me that got a bad attitude, whatever was going on in their life, whatever was going on you know, in their work, they get tired of doing break jobs or whatever.
Cecil Bullard: They just had bad attitudes and the attitude affects productivity. So. If I can help the employee understand that their attitude is not in a good place and we have a good culture in our company, then I can work with them and then they'll be more productive teach them good work habits. So I have this as a manager in a business, I have this vision of this wall that has these bricks and if I am managing you and you're my employee and you're not, you know, producing what you should, you have too high of a comeback rate.
Cecil Bullard: Your attitude is poor. I'm going to look at the bricks and try to determine, you know, do you have a poor attitude because the company's holding you back? Are you not as productive as you need to be because the company is holding you back? Our processes, our systems, or. Is it something that, that you're holding yourself back?
Cecil Bullard: And I would tell you it's probably in the beginning with an employee, you've got a good employee and their productivity starts to go down, et cetera. It's probably 80 percent or 90 percent company breaks and 10 or 20 percent personal breaks. And then over time, if we don't solve the company breaks, then it's maybe 50 percent or 60 percent company breaks.
Cecil Bullard: And 40 or 50 percent employee bricks getting in the way. And what we need to be doing as management is we need to be identifying and removing those bricks. And so, if I if my job as the manager, my job is to make sure that you hit your goals and targets so the company can hit their goals and targets, then I need to be identifying the bricks, and then where I can, where it's my responsibility solving those problems.
Cecil Bullard: Where it's your responsibility, helping you understand how to solve those problems yourself, or helping you identify those problems and in a way, maybe holding you accountable or helping you accept responsibility for your own issues and problems. I think we have a real management crisis. I would also tell you, we have a customer service crisis in this industry and probably in our in the United States, Canada.
Cecil Bullard: But I would also say we have a management kind of crisis because We have a lot of people in management that aren't, they don't have good habits. They're not, you know, finding and removing the bricks on a constant basis. Again, if there's any questions, please ask them. And all right. So that was kind of, that was kind of a preemptor to the three, four, and five, number three, make sure you're using a labor multiplier.
Cecil Bullard: And that labor multiplier is appropriate. Why do we use a labor multiplier? Why am I charging if the book says it's a three hour job? Why am I charging four hours for that job? Well, the book and the labor guides really don't consider the test drive. It's not included the writeup, the paperwork, the time that the tech is now spending in creating the story and saying, this is what happened.
Cecil Bullard: Go back 25 years ago. We didn't have our techs write up what was going on with the car, why it needed what it needed. We basically had you know, in many cases, the technician walking into the service device saying this car needs breaks and here you go and away you go. Now we've got technicians in AutoLeap writing stories out and taking their time and many technicians are not.
Cecil Bullard: Great typers, some of them are not great spellers. So it takes them longer. None of that is considered in the labor guidebooks. The age and condition of the components that's not considered when they're setting labor times, they're working on brand new cars that haven't been sitting around for a long time that haven't had issues that haven't had another technician over tighten bolts or, you know, screw something up.
Cecil Bullard: They're also not considering cleanup time. And I call those. Brown bananas. And so, you know, in the grocery store interestingly enough, the margins are very low and the grocery store has a thing called the loss rate. A loss rate is things that are stolen. And things that spoil things that go bad.
Cecil Bullard: And so my grocery store is going to buy, I don't know, 10, 000 bananas this month, this week, but they're not going to sell 10, 000 bananas because some people are going to grab a banana and eat it as they walk through the grocery store and then throw the peel, you know, in with the milk. Some people are going to steal a banana, put it in their pocket and walk out of the store with it.
Cecil Bullard: And some bananas are going to go brown and go bad where nobody will buy them and end up getting thrown away. And what the grocery store does is they charge a little more for the green bananas so that they can pay for the brown bananas and the leakage the loss rate. Our loss rate, our leakage is in test drives and write ups and the age and condition of the components.
Cecil Bullard: Our Brown bananas are, you know, other texts have screwed things up and now the job is harder than it supposed to be. Ours is in the cleanup. These are our brown bananas. And frankly, customers have to pay for those brown bananas. So we use a labor multiplier or a labor matrix today. And I can also tell you that 20 years ago, we didn't today.
Cecil Bullard: We do most of the shops that we work with. And by the way, when I say most, I would say a hundred percent. But then somebody might go, well, I know Bob and he doesn't, but I'll tell you right now of the hundreds of shops that we work with every one of them unless they're just coming into our program, they don't understand it uses a labor multiplier.
Cecil Bullard: And that multiplier today in most shops is somewhere between 20 and 30%. And I do know that some of my BMW guys are using a higher multiplier because of the way that BMW does their labor guides, but. A minimum of 20 percent and probably to 30 percent on a labor multiplier. If I use a 25 percent labor multiplier and I have three techs doing, you know, 72%, 362.
Cecil Bullard: 9 hours and I multiply that by 1. 25, that's 453. 6 hours. That extra 400 that extra 90. 7 hours at 128 an hour, It's going to generate 11, 610 per month. And by the way, that is likely that's going to add to my labor margin. It will add to my productivity, depending on how I'm defining, I can define productivity by dollars or hours produced and the labor multiplier, if it's an hour and we're now we're charging 1.
Cecil Bullard: 25, if it's six hours and now we're charging, you know, whatever it is. Eight point whatever that's going to add to my profit. And so in a typical shop with three texts doing 72%, number one, you're 72 percent is going to go up. Number two giving you a better labor margin. Number two, you're going to get more money for that job and you're going to put 139, 000 into your gross profit, most of which will probably fall into your Bottom line profit.
Cecil Bullard: And again, if there are any questions, please feel free to ask next find your leakages this goes back kind of to the wall. Where is labor leaking through my shop? And I'm going to talk about a few different areas that we see that are fairly common. Every shop we have has some labor leakage, meaning we don't charge enough.
Cecil Bullard: We don't get enough. Our tech takes longer. Sometimes we don't charge at all. And so here's a few areas. Number one, In your canned jobs. A lot of times we have canned jobs that were put in six years ago, eight years ago, and even though we've raised our labor rates, we have not done any adjustment to our canned jobs.
Cecil Bullard: So, you know, an oil change that used to be 39 average is probably now 89 average because of components and costs of parts, but also because of labor increases and because, and if we have a canned job, that's a, I don't know, 39 oil change. And we've raised the rates everywhere else. Maybe it's time to raise the rate on some of our canned jobs.
Cecil Bullard: And I always tell my clients, if you don't think you can go all the way to 89 between 39 and 89, where do you think you can go? That's that's kind of a management methodology. It's a sales methodology, but it's a, okay, I can't stay at 39. I don't know that I want to go to 89. So I don't know, take it to 49, get another 10.
Cecil Bullard: That's going to increase your margin. And if you're putting that in labor, it's going to increase your productivity and your labor profits. Charging. We do this all the time. I go into shops and I sit down in their office and I read a people magazine or whatever you got, or I'm on my phone, but I'm paying attention and I'm watching and what happens is customer calls.
Cecil Bullard: And says, Hey, I've got a problem with my car. It doesn't run right. Or it's got this, or it's got that. And we go, okay, let's get it in. And that's going to be, I don't know, 140. That's my one hour diagnostic. And if you've got a good salesperson, when the customer comes in or good service advisor, when the customer comes in, they'll ask them, is there anything else that we can do while you're here?
Cecil Bullard: Is there anything else going on besides that one problem? And I'll see a customer say, yeah. You know, I've got this really bad rattle coming from the rear of the car when I go over bumps and tech service advisor, write that down and then yeah, and you know, I've got this weird electrical issue.
Cecil Bullard: My driver's door, sometimes it doesn't roll down automatically. I have to turn the car on and off or I have to jiggle the switch or bang the door, whatever it is, and they'll write that down. And now I've got a technician's got three problems to diagnose in really three different areas. But we never increased the time.
Cecil Bullard: So now I'm giving a technician instead of one potentially, you know, MIO problem and I'm giving them three different problems, but I'm only sending it out for one hour. And so I would be teaching and training the service advisors, how to sell the additional labor to the customer at the time. And in my world crazy as that might be.
Cecil Bullard: If you don't want to pay me to fix the rattle or to find out what it is, then I don't want to fix it. I don't like working for free. I've been doing this so long that, you know, I just, I see this happening and I see this labor leakage and then at the end, the shop's not making the money they need.
Cecil Bullard: So this is an area that I can go in, I can pay more attention to times. I can make sure my service advisors are you know, paying attention to times. My technicians when they had an hour long diagnostic, they had a 45 minute timer. They put on at the end of 45 minutes, they stopped whether they had finished the diagnostic or not.
Cecil Bullard: I told, I taught my techs, tell me what you've done, what tests have you run, what have you found, tell me what additional tests you think you need to run to diagnose the car and and tell me how long you think that's going to take. And then we went to the customer and talked about their car, what we've found, what we've done, the additional tests that we need.
Cecil Bullard: I go to the doctor the other day. And you know, I'm in the doctor's office. I paid my deductible. The doctor gave me a shot in my shoulder. I've got a problem in my shoulder. So, that was another 79 once I paid for what I had to pay for. And then the doctor said, you know what, Cecil? I think we might have a problem with XYZ.
Cecil Bullard: I want to do a blood panel on you because you've got this issue, blah, blah, blah. So, now I'm going. To the lab and now they're going to run blood work and I'm going to pay an additional fee for that blood work. I mean, we just, we're so used to doing it everywhere else. We need to be conscious of that here.
Cecil Bullard: Paying five tenths with no charge for an inspection. I tell my shops, get rid of your oil change, stop changing oil. Stop talking about it that way. Start talking about servicing the car instead of having a, you know, 69, 89 oil change, have 139 you know, service of the vehicle that includes the oil and filter, but also the inspection.
Cecil Bullard: So maybe I'm paying my tech five tens. And right now I'm getting nothing. I don't care if you get another two tenths out of it or another three tenths or another five tenths, get something out of it. And then when you're estimating a lot of times because of your process, the service advisor is the one doing the estimate, but the technician, the one that looked at the car.
Cecil Bullard: So broken bolts, rust cleanup, things like that are not being considered in the time. So make sure that your techs are aware of that. So that they can let your service advisors know. And if that gets you another, I don't know, a few hours. So what if I captured an hour a day per tech? And again, in that same three tech shop, that's 99, 000 a year by capturing an hour a day, because I worked in these five or six areas, five areas.
Cecil Bullard: Just even just doing a little in each area. Produce another hour per tech per day. If I'm willing to do the management and pay the time number five, look at your workflow because this is the thing that holds your techs up for being productive, probably the most and make sure that you have good scheduling, good dispatch and really great estimating process.
Cecil Bullard: You know, how easy, how quickly can I get the, that estimate done properly through and back to my tech in a lot of shops, that's taking two hours and three hours when it really should only be taking 30 or 40 minutes. And it's because in many cases, the service advisor doesn't have the information that the service advisor needs.
Cecil Bullard: So in, again, in my shop our techs gave us four pieces of information because. As a service advisor, I needed those four pieces of information in order to do an estimate, do it quickly and do it accurately. So number one, what does the car need? In other words, here's the problem. See, so, okay. Number two, why does it need that?
Cecil Bullard: Well, here's what, why it's broken and it failed the test. It's out of spec. It's you know, leaking, you know, whatever that is. And I used to tell my people. My service, my, my tax, I used to say, if you could describe it in a paragraph, describe it in a paragraph, but if you can describe it in one sentence, do that instead of a paragraph, and if you could describe it in two words, instead of a a sentence, then do it that way.
Cecil Bullard: So like in my shop, we created standards and we created kind of a shorthand so that my tech could say to me you know, this is a 0 percent on tires. And on brakes, 0 percent means it's time to replace the tires and brakes because they're worn out. You know, we had these this is a leak. Well, a leak is different than a drip.
Cecil Bullard: A drip gets on the ground. A leak is actually leaking, but getting in the belly pan and not reaching the ground. So now I can talk to the client and speak better about it. How much what does the car need? Why, how much time do you think it's going to take? Because. If you're the tech and you look at this thing and you see that somebody else has jacked it up or there's a, you know, it's really rusted or, you know, Oh my gosh, this is an intake on, or excuse me an exhaust manifold on this kind of vehicle.
Cecil Bullard: And man, I don't know how many of these I've taken off where almost every single time one of the bolts is broken. Then let us know that because as a service advisor, I don't know that. And I might just look at the book time and estimate it per the book time. When I need to be considering that there's going to be a broken bolt.
Cecil Bullard: So in your estimating process, make sure that this additional stuff is being told to you by the tech. And then last but not least, what parts do you need that will help us on the getting the parts, getting the right parts, getting the, all the parts you need as a service advisor. So my guys did all of this.
Cecil Bullard: And it only took him a few minutes, but what it did was keep me as a service advisor from walking out in the shop, grabbing that tech away from the job that he's doing, having a five minute conversation or seven or eight minute conversation about what was needed and why it was needed. And, you know, is there something else I need, what parts.
Cecil Bullard: And so it really improved the time that I was spending with the customer, you know, with the estimate. Because I wasn't walking out there to have that conversation. I rarely went out in the shop and we have some service if I say, well, I got to see it before I can sell it. I'm sorry. I personally don't agree with that.
Cecil Bullard: I've seen lots of bad breaks. I've seen lots of oil leaks. I've seen, I don't know, a million tires that were worn out. I've seen, you know, exhaust systems falling apart a thousand times. You know, I've. As a service advisor, having done it for so long, I've seen all this. I don't need to see it again.
Cecil Bullard: If I have a good trust between myself and a good communication between myself and the tech, it will. Create more efficiency, which gives the service advisor more time to spend on the estimate, which gets the estimate out faster, and it also will increase the time for the technician. So if I spend my time here, it's going to reduce time spent later by both of us and improve the workflow.
Cecil Bullard: I get the estimate out faster. The faster I get the estimate out, the more time the tech has to get it done. The more likely they're going to get it done faster, blah, blah, blah, blah, blah, on and on infinitum. So I'm going to work on my workflow. I'm going to improve my estimating process. And it seems really simple and it really is, but in many cases.
Cecil Bullard: We don't have a good estimating process and or process if you're in Canada. And it takes additional time, which is one of the things that's killing the technician's productivity and actually hampering the service advisors productivity. So what if I did that and I improve that workflow and if you had an effective labor rate here's the formula to determine what your hour's worth.
Cecil Bullard: So in a shop that has 128 effective labor rate. It's the formula to understand what your hours worth is. One plus parts over labor. If a 45 percent of what you do is parts and 55 percent is labor, then you're 128 times 1. 82, meaning that your hours were 232 and 96 cents. Every time you sell one, that's what it's worth.
Cecil Bullard: Every time a technician does one, that's what it's worth. Well, what if I improve my workflow process so that now my technician could get more work done? Because the estimates are happening quicker. There's less time spent on, you know, verbal and face to face communication et cetera. And I could put another hour and a half into my day, right?
Cecil Bullard: And so now I take an hour and a half. Now, by the way, if I've got three texts, it's a half an hour of tech. And if I got if I did that 250 days a year that's 87, 000. What if I only got half of that? You know, what if I only recovered 15 minutes a day per tech? Well, that, that would be another 43, 000 in, in my shop.
Cecil Bullard: So in order to really increase your margin, you have to become efficient and productive. And you have to be charging properly and you have to, again, in order to charge properly, you have to learn how to sell properly and build value for your clients, et cetera. Okay, well, what if we put all of it together?
Cecil Bullard: What if we just did a little of everything? And and so we're going to increase our parts margin by 10%. That's going to bring us about 27, 000. I'm going to increase my labor rate by 10 bucks an hour. That's going to bring me 43, 000. I'm going to increase my labor multiplier or use one. If I'm not, that's going to bring me 139, 000.
Cecil Bullard: I'm going to reduce my leakage one hour a day per tech. That's going to bring me 99, almost a hundred thousand dollars. And I'm going to improve my workflow. Just by adding 1. 5 hours a day, by looking at the bricks and getting rid of the bricks. That's going to give me 87, 000. So, and the total there is almost 400, 000.
Cecil Bullard: Well, what if I only got half of that? What if I could only do half of it? And what if I only got half of that to drop to my bottom line? That's a hundred thousand dollars a year. And so sometimes I look at this overwhelming, like, man, I'm working my butt off. I'm not getting the profits I want or need.
Cecil Bullard: You know, this is difficult. The other thing that happens when you clean up these processes and we start tearing the bricks down. Your employees see that their job is easier. They're more fulfilled when they're more fulfilled. They're actually more productive. You know, there are side benefits to doing these things.
Cecil Bullard: And not just the profit that you might make, but it's a happier environment. Now I have money to pay people more than I would have paid them and to motivate them to be even more productive. So anyway, that's. You know, I'm constantly working on tearing down the bricks in the wall. You have to be doing that if your shop is not at 20 percent net, you know, if your goal is a 62 percent or 64 percent gross profit.
Cecil Bullard: With a loaded labor and you're not there, then what are the bricks and how do I take them down. So, we're at, we're close to the end. We got another five, six minutes, Amber, do we have questions? 
Amber Wright: Yeah. So what is the best way to inform a customer that the job is going to take more labor than what the customer approved job for me?
Cecil Bullard: I think number one, don't create the expectation that. You know, my diag is the final thing, you know, when I had, I'm sorry, it sounds like I cut you off, Amber. I didn't mean to do that. No, you're fine. 
Amber Wright: It was just, he was giving an example, but you go. 
Cecil Bullard: Yeah when you know, I'm setting the diagnostic up as a service advisor, every, almost every customer I'm like, you know, by the way, when we get this done sometime at real close to one o'clock, are you available?
Cecil Bullard: I'm going to call you and we're going to talk about it. And if there's anything that we need to do to take care of this problem, then we're going to talk about what that cost is. You know, and I think there are jobs where you should be able to go. This is the price. So, you know, I'm doing a break job.
Cecil Bullard: Gosh, if we can't estimate a break job accurately, and I got to call the guy back and talk about extra money maybe we're just not doing as good a job as we should, but there are other jobs. Like when you get into an EVAP system, you know, I'm going to run these tests and this may not diagnose the whole thing.
Cecil Bullard: I may have to replace a component and then there might be additional efforts. Or when I get into a car, you know, customer calls me on the phone. I know nothing about the car. I've had customers call me and tell me they had a Toyota Corolla and when they came in it wasn't even a Toyota. And they don't even know what they're driving.
Cecil Bullard: And so You know, all we know is that there's a check engine light. I'm not guaranteeing in that hour that I can diagnose and tell you what's wrong with your car. I'm going to run some tests. You know, we, you know, I can tell you that probably 70 percent of the time we can figure it out in an hour. I've got great techs.
Cecil Bullard: I may have to call you to talk about additional testing. You know, if you prep your customer in the beginning, it's much easier. And I, you know, a lot of times we have owners that are nervous or scared to make those calls because they're really not salespeople. And they are so invested and they're really afraid.
Cecil Bullard: I just don't want my customers to hate me. And they're very careful about what they do. I'm sorry, I can't. Yeah. Broken bolt. Well, broken bolts, a broken bolt. You know, I didn't make the car. I didn't drive the car. I did. I didn't buy the car. I didn't get the benefit of it. Why am I paying for broken bolt?
Cecil Bullard: And by the way, if you're a tech, or you're working on cars, occasionally a bolt's gonna break. And if you're blaming the tech for that, now by the way, if I have a tech who keeps breaking bolts, maybe I better teach him how to take out a difficult bolt. But if I have a tech who doesn't normally break bolts, it's not a thing and the bolt breaks, is it our fault, or is it a condition of the vehicle?
Cecil Bullard: And if it's condition of the vehicle, is it my responsibility or is it the owner's responsibility? So I have no problem calling up and saying, you know, while we were doing this, you know, we, there's a bolt that broke coming out. This happens occasionally. I hate to be making this call, but here's what we need in order to take care of that.
Cecil Bullard: And I will tell you the clients that we've worked with that have actually gone back and been able to do that. 9 percent of their clients don't argue about it. They're just like, okay, you know, I go to the dentist. I don't think I have any cavities. When he comes in and says, I have a cavity. I'm like, okay, fix it.
Cecil Bullard: And he goes, digs in and he gets too deep and he goes, Oh, we're going to have a root canal. I don't go, well, wait a minute. It's your fault. I'm like, oh, that's horrible. I hate to pay for a root canal. Okay, you know, take care of it. I think in this industry, we just, we're just so emotionally attached and Just afraid that our customers are going to hate us because we, it wasn't exactly what we said.
Cecil Bullard: I don't know. I've been doing this a long time and I can't tell you how many times I've called customers later and said, Hey, while we were there, we found this. And here's what it's going to take for us to take care of that. And I would just do it without any emotion. I mean, yeah, I feel bad for the customer.
Cecil Bullard: But I don't feel bad for me. I didn't do anything wrong. It's their car. I don't know if that answers that or not. Amber, do you have a couple more? 
Amber Wright: No, no more questions at this time. Just some kind of comments and suggestions on how other people handle that as well, which I love that you guys are engaging in that and helping each other.
Amber Wright: If you guys want to give it another minute we can ask any questions or any last minute thoughts, Cecil, from you. 
Cecil Bullard: I would just say. You know, for management wise, you need to be looking at your business. You have goals and you need to feel like these are the targets I want to hit 20 percent net X percent gross profit.
Cecil Bullard: And I'm going to manage my business and look at that wall and tear those bricks out and get rid of those bricks constantly, because, you know, it's amazing. You can tear the whole wall down. And then, you know, two weeks later, someone's putting another brick or two on the wall. So for me it's manage it.
Cecil Bullard: Manage it. And then I'm also not, I didn't buy the car, I didn't build it, I didn't drive it, I didn't break it. It's not my responsibility. My job is to help the customer understand what they need to do that well, but not perfectly. I don't have perfect techs, I'm not a perfect person, I have never met a perfect person.
Cecil Bullard: You know, there's a few people that come fairly close they're Amber.
Amber Wright: I 
Amber Wright: hope that's me. I see what you did there. I did. Hey, I think you made my day. What are your thoughts on commission based text versus non commission? 
Cecil Bullard: I don't like flat rate. In some states, it really does violate the labor laws today.
Cecil Bullard: I think there's a real black cloud over flat rate today. And if you're paying attention to the blogs and the, you know, the online channels and all of that. There's a lot of texts that are, they've just been used and abused. The problem with flat rate is it puts almost all of the responsibility and all of the risk on the technician shoulders.
Cecil Bullard: The problem with hourly is that it puts all the risk on the business and the technicians have no, no push, no drive. And so I like to build what we call performance enhanced pay plans. I do it all the time, probably four or five a week for our clients which are a combination kind of a blend.
Cecil Bullard: Where there's a reasonable base, probably somewhere 60 to 70 percent of what I can pay for that position. And then there's a bonus structure around performance and education and things that I want from that position. And so my thoughts on, you know, commission only, you know, by the way, I was always a commission guy as a business owner.
Cecil Bullard: I'm. 100 percent of commission guy. My company doesn't make money. I don't survive. But I think today in the marketplace, it's more difficult to get texts that way, and I really think we need to rethink the way we have paid technician service advisors in the past. And really think about a new model for that.
Cecil Bullard: And my model for that is kind of a blended where the technician knows that they're going to make money. If you follow Maslow. You know, Maslow says, if you can't take care of your basic needs, then you can't think about higher function, things, God how to do this better being productive. And so I'm not a giant fan of commission only, although I will tell you, I will also have technicians and owners that will say, wait a minute, I love that because I can go out and do 80 hours and make twice the money.
Cecil Bullard: Okay, great. You should. 
Amber Wright: Love that. One last question. And of course, if you guys want to put up the screen on how people can reach out to you again, while we answer this last one Preston said, I work on classic cars and many clients have purchased their own parts before they find me. They're usually the same parts I would have bought anyway.
Amber Wright: I have taken those jobs in but increased my labor rate to accommodate the lost parts margin. I don't feel like I have the best delivery on explaining why. I'd be curious if you have input on that scenario and explaining it to the client. 
Cecil Bullard: If you reach out to me, I have a whole write up on that. That's one page for clients.
Cecil Bullard: There's three reasons not to do parts that the customer supplies. One is I don't know the provenance of the part. I don't know the quality of the part, the fit of the part. There are 20 percent crappy parts online. And then, you know, there are my, I'm an opinionated guy because I was a tech. And so there are certain places where if you got the part there, I don't feel good about putting it on your car.
Cecil Bullard: So one, one reason is that, and the provenance issue is an issue for me and my liability and my insurance. So, my insurance finds out I'm putting parts on your car that you're supplying. That creates more risk for them. They can raise my rates or cancel me. So they could literally say where that part come from.
Cecil Bullard: And I'm like, well, the customer supplied it. And then they'll say, I'm not taking care of that. And I could have a 12, 000 engine job, go bad. That now I'm responsible for because the second reason is the courts see us as the experts. So if I go to court, whether the customer supplied the part or not, the judge believes I'm the expert.
Cecil Bullard: So I should have known that part was not a good part or not a high quality part or whatever. And so I'm responsible for warranteeing that part, whether or not I made the profit on the part that I want to, or I need to. And then the third reason is. Part of the money I make in this industry and maybe, you know, 20 years from now, that won't be it.
Cecil Bullard: We won't, we'll just give parts away for free, but we'll charge five times the labor. I don't know but today a good portion, 40 percent of my profits or 45 percent of my profits come from parts. And so if I'm taking their parts in and I'm not raising the labor rate high enough, or I'm not financially in a place to even.
Cecil Bullard: Hold up the warranty. So I, you know, there's three great reasons not to do that. And I would literally tell you, show me a restaurant in town that will let you bring your own steak and that will cook it and and take any of the risk at all. Just show me one restaurant and then we'll have a different conversation about parts.
Cecil Bullard: You know, and don't tell me it's my best friend, my buddy who owns a restaurant who I help and I go in now that doesn't count. Just show me a restaurant where it's not your friend, where you could go in, you know, an Outback, a Longhorn Steakhouse, anywhere else where I could take my own steak and they're going to cook it and lower the price of the meal for me.
Cecil Bullard: Show me where that's going to happen. And then we'll have a different conversation on Don't do it. That's my answer. 
Amber Wright: Well said. That's what they said. So, appreciate it guys. We did. I put some key takeaways in the chat. There is a survey, but we will also send it out afterwards. Again, this session was recorded, so you will get access to that following.
Amber Wright: We really appreciate it, Cecil. A lot of compliments, excellent points. Thank you. So, we look forward to having you on our next webinar. 
Cecil Bullard: Can't wait. Thank you very much, Amber. 
Amber Wright: All right. Bye. 
Cecil Bullard: Bye bye.

101 - Collaboration Over Competition: Building Strong Business Partnerships with Shop Owners Tim & Johanna

101 - Collaboration Over Competition: Building Strong Business Partnerships with Shop Owners Tim & Johanna
August 21st, 2024 - 01:02:25
 
Show Summary:
An insightful podcast by Juliana Sih, founder of Crescendo, a Leadership and Life coaching company dedicated to empowering individuals to achieve happiness, financial success, and fulfilling relationships.
In this session, Juliana will guide you through the essential strategies for building and maintaining successful business partnerships as well as discovering how to resolve conflicts with ease, create a unified vision that drives success, and foster trust within your partnerships.
Juliana’s holistic approach, combined with her passion for coaching, will empower you to take actionable steps toward a more harmonious and productive business relationship.
We are excited to feature shop owners Tim Chakarian and Johanna Reichert in a live Q&A segment, where they will share their experiences of working together in the business. They’ll discuss the unique challenges and rewards of navigating a professional and personal partnership, offering practical advice on maintaining a healthy work-life balance.
Key Takeaways:
Effective Conflict Resolution: Master the art of active listening to make conflict resolution straightforward and manageable.
The Importance of Goals and Vision: Learn how to ignite success by crafting clear goals, uniting your team with a shared vision, and implementing effective systems.
Building Trust: Gain strategies to build and strengthen trust within your business partnerships and with employees.
Whether you’re running a business with a spouse or managing partnerships within your company, this podcast will provide you with the tools and insights needed to foster collaboration over competition.
 
Host(s):
Jimmy Lea, VP of Business Development
 
Guest(s):
Juliana Sih, founder of Crescendo
Tim Chakarian and Johanna Reichert, Bimmer PhD Motorsports
 
Episode Highlights:
[00:03:30] - Juliana kicks off with an interactive exercise to uncover each participant’s mindset around leadership, success, and change.
[00:07:10] - Johanna shares how she went from delivering mail to co-owning a thriving BMW repair shop with Tim.
[00:10:53] - Tim confesses how his ego resisted training until one class added $5K to their bank and changed their mindset forever.
[00:13:27] - Johanna reflects on the challenge of finding management training early on and how it's crucial to building a strong shop culture.
[00:17:20] - The couple explains how they bring in their manager as a neutral third party to mediate disagreements and gain new perspectives.
[00:21:27] - Juliana breaks down conflict styles (fight, flight, or freeze) and explains how active listening can de-escalate high-stress situations.
[00:28:13] - Johanna discusses the emotional work behind resolving conflict by owning your part and seeking connection instead of blame.
[00:31:04] - Tim shares how vulnerability and empathy became game-changers for him as a mechanic and business owner.
[00:36:14] - The couple reveals how shared tools like the Actionizer and group coaching keep their goals aligned and growth intentional.
[00:50:20] - Juliana outlines how trust can be broken, and rebuilt, through transparency, consistency, and small, daily promises.
 
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=39WLF6tV6P4
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
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See The Institute's events list: Click Here
Want access to our online classes? Click Here
________________________________________
 
Jimmy Lea: My name is Jimmy Lee. I am with the Institute for Automotive Business Excellence, and we are here to just really make sure that we're working well with our business partners and we're not going to jail, but what does that mean? Well, that means that we really don't want to kill them. No, definitely. We don't want to kill them.
Jimmy Lea: My name is Jimmy Lee. I'm here with the Institute and super excited to have with me today as our panelist, Juliana C. Juliana is a licensed. Marriage, family therapist, and she is a coach. We also have joining us Tim and Johanna from Bimmer's PhD. So, come up on camera, you guys. It's so good to see you.
Jimmy Lea: Glad that you're here with us. Cameras are working. You know, technology is great when it works. And when it doesn't, oh my goodness, does the blood pressure go up? Tim and Johanna, thank you. Good to see you. Good morning. 
Johanna Reichert: Thank you for having us. 
Tim Chakarian: Morning. 
Johanna Reichert: Nice. 
Jimmy Lea: All right. And Juliana. Hey, rock on. And this is Juliana.
Jimmy Lea: See we, she and I have done a few webinars together once upon a time when we were at. Kukui, Julianna and I was at Kukui, Julianna joined for a couple of webinars, as did Tim and Johanna. So, phenomenal. Glad to get the band back together again. And with that, I'm Julianna, you are on for screen share.
Jimmy Lea: So go ahead and if you would to introduce yourself, you're muted at the moment. 
Juliana Sih: Yes. I'm so excited to be here. I'm just going to move a slide. I'm, you know, we're talking today about collaboration over competition, building strong business partnerships. So if you're here, I just want to acknowledge you for being here for taking time out of your busy day to learn something new.
Juliana Sih: There must be some intention for you to want to be. So I just really want to acknowledge you for taking time out of your busy day to be here. So we got quite a bit going on. And I want to quickly introduce myself before we go into that. My name is Juliana. I'm a leadership coach and I'm passionate about this topic because I want to help my clients have better relationships, make more money and be happier.
Juliana Sih: And I do that through the vehicle of coaching. I've been doing this for about five years now, full time. And then I did it as a side hustle for two years before that. Before we get started, I just want to go over some quick housekeeping items. I want you to have a pen and paper available. So if you don't have a pen and paper available, take 10 seconds to go and get a pen and paper.
Juliana Sih: We're going to do a little bit of writing. We're going to do an exercise. This webinar is going to be interactive. My hope is that you get as much as you can out of it, you learn something new about yourself, and you have something strategic and tactical for you to take on today to make your relationships better.
Juliana Sih: If you can keep your video on and keep interacting in the Q and A I would love if you could avoid multitasking. I know it's so easy to be on your window, on your phone at the same time, but I really want you to get the most out of what our webinar today. So please avoid multitasking. At any point, if you have some questions, go ahead and put it into the Q and a box.
Juliana Sih: And Jimmy will kind of lead that portion to get all the questions answered. All right. So we're going to dive right into exercise. I thought initially we had checks, check Chat boxes available. Well, we don't. So I'm going to have you write down on your piece of paper. We're going to go through a quick exercise.
Juliana Sih: It's going to be a fill in the blank. And I want you to write down the first word or phrase that comes to your mind. And it's important that you're honest. And it's absolutely necessary for you to be honest so that we can go in deeper into understanding yourself. All right, ready? We're going to fill in the blank with leadership is.
Juliana Sih: Write down the first word that comes to mind. Leadership is. Success is.
Juliana Sih: Success is.
Juliana Sih: My employees are.
Juliana Sih: My employees are.
Juliana Sih: As a leader, I am.
Juliana Sih: As a leader, I am.
Juliana Sih: Last one is, my relationship to change is. My relationship to change is...
Juliana Sih: so now what I want you to do is I want you to take a quick look at your paper and I want you to underline the word that you want more of. So let's say that what you shared on your paper is leadership is fun. So I want you to underline that word because you want more of that in your life. And then I want you to circle the word that you want to do, improve on. Let's say my, my relationship to change is it's hard and you don't want it to be hard anymore. So I want you to circle that word. And the reason why I had you do this exercise is because this is our frame or context. Our mindset, the way that we view life, our truth tape is the narrative that we say talk about in our head over and over again, that becomes our truth.
Juliana Sih: And what we don't realize is that we have the power to rewrite our truth tapes. So I want you to take a look at the word that you circle, and I want you to start thinking about ways that you can. Rewrite your truth tape because after all the way that we see the world, that is under our control and we can change that narrative to be more empowering and to help us to move forward and be better people.
Juliana Sih: All right, we're going to move into, I'm going to have to go back to Jimmy now so he can. Do a little intro again.
Jimmy Lea: Nice. Nice. So excited for that size. Juliana. Thank you. And I was writing so frantically and I was thinking as you were asking the questions and trying to write it down as fast as I could. That was a good exercise. Joining us today is. Tim and Johanna, they are the owners and the operators of Bimmer's PhD.
Jimmy Lea: So you guys can come up on camera. They they have been working together for quite some time and successfully. I'm sure that there have been moments where Maybe Johanna wanted to fire Tim, and I'm sure there are moments where Tim might have wanted to fire Johanna and that's gonna happen that's gonna happen in any business relationship and even in a Personal relationship.
Johanna Reichert: I don't have control over the video. 
Jimmy Lea: You don't well, let's ask you to start the video. How about that? Perfect. Did that work? , you know, it's great. Technology works . So we got that going. So what's the history here, Tim and Johanna? How is it that you guys came together and started Bimmers PhD?
Jimmy Lea: Where what's the, a little bit of the backstory? Go for it. 
Johanna Reichert: Yeah. Well, Tim was a BMW Master Tech at the dealership. And I was a mail lady, actually. I used to deliver mail. And we got together, and within about, it was right when he was thinking about opening up his own shop, because he was kind of tired of how the dealership treated, A, employees, and B, their customers.
Johanna Reichert: And so he thought, I think I can do a better job at this, and take care of customers better than the dealership can, so. He was apparently looking for a shop when we first started dating and I told him, Hey, that's a worthy idea. Let's go ahead and do it. And so I told him, you focus on the shop. I'll focus on the house.
Johanna Reichert: And he opened up the shop all on his own. He would order parts and close the shop and go pick up parts and come back. And then he would. work on the car and then he closed the shop and go pick up the customer and bring him back and so it was all a one man show all on him and then maybe about six months after we'd gotten together we realized that I could probably work at the shop and I didn't have to work at the post office anymore so I quit my job at the post office and I started working with him in the shop kind of doing the admin and the office work and P& Ls and things along those lines.
Johanna Reichert: I mean I did backup service advising and things along those lines too but that's not My forte. So yeah, I kind of do the back end and Tim ran the shop and was service advising and we've just kind of grown it over the last 15 years. We have a staff of nine right now. So there's Tim and myself and we have a service manager and a backup service advisor.
Johanna Reichert: We have two technicians and one apprentice, two, two, two regular technicians and two apprentice technicians and one porter. 
Jimmy Lea: Wow, that's phenomenal. That's awesome. So, I need to go back here to the beginning again. Here, six months in, Tim's working, the shop, open, close, open, close. You're still dating, is this right?
Jimmy Lea: Yes. And you quit with the post office and came into the shop and you're still dating. At what point did you guys get married? And this was like, this is the real deal, boys. It took about five years. 
Tim Chakarian: From the beginning that we were going to be together, but let me add a little clarifying story.
Tim Chakarian: So we love their bike riding and spending outdoors and going camping together. So still working at the post office and every opportunity she has, she comes in visits, but. A one man show. I mean, like you ever seen the guy that's like doing the drums and the guitar and the harmonica, that was me. So, it was a breath of fresh air when she came to help me, but you know, her very first phone call, she like choked on the phone call and today she teaches how to do phone calls.
Tim Chakarian: So we, we didn't know Jack, Jimmy, we didn't know anything. So I was a, I can figure it out better mindset. from, you know, the 1800 square foot shop and the one lift that there was in the one office that there was. So, anyways, Johanna got her dirt bike riding. She bashed her knees, got some stitches, and so she got to not go to work to the post office.
Tim Chakarian: And I was like, well, why don't you come in and help me out? And that's when we quickly realized, you know, we're great partners, you know, we love each other, but we, there's a little bit of compatibility issues. She's like, you don't know what you're doing when it comes to the office work. And I was egotistical.
Tim Chakarian: Mechanic who said, I know what I'm doing. I've been doing this a long period of time and we quickly figured out if we don't get some help, we're doomed. So, we were, but at that point we're buying parts from WorldPAC. So there was a group meeting. So Johanna said, why don't we go to those, one of these trainings?
Tim Chakarian: And I said, trainings, I know everything. I don't need to go to training. I could probably be the instructor myself. Oh, we went to one of these trainings and quickly realized we don't know jack and we implemented what we thought. All right. If we try this is going to make money. And within our 1st month, we had 5, 000 extra dollars in the bank.
Tim Chakarian: So we quickly learned that. Hey, we got we got to get with somebody that knows how to do this so that we can learn this process because we need more than just to go to this training event. And that's when we started picking up coaching. And I think that's been the biggest game changer for that big gap in the story of how we started as a one man or two man, husband and wife team to hiring somebody that seeing things from a bird's eye view that said, you really should do this.
Tim Chakarian: And being able to understand how we transition our personality to I should do this, even if I don't want to. And in Juliana's words, she put coaching to me is coaching is something doing things that you need to do that you don't want to do. And I think that's the strength that we drive off each other's quickly learning to understood like we don't know this stuff.
Tim Chakarian: So we need to get somebody to train us and hold us accountable. And then from there, we've kind of progressed it to how do we hold each other accountable and not rip each other's heads off because we're not always going to agree that we don't agree. We don't always agree. 
Jimmy Lea: No. Yeah, that's right. Well, and I'll tell you what's interesting.
Jimmy Lea: And Johanna classic situation here that I've seen in the industry, when a husband and wife are working together and the wife sees that there's an opportunity for training the females. are very much. Yes, we need training. Yes, we need coaching. Yes, we need direction. Yes, we need to do this.
Jimmy Lea: And we the men, the egotistical testosterone driven men that think we know everything are the ones that are saying no. I already got this figured out. I'm so glad that you got in there into coaching and training. I'm so glad to see that Training paid off so quickly a 5, 000 bump. You were able to see that immediate which is awesome.
Johanna Reichert: I tricked him. I said, let's go travel. There's a class they can go. We can go take some training and make it fun. So we can do traveling and we can also get some training at the same time. And he's like, That sounds cool. So you got a little bit of everything in at once and that put back. Love it. 
Jimmy Lea: Oh, I love it.
Jimmy Lea: I love it. . Johanna, a question for you in, in getting this coaching and training, I, you know, we you see, oh, how do I ask this question? In the training that you guys received it was mainly focused on the business. Right. At what point did you see a say, okay, now we need to focus on us as a partnership.
Johanna Reichert: That's actually a good question. You want to go for it. So I feel that it's, you know, you can find service advisor training, you can find. technical training for your technicians. It's actually not very easy at least, you know, five years ago, 10 years ago to find management training. You know, how do you become a manager?
Johanna Reichert: How do you work with people? How do you create a good culture in your shop? How do you create a team that loves working for you and that they're loyal to you because they love coming in to work for you? And if another shop offers them a job because they know that you train really good technicians and they want that.
Johanna Reichert: Those people aren't going to be like, oh cool, they're going to offer me more money, like they like working here because you've created a culture and an atmosphere where they get along with everybody else and they want to be there. And I was, I remember thinking like it's hard, you know, it's not easy.
Johanna Reichert: If you don't know how to manage people, how are you going to figure out how to do it? So I just remember feeling like I wish that there was more of that. And I really do feel like within the last three or four years that, that you know, there that's been more. It's come around where it's like, Hey, these people need training.
Johanna Reichert: They need to know what they're doing when it comes to working on their business and not working in their business. And that's been super helpful. And I really am appreciative that has come around. Cause it didn't exist, you know, 10, 15 years ago. I think that's something to add to. 
Tim Chakarian: No, I think that's the bottom line.
Tim Chakarian: It is, you know, getting a good coaching program was the key for us. Once, once we got in with the Institute and we realized what are those process steps that we need to change. That's when the quick results come and the slow results come when. We the owners have to fix us before we can fix the shop, right?
Tim Chakarian: And you know today I can tell you fix the owner fix the shop means so much more to me than in the very beginning It was like are you saying that I'm broken? Yeah. Yeah, I was 
Jimmy Lea: Yes, in fact, we are saying you're broken and but and that's the interesting thing is you don't know what you don't know You didn't know that you were operating broken But it's always 
Johanna Reichert: improvement.
Johanna Reichert: We probably still are. 
Jimmy Lea: Absolutely. That is a nonstop everyday battle and relationship. We choose to be together. We choose to work together. As opposed to allowing some conflict or some problem rip us apart. We choose to work together to overcome all the obstacles, no matter what those obstacles are.
Jimmy Lea: We choose to be together and that's a choice to take. So I have a question for the both of you. When there is conflict in the business, how do you resolve that conflict in the business? 
Tim Chakarian: You ever seen Homer Simpson grab Bart? No, I'm just kidding. 
Johanna Reichert: Should I 
Johanna Reichert: be strangling first? You know, we actually have a good team with our manager, too.
Johanna Reichert: One thing I noticed is when Tim and I do have you know, a difference of opinion we'll pull our manager in and say, Hey, you know, this is what's going on. This is our thought process. We'd like to get like a third opinion and kind of see. What you think. And he's actually pretty good, like, you'd think, oh, he thinks more like one person, or he thinks more like the other person.
Johanna Reichert: He's actually a pretty, pretty good melding of, he's just calm, and he kind of looks at things from different points of view, and sometimes he'll agree with what I say, and sometimes he'll agree with what Tim says. It's never like a, oh, I know if we pull Kevin in, I'm gonna get my way. You know what I mean?
Johanna Reichert: It's he always pulls a fresh perspective in because he's the one, you know, managing the shop. He's the one that's seeing what's going on and the every day to day. And we're, you know, we're in our offices trying to run it and look on the business. So he's more in it. So he offers a fresh perspective.
Johanna Reichert: So if we feel that we can't come to an agreement on something, or we just can't see eye to eye on something, it's, we always like to get a fresh perspective from somebody that we trust and who we also know, you know, has the best interests of the business at heart too. And that helps quite a lot. 
Jimmy Lea: Yeah. Oh, I love that.
Jimmy Lea: That's awesome. That's amazing. 
Tim Chakarian: And in turn, 
Tim Chakarian: what that does is it helps us see it from a different point of view, right? Because I think as what I was going to comment on, that is sometimes husband and wife are like, no, we got to do it my way. There's this like unsaid domestic battle of, I have to win the argument.
Tim Chakarian: In the very beginning, and this is the insight that I would tell you now, how did the manager come into play is the question you're going to ask in the very beginning. It was like bringing this up to our coach, right? Whether it's your business coach or your life coach. Hey, how do you help me deal with this situation?
Tim Chakarian: And they help you utilize those tools in the very beginning. Secondly, you start practicing those tools on each other, but we suck, right? So, and my apprentice technician, how many times I got to remind him, use the magnetic socket, put the extension. Why? Because if you try to put the bolt in with your finger, you're going to fail.
Tim Chakarian: I don't want them to fail just like the coach doesn't want us to fail. So we start muscle memory, those tools and the things that we had, and when it doesn't work with each other. Now that we've got, you know, that we've built ourselves a good culture in the shop where we have the respect of our manager, it's hey, can you help us resolve this?
Tim Chakarian: Or what would be your take on it? Because ultimately we're going to visionary it, right? We're going to process it, right? But who has to do it? Them. So if we have their why or how they see it, it changes our viewpoint as to, okay, well, I definitely want the success of the team. So that's not what I wanted to do.
Tim Chakarian: I thought I was going to win the argument, but for the sake of going home, happy and sleeping in my own bed with my wife. Let's go ahead and do this for the collective of the team, and now that's that little bit of maybe I'm not always right mindset that comes up, whether that's on her part, Kevin's part, it helps level the playing field so that it's win for everybody.
Tim Chakarian: And I think that's the key factor is when you get that leadership maturity, you understand I have to make this win for everybody in order for me to get what I want. And then you will get a fulfillment. It just won't be the expectation that you might've had going into it. 
Jimmy Lea: True. And I love that you have this third party.
Jimmy Lea: Kevin, that is able to come in as your manager, as a sounding board. Have you ever had a situation where Johanna, you had this idea, Tim, you had this idea and here you present them both to Kevin and Kevin's like, well, did you guys even consider this idea? 
Johanna Reichert: Yeah. Yeah, definitely. Oh, yeah! That's the one thing I love about getting the outside perspective.
Johanna Reichert: I mean, we've worked with Giuliana before as well, and sometimes I would talk to her about, like, something that was frustrating me. And she's like, well, what about this? And I was like, huh. Like, I literally Never would have thought of that. Ever. I would have never ever thought of that in a million years. So, that's what I love about talking to people, especially people who are trained to do that kind of stuff.
Johanna Reichert: Juliana's amazing because she's a life coach. We have Jennifer Holbert who is our gear performance group facilitator. If we have, if, you know, if we go to Kevin and maybe Kevin doesn't have the answer that we need or maybe we need a little bit more insight. Jennifer's always a text away, and she's also amazing, especially when it comes to business advice and things along those lines, so we have a good network and it's, you know, always surround yourself with people who are smarter than you, better at your job than you, because, you know, you're always going to be able to network with those people and learn from them and get advice from them.
Johanna Reichert: And sometimes it's literally something you're like, mind blown. I would have never thought of that. I didn't even think it was an option. And yet it's so simple. It's so simple. You just never would have thought of it. 
Jimmy Lea: It's so true. It's so true. It's great to have that coach. That can give you the guidance because that is all also with Julianna and Julianna.
Jimmy Lea: If you're here, this is where Julianna has trained and taught and researched and developed and worked with. She has these skills, these tools to help couples to help business partners to come together. And when there is conflict to work through that. 
Juliana Sih: Yes. Yes. And that's exactly what we're going to be diving into.
Juliana Sih: Some of the things that Tim already shared are going to be things that I'm going to be talking about. So I love that. But conflict is, you know, a clash of interest values or needs between individuals or groups that often result in disagreement, struggle, and tension. And people don't often know how to deal with conflict because it gets really uncomfortable.
Juliana Sih: First of all, you know, we're in a state, a heightened state of fight or flight. Literally the same parts of the brain that are activated when you're being chased by a cheetah are the same parts of the brain that are activated when you're in a conflict. So imagine being chased by a cheetah and trying to talk it through, right?
Juliana Sih: No wonder we say things we don't mean. We say sometimes our ugly self comes out. Or some of us might just freeze and not say nothing. And some of us might actually just like flee the scene, right? Like, I can't talk about this now. I got to go. So we all have a different conflict style. So it's important to identify your conflict style.
Juliana Sih: You know, are you a fight? Are you gonna die on that Hill? Are you a freeze and you just clam up and you're not even listening to the person you're in your head overthinking, or are you like the person that leaves? Figure out what your conflict style is like. I think that's really important. And I'll share a quick yeah.
Juliana Sih: And I'll share a quick story about when I was in college back in the day, I was trying to take this class that I didn't have the prereq for, right. And some of my classmates were getting exceptions and getting exceptions to get into that class. So I emailed my counselor and I was like, Hey, this seems unfair.
Juliana Sih: Why am I not getting into this class? And he sent me an explanation that I needed one or two more classes that they had taken that I didn't. And I was not happy about that. So I emailed his boss and I sent him an email, a not so nice email saying like things, why I felt like entitled to get into that class.
Juliana Sih: And I felt pretty good after I sent the send button, I felt pretty good. I was like, these are good points. He's going to let me into the class. Few days go by. I don't hear anything. Another few days go by. I don't hear anything. And that's when I realized. That's when it dawned on me that I did not handle this conflict well.
Juliana Sih: I was trying to fight and compete against that counselor versus trying to collaborate with him. And that was the day that I learned that, like, it's really important for me to take a step back, not be in my fight or flight mode, in order to resolve something peacefully and in a way that works for both of us.
Juliana Sih: I personally believe that listening is an antidote to conflict. And there's a difference between listening and active listening. Okay. Active. They're just two different things. If you're thinking about the next thing to say, that is not listening. If you are thinking about your to do list while someone else is talking, that is not listening.
Juliana Sih: Active listening is about being intentional, engaged with the other person, fully concentrating on the speaker. You're giving them their full attention. You're working to understand what the other person is saying, and you're also noticing what they're not saying. You're providing feedback, you're engaging with the conversation, you're paraphrasing and summarizing.
Juliana Sih: And you're also paying attention to their body language, eye contact, and showing attentiveness that you're paying attention. One of the fastest way to deescalate a conflict is to move into the mode of active listening and stop being in your head and be with the other person. Active listening is not looking at your phone while someone else is talking.
Juliana Sih: Some other quick effective strategies that Tim already touched on was create a win, right? When you're in a conflict, try to find a solution that is a win for both parties, because then you're not going to be competing against each other. Right. Cause if it's a win lose, someone's going to lose and they're not going to be happy about that.
Juliana Sih: So create a win. Another important thing is to like, learn to manage your emotions because after all, we cannot control other people, but we can control our emotions. So understand your conflict style and start to work to reinvent it, right? Like that true tape, rewrite that true tape agree on the action steps.
Juliana Sih: So you don't leave conflict up in the air agree on the next action steps. And I think the most underutilized thing that sometimes what Tim mentioned about the ego is we forget that we got to be willing to forgive and let go because after all, there is a way to clean up, right? Clean up on aisle seven.
Juliana Sih: We have to be able to clean up if we make a mess. And it couldn't be as simple as, I'm sorry I messed up. What I can own about how it went is this. And I know it's tough because our ego doesn't want to admit that it's wrong. But it, you know, our soul and our heart, we want to reconnect back with the person when we have conflict, we don't want to leave it up in the air, especially not if it's our business partner.
Juliana Sih: And there is almost always something that you can own. There are two sides to the story and you can take ownership for how it went. So I have a little. Practice for y'all to take on. Let's put this into action. Let's practice some active listening. Today, pick someone in your life that you want to practice active listening with.
Juliana Sih: I want you to practice focusing on them, pay attention to them. Notice what they're doing or not doing. I want you to. Be engaged with the conversation, summarize and paraphrase what they're saying. Ask clarifying questions. People say things that don't make sense. They need the other person to ask questions about it.
Juliana Sih: And then notice if they're making eye contact. Notice if they're fidgeting or notice if they feel, look really comfortable. So take on that practice for two weeks and I guarantee you it'll transform the relationships that you have in your life with that active listening skill. All right, back to you, Jimmy and Tim and Johanna.
Jimmy Lea: So, Tim and Johanna, what do you guys do for active listening? How do you resolve conflict between the two of you? What is your active listening? What does that look like for you guys? 
Johanna Reichert: I think it does, it takes a conscientious effort to stop the thoughts that are going on in your head of what am I going to say next to what he's saying right now and just really What's his point of view?
Johanna Reichert: How's he feeling? I'm a pretty empathetic person. So it's actually a little bit easier for me to just kind I always will put myself in the other person's shoes and wonder like, you know, if I was them, how would I feel? And it's usually, you know, not great. And then I don't want to make people feel that way.
Johanna Reichert: So, you know, it's a conscientious effort. You have to kind of stop yourself in your tracks of what you're used to doing. And Like Juliana said, like you just got to be an active listener. You have to, I think one of the big things really with everybody is just what are you going to say next? You know this, what he's telling me that I did this, and this, but I need to defend myself and I need to say, but this is why I did that.
Johanna Reichert: And this is why I did that. And well, you did this, but that doesn't get anybody anywhere. It just creates more conflict. And then you'll find that if you just take a step back and be like, okay, you know, if I did this. If I was him and he did this to me, whatever, if this was done to me, how would I feel?
Johanna Reichert: It's like, okay, you know, I feel pretty crappy. I wouldn't like to feel that way. So, I can see why he feels the way he feels about my actions or lack thereof. And so, it's easier to kind of take a step back, listen to it, and then, you know, once you, I've noticed a lot, it's like, Usually there's two sides to a conflict, obviously, right?
Johanna Reichert: You know, you say something, they say something. It's kind of crappy on both parts, even though one may be a little bit more copable. After you're like, oh, you know what, I didn't mean to make you feel that way, I apologize, I totally see why, what you're, where you're coming from, and I'm gonna make a conscientious effort in the future to think before I act, or think before I speak, and not repeat this action.
Johanna Reichert: And then you'll get I'm sorry too, you know, I shouldn't have said this and I agreed and everybody you feel you both feel connected and you feel the same And it's Gianna said it's a win. So you're not sitting there like it's my fault I feel like crap now because I'm the one that did everything and you were right and I was wrong Because they don't want you to feel that way either you know if you really have a good relationship and a strong relationship, they're gonna be like I love the fact that they admitted they were wrong.
Johanna Reichert: I love the fact that they, you know, said sorry to me. And you know what? I had something to do with this too. What was my part and what can I do to make it better and to also communicate with them that, hey, let's work together so that this all ends up being a win for everybody. 
Jimmy Lea: Oh, yeah, for sure. For sure.
Jimmy Lea: Yeah, being able to take a walk in somebody else's shoes for a mile or 2 or 3 to understand their point of view and their perspective goes a long way. 
Tim Chakarian: That's hard to do for a mechanic to me, because we're always trying to get to the root cause. I'm being honest with you looking at, like. You know, my growth from being the, what do you need, let me fix this right now mechanic to understanding that empathy because I don't have that empathy and that's a quality that I yearn for, but I think the part of it that took a challenge, and I would probably challenge other mechanics and leaders to start with this is start with vulnerability.
Tim Chakarian: You know, and I think changing the conversation, it's easy to say, you made me feel right one, two, but we've got three more of these bullets pointing right back at us, or as you know, I've had to change and go, okay, cool. Well, those conversations that I started with ended with more explosion. Now the conversation is okay.
Tim Chakarian: I listened. I heard what you're saying. And oftentimes, usually you miss a word or two, like right last week. I think it was even earlier this week. She said, Okay. I did that already and in my mindset, I was going to do that because I was pretty sure that she didn't do that and I heard her talking about it.
Tim Chakarian: But I missed that I already word so I found myself doing what she's doing and now we became counter counterproductive So I think the point that I want to drive home is I've had to change and being vulnerable and for leaders Oh my god, we're not vulnerable that shows you're weak and you don't know.
Tim Chakarian: Yeah, I don't know I don't have the answer and that starts with my wife that starts with my manager and it goes all the way down to my Text they come up to me in the middle of a job. I don't have the answer right now Look at work towards it together, but being vulnerable and saying, I'm not sure let's figure it out together gives the other person their ability to kind of just drop their guard and go, okay, cool, we can come back to this and it's organized and set in a time frame versus a fire putter outer, you know, a scenario where you've got something that you're handling that you're not in the correct mind frame for.
Tim Chakarian: Again, we could go down the scheduling path talking about that, but handling that at the right time and making sure that you leave the other person feeling empowered, right? I want to make sure that you feel, when you leave, you feel like I did the best I could to help you with your situation. So you're inclined to come back and ask me for help again.
Tim Chakarian: And that goes all the way down to your clients, your customers, your family members. It works all the way around. And if it wasn't for the people around us that helped you see that with patience, at least with me, I wouldn't be here today. So that's a very good point that I find myself constantly working on and failing on too, but you know, work in progress, 
Tim Chakarian: right?
Johanna Reichert: Failing forward. 
Jimmy Lea: It always is. It always is. And Tim, thank you for being vulnerable in this situation. It's not always easy, man, and I understand that, and I'm with you. I am working actively to develop more empathy, and it's something that I'm working on. Tim, it's great to hear that I'm not alone. I'm glad that you're working on it as well.
Jimmy Lea: Brother, that's awesome. Thank you. So, question for both of you then. Also, I'm going to steer a little bit different direction here. When we talk about the business goals, And your vision of where you want to go. How do you align your business goals to be in line with your vision together as partners?
Jimmy Lea: Because maybe one wants to go another way. One wants to go another way. How do you align your goals to be with your vision together? 
Tim Chakarian: Actionizer. 
Johanna Reichert: Yeah, that's, that helps. And that's the to-do list. Yeah. Right. So I feel that the training that we do it together. You know, very rarely, there was one time when our service advisor, our manager, was out on paternity leave.
Johanna Reichert: And so we didn't really have anybody who could run the shop. So one of our meetings, Tim had to go alone up to Seattle, and I stayed here to kind of help run the shop with the backup service advisor. And that was one of the only times where. He went up and got the training and I didn't and it actually felt really weird for both of us because he was pretty much ahead of the game.
Johanna Reichert: He got all the, you know, in person training and going over everything that we were doing and the things that we were working on in the group. You can definitely feel the difference when you're not together doing it, because when we're together, it's like, okay, you know, you get an assignment, look at your actionizer, what are your goals, what are the things you're working towards, how are you doing on it, and then we both sit down and look at it, and okay, you know, this is what we're working on, have we gotten some headway on this, or what steps do we need to take in order to get there Tim's a little bit more brave when it comes to things than I am, you know, he like, From like five ten years ago, he's been wanting to be a multi shop owner.
Johanna Reichert: And I'm like, oh my gosh, it's hard enough running one shop and being on top of everything with one shop. Why would I want to do it with two or three or four or five? So he kind of sometimes has to drag me with my heels on the ground up into those things. But, you know, I'll come around. But he's kind of the visionary and I'm kind of the one that sits in the back and it's like, well, you know, you gotta think about this rationally and what's going on.
Johanna Reichert: But we corroborate we do it together. So. You know, I help him to not make too rash of decisions when it's not when it's not a good time. And he helps me to kind of make rash decisions when it's the right time. So, we just work together at it. And, you know, I feel that the training and the group effort doing it all together, that really helps to keep us in line.
Johanna Reichert: And then you just have to set the time. And that's really hard. I mean, it's actually something that we find to be difficult. Because you know, you live with each other. You work with each other, you sometimes we drive with each other, sometimes we don't. 'cause you just need that 45 minutes away from each other, every, you know, every day.
Johanna Reichert: So it's like when you get home, do you wanna sit down and work on the goals of the shop? Sometimes it's like, no, I don't wanna talk about the shop. I just want to like cook dinner and or relax for a minute. And he's usually very, we gotta talk about this, we gotta talk about this. So, you know, it's kind of finding a, an even ground.
Johanna Reichert: Finding the time to do it and making sure that you stick to it. He's a little bit better and more consistent with it than I am, but he helps me out, which is once again, it's a good thing because we need, we're opposites and you need somebody to help you out where you're deficient and vice versa. 
Jimmy Lea: Oh, I love that.
Jimmy Lea: That's amazing. That's amazing. 
Tim Chakarian: I don't know how to follow up on that, man? That was all in a nutshell, but it's the groups. I think if I could add one thing. For those that don't know we're in a groups program with the institute and that means you're within 12 other 15 shop owners and we meet and we hold each other accountable and I think that's the key behind it is people look at coaching like, Oh, somebody's going to tell me what to do.
Tim Chakarian: No, I tell this other person, Hey Johanna, I need help with this and can you help me with this? Can we sit down and collaborate with it? So in that group setting, we've learned to use a page that we call the Actionizer and it has goals. For the company and then personal goals and I'll tell you my personal goals are like I had to add categories to the personal goals.
Tim Chakarian: So what that did is when I first seen that it helped get all my ADHD ideas out of my head and on paper and then now we can discuss them and say, is that our goal? Yeah. And on that goal list, this year we hit, we bought our first house. This year we hit, we bought our property of 15 years we've been renting.
Tim Chakarian: So if you put goals in front of you and you work towards that and you talk about it, whether you want to talk about it, whether you don't want to talk about it, it puts the vision in front of you. And I've learned to be more and more process driven, which helps you go, okay. How do we get to where we need to be?
Tim Chakarian: And I think working with Juliana and past before that has been the clutch. Cool. I got an explosion of emotions. I don't like, how do I change that? Well, I changed my relationship with my emotion. I don't like this anger that I feel. How do I change that relationship? I got to either take time away or go.
Tim Chakarian: These are the steps that I'm going to do like we did. And these are the things that I'm not going to do. So when I hit those, I go, damn it, that's that I didn't want to do. Let me go back to what I was doing because I wrote it down. It's real to me. And when you got an accountability partner, I wouldn't be a good partner if I just said, yeah, whatever you want to do, because that doesn't lead to the end goal of.
Tim Chakarian: Doing what's hard right doing what's hard I'm, sure joey i was gonna go back. So i'll just shut up and let her do her deal 
Juliana Sih: No, I think you're hitting the nail on the head tim I mean, it's so important to have goals and to know the direction that you're going especially in business partnerships and I think oftentimes we talk a lot about goals people talk about goals vision values, but they're actually Quite distinct, but they get all moshed up.
Juliana Sih: So a vision is the bigger picture. The thing that you're working towards, it's designed to motivate and guide over an extended period of time. And the vision is also meant to motivate your employees as well. And it could affect how you interact with your customers. Goals are a little bit smaller. They're clear.
Juliana Sih: Clearly defined in focus. There's typically a deadline or a timeframe around it for you to achieve it. And the values is the thing, the guiding principles that you make decisions with and create the goals and vision with. So I'm going to give you, I mean, Tim shared an example of the values of a goal, but I'm going to share a little personal story about when I was in my mid twenties, I started dating this hot nerdy scientist and on paper, he sounded great.
Juliana Sih: He sounded great. Except for the fact that inside, I knew that we didn't really want the same things. We didn't really talk about our goals, right? I was looking more for a monogamous relationship, long term, maybe lead to marriage. At least I wanted that possibility to be in place. And for him, I don't think he knew what he wanted.
Juliana Sih: He didn't know what he wanted. So we never talked about it also. Like sometimes we're too afraid to talk about the things that we want because they might not align with the other person, but I spent five years with this person when I probably should have broken up with them three, you know, after two years.
Juliana Sih: So although the relationship was still great, we, our visions and our values did not align. We were not on the same page about what we wanted. And that, so imagine that in a business partnership. Right. Tim wants five shops. Johanna is like, I'm good with one, but if they didn't communicate about that, then their actions would be different on a daily basis, but they do communicate about that.
Juliana Sih: So that is like the very important piece. So if you're a shop owner, make sure you have a guiding North star that everyone in the company knows, including your employees, make sure you have a target or a goal that is specific. And you want to create these for your employees as well, because that's going to help motivate them.
Juliana Sih: You know, if your employee wants. Let's say they want to manage people and they don't communicate that to you, or you don't know about that. You're never going to put them into a manager position because maybe they're so such a good tech, or let's say your employee wants a raise, but you don't ever specify what they need to do to get that raise.
Juliana Sih: So it's a co creation between the shop owner and the employees to make sure that there's a target that they're working towards that is specific. So that helps to motivate them. So every day that they come in, they're excited and doing their best job. And then you want to make sure that you communicate.
Juliana Sih: And over communicate your goals your vision and your values as well. So the values will help shape how you pursue the goals and uphold the vision. And I think in my relationship, when I didn't have the vision and the goals in place, I wasn't in integrity with my values. Also, I did things that did not withhold, like did not uphold my values.
Juliana Sih: And I tolerated things that were. That were not part of my value. And once you kind of have a vision and goal in place, then you can create some really clear communication protocols, right? Like having those standard operating procedures. It's hard to create standard operating procedures in a business. If you don't have a vision or a goal for the company.
Juliana Sih: So. And this is important when conflict arises, right? Let's say one of your employees is not doing so great, or they had to leave. What are you going to do? You have a protocol in place for that. Figure out the best way to, you need to have communication protocols, such as knowing how you're going to communicate to people.
Juliana Sih: Are you going to email, text them, have a verbal conversation. So all these things can be created when you make your goals and your vision put into place. So I'm going to turn it back to Jimmy and Johanna now for our next section. Oh, go ahead. 
Jimmy Lea: No, this is really good because I have a situation here. I'm going to throw out at Johanna and Tim.
Jimmy Lea: Fictitious. This is fake. This is not real. And, but, and it goes right in with what we're talking about. If Tim was to come home and say, Hey, Johanna, I just bought our second and third shop. Yay! Tim's all excited because it's going after his vision. And if they hadn't had conversations, Johanna's thinking, What in the gitch?
Jimmy Lea: No, right. I mean, that would be a bad situation. So totally fake. I understand Tim and Johanna, what do you do in your relationship that helps with the transparency and transparency? Did I say that right? The transparency with your relationship and to develop trust in that relationship that you're both on the same page.
Jimmy Lea: What do you do 
Jimmy Lea: Meetings? 
Tim Chakarian: Yeah, monthly meetings, but mainly the financial meeting. I think going over, you know, where understanding this money that we moved. Where did it go? Did we end up with profit? How much of it ended up for us? Did that go in the goal set that we had? 
Johanna Reichert: Doing your numbers every month.
Johanna Reichert: Well, I mean, that's step one. You need to be doing your numbers. But there's so many shop owners that don't. Which, I mean, I get it. Most people are like, Hey I'm a mechanic. I know how to work on cars. I think I can do this. And you very well could. But you also need to make sure that you stay on top of things.
Johanna Reichert: And if you're deficient in an area, That's totally fine. Find somebody who's not deficient in that area. So, find a bookkeeper, find an accountant find somebody who's able to handle that part. Because if you go month in, month out, and you literally have no idea how much money you've made, or you have no idea what your margins are.
Johanna Reichert: Yeah. I mean, most people think, Okay, I just I just had this big job. I just sold 3, 000. I have 3, 000 in my pocket. But part of that's sales tax, part of that paid for the parts, part of that paid for your technician, and then, you know, you have rent on your building, and you have electricity, and you have, and it's like, dude, but they think, well, I've got 3, 000 in my bank now, so I'm good for the next week or two you, some, so, there are so many shop owners that do that.
Johanna Reichert: And it's really scary. I can't even imagine running a business like that. It would be nerve wracking constantly. So, not only having a monthly meeting, but to have something to have a monthly meeting about. We do our P& Ls every single month. I try to have them done by the 10th, but the 15th at the latest.
Johanna Reichert: In the groups, they hold us accountable. We have to have our numbers turned in by the 20th. So that we all go over it and we're all on the same page, and if anybody needs help, they reach out to other people and they get help. So that's one thing that, that's key with that. But also, I think just, you know, you if you don't have a trusting relationship, and you know, I, you know, I don't lie to him, and he doesn't lie to me.
Johanna Reichert: You know, I'm not counting white lies. Everybody lies. But, you know what I mean when it comes to the important stuff? You know, you, if you know that the person's gonna tell you what you need to find, what you need to hear Tim's really good at that. So, I think that we have a pretty good Understanding that we don't keep things from each other.
Johanna Reichert: We're on the up and up about things when I make mistakes, I let him know I make mistakes because it's going to be easier to discuss it and be forefront about it than it is to for him to find out and go, did this happen? And it's like gulp. You know, you don't want to be in those kinds of situations.
Johanna Reichert: So I think that we're pretty good at that too. And that's a tremendous help. 
Tim Chakarian: And if you follow that thought to an end, Jimmy, you know, if I come home with three shops, At the end of the year, am I still going to have those three shops? Do I have the commitment of my team and my spouse to be able to progressively accomplish my goal?
Tim Chakarian: Or did I just fly off the handle and, you know, that's the equivalent of you can use another scenario as a Ferrari. Anybody can afford to go out and buy the Ferrari, but are you going to park it on the street in your apartment? You know, what did your mate say? Can you afford the tires and the mate?
Tim Chakarian: Can I afford to follow through on this decision that I made? And do I have the support of my mate? Because If you don't, you know, you're going to have a rudder that goes this way, but you're going to have another jet that goes this way. And then the jet never gets off the ground. You got all these people making decisions, right?
Tim Chakarian: So I think talking about it on a regular basis, having a good financial analysis of is this real, you know, like Joliana talked about the goal, setting smart goals, right? Measurable goals, realistic goals, attainable goals that we can say. a hundred percent, and that's what the actualizer does when we get to our goal.
Tim Chakarian: I put a full green, 100%. I pat myself on the back. I pat her on the back and I say, yeah, I did this. Okay, cool. What's next? And sometimes, believe it or not, it comes up month after month. We still, I still have to fix the lights. The techs are still telling me that now one more light is out, so I'm not perfect, you know, any more than she's perfect.
Tim Chakarian: But just to get lights fixed in a shop, there has to be a plan, there has to be a budget, and these are the things having these constant conversations, putting these small little Processes and steps in front of us not only helps us, but it sets a really good example for our staff because when we're not here, they go, oh, when they weren't here, this is when they were here.
Tim Chakarian: This is what they expected us to do versus oftentimes what I'm talking to other shop owners when the cats away, the mice will play and we don't want that. I want to set a good example. So my staff knows. You know, Kevin's growth spurt is, or Kevin's growth plan is to become the manager and run the shop 100 percent independent of Tim and Johanna.
Tim Chakarian: When that occurs, then, only then, can we put ourselves in a position where we're not part of the hamster wheel and we can now go open a shop 2, 3, whatever the scenario may be. But the collaboration is there and I really want to elaborate on collaboration because this hit me on a drive in one morning, I was listening to John Maxwell book and he was talking about the difference between cooperation and collaboration.
Tim Chakarian: And that you're smiling because we've had this conversation before. Cooperation is everybody does what I want, we're all happy. Collaboration is she doesn't agree with how I want it and now we have to figure out how to make this work for everybody and that is so much easier because everybody laughs when I say this, but you know, as a D mechanic personality, I'm easy to get along with as long as I get my way.
Tim Chakarian: But that doesn't work in the long run. And that's the bottom line is that may be short term, but it's not sustainable. And when you think of a business or when you buy a property, you don't do it for five years. This is a long term infinite game that you're going to plan and do something with this wealth of an empire that you built with your partner, in my case.
Tim Chakarian: And, you know, I wish that for the best. I wish that for other shop owners, it's definitely challenging working with your spouse. But I think the reward of it, like Johanna said, how are you going to find another person that's going to trust you, that you can turn the entire finances of your empire on over with and have them give you a good report.
Tim Chakarian: It's challenging, but when you do, you have this amazing relationship that you run a business, raise kids, raise a family. and still go home to watch the sunset with your mate, you know, and hopefully we'll be in business 50 years and be married 50 years and, you know, be sitting around like the old couples.
Tim Chakarian: And that has a lot to do with the people that got us here, the network, the Institute, Giuliana Jimmy, yourself, and all of the other people that we surrounded ourselves in. So it's a day to day work in progress. And like one coach told me nonstop ever growing improvement. 
Jimmy Lea: Always. And I'm looking forward to those races on the front porch in our rocking chairs.
Tim Chakarian: Amen. 
Jimmy Lea: Amen. We're going to do it. So you talk about cooperation, collaboration, and I totally agree. That's been some long conversations we've had, which is awesome. What about trust, Juliana? If we talk about trust in a relationship, is there a way to build trust? Because maybe relationships don't start with that trust level.
Jimmy Lea: It's all, do what I say, do what I say, do what I say. How can we build trust in relationships? 
Juliana Sih: Absolutely. Absolutely. I think we underestimate that the ability that we have to build trust. So trust is assured reliance on the character ability, strength, or truth of someone or something. I believe you can gift trust, right?
Juliana Sih: It's not necessarily transaction, but it's also conflict complicated. And not only is there trust with others, but there's also trust within yourself. So if. Trust can affect your confidence, your integrity, and how you show up in the world. And often time, trust is kind of complicated too because you don't necessarily know that you broke trust with someone, right?
Juliana Sih: Right? It's like death by a thousand cuts. Sometimes we just don't know. Maybe it seems minor. They got over it and they're like, oh, okay. Like, we're all good now. You know, I'll share a quick story about when I broke trust, not only with myself, but also with my coworkers. This is a little bit embarrassing, but I'm going to share it anyway.
Juliana Sih: So I went on vacation, but I didn't tell my boss. And this was pre pre coaching when I had my own business and I went on vacation without telling my boss. I was naive and I thought I could like work remote and I was going to Burning Man. It was just like a lie that I told myself that I could work at Burning Man cause it was just not going to happen.
Juliana Sih: So I lied to my boss about where I was going and I lied also to myself that I could, would be able to work. And. You know, the first few days were terrible. It was like eating me inside that I had told this lie. Eventually I was able to get out of it. And like, I had fun at the event, but you know, when I had to go into work that Monday or Tuesday, whatever it was, I had my tail between my legs and I knew that I had effed up.
Juliana Sih: And What I had to do was I had to rebuild trust. I had to a, admit to all my mistakes because that was going to help me to trust myself. But B, I had to also do a really good job at my work project managing. I was excellent with my clients. I was a transparent in my communication and I was able to rebuild that because after all, there are a ton of different ways that we can break confidential, like break trust, right?
Juliana Sih: Beach of confidentiality. Someone tells you something in secret and you go tell it to someone else. That breaks trust, or you're dishonest, or you don't follow through on something. Like you say, you're going to do something you don't follow through or you're inconsistent. But just as just as much as it's easy to break trust, it's also just as easy to build trust.
Juliana Sih: And. Building trust can look many different ways. It can be owning up to your mistakes. It can be being consistent, showing up, like saying what you say, you're going to do something and you do it. That's the way that you start to build trust again. Build a positive relationship. Maybe you actually have a conversation around how you want your relationship to look like.
Juliana Sih: Things that I know for sure build trust is transparent communication, openly share information. I love what Tim and Johanna said about they constantly communicate. They're open about it. They're honest. Don't sugarcoat. Don't sugarcoat. You're only lying to yourself or the other person. You only sugarcoat because you're trying to protect yourself.
Juliana Sih: Or the other person and neither of them that really work integrity and consistency or keep your promises. And it can be small promises, but keep your promises a to yourself, right? Because that creates confidence. If you don't keep your promises to yourself, that starts to erode you, you trusting yourself and your abilities.
Juliana Sih: The last thing is just respect and recognition and knowledge. Thank your partner, let them know they're doing a good job. And always address their concerns thoughtfully. So I have a little practice before we all take, another little practice before we all take off. Pick one person in your life that you want to build trust for.
Juliana Sih: And for the next two weeks, you're going to create small promises with them. And you're going to follow through. They could be simple like, Oh honey, I'll email that difficult client. And then go do it. Or, you know, I'll take care of this at the shop and then go do it and then practice being honest, diplomatic and tactful, especially if there's conflict and start to build that trust in two weeks.
Juliana Sih: If you just do these simple things, your transit your relationship will be transformed. And if you're looking for a little bit more transformation, I'm offering all our participants 30 minutes of a complimentary coaching session so we can dive into your partnership and to get a little bit more specific about what you're looking for.
Juliana Sih: Jimmy, I have a closing quote before we go into questions. Should I go into that? 
Jimmy Lea: Yeah. Yeah. Go into your quote, closing quote. But before you do that, you know, I do have a question for you with the QR code, if you want to bring that back up, is this just for married couples or is this also available for business partners?
Juliana Sih: Both. Both. 
Jimmy Lea: Okay. 
Juliana Sih: Or maybe even people that are thinking about getting a business partner. That's a great time to also think about getting a coach is even before you're in a business partner. What do I want in my business partner? What conditions must be met before I even say yes to this person?
Juliana Sih: What do I actually need in a business partner? 
Jimmy Lea: Yeah. Oh, that's extraordinary. Yeah. Oh, that's wonderful. Yeah. Let's go into the quote. And then I do have a question for Tim and Johanna. 
Juliana Sih: All right. Great. I just have a little closing quote from Henry Ford about, you know, coming together as a beginning, keeping together as progress and working together is success.
Jimmy Lea: Oh, I love that. Yeah, let's go for the success for sure. So this question is from the audience Selena Solana says, Hey, Tim and Johanna, did you seek leadership coaching like Julianne offers or did you learn more of it along the way? 
Johanna Reichert: Yeah we definitely went looking for, like I said when I felt that there wasn't really a lot of management kind of coaching or how to be a good leader to deal with your people and kind of understand what they're going through, etc.
Johanna Reichert: We spoke to our personal business coach at the time, and he actually knew Juliana. And he said, I think I, I have somebody who might be able to help you out with that, and he introduced us to Juliana, and we actually did start working with her on that, because I, like I said, I felt like that it was a, an area that was lacking anywhere that I had looked, and so, I do feel that actually has improved more even expanding beyond Juliana it's helpful to get the life coaching that she offers and then also working with different different people.
Johanna Reichert: Groups, they have training groups. They have different things to offer now for management and how to be a good manager. 
Tim Chakarian: Yeah, and I want to elaborate on that. That's different than your business coach, right? Your business coach focuses on you, your process, your business and how to get there. We wanted to focus a little bit more first together, how do we help our relationship and understand that and in our meetings, we discovered.
Tim Chakarian: We kind of have to separate this a little bit. There's a whole different learning that I need that I got to have a little bit of time with Juliana. And I understood, to me, that came really quickly. What do I need to do? How do I do it? How to get it done? And the progress in the beginning was slow. But once I got it, it was like, okay, cool, I ran with that, right?
Tim Chakarian: And then Johanna continued to meet with Juliana a lot more on a weekly basis. And I think that really helped. The point I'm getting at is it helps you individually. This is your life coach to help you focus on things that are you and you only. And hopefully that's in the direction of your partner. And if that aligns with what's going on in your group program or your coaching program, even better, it's like socks and shoes that fit together.
Tim Chakarian: And then you got those awesome laces that just say, I'm Jimmy Lee and I love, I mean, it's just, it becomes a perfect package together. So if you're doing business, if you're not doing business coaching. Get there. If you're doing business coaching and want to try life coaching it's life changing. And I think that's why they call it life coaching.
Tim Chakarian: I've since moved on from it, but I gotta tell you, Juliana, all of the tools and the things that you've taught me, I use, if not day to day, weekly. And some of the ones I don't use often, I remind myself when I step in it to go, Damn, that was that thing I wasn't gonna work on. But, you know, work in progress, right?
Tim Chakarian: It's the whole network behind us from Juliana, from the business coaches to David Cousa to Cecil to Jennifer, everybody, even coaches that are, don't know that they had an impact on us. You know, Aaron Woods, I'm going to call you out on that one. It's the, all of the stuff that the people that you're around that helped you go, this is the little things that you should be working on constantly hearing those.
Tim Chakarian: Helps bring those to fruition. And you look back and you're like, wow, I can't believe we've accomplished so much in 15 years. 
Jimmy Lea: Yeah, that's super cool, man. Thank you for sharing. I appreciate that Juliana you want to bring back up your qr code. I want to give you a big shout out Thank you for all of your time your effort your energy your thoughts and I tim I man I agree with you.
Jimmy Lea: Let's work on us. Let's work on our relationships. Let's work on the business Because that'll get us in the right direction down the right road and have the right vision for getting there So anybody that's watching this Scan the QR code. This will get you on to Juliana's calendar. Pick a time that's convenient for you.
Jimmy Lea: Her calendar is there available for you to have a meeting. And Juliana, thank you for offering this to everybody who's listening. That, that is so powerful. Thank you very much. 
Juliana Sih: Yes. Thank you for having me. 
Tim Chakarian: Listen, take advantage of the 30 minutes. 
Jimmy Lea: The 30 minutes will go very quickly. You'll be surprised at how quick it goes and how much you get out of it.
Jimmy Lea: And you just want more and more. So, thank you. My name is Jimmy Lee with the Institute for Automotive Business Excellence. Thank you to Tim. Thank you, Johanna. Thank you, Juliana. You guys are awesome. We'll see you guys again soon.
 

100 - Next-Gen Success: Opportunities for Young Leaders in the Automotive Industry with Raven Harris

100 - Next-Gen Success: Opportunities for Young Leaders in the Automotive Industry with Raven Harris
August 14th, 2024 - 00:58:27
 
Show Summary:
In this webinar, Raven Harris, a successful Euro shop owner in Simi Valley, California, will share his journey and insights on how the industry is evolving and the vital role young talent plays in its future. We will explore the diverse career paths available, from technicians and managers to aspiring shop owners, and discuss the skills and mindset needed to thrive in these roles.
Key Takeaways:
Attracting & Retaining Young Talent: Understand the importance of attracting young professionals to your shop and the strategies to do so effectively.
Exploring Opportunities: Discover the diverse career paths available for young individuals in the automotive industry, making it an excellent time to enter the field.
Fulfilling Industry Demand: Gain insights on how many shops are actively seeking technicians and the potential this creates for young professionals.
Developing Inexperienced Talent: Explore strategies to attract top talent and develop young, inexperienced individuals into key employees or even future shop owners.
 
Host(s):
Jimmy Lea, VP of Business Development
 
Guest(s):
Raven Harris, German Auto Specialist
 
Episode Highlights:
[00:01:19] - Raven describes his Air Force experience maintaining C-17 aircraft and how it parallels his current role as a shop owner.
[00:04:52] - He shares a late-night repair story that demonstrates his problem-solving mindset under pressure.
[00:08:17] - Raven explains how he rebranded the “oil change” into an “oil service” and doubled his revenue from that service line.
[00:10:03] - He outlines his decision to pursue business acquisition over real estate and how he found his first shop.
[00:13:34] - Raven breaks down the creative financing structure he used to purchase a $1.4M shop with only $70K out-of-pocket.
[00:18:09] - Since working with a coach from The Institute, his ARO jumped from $750 to $1,250, with a goal of hitting $1,500.
[00:21:29] - Raven discusses tracking ARO, AWRO, and close ratios - and how he uses these metrics to drive performance.
[00:26:22] - He shares why European repair shops offer a high-margin opportunity and how brand perception plays into value.
[00:36:45] - Raven talks about mentorship, learning from other multi-shop owners, and using recruiters to find top-tier talent.
[00:52:10] - Despite year-one challenges, from theft to lawsuits, Raven’s resilience and belief in solving problems helped him thrive.
 
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=jSWDNzgsLwg
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: 
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Jimmy Lea: Welcome. Good afternoon, friends. Glad you are here with us as we start this webinar. I'm super excited for our guest today as we talk about that next generation that's going to take over and that next generation of success going to be streaming into our industry, the automotive aftermarket.
Jimmy Lea: Those of you who are here, we're talking about the next generation of success and the success that they are going to have in this industry, the automotive aftermarket. And I'm super excited to be the host for you today. As we talk to specifically Raven Harris is the owner of German auto specialists up in Simi Valley, California.
Jimmy Lea: He is running a phenomenal shop there doing a great job with his technicians, with his his business. And one more shout out here, Raven for Craig Zale joining from Lucas, Texas. Craig, you're awesome. I've been to Craig's shop a couple of times too which is awesome. And I've been to Jeff's shop, which was the old shop.
Jimmy Lea: Jeff's now in a new shop. So Raven, thank you for joining. Glad to have you with us as we're talking about German auto specialists. Thank you so much for being here. Thank you for taking some time to talk to us today. I'm excited to talk to you because of your background.
Jimmy Lea: Yeah, for sure. I'm happy to be here. Thanks for having me on. Hey, you're welcome. You're in the Air Force and you worked on the C 10. 
Raven Harris: C 17 aircraft, correct. 
Jimmy Lea: C 17 aircraft. My father was also in the Air Force, and he worked on the control panel for airplanes. I'm trying to remember which one. The big bomber airplane back in the Vietnam era.
Jimmy Lea: Huh? Maybe a little after the B 52, maybe? That sounds right. That sounds right. Yeah, I have to find out from my dad. I'll get back to you and let you know because you're on the C 17. And what is the C 17? What do you, what did you do? 
Raven Harris: It's like the workhorse cargo jet of the Air Force. So, basically they just send missions, drop packages all over the world and we maintain those.
Jimmy Lea: So this was the big mama jamba, like the size of a football airplane, football field, airplane 
Raven Harris: one smaller than the largest one we have, which is the C five. Right. So you can actually fit a C 17 inside of the C five, but the C 17, the most capable because it's just large enough that it can actually take big missions, but it's just small enough that it's still maneuverable and you can get it around and land on shorter runways.
Jimmy Lea: Nice. That's very cool. When I was in Las Vegas, I had an office very near Nellis Air Force Base. And I would tell you, I would swear to you, there was a C 17 or a big massive cargo type plane that went over the top of our office. You couldn't hear yourself think it was so Loud. 
Raven Harris: Right, right. Yeah. No, those things get crazy.
Jimmy Lea: Yeah, and even the stealth bomber that came over, not the stealth fighter, but the stealth bomber came over our office once. It was past us. The noise came, but phenomenal situation to have happen. Just crazy. So what did you do on the C 10s or are you a mechanic? 
Raven Harris: Yes, actually I was a mechanic in the air force, but the official title is crew chief.
Raven Harris: So basically I'm like a general doctor of the aircraft. So I'll find the problem and I'll call someone else out to fix it. So kind of similar to what I'm doing now. 
Jimmy Lea: Oh, I love it. I love it. I've got a story from my grandfather. He worked in the commercial airlines. He was also a technician. 
Raven Harris: Okay. 
Jimmy Lea: Tell me a story about a situation where you got called in to fix something.
Jimmy Lea: They had spent a day or two trying to fix it. And here you jump in. With your team and have it fixed very, in a very short amount of time. You got any examples like that? 
Raven Harris: Yeah, just a few times. Usually it's going to be engine related problems. So we come across some engine problems when the first team of crew chiefs couldn't come out.
Raven Harris: Then it's in second team, just some. The team is a little bit more specialized and we work with the Jets crew to go ahead and get that knocked out and Jets crew. They're definitely specialize in just engine. So they had called over my team pretty late in the night. We were working night shift and they're probably about 12 hours into the job and they seem to be stuck on this portion of the, the aircraft where the jet the engine is supposed to have the stress reversers where the thrust reversers are going to help stop and break the engine. So basically what it does is it takes the the airflow right and pushes it out towards the back of the engine. But when you're using the thrust reversers going to take that airflow and blow it back towards the front of the plane.
Raven Harris: And that way it actually helps slow down the aircraft. And so the thrust reversers were broken and they were doing 12 hours and they were ready to go home. So we came in second shift and I got ahead, went ahead and knocked it out. 
Jimmy Lea: Nice, nice. My, my grandfather that worked in as a technician on large commercial aircrafts, always as a technician said, people want to underestimate us.
Jimmy Lea: They want to say, Oh, you work with your hands. Oh you're a wrench. Oh, you just turn wrenches. You're not very smart. Well, this is the smartest thing that I have ever heard of. They called him on Christmas day. Jim, we're having a problem. I'm named after grandpa and dad and me and then my son. Jim, we're having a problem.
Jimmy Lea: Can't get this fixed. We've been working on it for a day and a half, but we know you can get it fixed. We just can't get fuel from the tank into the engine. And he says, it's Christmas day. I'm here with my family having a great time. Thank you. I'll be there in a day or two, right? I mean, after Christmas, they said no.
Jimmy Lea: We've got people here. They're in San Francisco. They're on the, they're in the airport. They need to get home. It's their Christmas as well. He says, all right, well, I'll tell you what I, if you guarantee me. Three. Triple pay. Triple pay. Guaranteed. No matter how long it takes me to fix the job or not, I want a full guaranteed full eight hours.
Jimmy Lea: They said yes. He went in, fixed it within 30 minutes, 45 minutes. On his way out, the manager's like, no way no, I'm not going to pay you triple pay for eight hours. You were here for 30 minutes. And somebody from the C suite was coming along and said, you're going to pay him. Thank you very much, Jim. Have Merry Christmas.
Jimmy Lea: Goodbye. Go home. And the plane was able to take off. The families got home technicians. I Large respect for technicians and the ability to make things run and make things work. It's a very specialized skill set and you, thank you for your service. Thank you for what you've done for the Air Force and thank you for.
Jimmy Lea: Keeping us safe and at home. Appreciate that. 
Raven Harris: Well, it's funny. That story reminds me of this lesson. My first coach at the Institute would always tell me is like, you have to understand price versus value. Right. And you'd always give me a similar story about like, he was a lawyer. And there was a train that had I think it was like this carrying potatoes or something like that.
Raven Harris: And the train got stuck and it wasn't able to cross over some certain border. And you know, they were calling all these lawyers trying to figure out how we can get this train across this border. And they called in what was it, they called in the instructor, my lawyer or my instructor, the lawyer, and they asked him how can we get this situation resolved?
Raven Harris: And he's like, all right, well, you're going to have to pay me a certain amount. And so he charged him, like, I think three times his normal rate but he was the only one who could get it done. And so he got it done probably in like just a few hours from a couple phone calls, but he's the only one who had that ability.
Raven Harris: So. You know, there's price and then there's the value. And so the value definitely outweighed the price at that moment. 
Jimmy Lea: So, Oh, that's a beautiful situation now. And I've heard that story may have translated into your business as well. When you started with the Institute, you had an oil change and now it's an oil service.
Jimmy Lea: What can you tell me about that? Yeah. 
Raven Harris: Yeah. That's a great segue actually. So, I was looking for opportunities to be able to increase my ARO. And so, my average ticket price needed to go up. And so I figured if I'm going to raise the average, I need to raise the lowest ticket item that I have in the shop.
Raven Harris: Instead of doing an oil change, I swapped over to what we like to call an oil service where we'll do an oil change, but we've added a few bells and whistles to help the customer just get more longevity out of the old chain. So we'll go ahead and we'll add in some we added this almost like a degreaser that goes inside of the engine and we run it for 15 minutes and it pulls all the oil, all the gunk out.
Raven Harris: And then. After we flush the oil, then we put new oil in and then we run it. And then we'll usually add an additive on top of that. So, instead of just the basic oil change, now we tell them we don't do all changes, we do oil services, right? So it's a full service. You're going to get more mileage out of this oil change.
Raven Harris: And we were able to double the price from one 50 per oil change to 300.
Jimmy Lea: 300. 
Raven Harris: Yep. So that's about our lowest job you can get in the shop, 300, 350, depending on how many tons of oil. 
Jimmy Lea: Dude, congratulations. That's awesome. 
Raven Harris: I know, it's cool. 
Jimmy Lea: That is super cool. Oh, and a shout out to your coach with the Institute. Shout out to Kevin for helping us to understand the difference between value and cost.
Jimmy Lea: You're providing a tremendous amount of value. Oh, I love that. Okay. So let's go back into the beginning. You're in the air force, you get out of the air force, you're getting ready. Get into the automotive industry. What motivated you that direction to get into the automotive? Why not stay in a commercial and in a commercial flights flight mechanic?
Jimmy Lea: Sure. 
Jimmy Lea: Yeah. Well, I'm not sure how well this response is gonna fit with the general mechanic, but me, I was just actually I used to buy real estate while I was in the air force and started buying rental properties. I'm doing the math and I'm like, all right, it's going to take me about 100 houses before I can get financial freedom.
Jimmy Lea: So maybe there's a better opportunity. So I started looking into business acquisition. I'm like, Hey, you know what, I could actually go out there and buy a business. Instead of start one. And so I had this kind of idea in my head and I just started studying up on the process. How can I buy a business?
Jimmy Lea: What type of companies are out there? What's a good business to buy? What are the prices? And after I started teaching myself some evaluation I just told myself, you know what, I could do it. So I moved back home to California where I'm from. I'm living in Los Angeles and I started looking just about an hour and a half radius away from where I'm at in Hollywood.
Jimmy Lea: So, spent some time, took me about, let's say two months to find the business, but it took me another six months to close on it, right. Through negotiations and things like that. But I finally came across a European auto repair shop and kind of checked all the boxes for me. And so I knew that this would be a good opportunity going forward.
Jimmy Lea: I just took a risk on myself. 
Jimmy Lea: Nice. And that's awesome, man. Congratulations for doing real estate while you were still in the service. I, and I agree with you this, buy it versus build it. There's a book. Yeah. Say it again. I didn't build. Yes. I've been reading this book. This is a really good book. My brother turned me onto it.
Jimmy Lea: He's looking at buying this metal fabrication company. And so he's looking at buy it instead of. Build it from the ground up a phenomenal idea. So the get into this concept because here you are just out of the air force. You find a company, it takes you two months to find it. It takes you six months to buy it.
Jimmy Lea: What is the financial
Jimmy Lea: makeup look like for buying a business? What did that look like for you? 
Raven Harris: Well, I knew that I wanted to find a business doing between 500, 000 and a million dollars in EBITDA. And so that's just a fancy financial term for saving profit. And with that I knew that if the company was less than 500, 000 in profit, most likely I couldn't hire a good management team in place.
Raven Harris: And also I wouldn't have enough meat on the bone to just have that barrier of safety. Because in my mind, and from what I've seen, usually in business is that the larger companies are usually safer, right? It's a lot easier to go from 100, 000 to zero than it is to go from a million dollars to zero, right?
Raven Harris: You got some more space in there. So I was looking for a business that had a decade of history that had great reviews. The shop where I had it, when I found it, it was doing about 500 five star reviews. So probably the greatest reviews for any repair shop that I've seen. Ever, right. And so, you know, there was a lot of tells that told me this company was going to be profitable and that it was going to be a good opportunity.
Raven Harris: And so, the business ended up doing about 600, 000 in profit every year. And I paid a 2. 3 X multiple came out to like 1. 4 million total. Okay. Yeah. And I can get into more about like how I broke that down through some creative financing and some different structures, but it's up to you guys. 
Jimmy Lea: Well, yeah.
Jimmy Lea: Cause here you are looking at a company at a business and it's a profitable business and clearly somebody wants to get out, somebody wants to get in and I'm glad that you were able to get in there and you know, and you understand the financial model of what you're looking at so that you're able to get into it.
Jimmy Lea: What does it take to get a loan? For 1. 4 million. 
Raven Harris: Sure. Yeah. So, I guess he's gonna take some creativity and some good credit. I'd say if you got those two things, you could probably make it happen. And so, what I did is I was able to get about a million dollars financed through the SBA. And so, the SBA said, okay, we'll give you a million dollars on this business, but the seller said, I want 1.
Raven Harris: 4. I said, okay, that still fits within my evaluation criteria because I knew that without getting too technical, basically if you pay anything over a three and a half X multiple on payment, right? And so what a multiple is you're going to multiply that EBITDA or that profit by a certain number.
Raven Harris: And so anything over three and a half, what happens is your debt to income ratio becomes too high. And so banks won't loan on those types of businesses. So I knew I needed to buy a business. And well below three, because even three was too high for my threshold. It was like you know, almost like 50, 50.
Raven Harris: Like if I make a hundred thousand, 50 goes back towards debt and 50 goes to me, you know, and I just thought that's not enough breathing room. So I needed to get it way below three. And you know, once he said 1. 4, I knew that was doable. But another thing is the business was making a lot of cash.
Raven Harris: Right. And so because it was making a lot of cash on the taxes, those taxes weren't necessarily reporting all of that cash. And so what I needed to do was I needed some one proof, right, that the cash was there. And so I kind of just did that through some investigative journalism, right, just kind of looking at how busy was the shop.
Raven Harris: What's the card count? What's the average ticket price? And I was able to work backwards from there and say, okay, so this business has definitely done this revenue and their profit margins are definitely this number. So I can say that they have me that cash, even though they didn't report it on their taxes, but the bank said, Hey, we'll only go ahead and loan you on what we can see on the taxes.
Raven Harris: And that was about a three X on 300, 000. So for the other 300, 000. There, which was basically that extra 400, 000 of that 400, 000 back to the seller. So what I told him, what we'll do is I said listen, what we can do is I can set you up with a seller note and I'll pay you that 400, 000 over the next five years.
Raven Harris: And so we broke it down to where in the first year I pay about 40 percent of the note. And then over the last four years, I pay about 15 to 20%. And so. With that, I was also able to get my down payment from the bank because they said, Hey, you need to come in at 10 percent for the SBA. Oh, but now that the seller is holding about 30 percent of the total purchase price as a note, we'll actually lower from 10 percent to five.
Raven Harris: So I was able to buy the business for about 70, 000 out of my own pocket. 
Jimmy Lea: Yeah. I was going to say you're about 70. Yeah. Oh my gosh. That's phenomenal. Congratulations. So when did this all happen? I mean, is this like. Yesterday? Is it last year? Two years ago? Three years ago? How far in are you? Sure, yeah.
Jimmy Lea: So, 
Raven Harris: I guess technically now I'm just over a year and a half. We're right at the year and a half mark. Baby! Last February I got started. So, First year was taking all my lessons, taking them to the chin, and it was a lot to learn, figuring it out. I remember I went to this what was it?
Raven Harris: I went to this event for the parts authority where they send everyone to Cancun. Right. And so it's like a networking event for all the mechanic shops. And if you sell a certain amount of parts, they'll send you. So I went over there and I'm talking to some other guys who own shops and they're telling me like, yeah, you know what?
Raven Harris: I've got like, seven shops. I'm like, how'd you do that? And they're like, Oh, you know what? I got a coach. I was like, really? I was like, wait a minute, like a light bulb moment. I was like, why am I not doing that? I should just go get information for people who already have it. Right. So 
Jimmy Lea: they've been there, they done it.
Jimmy Lea: They've got the t shirt and the scars and the hat. They can show you the direction. Carry on. Okay. Keep going. 
Raven Harris: So that was basically it. I was kind of fumbling around in the dark, figuring things out. Just staying afloat really. But once I realized I should just get coaching and just speed through the rest of the way I just kind of went online and I found you guys and, you know, I saw your podcast and you guys had great information.
Raven Harris: I had auto leap at the time. So, you know, they would always have the podcast with Cecil and then You know, I just went for it and you know, everything my coach told me, I just took action as soon as possible. So he told me something on Monday, it'd be in the shop by Tuesday. 
Jimmy Lea: Dude, dude you're a model student, bro.
Jimmy Lea: That's freaking awesome. You know, I, here I was going to pontificate on Michael Jordan and, you know, Phil Jackson and you know, every professional athlete even has a coach, right. And, but you're the ideal student. So you get with the institute, you get with Kevin's your coach. What have you seen?
Jimmy Lea: What's the results that you have seen that has happened for you and your shop? 
Raven Harris: Sure. Yeah. So, definitely there's been much more order to the process than there was before we've been able to increase our ARO from 750 per ticket to about 1250 per ticket. And some months I get closer to the 13, but the goal is to get to 15.
Raven Harris: So I'm pushing it. And what else are some of the things I think that finding a good team as well, and what that team looks like maybe made everything, you know, night and day difference. So between those few factors pretty much set up at this point. So. 
Jimmy Lea: You know, so what does your team look like right now?
Jimmy Lea: Who is on your team? What does that look like? 
Raven Harris: Yeah. So I've got one lead technician and then three mechanics and one like intern type mechanic. Right. So I'd say, 
Jimmy Lea: is it an apprentice or is it, what's an intern? 
Raven Harris: Yeah, exactly. So, just really some high schooler came by and said he wanted to learn how to do oil changes and inspections.
Raven Harris: And we said, you know, we got a job for you, you know, shut up. Yeah, so it was a good opportunity for both of us because getting those inspections knocked out allows my guys to just kind of focus on, you know, changing parts and the money making opportunities. So, you know, and that's happened a few times that like high school is coming in and out.
Raven Harris: I just wanna learn inspections and oil changes and simple stuff so they could do to their car. So it's been working out. And then I have two service advisors in the front, and then me and I have an assistant. 
Jimmy Lea: And you have an assistant, okay. Yep. So, so your understanding of your financial model.
Jimmy Lea: I, I would say that's pretty well dialed in. What advice would you give others that are looking at their finances? How can they understand it better? What advice would you give them? 
Raven Harris: Sure. Yeah. So, I guess if it comes down to auto repair shop advice or just finances. Which one would you say?
Jimmy Lea: Do the finances first and then we'll go to the other one. 
Raven Harris: Okay. I think it's definitely important to what I did is I got a fractional CFO. Right. And so instead of a bookkeeper I found a chief financial officer and he works on like a billion dollar company. And then my small one, cause he does a part time and sick retired.
Raven Harris: So he's just. Kind of doing me a favor, but you can find people like that all over. They're called fractional CFOs. So it's like having a CFO for your company, but he only works part time, but that's really all you need because auto repair shops are pretty simple. You're doing the same things every week.
Raven Harris: Not too many moving parts. And so once you get set up. Then they could kind of look over your numbers. And what I do is I meet with my CFO every Tuesday and we go through my profit and loss statement and my balance sheet, and we kind of see what's going on in the business. And because I'm able to see it every week, I'm able to keep track of what's going on.
Raven Harris: And so, that's on the kind of the financial side, but on the shop number side, I'll look at you know, the close ratio, the ARO and the AWRO. And so the reason I looked at those numbers the most is because. If I see that the AWRO, right, which is the total ticket price that we give to the customer, that tells me how well are we doing inspections.
Jimmy Lea: Okay. To find that out too. So people understand ARO and ARWO. 
Raven Harris: Yeah. So if you have the air it was an AWRO, right. 
Jimmy Lea: Actual 
Raven Harris: I'm not even sure about the full term. I just know what it means. 
Jimmy Lea: ARO 
Jimmy Lea: is your average repair order. 
Raven Harris: Yeah. The ARO is average repair order. AWRO. I'm not sure. I just know it's the total ticket price.
Jimmy Lea: Average 
Jimmy Lea: written repair order 
Raven Harris: repair order. Yeah. So the average written repair order you just get to say, what did my guys find on the inspection? Right. Yes. How much did they present to the customer? Right. And for my service advisors to sell, right. Yes. So I know that my service advisors have a 50 to 60 percent close ratio, right?
Raven Harris: So what that tells me is that with a 50 to 60 percent close, the more I can present the customer, the more money I can make, right? So I keep that AWRO high, right? I try to get my guys to go for 3, 000 worth of work because they'll close on 50%. Right. Which is 1, 500. And that would put me at the ARO, the average ticket price of 1, 500.
Raven Harris: Right. 
Jimmy Lea: Nice. Nice. I love it. 
Raven Harris: So look at those numbers. 
Jimmy Lea: Oh, I love it. I love it. Now, also, we're talking about things that are necessary or needed on the vehicle, or it's a future item. This isn't selling work just to sell work. This isn't Painting shocks on a Ferrari. This is proper. Your shocks are seeping, weeping.
Jimmy Lea: Here's a picture DVI shows it. So there's a question coming in from Chris, his question about your intern. How do you know if the intern can spot an issue, recommend it, escalate it and move it up to the more experienced techs? How does the, your intern know the problems or issues if he's not a Trained mechanic or trained technician.
Raven Harris: Yeah. So, well, they're always going to get a lot of training before we just let them start looking at cars because that's the, my AWR was zero pretty quick if we just took whatever they found in our beginning. And so, what we'll do is we'll train them up and we use the tech metric. So we go through inspections with the.
Raven Harris: DVI digital vehicle inspection, and I've got a 60 point inspection where I can basically go step by step. They go ahead and they look over every part. And so my lead technician will show them, all right, for the brakes, this is what you're looking at. You're going to measure them with this. You're going to check the calipers.
Raven Harris: They're going to throw on look at the rotors. You're going to look for rust and all these things. So they have all this criteria for each step and they go down. At the end of the day it's really just a checklist that they can follow the checklist and follow orders. They can find problems. So, it's not necessarily that they know how to fix it or even that they know what the problem is, but they can alert us to the fact that, Hey, there's something going on here.
Jimmy Lea: Yes. Oh, I love it. I love it. And also I say that. A technician, an intern and even an apprentice knows when something is worn, torn, frayed or broken, cracked, leaping, leaking, seeping, you can see those things and they just need to understand that when you see this, document it, then the more experienced technician can look at it and say, okay, yeah, that's an issue or okay, that's an issue, but not yet, maybe next visit.
Jimmy Lea: We can take care of that, 
Raven Harris: right? So they kind of bring it to the attention of someone who is more qualified. 
Jimmy Lea: Oh, yeah, absolutely. Absolutely. Okay. All right So let's go now for the young entrepreneur looking to Buy a shop purchase a shop look at a shop. How what advice would you give them in?
Jimmy Lea: Evaluating a shop or a business? 
Raven Harris: Sure. You asked me i'm definitely going to say go euro, right? European is going to be one of the best and the reason why is there's a specific Benefit to this model, right? If you have European and that's it, the margins are higher, right? So you're going to have higher quality customer usually with more expendable funds and more willing to do higher ticket repairs on their car.
Raven Harris: Right. And so what that means is that you're not going to have to fight over, do you have the lowest oil change in the area? Right. Because they are already, what they already have the expectations set by the brand, right? So BMW, Mercedes. Porsche, Ferrari, they already, when they buy the car, they know, hey, this is not going to be an affordable, reliable vehicle to give you from A to Z.
Raven Harris: It's just going to 
Jimmy Lea: It's not a 
Jimmy Lea: grocery getter? 
Raven Harris: Right. I mean, they use it for that. Definitely hundred percent. That's what most of our customers are using it for to pick up the kids in soccer practice. But it's, you know, just the outward representation of themselves. They want to they feel as though they're more of a higher quality individual, you know, they put into their car, they care about it.
Raven Harris: They care about their appearance, how they look, things like that. And so those type of customers, they expect a higher quality service, but that also means a higher price. Yes. 
Jimmy Lea: Yes. So, so you your advice is definitely look European, but even regardless, even if it's Toyota, Lexus or it's all domestic or it's all Asian vehicles or whatever your mix is gonna be.
Jimmy Lea: Your evaluation holds true to all of it. 
Raven Harris: A hundred percent. Definitely. I mean, so usually what you'll see is that you'll see a shop that's the same doing all Japanese cars. They're going to have margins. Closer to 20 percent on the bottom line. So if it's doing a hundred thousand dollars, you'll get 20 grand at the year in your pocket.
Raven Harris: Right. And so, that, that could be definitely still a great opportunity if you buy the business large enough, right. Because you know, a smaller business it's making a hundred thousand, right. And you only get to keep 20. It's not going to be worth your time. You will got to go for something larger, but any business any auto repair shop can do those 20 percent margins.
Raven Harris: That's basically standard, especially if you get the coaching, you know. It's a numbers, right? 20 percent is basically the standard. 
Jimmy Lea: Well, and here's something interesting, Graven, as I go around the country, most shops that I go and visit okay, this isn't that broad of a brush. A lot of shops that I go to, not all of them, a lot of them are in the three to 4 percent net profit, 
Raven Harris: right?
Jimmy Lea: They're alive, they're breathing, they're one hiccup away, one problem away, one lawsuit away from closing the doors because that three and 4 percent net. That's pretty tough. 
Jimmy Lea: Those 
Jimmy Lea: shops that are in coaching that I've been to across the country. Okay. There's been one, one shop I've gone to that did not have coaching at the time, but he did come from coaching.
Jimmy Lea: He was able to implement everything and kept it going. And that's the hard thing, right? To be consistent and can keep it going. He kept it going. So most shops that are in some sort of a coaching training situation are 20 percent plus 20 percent net plus. 
Raven Harris: And I think that's why the opportunity is so big because there's so many shops out there, right?
Raven Harris: With these low margins. And so when you buy a business, you're buying it based off their numbers, right? You're not buying it based off what you can do with it. So you can look at a business and say, Alright, like today, if I wouldn't do a shop based off my time being in the company, I've learned what I should look for when I'm going to buy another shot.
Raven Harris: So I'm actually in the process of buying a second auto repair shop now, another one out in closer to the beach. And so, with that, I know that there's certain criteria that I'm going to look for that even if the business isn't profitable, I can put my management style in place. I can use my numbers.
Raven Harris: I can say I could take What my shop is doing here, and I can duplicate it, copy and paste it onto another location because I already know how the systems ran. So if it's running at three, 4 percent margins, I'll get it up to 20 percent if it's a domestic, and I'll get it up to 30 percent if it's European.
Jimmy Lea: Nice. Congratulations. So I've got a Question coming in from Alex. And I don't know if you're going to be able to answer this question or not the way he's asking. He says, what's the best route in a cost perspective to access information, to diagnose and repair Euro products without purchasing the excessively priced right from the OE with a subscription besides pro demand all data identifics and the advice for him.
Raven Harris: He's trying to figure out how to not use all that. Is that what I'm getting? 
Jimmy Lea: Yeah, he's trying to figure out how to fix euros without getting the euro software. 
Raven Harris: Okay. Well, what I did is I just reached out to another shop owner and I told him let's split the cost of all data. So I still use it, but Oh, nice.
Raven Harris: Because he could have multiple users. So I told him, I think it's like 200 bucks. I sent him 100 bucks a month to get access to that. There's also some other, there's a website for BMWs called new TIS, N E W T I S. It's not even an American platform. I think it's like under a Russian name because BMW keeps shutting it down.
Raven Harris: But you can pay like 50 to get access to that. And it's called like newtist. ru. And you, once you get access it's got basically all the documentation and word data for BMW specific. So it's good stuff. It's got like, exact repair orders and how to remove parts and put them back together.
Raven Harris: It's got part numbers. It's got everything in there. So newtist. ru if you're a Beamer guy. 
Jimmy Lea: Nice nice. So, thanks for talking about that. And Alex has more questions. Maybe you and Alex can connect after or something like that. But back to the shop and your shop that you've got. Are you looking at expanding?
Jimmy Lea: You talked about being able to rubber stamp your 20 percent or 30 percent and take it over to other shops. Where are you at with that? 
Raven Harris: Yeah. So, basically the beginning of this year, I was still figuring out, I was like, okay, what do I want to do forward? You know, I got a management team in place. I go into my shop about once every two weeks, go say what's up to the guys, make sure everything's working order and pick up some cash.
Raven Harris: And, you know, I'm on my way. And so I'm like, you know what, I think I could probably just go ahead and do this again because it's working out for me. So, I started just basically getting back online similar to how I did for my first business. I just went to businessesforsell. com and another website called Axial and reaching out to old brokers that I had been in contact with before.
Raven Harris: And you can find them just through internet searches, you know, and so I give them a call. I tell them what I'm looking for. I'm looking for an auto repair shop in Southern California. I'm looking for it to do over 500, 000 a year in EBITDA or profit. And I wanted to have at least 10 years experience with some good reviews and I would take the rest from there.
Raven Harris: And then they'll usually send me a list of people. I'll reach out. I'll tell the the owners. Hey, I usually do purchase businesses for between two and four X multiple. And would you be interested in selling or be thought about retiring or something like that? 
Jimmy Lea: Interesting. You know, that's a great way is just even to search all the euro shops in your hour and a half radius, walk in and say, Hey, I'm looking to talk to the owner.
Raven Harris: Yeah. And if that doesn't work for you, if you want to move with some speed, you can also write a letter. To all the like five star reviewed euro shops in your area and sign them, right? So you can type out the letters, sign them, and then send them out through the mail. And you can probably send out like a couple hundred letters in a day.
Raven Harris: That'll save you some time from driving. And the close ratio on that is about a four to 5 percent callback. So if you send out 200 letters, you should get about eight calls back. 
Jimmy Lea: Oh, that, that'd be nice. That'd be nice. Yeah, there was a gentleman that I know of in, in California, San Francisco Bay Area, and he kept in touch with a lot of the shops around his area.
Jimmy Lea: Take them to lunch, take them to breakfast, play in the long play, because he wanted to buy their company, wanted to buy their business. And it got to a point where one of them was like, okay, well, that's it I'm done, you know, here's the price. And as they were negotiating the deal, The gentleman passed away, so now he's working with the wife in trying to purchase this business.
Jimmy Lea: This is what we were looking at. This is what we had agreed on. Are you still interested in selling to me? And he was able to get it for a pretty dang good price. And it was the price that the previous owner had agreed on that they came to terms and they were actually able to make a deal.
Jimmy Lea: So, yeah, I love that you're expanding the kingdom, if you will, expanding the walls, expanding your reach and your influence in the industry. That's awesome. Let's make sure that we make something really clear here that we are not propagating theft of information. We're not propagating going around any OEs.
Jimmy Lea: If you're in the Euro business, in the Euro industry, you definitely want to have that proper information, the proper tools. It takes those proper tools. So I've been to quite a few shops that every single line of vehicle has a specialty tool. And so they'll have all the Volvo tools. They'll have all the Saab tools because that's what they work on.
Raven Harris: Yeah. Yeah. That would be crazy. 
Jimmy Lea: In that Euro industry, you've got all the BMW tools, all the Mercedes tools, because they're not the same, right? They are different, right? You've got to make sure you have the right tools to diagnose the right vehicles. 
Raven Harris: Yeah, at the end of the day you're going to be using it so much.
Raven Harris: It's worth the investment. It doesn't make sense to try to get around it. 
Jimmy Lea: Yeah. And make friends with those domestic shops down the street from you, Raven. Cause they might have a Euro card that they ought not be working on and they could bring it to you. Yeah. That's a great way of doing that as well.
Jimmy Lea: That's awesome. Okay. So want to give a shout out to, you have a mentor in the industry. Bob. Tell me about Bob. 
Raven Harris: Yeah. So, actually I came out to to an event. What was it? The marketing event you guys threw 2023. 
Jimmy Lea: Mars, 
Jimmy Lea: the Mars conference. 
Raven Harris: So I was there and we were going over some of the social media portions and while they were doing that I was out in the lobby talking to the owner of wicked file, which is Bob, and he was telling me about his software so wicked file basically allows you to track your invoices for parts, your returns your credits.
Raven Harris: And it puts it all under one platform. So you can actually see what's going on. Okay. Did you get the credit for this part? Was this part returned? What happened when you ordered this part, but it didn't make it onto the RO. It was a part of stolen by an employee. You did it disappear. What happened?
Raven Harris: Right. And so, this kind of, you know, Handles everything from from beginning to end when it comes down to parts. And so I was just asking him a ton of questions, trying to figure it out. And as we talk more, he was just giving me more information, just generally about opening up shops and how to manage it.
Raven Harris: He's got about 10 shops himself. And so, he's the one who kind of gave me the idea to just keep going with getting more shops. Cause one of the issues that I had come across is, Hey, it's hard to find mechanics. I don't know if I want to double down on buying more shops, if I run into some issues.
Raven Harris: So, He let me know that he was doing something similar what I was doing, which is just reaching out through headhunters, and they'll go out and find them for you. You know, you have to pay a little bit of a premium to be able to hire these people to find good employees. But from what I've been able to see, it's definitely been worth it.
Raven Harris: And so I'm not really spending any money, any time to go out and do it, but I just paid him the money and they're usually bringing in really Eight players. And so of the two or three people they bought in, they've been really good in my shop. Start players immediately. So, definitely been worth it.
Raven Harris: And if they're able to do it for one shop, they can definitely do it for more. And so, you know, those few tips that Bob had given me were really helpful. And I ended up getting his number and I still talk to him to this day. And you know, we just kind of chat business and whenever I need some help on wiki file or whatever, he'll pick up and tell me what's going on.
Jimmy Lea: Oh, that's awesome. And I've heard some horror stories where shops have paid shipping on a part two, three, four times because they kept getting an invoice. So they just kept, they would just pay it. And here it adds up a lot and wicked file. What a phenomenal program. What a phenomenal software to help you as a shop owner, make sure that you are.
Jimmy Lea: Charging for the parts. You are getting on the invoice. You are getting on the repair order. Your technicians we trust them that they're the best, but you know, occasionally 
Jimmy Lea: parts go missing. 
Jimmy Lea: We don't want that. 
Raven Harris: Even if you're doing a great job for sure, there's no way you can catch it, like the things that we could fire catches.
Raven Harris: Are like so minuscule that you would have to be have a full time parts person. They would have to be here documents side by side every single document, the statements credits everything would have to be like you'd have to line it all up. No one's doing that I can guarantee it you know there's somebody looking over it.
Raven Harris: But no one's going to be able to catch it like Wicked Fowl can. So it's almost mandatory, I'd say at this point, especially if you're doing over a million. Less than a million you can manage to get a couple losses in parts throughout the year because things slip through the cracks. But over a million, it's definitely something you need to be looking at.
Jimmy Lea: Well, you heard it here from Raven. If you're over a million, you need Wicked Fowl. Their commission's in the mail, the check's in the mail, Raven. Hey, you know what? And I just drew a parallel between something you said earlier and something you just said now, those companies, those businesses that are at a million, there's a lot more runway or there's a lot more ladder to come down before you hit zero versus a hundred thousand to hit zero, same thing with your shops, if you have two, three, four, five, 10, 20, 30 shops, you've got a lot more.
Jimmy Lea: Available to you that you could move a technician here within, if you've got that group, if you've got a solid foundation, and if you're treating your people extremely well, they love you they recruit for you. Now your commissions to those headhunters, while it was absolutely warranted needed necessary in the beginning.
Jimmy Lea: Now your word of mouth is drawing in all those technicians, building the kingdom even further. 
Raven Harris: Came to the same conclusion. You figured it out. It's like, the bigger you go, it's almost like the safer, you know, it seems more risky, but you know, you're looking at it from the wrong perspective, you know, the larger the company, you know, if you have a small shop, right.
Raven Harris: And you are, you're a service advisor and you have two mechanics, right? One day, one of your mechanics calls out sick. 50 percent of your workload just disappeared overnight because your mechanic just called out sick, right? So you can only 50 percent capacity, right? And most likely they weren't even working at 100 percent capacity.
Raven Harris: So now you're like at 20 or 30 percent capacity, right? Because no one's 100 percent efficient all the time. Yeah. That's if you just have one shop, right? But let's say you have a large shop or you have multiple shops. You have one manager, he manages multiple shops and you can move mechanics around, like you said, and you can share information and you can maybe even share tools and parts and get things faster.
Raven Harris: Oh, I have the spare part over here. We can get it to you. Things like that. So, the business gets more efficient and more profitable the larger goes and you actually deter from risk. If you're a larger company versus a small one. 
Jimmy Lea: I love that. I love that. Let's talk about you talk about your mentor.
Jimmy Lea: You talk about your coaches. We also, you have interns, you have apprentices that have now come into your shop. Are you looking at expanding that program? Are you looking at giving back to your apprentices, expanding that program? What does that look like for you 
Raven Harris: currently? I mean, it's definitely something that I've been thinking about trying to get a full program put together, but it's so hit and miss with finding people, especially the younger guys they come in and then they, you know, they want to go back to school or they want to change careers or something like that.
Raven Harris: So, you know, we give them opportunities when they come by, but we haven't been doing the outreach for that so far. 
Jimmy Lea: Nice. You know, there are some apprentice programs that are already established. They're already. for having me. Bye. approved with the federal workforce, even the state of California, to where there are grants you can apply for 50 percent of their pay is paid by the federal workforce.
Jimmy Lea: And then you're covering the other half. There are a lot of programs out there that are already done established. So the groundwork Maybe easier for you than creating it all from scratch. 
Raven Harris: Y'all have to check that out. 
Jimmy Lea: Definitely. I know Napa has one, I know world pack has one. I know ASCCA has one. Are you familiar with ASCCA?
Raven Harris: No.
Jimmy Lea: It's the 
Jimmy Lea: association in California, specifically in California. So I need to connect you with Rocky and David. David Kousa is up in San Francisco area, Rocky is down in Santa Ana area. These guys they have a, it's a phenomenal association for California and it specifically looks after you as a shop owner.
Raven Harris: That's cool. Definitely. 
Jimmy Lea: What opportunities would you see that are available to younger generations? What opportunities are out there? 
Raven Harris: Well, when it comes to shop owning or just just in life? 
Jimmy Lea: All the above talk about life first. And then we can talk about shop owning a shop. 
Raven Harris: Yeah. So, I chose a European auto repair as my first business acquisition, but I just think the time now for buying companies the time is great.
Raven Harris: It's a perfect storm. I'd say there's a lot of baby boomers are looking to retire. And they usually have no succession plan. There's no successor to anyone to take their place once they're gone. And so there's going to be a huge wall transfer of people who either going to shut their doors because they're not going to work anymore.
Raven Harris: They don't have anyone to take over or they're going to be trying to sell. And so either way, that's an opportunity for you to get out there and take over a business that's already. Got decades of experience. It's already been making money and you can go and add some technology, add some hard work, some grit, some new energy to the business and make a good life for yourself.
Raven Harris: So the American dream is still out there if you're looking through acquisition. So I'm a big proponent of acquisition for people of all ages. But if you're young, you know, that should stop you. I was 23 when I found German, I was specialist. 
Jimmy Lea: 23. How old are you now? Raven just turned 26. Happy birthday.
Jimmy Lea: That's awesome. So what does the future look like for you, Raven? We're going to get back on a podcast a year from now, two years from now, three years from now. What is your future? What does that look like for you? 
Raven Harris: Sure. So, right now I'm looking for a couple more auto repair shops. Maybe within the next year I'll have two more would be the goal.
Raven Harris: Maybe two every year for the next five years. After that, I've built up a size where either I will merge with another company that has like five or maybe I will sell it to a private equity company that would basically take my five shops or 10 shops and they'll do the merging for me right with another 10 and they'll move me up where I'll take a small equity position, maybe 30%.
Raven Harris: And then the rest I'll take as cash and then they'll go and roll it up to the next group and I'll get a little cut of this slice of that one as well. That could be one opportunity, but I really do like the industry and I do like owning an auto repair shop. I think it's a great cash flowing business. So another option is I'm actually going to another event, but one of the coaches that I was working with basically told me that I can take a company public if I make a certain amount of money and he basically gave me a book on how to do it.
Raven Harris: So. If I do get to the, let's say 10 shops in the next five years, maybe I keep them all and I take the company public and it trades on the NASDAQ. And you know, I'm able to just borrow against my shares and live off that that income. 
Jimmy Lea: That'd be phenomenal. So you were gonna retire when you are 32 years old?
Raven Harris: Yeah, something like that. Between 30 and 35 . The thing is like knowing me, if I was to have some big payday at the end where I like, I exit for, you know, here some, here's something interesting that I think people would like to know, is that if you go multiple shop it's the growth of the valuation is linear or not non-linear.
Raven Harris: So what happens is. You buy a shop for, you know, let's say two X, two to three X multiple. But you combine it with five other shops, right? And now you're not trading for two to three times profit anymore. You're trading for five to six, right? And if you can get to 5 million in EBITDA per year, you can actually sell that company for eight times, right?
Raven Harris: So for 5 million a year, you can have a 40 million exit. 
Jimmy Lea: I love it. I love it. 
Raven Harris: Numbers just get astronomical after a while. And so if I was able to buy let's say. Five more shops. Right. And then I combined them with a friend of mine who's got three shops and we put it together. We say we're all under one automotive group, right?
Raven Harris: And now we're at 5 million a year in EBITDA. Well, then we sell it to the next guy and we have a 40 million exit. And then I would take that 40 million and go buy 20 more shops. 
Jimmy Lea: Yeah, I love it. I love it. And you know, the Institute, when we merged with Michael Smith, Hertzberg and Smith Institute now has that program where you can take your.
Jimmy Lea: Five shops combined with another, as soon as you have 30 rooftops it's ready. It's prime. It's ready for private equity acquisition. So yeah, we Raven, when you get there, we've got some guys in the. Institute that are looking to get to that 10, looking for the PE and the buyout. We've got other guys that are looking to get to the 50 and the hundred and then take it to PE, which that's of course, then an even bigger payout, a bigger payout day.
Raven Harris: Yeah that's the big one. 50 to 100 is kind of like the 
Jimmy Lea: goal, I'd say. That's a lot of shops. That's awesome. And you can do it, dude. You absolutely can do it for sure. Okay. Talk about Brian Bates and what he did. Yeah we did have you heard about What Michael did with Brian Bates. So, Michael set up a program in the Denver area and these shop owners, they all came together and they got to a point where they had 40 or so rooftops and they were ready to go, they took it to.
Jimmy Lea: P. E. and they got a lot more than the street value. Instead of only getting three to four to five times EBITDA, they're up in the eight to nine times EBITDA. Super successful. They, these guys are continuing to grow. They continue to go. Now that happened a year ago, March. So it's very recent past.
Jimmy Lea: It's very recent history. All right. Well, one last final question here coming in from Alex. His question is about expanding his kingdom. Would you recommend going with a lease and Alex, I want to make sure I say, ask this question, right? I have a successful shop, but I want to expand the footprint.
Jimmy Lea: Would you think lease and start fresh with the same name umbrella or buy an existing to have a foundation in the area of for some expansion? What would your advice be there, Raven? 
Raven Harris: So, the question is what I buy the 
Jimmy Lea: business, change the name, keep the business name, and just continue to expand the business.
Raven Harris: Yeah, so, it really just depends you know, how well is it 
Jimmy Lea: working. 
Raven Harris: For example, my company, I just kept the name because everyone in Simi Valley knows German Auto Specialists. It's been there for a decade and it was passed down between the seller's father before him. So it's just been around for a while.
Raven Harris: People know the name. It's got great reviews. You want to, you don't want to mess with the Google analytics too much, right? So I just kept it. But I think if I was to go and acquire more, what I would probably do is I would. Change the name to gas automotive group, right? So German auto specialist is gas automotive group, right?
Raven Harris: Interesting. Play on words and I think that it still allows me to acquire other shops that may not be German, right? So that'd be one of the things if I was to go and buy a Japanese repair shop. It does make sense to call it German auto specialist, but if I call it you know, gas automotive that, that gives me a little bit more leverage to, to move things around.
Raven Harris: And so I think it really just depends on the situation, how you want to attack the strategy, how you want to acquire. But name is important. If you're just going to buy one business, it's better to probably just to keep the one that's already got the brand recognition. 
Jimmy Lea: Yeah. And if they're close.
Jimmy Lea: It makes sense to switch it out. But I've also heard of shops that kept and they own three shops in town. They're all competitors. People get upset at this shop. So now they're going over here. They get upset at them. So now they're going over here. They don't understand that it's all owned by the same guy, but nevermind.
Jimmy Lea: It's all good. 
Raven Harris: Like I said, it really just depends. There's no, I mean, I've asked the same question. I was trying to figure it out. Does it make sense to have it all under one name, one brand? There's definitely a lot of benefits to it, but like, like we just discussed there's also other strategies you can use by having different names.
Raven Harris: So, 
Jimmy Lea: oh yeah. 
Raven Harris: One thing too, that I do want to mention though, I don't know if we're about to get out there is that, you know, in my first year of running the company, it definitely was a struggle. So I know at this point, it's basically just me. Telling you, you know, it's great. Everything works out. But year one, I was basically working at the shop 12 hours a day, Monday through Friday, and I was doing more work on the weekends.
Raven Harris: Right? So, I signed myself up for that. I knew that it was going to be tough. I knew that I'm not a mechanic by trade on BMWs, Mercedes, you know, I was working on C 17 aircraft. So, the learning curve was huge, right? I didn't know anything about ordering parts. I didn't know anything about being a service advisor, making sales, but I had the determination to learn.
Raven Harris: So, yeah. And I knew that my strong suit was the financial. So as long as I could keep my numbers in order, and I could keep track of that I can basically handle everything else. And so, that only comes through repetition and practice, and really, you know, a lot of self belief that you can get it done.
Raven Harris: But anyone can do it. You know, I didn't you know, I was in college, but I dropped out to come by a business. So it's not that you need a Ivy League degree to get it done. It's just that you need to spend the time. You know, I was listening to podcasts every day. I was you know, getting coaching and things like that.
Raven Harris: And It really wasn't until I found a good team right behind me that allowed me to really step out of the business and instead of working in the business, I'm working on the business now. And so I think that there's a few lessons that I had to learn the hard way for sure throughout year one. It's just one of those things like you're in business like you got to figure it out.
Raven Harris: You know, I've had basically everything they could have went wrong did you know they did. I had an employee who crashed my shuttle van. It got completely totaled. You know, it stepped out. I had to go to a conference and the second I landed on the plane, my employees are calling me like, Oh, we crashed the shuttle van.
Raven Harris: It's gone. So that's 20, 20, 000 out the window. They have never paid me back for it because, you know, the title was held by the bank. And then I had an employee steal from me when I bought the shop. I inherited some drama between the previous owner and his competitor across the street. They were leaving bad reviews on my site.
Raven Harris: I got sued multiple times. I've been in and out of court, let's say three or four times now. Just customers who they thought that they deserved some money or some sort of Some sort of repayment for whatever service you know, that they did, they may or may not have got for me. Haven't lost any in court, thankfully.
Raven Harris: So, you know, I've always been on the right side of you know, those, but, you know, everything that could have happened year one, I've hired an alcoholic who's driving. I had no idea that I found out he was an AA. I had to let him go on the spot. So there's something wrong that could have happened in a business.
Raven Harris: It happened to be all in on year one. So I definitely learned every lesson along the way. And I'm sure there's thousands more. But I say all that to say that every time something like that would happen where I'm like, I couldn't find employees, you know, the revenue dropped in half. I just wasn't figuring it out.
Raven Harris: I just never gave up. And I saw that there was always a way forward. It's like, Hey, you know what? Things are tough, but I know what I need to do. Right? And so what I did is I adopted a mindset that said that problems are your friend. Right? And so what happens is you see every problem as an issue, right?
Raven Harris: Like, Oh, you know what? I can't find good employees. Then you will never get it right. It's always going to be something in the way of, Hey, I just can't find good employees. I can't find anyone to help me. You know, this business model sucks. This and that. And what I ended up doing was saying, Hey, you know what, this is an opportunity if I can figure out how to find good employees.
Raven Harris: My business will beat all of the competitors. Right. So I'm like, wow, what a great opportunity for me now, because I don't see it as a problem. I see it as an opportunity. So like, what a great opportunity for me to go out there and see that you know, there's this huge issue for all shops, right? It's not just not just mine.
Raven Harris: And if I'm the one who can solve it, right, I'm the one guy in the game who actually has the keys, then that puts me ahead of everyone else in the game. And on top of that, yeah. It just makes my life a whole lot easier. And, you know, the, after that, the profits are infinite. So those are all things I had to like learn and figure out along the way.
Raven Harris: If you get a coach sooner, you might have to, you might be able to skip some of that. And if you get a good team, you know, right from the beginning, those are some of the things that you might be able to skip, but I'm glad for my lessons. I just want to throw that out there that you know, it's not that easy, but it can be done and it's definitely worth it.
Jimmy Lea: Oh, dude, that, that's an awesome way to wrap this up. I thank you for adopting the mindset of friendship. You've made friends with your problems and your opportunities. You've adopted the mantra of keep moving forward. I totally agree with that. You can keep moving forward and keep moving through it.
Jimmy Lea: You're going to get there. You're going to make it happen. So dude, you are awesome, Raven. Thank you very much. I look forward to many years of success of your success and opportunities for us to get together again and talk about the next opportunities that have become your friends. 
Raven Harris: Yeah, for sure.
Jimmy Lea: Thank you very much. With that, we're out of here. My name is Jimmy Lee. I'm with the Institute. My good friend, Raven Harris, German Auto Specialists soon to be known as gas automotive. Thank you.
 

99 - Sharpening Your Skills and Staying Ahead of the Curve

99 - Sharpening Your Skills and Staying Ahead of the Curve
July 23rd, 2024 - 00:59:42
 
Show Summary:
In this episode, Gregg Rainville and James Harris from Steer lead a discussion with automotive industry pros and shop owners, including Jimmy Purdy and Jennifer Hulbert. They discuss how to proactively prepare for seasonal slowdowns in the auto repair industry. The conversation explores smart CRM usage, campaign timing, customer retention, and reputation-building strategies that drive long-term success. The panel emphasizes the power of data, the importance of a marketing plan, and how to turn marketing efforts into measurable results. From Google Ads to handwritten postcards, they cover it all, with humor, real-world insights, and a heavy dose of experience.
 
Host(s):
Gregg Rainville, Steer CRM
James Harris, Steer CRM
 
Guest(s):
Jennifer Hulbert, The Institute
Jimmy Purdy, Shift'n Gears Auto Repair
 
Episode Highlights:
[00:05:14] - Jimmy shares how fair season marketing didn’t deliver results and why shop owners should carefully evaluate where their target customers actually are.
[00:07:52] - Jennifer explains how analyzing seasonal trends and planning 60–90 days ahead can help avoid last-minute marketing scrambles.
[00:10:15] - Shops should have a “slow day” action plan ready to go, including quick-launch campaigns and customer communication tools.
[00:12:17] - You can’t out-market poor phone skills. Jimmy and Jennifer stress the importance of phone training for service advisors.
[00:13:11] - Trust-building through DVIs, solid repair work, and personalized follow-up is just as crucial to marketing as paid campaigns.
[00:17:25] - Referrals and reviews still work, if you actually ask. Jennifer shares simple ways to turn happy customers into promoters.
[00:21:53] - Visibility in your community is powerful; from volunteering to gym memberships, Jimmy highlights low-cost ways to grow your network.
[00:25:04] - Many shop owners market to the wrong audience. Defining your ideal customer avatar helps you stop wasting money on ineffective tactics.
[00:29:55] - Retention often outperforms acquisition, Jimmy shifts budget toward existing customers when new car counts dip post-holidays.
[00:34:36] - Use your CRM and tools like Google Analytics or The Institute's dashboard to measure campaign performance and make smarter decisions.
 
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=SldUPs30PsU&t=3s
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: 
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________________________________________
 
Gregg Rainville: To discuss today, sharpening your skill, your skills and staying ahead of the curve for whenever your shop might have slowdown periods throughout the year, which really could be any time of the year. A big thing, what we've done over at STEER is not only our company, but what we've tried to build a platform to really help making data driven decisions.
Gregg Rainville: So being able to look at your data back in 2023 to know what might happen in 2024 now it's just crazy that we're halfway through 2024 looking into 2025 and we should start talking about You know, when are those slow periods? We have back to school. I know after the holidays, things typically slow down for shops, but we have a great panel today to discuss this with the Institute and also Jimmy party from shifting gears.
Gregg Rainville: It'll be a great way where we can discuss you know, what's some shop owners and coaches, what they look at, some strategies you'll also have me and James Harris from STEER here also just to give some insight with some of our. What we've seen in the marketplace quick background on me.
Gregg Rainville: I've been with STEER for over 12 years now have a lot of industry experience. Fun fact, I visited over 200 shops in 2022. It looks like from looking at James's bio, he's got me beat with 400. Over the last year, and I believe James is actually on the road right now in Kansas city, visiting shops.
Gregg Rainville: I'll be out in the market next week, visiting shops for mobile one which I love doing. But personally, I love being out in the fields. I love visiting shops, love talking to shop owners. I do also like going in the STEER platform with some of my friend shop owners and building campaigns and seeing how those campaigns work for the shop doing a B testing.
Gregg Rainville: It's probably one of my most favorite part of the job is actually going into the STEER platform and seeing if I can turn around car count for some of these shops that I work with. Other fun fact about James is he's a great golfer. A lot of people tell me that they're good at golf.
Gregg Rainville: I don't believe them. I actually golf with him a couple of weeks ago at tools and he can drive the ball probably close to 300 yards consistently. So James, I'll give you, I'll give you some props there. 
James Harris: I appreciate that. Appreciate it. 
Gregg Rainville: We're lucky to have James. He's been with us for over a year now. He came from shop where so he does have shop management system experience.
Gregg Rainville: And now he has over a full year of CRM experience and he really helped us with launching the advanced auto parts relationship. And now he's working with me closely on, on mobile one, visiting some different type of shop with quick loops and stuff like that. But again, with me and James, we have a lot of experience visiting shops and really just talking to shop owners and trying to help them overcome some of their struggles.
Gregg Rainville: Next, I'll introduce the panel. We have Jennifer Hulbert here from upstate New York, right? Right, Jennifer? That's correct. Upstate New York. All right. We're covering the whole entire United States with Jimmy being in California. Jennifer has spent her whole entire career in the automotive industry.
Gregg Rainville: So she's got me and James beat there. Definitely. I love that she's into data. I think you're perfect for the panel. The fact that you like. Like looking at data and you like financials and I love that you care about your shops and seeing them succeed. I think that's something that also me and James like to see too.
Gregg Rainville: So welcome to the panel. I'm very excited to see what you have to say about KPIs and some of the things to look at for a shop when doing campaigns and stuff like that. 
Jennifer Hulbert: Thank you. I'm excited to be here and excited to, to get this information out to the public. 
Gregg Rainville: Excellent. And then we got the rockstar Jimmy Purdy.
Jimmy Purdy: I think you're the only one that says that Greg. 
Gregg Rainville: Jimmy has mastered the 3 60 Facebook live and it's going, I think it's going viral amongst other groups. Jimmy, 
Jimmy Purdy: Talk marketing, thats important, you know.
Gregg Rainville: We are, that's right. So we've got a marketing expert in the house. 10 years, 10 years, a technician led to him owning his own shop.
Gregg Rainville: So he's got a lot of experiences, I guess, on both sides of the house. 
Jimmy Purdy: Yeah, the atypical tech term shop owner. 
Gregg Rainville: Perfect. I met Jimmy this past winter out at the Mars conference for the institute. So it was great just actually meeting up with him, talking to him a lot about my experience and then him telling me stories about kind of his experience in the industry.
Gregg Rainville: And then we also had some fun kind of going around Ogden and meeting some local people and seeing what they do for Facebook marketing live at their bars, which was, yeah, which was pretty, pretty interesting, but we are super happy to to have this panel today and kick things off.
Gregg Rainville: All right. Excellent. So, so Jimmy, one of the things I talked to you a couple weeks ago we were talking about things slow down typically towards the end of the summer going into back to school. A lot of my shops to our shops that I see when I look at the data and STEER things slow down after the holiday season.
Gregg Rainville: I don't know if there's like a lot of spending that goes on and then, you know, Consumers typically kind of watch their wallet and sometimes car repairs right now might not be top of mind during that time. But Jimmy, you said something really interesting to me where you're talking about not only back to school, but right now is like fair season, especially where you live.
Gregg Rainville: And I know where I live in Massachusetts, there's a lot of fairs popping up. So. You were talking about doing maybe some campaigns or some marketing around fairs, but then leading into the school season can you tell us a little bit of kind of what that looks like? Some of the strategies and some of the things you're thinking about.
Jimmy Purdy: Yeah, its tough man because it's like, what are the ebbs and the flows?
Jimmy Purdy: What are the highs and the lows? What? I mean, you can put all your eggs in one basket and it works. Then you do it again and it doesn't work. And then you're trying to like find the rhythm and the seasons and I don't think auto repair is Not in california seasonal right and that's like different across the whole country too.
Jimmy Purdy: Like because you have seasonals Like, I don't even know tire, the tire thing was the thing on the east coast, right? Where you like store the tires, you do the tires, like that just blew my mind. I'm like, I'm in California. We don't have snow season. So marketing that way is like, that's, that doesn't work for me.
Jimmy Purdy: Like that wouldn't make any sense. But to your point with like the fair season, that's something that affects everyone across the country because fair season is the same time. Across the whole nation, right? Like it's always the same and the same with road construction. And we're talking about, like, everyone seems want to do road construction at the same damn time across the whole United States.
Jimmy Purdy: Like they all get together. So how do you like market towards that? And how do you anticipate that? Because if I did it today, the fair started four days ago. So if I put a campaign together right now, they're going to do anything for me. So I've got to anticipate that. And then is that even worth the time though?
Jimmy Purdy: Because then we were talking like, well, people come to the fair. Are they even interested in auto repair? And like, are those people that need the auto repair when they go to the fair? Is that your ideal client? Right. And we were talking about trying to find the avatar and like, who exactly is it that we're trying to market it towards?
Jimmy Purdy: Like, is that even something I want to spend my time and energy on? I know a few years back they have a booth at the fair and I wouldn't got a booth for the shop fair. It was like the worst decision I ever made. Like it was a waste of money. I spent all, I mean, other than I can bring a cooler into the fair and we can drink our own beer there.
Jimmy Purdy: That was pretty much the only benefit, but I only think it benefited my friends, you know, cause they're like, Oh, Jimmy's got beer at his booth. We'll go over there and hang out. Right. Like I didn't do anything for the shop. So it was like. I don't think that was the right tactic to go towards, but it's just paying attention to those outside things that are around and how can I capitalize on those situations?
Jimmy Purdy: I think it is the main takeaway, right? 
Jennifer Hulbert: I would absolutely agree with that, and having a plan is the first step. So looking at the data, you mentioned that in my introduction looking at your historical ebbs and flows and highs and lows, and then putting a plan together so you're anticipating those typical slower seasons.
Jennifer Hulbert: Back to school is a perfect example of that. That timeframe can shift across the country. I'm in upstate New York. We don't go back to school until after Labor Day. A lot of Southern states start now or in the next couple of weeks. So pre planning for that in, in months in advance. Also looking at your total marketing.
Jennifer Hulbert: So STEER focuses on. Customer retention marketing. We also are concerned about new customer attraction, but making sure that you have all of those pieces, new customer attraction, retention, and image and branding handled in your marketing plan and have an actual plan with a calendar and a budget is very important as well.
Jennifer Hulbert: Yeah. 
Gregg Rainville: How far out should you be planning? I was gonna, I was going to say, because I have some shops right now that I'm talking to that are scrambling. So they're like, my car count just died. Right? Like, like, they just told me this last week. They're like, what can we do? So I'm sending out some text blasts and I'm trying to do whatever I can to kind of get creative in the month of July to help this shop.
Gregg Rainville: But. What could they have done better kind of planning, just knowing that things slow down maybe for them in July, like, like, like, should they have planned this two months out, three months out? Is there like a magic number of when you should be planning this out or a year out if you're a real good planner?
James Harris: Yeah, that's what I was going to say, Jennifer, on top of that, like, how much of the plan would you say get into place at the beginning of whatever that cycle is? Do you go ahead and look at the whole year or kind of what are you doing there? 
Jennifer Hulbert: Yes. And no, I think more than 30 or 60 days customers aren't going to remember the pieces that you sent to them.
Jennifer Hulbert: And I'm talking about planning for mail pieces typically because the email campaigns, the text message blast can happen pretty instantaneously or within a couple of days. But if you're preparing for something in physical mail that takes months to prepare for, to make sure the print is ready for the date that you want it to go out.
Jennifer Hulbert: Slow times happen unexpectedly. I think in every single market, I am a shop owner as well. And that happens to us. So having a prebuilt like slow day action plan, what can you and your marketing and your staff do to communicate with customers within a couple of days notice? So having just some of those campaigns ready to go out, Would be my recommendation.
Jennifer Hulbert: And then communicating with your marketing team, being someone like STEER and saying, okay, you know, I can contact my rep and in a short period of time, I can have a piece go out for a specific, like an immediate. turn that maybe wasn't expected for. Jimmy, you mentioned road construction. Many people have had complications because of road construction and you can't plan for that.
Jennifer Hulbert: So if your physical road is closed in front of you, how do you communicate how to get to the shop easily and quickly? And again, that relationship with a marketing rep would be very important. 
Jimmy Purdy: Yeah. And making sure you're paying attention to how many new clients you're getting every month versus your growing debt database.
Jimmy Purdy: And that's the one thing I'm struggling with, right? We have a huge. Problem with retention and having a CRM program put in place to constantly be in front of mine is what I struggle with because I hate sending out those text reminders. I hate when someone clicks unsubscribe right to my email that I worked so hard to get in.
Jimmy Purdy: And that's the other point. How many of these emails are you capturing when these people come in? How awkward is that conversation when someone comes to the counter and you're like, Can I get your email? They're like, actually, I don't believe in that stuff. And you're like right. And then so like the next time around, you don't want to ask for the email, but that's all the stuff that builds that client base that helps you when you're slow, you can send out that text or that email blast and be like, Hey, you know, we got some spots available this week.
Jimmy Purdy: If you're looking to get that old change we talked about last month. I mean, that's just been huge in the last year for me to start learning that and like implementing that instead of like constantly going for the new stuff. Like, well, why don't you just pay attention to what's already sitting in the, And the cash register has been huge. 
Gregg Rainville: I'm sorry. I was just going to ask about just like picking up the phone too. Like, Is that worth it to like set aside some time and go through the list and call customers 
Jimmy Purdy: if you like it? 
Gregg Rainville: Yeah. 
Jennifer Hulbert: And if you're good at it, so it, it takes a, the right person to make those calls. So they're not, they sound not scripted or they're not floundering.
Jennifer Hulbert: So yeah. 
Jimmy Purdy: And Jennifer, on that point 
Jimmy Purdy: too, like having like someone like the Institute, take your advisor through their coaching program. And like, learn how to answer the phone. Cause you can do all the marketing in the world, but if you don't have someone that knows how to answer the phone, that's like, what can I do for you?
Jimmy Purdy: Right. Instead of being like, Hey, this is Jimmy with Shifting Gears Auto Repair. How can I help you today? Right. It's like, it just changed. Like you can spend all the money in the world of marketing or retention. It's like, why isn't anybody coming back? It's like, well, cause you suck to deal with. 
Jennifer Hulbert: Well, I think that's a great point, because if the phone isn't answered correctly or the customer's not handled in the proper way, then the customer's not gonna have trust with the shop.
Jennifer Hulbert: And that's why customers stay with typical shops is because of that trust factor. So
Jimmy Purdy: They got no right to trust you. 
Jennifer Hulbert: They do.
Jimmy Purdy: Just like Walker says. 
Jennifer Hulbert: Yes. And that leads to a couple other areas. I mean, you need to do the repairs right the first time. So you need to have the technical staff behind the scenes doing the work correctly.
Jennifer Hulbert: And you need to be able to communicate what the vehicle needs like through a DVI or a vehicle health evaluation with the customer. So those are a couple other pieces that people typically don't think as marketing. But in my opinion, there are. As important as a CRM campaign and reaching out and say, Hey, remember when your vehicle was here and we provided this beautiful report, all kinds of pictures and data about your vehicle, these are the items that you didn't do, but because we developed that trust level with the customer during that DVI and sales presentation, they're more likely to come back because of that trust.
Jennifer Hulbert: And then the reminder from a STEER CRM. 
Jimmy Purdy: And that gives you a better ROI, right? You raise your ARO. That makes gives you a better return on the investment of marketing, right? So if you get them in you do the dvi and you get your pair order up And that makes it more feasible to spend more money on marketing.
Jennifer Hulbert: Absolutely. 
Jimmy Purdy: You have a low ARO, then it's like, well, I'm spending all this money on marketing and I'm not seeing any dollars in my bank account. Trust me. I know I've been there. 
Jennifer Hulbert: I remember the time that you were there. 
Jimmy Purdy: So it helps. And then you start watching the numbers and you're like, Oh, it's all starting to kind of make sense now.
Jimmy Purdy: And then Greg, we talked the, what was it about a week ago about using that money for retention. So how much does it cost you to acquire each one of those clients? Right. And what if you, instead of spending that kind of money. And if you're just going to spend a dime on acquiring new ones, why don't you just give a discount to your existing client base that's already there?
Jimmy Purdy: Because it's going to cost you money either way to get someone in the door. And I was like everybody, I was like everybody else. I didn't believe in marketing. I'm like, nah, if I just do a really good job, then everyone's going to know about it and everybody's going to come to me. I don't need a market.
Jimmy Purdy: Marketing's for the week, right? Like, I was like, I just, I'm just gonna fix the car so good that the world will spread and I'll have to worry about spending a dime in marketing. Right? Like I really believed that and it's like that's so wrong. 
Jennifer Hulbert: No, I absolutely agree with that. And many shops feel that way that they don't need to market and they don't need to get their name out.
Jennifer Hulbert: One of the areas that we haven't talked about yet is reputation. So are you asking for reviews? Are you talking to your customers about that? Are you sending a campaign and saying, hey, if we did a great job, please leave us a review? Are you responding to those reviews and monitoring them and communicating with a customer who may be not be satisfied and rectifying that situation?
Jennifer Hulbert: So I think reputation is as important as well. There's a lot of pieces that go into this. 
Gregg Rainville: Yeah, I was going to mention getting that feedback loop during those slow times might be a really important time to see how your staff might be handling the stress. I know personally for me, you know, coming from a sales background and James, you also have a sales background, you hit the end of the month.
Gregg Rainville: And it's the same thing. It's like, are you near your number? You're not at your number. Like, are you, do you smell desperate when you're actually calling the customer? You don't want your team to do that. And also that, that could trickle over into other parts of the business. But I think to your point, Jennifer, like if you're having that feedback cycle and you're monitoring that closely, and especially during a slow time, I think.
Gregg Rainville: Some things might be exposed that, you know, I didn't appreciate this about the shop or it's like when you, your standard operating procedures kind of get exposed. If there's something that happens by, and then again it's that feedback loop, but I think during these slower times, it's probably a better time to keep an eye on it 
Jimmy Purdy: Not just listen to negative 
Jimmy Purdy: stuff, but the positive stuff too, right?
Jimmy Purdy: The one missing part is the CRM is okay. Maybe you don't want to bother your clients. You don't want to hound them, whatever, but a lot of people are waiting for you to ask them. What they thought, like most people won't tell you unless you ask. But if you ask, they will tell you, right? We've had over 100 Google reviews in the last year just based on asking for a review, right?
Jimmy Purdy: Like just that simple text. Hey, let us know how we did and all of a sudden our reviews grow. And guess what that does to the Google, right? Like my whole thing is to stop paying for Google ads, right? Because it's not sustainable. You know, it's like if you're paying for Google, what's the best patient out there?
Jimmy Purdy: A sick one. Right. So if you're using Google ads and they're getting you business, they go, well, they're going to want you to keep paying for Google ads. So the more organic stuff you can get, the better off you are. Right. And one of the big things is getting reviews, but you can't get the reviews unless you ask.
Jennifer Hulbert: Correct. And the same goes for referrals. So asking a customer to refer a family or a friend can do the same thing. Because again, that existing customer already knows and trusts you and has a relationship with you. So they're going to sing your praises to another new customer that could potentially be yours.
Jimmy Purdy: Maybe not the in laws, but most families, 
Gregg Rainville: do 
Gregg Rainville: you have a process that you coach for asking for referrals? Cause I know this is like, it's almost like the, it's difficult. Sometimes when I talk to shop owners, we're like, I can't ask for emails. Kind of like what Jimmy was talking about earlier of just being like, you know, it sometimes gets awkward, but I see asking for referrals almost being sometimes awkward.
Gregg Rainville: Are there any strategies to help with obviously boosting those new customers through referrals that, that. You could give anyone who's listening today on. 
Jimmy Purdy: That's a good question. I'm listening to this one. 
Gregg Rainville: Yeah. 
Gregg Rainville: I don't know if you have it built in the CRM or if it's just asking. 
Jennifer Hulbert: I think you do both.
Jennifer Hulbert: Any in front of customer requests that you can have, I think is going to be the most impactful. So at my personal shop, we have a little card that we printed up and give to customers who we want feedback from. There are some customers that you don't necessarily want their feedback. Everyone is getting the email as a follow up CRM, but we do give a personal just little note, Hey, if we did a great job, this is how you can leave us a review, and this is where to find us on Google, the same thing for a referral program.
Jennifer Hulbert: So you need to have a process and you mentioned a standard operating procedure. before. Many of this type of items can fall into that. So are you offering an incentive for the customer to refer someone else? Are you offering a discount for the new customer to come in? Are you doing something like cookies or candy or is a thank you enough?
Jennifer Hulbert: So looking at Who you have in your database and who are your best customers. We all know who our top 10 to 12 or 10 to 20 customers are. You could ask them and do a survey. What would be a reward for you to send me a referral? Many people in my experience say just your thanks and just the fact that you do great service and are a part of the community is thanks enough.
Jennifer Hulbert: Some people say, you know, Some small type of discount. So defining what your process is and then following that process. I do think referrals are best if they're asked for in person or something, maybe like a mirror hanger. where the technicians faces. Hey, I'm proud to work on your vehicle. I would be proud to work on a friend or family members vehicle.
Jennifer Hulbert: Here is our referral program and please refer because it means a lot to me so you can really personalize it. And I think that means something to customers. But having that process is And Jimmy knows that we talk about SOPs all of the time in our group process. So I'm a proponent for having a lot of things in writing and documented, and then communicated with the staff.
Jennifer Hulbert: So they know exactly what and how to do that process. And this would fall into them. 
Jimmy Purdy: Yeah. Cause guess what? Six months go by and you're like. Wait a second. What did I put in that lasagna? And you don't remember the recipe, right? How did I get right but on that networking side? So the other thing too for referrals is like joining a bni group or the chamber of commerce or bdg, right?
Jimmy Purdy: Maybe starting a podcast getting a radio show but it can be as simple as like just volunteering at community events Like just getting out there one day spending two hours, right? The volunteers are like they only need you for two or three hours But the amount of contacts that you make and the people you talk to and they're like, oh you want auto shop?
Jimmy Purdy: Right, like I can tell you how many people I went to a local jiu jitsu gym, and I recommend everyone at least do one year of jiu jitsu But the amount of contacts I made there right you're Hello, talking with some other person for an hour, right? You get pretty intimate with them, right? And so they just trust you right away.
Jimmy Purdy: You're like, wow, you're holding my neck and your arms and you're not going to get your beards in my mouth. Yeah. But it's like just doing that. And like, quit going to be like Jimmy Lee and quit going to super cuts. Go get a good haircut. Right. And like make connections at the barber shop, right? Like so simple things that cost you any money.
Jimmy Purdy: That just builds this network. And then these people refer you, right. And like spreads like fire. It's like the next time someone's in that barber chair, they remember you. And they're like, Hey, actually I got a guy that owns a shop. He comes in here once a week or once a month or. If you're Jimmy one, every two hours or however many times he gets his hair done.
Jimmy Purdy: But you get my point, like get out there and like be with the community. 
Jennifer Hulbert: Well, and then communicate that through social media and your marketing programs. So if you're sending out emails and you want to highlight something that you're doing in the community, so your customers know that you are involved and that you're supporting their local community as well, share that.
Jennifer Hulbert: Make that part of your marketing plan because that what we do, we, many of us hold it so tightly to our chest and not communicate it out, share your staff, share your success stories, share your wins share, you know, customers that are coming into you for the first time, getting pictures, you know, if you can get a thumbs up picture in, in front of someone's car, and then communicating that out into all of your marketing platforms. CRM, website, all your social media.
Gregg Rainville: It brings your shop to life almost, right? Like, like people think they know your staff, they know you just because yeah, a lot of people, most people spend what, two, three hours on Facebook a day, you know, and they keep scrolling through, they see your live videos. They see your pictures.
Gregg Rainville: They see your friendly faces. Like, like they, they want to go there and do business. 
Jennifer Hulbert: It makes you a person, so it makes you relatable. 
Jimmy Purdy: If you use it right, like radio has got a pretty bad rap, right? Because everyone wants to do a radio ad and then they expect this huge turnover. And it just doesn't work like that.
Jimmy Purdy: And so like me doing the radio show, I have people coming all the time. And they're like, I just feel like I know you, like I've never met you in my life. Right. Like, and it's like kind of a one sided relationship. They're like, Oh, you went here last weekend. You talked about, and that's what I do. I don't just make it all about the business.
Jimmy Purdy: I talk about what we did last week. And I talk about what we did last week and like, and just make it personal. And so they get to trust me, know me as a person. And I think that's kind of missed. And I think a lot of the big influencers, especially in the social media, that's what they do. They make it about them and not necessarily all about what they do.
Jimmy Purdy: Like educational content is great, but you're marketing to the technician. That knows how to fix his car. He's not gonna come to your shop . Right. 
Jennifer Hulbert: Yeah. Your radio show is marketing to that . 
Jimmy Purdy: Yeah. The radio. Yeah. I mean, it's a call in so they can call in if they've got problems with their vehicles, but I really try to make it more kind of layman's and kind of simple.
Jimmy Purdy: The podcast is really based on, you know, industry professionals and that's not really to market, you know, new clients to the shop. But I guess my point is I watch a lot of social media influencers and some of it's very. like educational technical content where I enjoy it. But I'm like, I'm probably not going to go to that shop.
Jimmy Purdy: Like that's not going to build my client list, but it feels like it's the right thing to do. Does that make sense? Like it's one of the big problems I have for a long time is creating content and marketing to other technicians and marketing to other like shop owners. Like, well, this isn't making any sense.
Jimmy Purdy: So who do I need to market to? And that was a big one that was it Jimmy Lee that had the dope marketing? It was definitely something with the Institute where I was looking through and like, Oh, I'm not marketing to the right person. 
Jimmy Purdy: I'm spending my 
Jimmy Purdy: money and I'm getting the right people in.
Jennifer Hulbert: You mentioned the avatar before. So figuring out who is your target customer? How many vehicles do they have? What's their income? What's their location away from the shop? How are you going to reach them? Where did they shop? How do they communicate? So figuring out some of that will help you target your campaigns.
Jennifer Hulbert: Do I need to email? Do I need to text? Do I need to mail and to who, what carrier routes, if you're going to be doing mail campaigns how often do they want to hear from me? And with CRM specifically, I see a lot of new shops coming in that have their reminders on and the appointment reminders, and they're asking for the reviews.
Jennifer Hulbert: And that's about it. So my first question is, okay, you have a 30 day reminder from a recommended service and then you don't communicate with them again for how long? So do you have an ongoing campaign that's targeting your whole database? And Jimmy, you mentioned this earlier that you hate to see those unsubscribes come in, if you're doing it too often, you're going to see those come in.
Jennifer Hulbert: But if you're doing it on a regular, maybe a monthly basis. That's not too close together, but you're still reaching your whole database. That's the important key is you need to stay in front of your customers 
Jimmy Purdy: and targeting the wrong clients. I mean, I just flat out say I've got the wrong clients come in and I'm just doing the wrong things, right?
Jimmy Purdy: I'm trying to get to the top pinnacle and I want to be, have this cool hip campaign, right? Like. And be able to do like a got milk campaign, right? Like, like Jeff Goodby and Rich Silverstein, like do this really hip thing. And it's like, I'm just so far away from that. Like I need to focus on who I'm supposed to be attracting and spend, spending all this money trying to build a brand and.
Jimmy Purdy: And you know, market to the wrong people. It's just, you got to take it in steps and kind of build that base layer and get a foundation built before you can start stacking on there. And then before you know it, I feel like you can kind of narrow it down and target exactly who it is. And then you can do targeted campaigns.
Jimmy Purdy: But I think for me, I mean, that's what I did. I wanted to go straight to targeted campaigns. Like I knew who I want coming in here. It was like, I still don't know. I still haven't figured it out. 
Jennifer Hulbert: Well, and then how did the customers want to be communicated with? 
Jennifer Hulbert: So. Is it mail? Is it text? Is it email? And one of the things you mentioned earlier, Jimmy, is it's weird for you to ask for an email. That's part of our incoming script. So it's name, phone number, address, email. 
Jimmy Purdy: And birthday. 
Jennifer Hulbert: Oh, we don't do birthday, but it's just that the normal feel that we ask and customers typically don't say no. If you just ask it that way. If you ask, well, Hey, I'd kind of want your email. So will you give it to me?
Jennifer Hulbert: Then you're going to get the nose 
Jimmy Purdy: the desperation, like Greg said, you can't mark it when you're desperate. I guarantee when you're busy and then you overpriced a job because you don't want to do it. And guess what? That's what they say. Yes. Every time. And you're like, I tried to price that out. 
Jimmy Purdy: I didn't want to do it.
Jimmy Purdy: That same job comes next month when you're not busy and you go a thousand dollars less. And then it's like, it's just a crazy thing. And like you said, people can smell it. Like they should know. 
Jennifer Hulbert: Well, and we talked a little bit about ROI. 
Gregg Rainville: What I was going to ask you, Jimmy, you're on the hot seat, I guess, of like, so when do things slow down for you coming up?
Gregg Rainville: Like this next, is it happening right now or is it happening in September? In a couple of weeks, you know, the data. 
Jimmy Purdy: Yeah, I'll probably see a slowdown in January. It's usually December for Christmas. And I think that's just standard. That's just like after Christmas, I think every industry in the world dies except for Amazon with all their return.
Jimmy Purdy: That's typically it. Yeah. 
Gregg Rainville: Are you planning right now, kind of what you're going to do for January? No. I'm going to put you in the hot seat with your coach. 
Jimmy Purdy: Yeah, right. And we'll talk about this tomorrow. I don't have to do it all the time. Like, Jennifer helped me. She's like, you need to do this. Right now, I'm focused on back to school.
Jimmy Purdy: So we have back to school flyers going out. And this is the first time we've targeted. To back to school. And so we're going to see how that works. And one of the things I've read was, you know, greatest is the enemy of great, right? And so you draw a line and you want to find like the greatest thing, like, what am I going to do?
Jimmy Purdy: What's the greatest thing I can do to get people in door, right? And then you miss all these great opportunities you can, right? So instead of like, you draw this line and you're just looking for this greatest thing, that's it. That's all I'm going to do instead of like, well, that could be a good idea. That could be a good idea.
Jimmy Purdy: And Jennifer doesn't like when I do this, but I do get a lot of ideas and like, but I want to throw everything at the wall and kind of see what sticks and they're all great ideas, but they're not the greatest, right? But you'll never know unless you kind of categorize them and start stacking them kind of like poker chips, right?
Jimmy Purdy: Like you're trying to like, well, that could be work. That could work. That works. So one of the time, one of the things this year is going to be targeting the back to school and see how that works for us in our area. Just like the fair time, maybe next year we'll try targeting the fair time again and see what happens there and just see if that works.
Jimmy Purdy: So I guess to your point of the slowdown we're looking for in January I don't really have a big game plan to get that moving. I already have like the basic stuff that I'll be working on getting a lot of the retention. That's going to be huge. I think getting new clients after Christmas time is going to be impossible, or it has been.
Jimmy Purdy: Like, our new customer count for the last three years has never ever gone up after Christmas, right? But we can target and do the CRM and reach out. to the people that we already have in our database and then work that way. 
Jennifer Hulbert: One of the key things that you said was our new customer count doesn't increase.
Jennifer Hulbert: That means you're tracking it. And that's important. So if you're not tracking the new customer and returning customers or your active customer lists, then you're not going to know if you're impacting that at all. And one of my coaches that I've had said, you may not completely make a poor month or a typical slow month, the best month of the year, but you're going to impact it and increase sales because of your marketing.
Jennifer Hulbert: So even if you can move the needle a little, then that, that's what we're looking for. 
Jimmy Purdy: Yeah. 
Jimmy Purdy: And sometimes, you know, marketing, I don't know who told me this, but your marketing budget could just be. Paying for cash flow, right? Like if you're not tracking how many return clients you're getting back in You're just paying for cash flow because the amount of money you're spending to get them in the door is just market to get new people in the door.
Jimmy Purdy: So it's like, it's just cashflow. Right. And that's great. When you're starting, like you have to do that. Like if you don't have cashflow, you don't have a business. Right. But over the years you start realizing, okay, well man, my retention rates down at like 60 percent right now, that's not good. And I'm in the process of that right now, the last two months, we've had a 10 percent drop from last year in retention.
Jimmy Purdy: Oh man, what are we going to do here? But it's not 20%, right? Like we're not, Based on new cars every month, I'm seeing the needle go the wrong way. And I'm like, okay, we got to work on retention. So what are we doing? We're doing a back to school postcard flyer for all of our existing clients. And we're going to spend all our money trying to get them back in the door instead of acquiring new.
Jimmy Purdy: Of course, you always got to get new. You always got to be constantly branding all always pushing it out there. But the focus right now is getting the clients that we already have in the debt database back in the door. 
James Harris: Yeah. And I think a big piece of that too, Jimmy is when you're looking at it, I know you said you don't want to throw stuff at the wall and see what works, right?
James Harris: But there, there can be a strategic way of doing that when you're using. Tools that allow you to track that data back and figure out what's actually working and see what dollars are bringing back with certain campaigns That's what you can reuse next year. That's what you can change next year if it didn't work I think that's a big piece to it right is making sure that when you're going into it You're really looking at analyzing what is working what's not and having a tangible way of grabbing that and seeing what I like doing 
Jimmy Purdy: Just to clarify, I do like throwing stuff at the wall.
Jimmy Purdy: So you would say, well, I know. Jennifer freaking hates it. And so does my wife. Like, stop coming up with all those ideas. I'm like, I'm telling you, one of these is going to be cold. 
Jennifer Hulbert: Well,  and when we're talking about retention rates, one of the things that we haven't talked about yet is the business model.
Jennifer Hulbert: So Jimmy, you are typically a transmission shop. where customers came to you for those large repairs and not for the maintenance services. Now you're doing tires and alignments. Now you're going to get into maintenance services. So that's part of the marketing plan as well is what is your business model and who do you need to retract attract?
Jimmy Purdy: Yeah. So, Stop stepping over to the dollar to pick up a dime, right? 
Jennifer Hulbert: Correct. 
Jimmy Purdy: But I really want Euro cars. Yeah, but you're not getting any Euro cars. Yeah. So just work on the cars that are, like, coming in. And that's what the classic cars are coming. I don't have to, they just come in organically.
Jimmy Purdy: I get a lot of classic cars and as soon as that word spreads, it's like, oh man, you can work on old cars? Yeah, it's not a problem. And I don't have to spend a dollar marketing towards it. And it's like, well, you know what? That's what's working. And now I got to figure out how to on the business side of it.
Jimmy Purdy: So aside from the marketing side, I got to make that make sense to make money.  But it's like, that's just easy. I had a going through some of my keywords and watching KPIs is another important one. So if you're spending money on Google ads, you better know what's working. Right. And so going through, I saw one of my blog posts for drive train really like took off my drive train because how many times have you looked through?
Jimmy Purdy: Like, what do people search when they're looking for auto repair? Like, what are they typing? What is it? Is it auto repair? Is it auto care? Is it maintenance? Like, what is it? All of a sudden drive train took off. So I just took it and put it on one of my KPIs. And boom, now I'm number one rated if someone searched drive train and it's just like, that costs me nothing other than just watching what was working and then just copy, cut, pasting.
Jimmy Purdy: And now it's on there and I'm ranked number one for drive train. And it's like, I didn't even know people look for that. I didn't even know that was a search term. 
Gregg Rainville: What I was going to ask, what, like what tools for looking at these KPIs, the key performance indicators like what tools do you use outside of your CRM, like, like are there.
Gregg Rainville: Are there any tools that you want to share with the audience? Maybe that you're using? I don't know if you're using like Google Analytics to look at this, but like, what are the tools that are great to have to like, to know what's working, what's not working besides CRM? 
Jennifer Hulbert: So if you're an institute client we have something called the dashboard that pulls in all kinds of data from your shop marketing system or shop management system, and we get all of that information.
Jennifer Hulbert: So. Gross profits, average RO, hours per RO hours for the technicians, and then we get all the marketing. So active customers, new customers, lost customers, we get attrition rates, and that's all pulled in from the management system if you are an institute client. Without that, I think you're pulling data manually from your management system unless CRM and you can pull that in.
Jimmy Purdy: It's a secret, Greg. It's a secret. It's Google analytics. Right. 
Gregg Rainville: It's called the dashboard. 
Jennifer Hulbert: For the Institute. Yes. 
Jimmy Purdy: If you have and we utilize that all the time being a client, right. But for what I was talking about with the keywords, looking through Google analytics having a marketing company that's working for you that actually shows you that stuff and sit down for a month.
Jimmy Purdy: And if you have a question, you can email them and they send you an updated. So I have another dashboard that's just for Google Analytics alone. And it goes through and it shows me all my KPIs. And I can go through and see what's working, what's not, where I'm ranking, where I'm not ranking, where I should be putting Google ads in.
Jimmy Purdy: Right? So one of the big ones was trying to get more Asian vehicles in, right? I want to get some Toyotas and Hondas. That was one of the things I started a couple of months ago to try to get more of those vehicles in because looking, that was one of our highest AROs was Toyota pickup trucks. It's like, people like to spend money on those things, right?
Jimmy Purdy: And Jeeps, but we already had a good thing with Jeep. So, we started doing a Google Ads campaign specifically for Toyota, Honda, and Subaru. That was it. That's all I want. That's all I want to spend my Google ads on. And that's all I'm going to do. Instead of saying, well, let's do Google ads for auto repair.
Jimmy Purdy: Okay. Good luck. You know what that CPC is going to be like, that's crazy, man. You want to compete for that? Like that's got to be organic. That's fishing in a big lake. Oh man. Tiny little fish. Yeah. 
Jennifer Hulbert: That goes back to your business model. So do those type of customers, do they shop and act differently? Is that your avatar or do you need to change your avatar and then be able to communicate the way that they're going to hear you?
Jennifer Hulbert: So when we say marketing, it's this whole big ball.
Jimmy Purdy: Yup. And then knowing which ones you should be for CRM, you should be targeting back. Right? Because if you're constantly having these problems with these certain clients and maybe you find a pattern that everyone that Drives a Volvo isn't someone you like dealing with then maybe not target to Volvos anymore Maybe get your CRM program to stop reaching out to those people I mean that's just what it is Like I everyone wants to make everybody happy But that doesn't make any money and that was like one of my big struggles too is like I want I just want to make Everyone happy.
Jimmy Purdy: So everyone that came through the door was like, yep. Come on in. Come on in. I'll help everybody And then I'm like, I'm not making any freaking money. What's going on here? And once I started realizing, I peel the layers back and start actually saying, okay, Toyota trucks make money. So I'll market towards Toyota trucks.
Jimmy Purdy: Then all of a sudden it's like, it makes sense. Like, yeah, I'm spending four or 5 percent on my marketing budget, but I'm making that hand over fist on ROI. So it's like, if you did that with a Volvo, you're probably not going to do it. Right. Or if you're a domestic shop and you're working on BMWs, you're probably not making the same kind of money target to what makes sense, you know, and it's always got to change.
Jennifer Hulbert: So monitoring that and then acting on that data is important. So knowing what that data is, where to find it and communicating with your marketing team. So a lot of people think that's internal, which typically falls on the shoulders of the owner, but STEER would be. Part of my marketing team, whoever is handling my website and my Google AdWords is part of my marketing team.
Jennifer Hulbert: So communicating with that team on a regular basis of these are the goals that we have set out for the year or the month or the quarter. This is what we think will work getting the opinions of that marketing team, because. They're the experts. STEER is the expert in the CRM. Whoever's handling the Google AdWords is that expert and getting their information and then coming up with a plan to lay it out, to do the best for the shop, monitor the results, make changes and continue to work forward.
Jimmy Purdy: Or you can just do a blind ly and just tilt up the wall, I guess. I don't know. 
Gregg Rainville: No. The the other thing is I'm sure, and I'm sure the dashboard has this, but I think understanding what your customer acquisition cost is. So like, like how much it is to get that Toyota truck through the door, like, like how much are you willing to spend Jimmy to get that, that Toyota truck through the door?
Gregg Rainville: I'm going to ask that as a question, $200? 
Jimmy Purdy: Just right, right to the point. 
Gregg Rainville: Yeah. 
Jimmy Purdy: Yeah. Put the knife to my neck. Yeah. Yeah. Well, you told me that's one of those cars that you want. You want to give me five minutes. I got to get all my stuff open here and look at it. Well, I mean, it just depends on the ARO, right?
Jimmy Purdy: So if our average repair orders is around 1500, then I just kind of averaged across the board. And if I look and see, okay, four trucks is number one and Toyota trucks is number two. Okay. Well maybe we should target more Toyota trucks. Right. And I think that, I think Jennifer, we had a conversation about that where Ford, Chevy, Dodge, people just look up auto repair.
Jimmy Purdy: They don't look up who fixes a Ford truck, who fixes a Dodge truck, who fixes a Chevy truck. Like they just say, who can fix my truck? Right. Like they don't. So, but Toyota, like I have a Toyota Tundra. Who can fix my Toyota Tundra? Who can fix my Toyota Tacoma? And so knowing a little bit of that. Yeah. Yeah.
Jimmy Purdy: It's like knowing a little bit of that. I'm like, okay, maybe I should spend a little money and target that and kind of see what happens. I don't have a lot of database. database driven, you know, behind me, I just that kind of makes sense. Let's see what happens. Right. And I just kind of roll that way, but it's not completely blind anymore anyway.
Jennifer Hulbert: Well, and then having that be part of your marketing budget. So we recommend between four and 6 percent of your annual sales should be towards your marketing budget. So what portion of that is that allocated between CRM, new customer attraction, your website, your. Any of your social media campaigns or any other marketing that you might do.
Jennifer Hulbert: So deciding how to break that up and what's going to be the most impactful. And unfortunately, sometimes you need to make an educated guess and throw some of that mud as long as it's an educated guess, right? 
Jimmy Purdy: I'm a diagnostician. I take all my best educated guess every day. 
James Harris: It's like that leash has got a little bit longer for you, Jimmy.
James Harris: You got a little freedom there now.
Jimmy Purdy: What about website? Like you talked about website and how many shops out there do not have a, you guys both go to 500 shops a year, right? 200 shops. How many of them don't have a website? 
Gregg Rainville: A lot of them have some sort of website. They think it's Facebook, their Facebook's their website. 
James Harris: I was about to say define website.
Gregg Rainville: Or they just have this like Wix website. And I'm seeing a lot, especially on the QuickLube side. And they seem really like proud of their website that their brother built for them. Or, you know, and it's nice but I don't think they understand like how important it is. 
Jennifer Hulbert: Well, there's a difference between having a website and then having a search engine optimized program. And again, that is part of your marketing plan. 
James Harris: Yeah. It even goes back to the pictures you have on your website too, right? You have a bunch of fake pictures on there of a shop that is not yours. And then someone shows up to your shop and it's got dirt floors and that's not what they saw in the picture.
James Harris: It's like, wait a minute. Where am I at? Am I at the right place? That's a part of building that relationship as well and retaining that customer from trust right away. 
Jimmy Purdy: Yeah, good point. Because that's like, how are they going to recommend you if that's the experience they got? They're not going to want to give that experience to someone that they know or love, right?
Jimmy Purdy: Like, they don't want that either. It's like, you go to the website, it's like, yeah, that dude I saw on the website is the same dude that's actually sitting at the office. That just builds trust like right away and it's just amazing to me how many people don't have a website or don't have an email And how that's just such a fun, but then they're spending ten thousand dollars a month on a billboard or a radio ad.
Jennifer Hulbert: Yes 
Jimmy Purdy: So, what do people do when they want to look you up? Well they will just go to my shop, they will, huh? Okay. 
Jennifer Hulbert: And then not tracking the results at all. 
Gregg Rainville: Yeah. And it's wild because we now live in a time where like scheduling is becoming really popular in the automotive repair space. I'm trying to break it into quick lube a little bit.
Gregg Rainville: It's a little. difficult with like first come first serve. But if you told me like three years ago that scheduling would be like a hot software, like I'd tell you a lion just because most of the shops I talked to them that I was visiting there like this is not a hair salon. This is not the dentist.
Gregg Rainville: Like it's really hard to book appointments. Like we don't know if the car is going to be here for 20 minutes or three days. But that's been a breakthrough. But That's the way people want to do business today. Like, like I talked to a shop the other day who's using online scheduling. And I was like, what made you make the switch?
Gregg Rainville: And they told me, they were like, I had a family or I had this family of vehicles. And the son brought his car to my competitor around the corner. And I asked him, I go, what are you doing? Bringing your car there? He goes, they had an online scheduler because he made it really easy for me to do business and book an appointment.
Gregg Rainville: And like, that's the way you need to start thinking, especially during these slow times of making it easy to do business with your repair shop. So it's that switch. 
Jimmy Purdy: Jennifer, you said monitoring too, right? Like tracking it. And that was another. The whole big thing that I was losing, right? Did you spend the money on a billboard or a radio ad and how do you know it's working, right?
Jimmy Purdy: Like the online scheduler, that's pretty easy. They make the online schedule, you know, they make the point and then they show up Oh, it's working. Cool. But like tracking the other stuff that was another one that I was missing out on too and being able to have like a QR code or if you're using like a CRM program, you know, it's working right away.
Jimmy Purdy: You send out the text and you immediately get the people in Yeah, the tracking phone numbers and all that stuff that like that gets kind of missed when you do these kind of off the wall marketing column campaigns, right? Like postcards. That's a tough one. Like, unless they come in with the postcard, then you don't know.
Jimmy Purdy: But it's another part of that process when they come in. Hey, how'd you hear about it? It's like crucial. How did you hear about us? Why are you here today? I know your cards broke, but like, why are you here though? Why did you come to me? 
Jennifer Hulbert: How did you hear about us?
Jimmy Purdy: Yes. And without knowing that, like, how do you know what is working and what's not working.
Gregg Rainville: I was going to, I was going to ask you, Jennifer, just like what kind of marketing is your favorite, like being a coach that's like. The most productive, but maybe the least expensive or maybe we'll say cost effective. What is your favorite 
Jennifer Hulbert: It's CRM.
Gregg Rainville: CRM. Okay. 
Jennifer Hulbert: Because again, your customers know and trust you already.
Jennifer Hulbert: They've already been to your shop and they've seen the stellar service that you're going to or should be providing. So that trust factor is pretty much already. already a given. And then a well qualified service advisor to deliver on the promises made. That's also key. So you can get the phone to ring all day long, but if that call isn't handled correctly, then that customer is not going to come in.
Jennifer Hulbert: So I do agree with CRM that's my go to, and that's going to have the biggest return on investment in my opinion. 
Gregg Rainville: And then what's your favorite for customer acquisition that you've seen work at your shop or for some of your clients? 
Jennifer Hulbert: Google AdWords and a well designed SEO website. So yes, my, you know, my cousin could have made my website and it looks absolutely fantastic, but is it doing its job to get customers to come in the door?
Jennifer Hulbert: That's a whole other type of website. And if you're not paying attention to the CRM, your Google Analytics, meeting with whoever your website provider is, and knowing that you know, you're getting the customer to come in the door. Recently I've had my website rewritten about five or six years ago and recently we started to see our organic searches really fall off.
Jennifer Hulbert: So my whole website, all 106 pages were indexed by Google, but now all 106 pages have new content to be re indexed. So knowing that and having a web company who understands that and can make the recommendations of, hey, these are falling off because we're paying attention to the data and we need to make some changes there.
Gregg Rainville: Excellent. No, this is great. I'm going to open up the chat now. So for anyone who's online right now, I know we probably have about 10 minutes left roughly. 
Jimmy Purdy: For the three of you listening right now, it's time for your questions.
Gregg Rainville: But if anyone has questions, please post them. We're more than happy to to give you, I can give you an educated. 
Jimmy Purdy: Yes. As an answer. So don't It would be an educated guess. I'm not the master, but I think learning and then just like you said, tracking and monitoring it and just constantly making changes.
Jimmy Purdy: Like the website's tough. Like it is so tough and it's a full time job. And I think a lot of us technician turned shop owner, we try to take on as much as we can, right? Like I can fix a car, I can fix anything, right? Like I can fix a sandwich. No problem. But then you start, you know, building the website and you're like, what am I doing this for?
Jimmy Purdy: Like, how much is my time worth? Right? Like the Dan Martel was a buyback your time, like figure out where you should be spending your time. And like building websites, not that you're, that's not what you should be doing. Right. And even with the CRM, like, Oh, I can make phone calls. I can text people.
Jimmy Purdy: And Greg, you brought that up. But what if I just, I can just cold call my clients. Okay. How long are you going to spend doing that? Like when you just have a campaign, you're just sending out automated texts and emails. And then maybe you can narrow it down and we do that at the shop We notice if we're not getting some feedback, we'll have a small percentage and it was okay So you guys I want you to call these five people and I want you to call these five people and that's it like we have a very select amount of people that we Go through and make sure like this is going to be worth the time to make that call to get them back in.
Jimmy Purdy: They spent 3, 000 last year and we haven't seen them in nine months. Let's see what's going on here, right? But without knowing the numbers and seeing that and having those programs in place, man, you're just trying to find a needle in a haystack. It is so much. It's amazing. 
Jennifer Hulbert: We do have a couple of questions and one of them is, are you using AI to generate content for your website?
Jennifer Hulbert: And I am not a website design SEO expert, but I have heard from the experts that we've worked with that using AI to generate content can actually hurt your rankings with Google. So I definitely do not recommend that unless you're having an expert tell you differently. And again, I want a disclaimer here that I am not an SEO expert.
Jennifer Hulbert: But working with a company who can create authentic content for your site is going to help your rankings with Google. 
Gregg Rainville: I feel like Google might be smart enough to know if it's AI content. 
Jennifer Hulbert: They are. From my understanding, 
Gregg Rainville: On that side, I'm not an expert. I'm more on the CRM side, but I would probably think that Google would know that the content being created isn't really human content.
Jimmy Purdy: I think it's got to be like a hybrid, right? Like you got to have some human like stuff in there because there's certain words and certain, what do they call it? phonetics that AI uses to script sentences that are very easy to pick up on. Like that's not how a human being speaks. I'm sorry, but it's all right. It's all factual, but it's not how a human being speaks.
Jimmy Purdy: I use AI a lot for, you know, Facebook posts. That's a big one. I haven't heard anything bad about using Facebook posts. So just boom, generate something on social media and do three posts a day. Facebook constantly. And then we've all seen it with the, with CRM. They're starting to use it to generate reviews for Google for the CRM programs.
Jimmy Purdy: Like, so I don't see anything wrong with that. I mean, I use it for emails all the time. I just make sure to read it. Like don't just post it. 
Jennifer Hulbert: So another question is there a silver bullet in marketing? My opinion is making a plan. So having a plan and following it, knowing who your target customer is, tracking the data, monitoring the data, meeting with your marketing team.
Jennifer Hulbert: Those in my opinions are silver bullets, but a specific campaign no I don't know of one that's just going to generate hundreds of customers to flock through your door. 
Jimmy Purdy: The Budweiser campaign, you know, frogs or maybe the got milk campaign. That was another good one. You know, one thing we didn't talk about was like doing like jingles.
Jimmy Purdy: And I don't know if that's going to be like the next thing for auto repair, but having some sort of audio cue. And I know there's another word for that, but you know, like everyone knows what HBO sounds like when the HBO thing comes on, the logo pops up and it's feel like the audio thing is like that really hits a lot of people and makes them remember you.
Jennifer Hulbert: Well that goes into branding. So how are you branding your business? And top of mind, 
Jimmy Purdy: I think that would probably be the closest thing to a silver bullet maybe is being, having a really solid brand. So you're always. Always thinking about you. It 
Gregg Rainville: Looks like someone's asking Jennifer to speak more a little bit about the Institute.
Gregg Rainville: So what the Institute does, I mean, obviously it sounds like you guys have this amazing dashboard, which I just learned about today. But and obviously the coaching side of things, like what else does the Institute offer, offer clients? And Jimmy, you could probably talk a little bit about it as well too.
Jennifer Hulbert: Sure. So we are an automotive shop owner advisor and management coaching group or company. So we have automotive shop owner groups similar to the 20 groups that you hear. So we're meeting in person with 15 to 20 people in a group and we're traveling around to the actual shops to do an evaluation.
Jennifer Hulbert: We have an advisor training group called the advisor program. We have a manager's program. We have an individual coaching program. And Cecil Bullard and Kent Bullard are the owners and they are a wealth of knowledge and sharing that knowledge with their staff and then communicating that out into every aspect of running an automotive repair.
Jimmy Purdy: It turns you from owning a job. To being a business owner. 
Jennifer Hulbert: Correct. 
Jimmy Purdy: Makes the difference. And I'm I've been two years now and we've taken our sales from, was it about 600,000 last year? And we're on track to break 1.2 this year. 
Jennifer Hulbert: Yep. Doubled in a year. 
Jimmy Purdy: Yeah. And not to mention the net, we actually have a net profit.
Jimmy Purdy: It's not huge, but we're working on that. But knowing that is what is important, right? Yes. Knowing what you're striving for and setting the goals and attaining the goals, and then having Jennifer hold you accountable because she will. You better do those things you said you were going to do.
Jennifer Hulbert: Absolutely. 
Gregg Rainville: There's an event coming up too. I think we can scroll it at the bottom or post it at the bottom. Yep, there we go. Look at that. 
Jennifer Hulbert: So we have the Institute Summit is going to be February 6th through the 8th, 2025. In Amelia Island, Florida. We have a great lineup of speakers coming in. We have all kinds of vendors coming in so you can learn more about the different products like STEER or a whole host of vendors coming in.
Jennifer Hulbert: This is the second one that I'll be participating in. Our first was in 2022, I believe. And it's just great to get all of these like minded people together like any industry event, the camaraderie that happens, the communication that happens, the ideas that flow. I'm just, I'm really excited to get to the Summit and it's in Florida.
Jennifer Hulbert: It is. And for me, that's important. I'm in upstate New York, so Florida, it's not going to be 30 below. 
Jimmy Purdy: It's important for everybody because we're going to Florida. We're in Miami. Greg knows. Good time, Greg. We're going to have a good time, man. 
Gregg Rainville: Ogden part two, but in Miami. Yes. Oh my God. Oh, can't wait. And then we're scrolling down below the the gearbox podcast on your favorite listening podcasts.
Gregg Rainville: Yeah. There's millions of podcasts, but you could find the gearbox podcasts, just do a simple search right on the app, 
Jimmy Purdy: lots of conversation, just like this with other shop owners across the whole nation. I go to different events. I talk to different shop owners, talk about their journey, talk about what's works for them and their shop.
Jimmy Purdy: If you're ever interested in being on it, you can find me on Facebook. I'd love to have anybody on. I like to hear the stories. There's so much we can learn from each other when we learn to collaborate. So, 
Jennifer Hulbert: Correct and I'm excited to be a part of this webinar with STEER. I think communicating this type of information out to the general public of people who just are learning how can I impact my business and what are the small tweaks that I can make.
Jennifer Hulbert: So I'm really excited to be here and happy to have been part of this team. 
Gregg Rainville: Yeah, this has been a great panel. I've learned a lot. I love, I knew Jimmy was kind of a wild child, but with, but it's good to know that Jennifer, you're there to keep them in control. But yeah, this is fantastic. With STEER.
Gregg Rainville: There are some new features coming out in the next few months. So we are doing a lot with Google. We have reserved with Google. We are doing a lot with scheduling, so doing some stuff on the customer acquisition side. I know we talk a lot about customer attention, but we are focusing a little bit more on the customer acquisition side and more to come with that.
Gregg Rainville: But again, I appreciate everyone's time and everyone joining the webinar today, I think we'll have part three in a couple of months. I'm looking forward to that with the Institute and I am looking forward to the event next year that hopefully. Me and James and we'll be attending again and find in the hotspot. Jimmy, we're going to go meet some locals and learn how to advertise our business. 
Jimmy Purdy: Social media marketing. One on one. We'll just have a class. And it's like, when's the class start at about eight 30 in the morning? No. Excellent. Cool guys. Well, thanks for having me. This has been fun.
Jennifer Hulbert: Yes.
Jimmy Purdy: I enjoy all your company. And I mean, I learned something every time I talked with. industry professionals like yourselves. So this is, this has been a great opportunity to be here. 
Jennifer Hulbert: Yes. Thank you again. It's been a lot of fun. 
James Harris: Awesome. Thanks y'all. I appreciate it.

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!
 
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
________________________________________
 
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.

96 - (Pt. 2) How to Mark Up Automotive Parts – Expert Strategies with Cecil Bullard of The Institute

96 - (Pt. 2) How to Mark Up Automotive Parts – Expert Strategies with Cecil Bullard of The Institute
March 27th, 2024 - 01:03:19
 
Show Summary:
In this follow-up episode, John Heller from PartsTech and automotive industry coach Cecil Bullard dive deeper into the critical topic of parts markup for auto repair shops. They unpack the emotional challenges shop owners face, the practical application of markup matrices, and how to maintain profitability while managing customer expectations. Cecil shares real-world examples, answers live questions, and explains how even small changes in parts margin can significantly impact a shop’s bottom line. This is a must-listen for shop owners ready to take control of their financial future.
 
Host(s):
John Heller, PartsTech
 
Guest(s):
Cecil Bullard, Founder & CEO, The Institute
 
Episode Highlights:
[00:04:15] - “Shops are leaving thousands on the table annually due to insufficient markup strategy.”
[00:07:41] - Cecil breaks down the jobber and dealer parts matrices to reach 58% gross profit margins.
[00:12:03] - Oil changes and low-margin jobs: how to offset with higher markup elsewhere.
[00:18:28] - Real example: how adding $200 to engine jobs improved profitability without losing customers.
[00:25:33] - Defining margin vs. markup, and how each impacts your gross profit.
[00:29:46] - Three reasons why a matrix might not be working for your shop—and how to fix it.
[00:37:04] - Emotional discounting at the counter? Why it’s killing your margins.
[00:45:25] - What happens when your margins slip: the math behind needing 26 more cars/month.
[00:56:54] - How to respond when customers price-check you against Amazon, or other avenues.
[00:59:18] - Cecil’s message to the industry: Stop letting customers bring their own parts.
 
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=XXyincl3Cwk&t=1s
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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________________________________________
 
John Heller: Hello, everyone. Welcome. We'll give a few more seconds here to let everyone join in. We know we had a lot of, a lot of interest and response from part one of this. So we thank you for taking some time to join part two. We'll make sure. We give a little time for everyone to make it in.
John Heller: All right, let's get this started. So again, as I mentioned, welcome. Thank you everyone for joining us here on this Wednesday. Hope your week is going well. We're glad you've joined us for this part two on this very important topic of parts markup. We had a great discussion last time with our guest speaker Cecil, and we decided to extend this into a part two, so we could dive a little bit deeper.
John Heller: into a better understanding common pitfalls and how we can work around them and a parts markup strategy in your shop. So I would encourage you as with last time, if you joined us, please use the chat function to post questions. Last time we had a lot of great questions and unfortunately we weren't able to get to them all.
John Heller: But I will do my best to, to look through the chat and try to summarize some common themes around questions and make sure that I'm surfacing those to Cecil and at the end, we will take about 10 or 15 minutes as well to get through more of the questions that you pose in the chat box as well. We understand your time is valuable.
John Heller: So first again, thank you for joining us. If you do need to hop at the, at the end. Of at the end of the presentation, so to speak, and can't stay for the Q and A, please know that we will be sending this out to not only those who have attended, but to the everyone who's, who's registered, so you can view and, and listen into that, that Q and A section of this.
John Heller: All right, so let's go ahead and get started here. Just as a way of reminder, PartsTech; we are a platform that makes it fast and easy for your shop to find and order the parts that you need across both parts and tires. We put all of your suppliers into one lookup, cutting out the hassle of you having to make separate phone calls.
John Heller: Cutting out the hassle of you having to log in separately into your suppliers, each and every single one of them. We make that now a very easy and simple experience to be able to find what you need in one lookup. We are absolutely free. There is no need to enter in any credit card information during the signup process.
John Heller: We just need your shop information. We'll get you a username and password, and then we'll help you get your supplier set up and integrated into a management system. If that's how you are using us and you're on your way. Simple as that. We allow you to connect unlimited number of part and tire suppliers, into parts tech, making sure that you've got the full breadth of availability when it comes to looking for parts from suppliers that you prefer to do business with. All right. So, as a recap of what brings us together today PartsTech recently conducted a survey, a very broad survey across hundreds and hundreds of repair shops.
John Heller: One of the key findings that stood out to us was this idea of parts markup. We found that a considerable amount of shops are leaving money on the table when it comes to how they're marking up parts. Gross profit margin analysis and things of that nature. So that put a bug in our minds to say, this is something we should dive into a little bit more, bring in some experts within the industry so we could facilitate a conversation and helping shops in the industry here, better understand parts markup.
John Heller: And be on the way to better profitability. Now, for those who joined us in the first webinar we didn't mention that there was some information that was available to you here. We've just got a QR code. If you wanted to scan this you would be brought to a landing page where we put together some material in collaboration with the Institute to be able to walk through a couple of these hot topics on terms, formulas.
John Heller: What are some of the foundational steps in determining this? A sample parts markup matrix, as well as the recording from our first part of this. And again, this was all done in collaboration with Cecil and the team there at the Institute. But today we get the honor. Of having Cecil join us and Cecil you made this statement here that many shops are leaving thousands and thousands of dollars per year on the table due to insufficient part market practices.
John Heller: And so we are excited again to welcome you back to this part two of our webinar and to dive into more questions, more topics around how we can help shops understand this whole idea of parts markup and very practical ways to get that in there. So without further ado, Cecil, Cecil, I'll turn it over to you and let you take it from here.
John Heller: Thank you for joining us. 
Cecil Bullard: Thank you, John. As we go, we do want questions. We like questions. It's not letting me share my screen, John. Now it is. How about that? We like questions. We want your questions. So please use the function or the Q and A to ask questions. I'm Cecil Bullard. I'm a coach and a consultant.
Cecil Bullard: I've been in the industry, my entire adult life. And I've been coaching for about a little over 20 years now, worked with thousands of shops. And so I see this over and over and over. When we first come into a shop, we look at parts margin and parts margins are usually somewhere in the 30. 2 percent to about 44 percent range when they should be in the 55 to 58 percent range.
Cecil Bullard: And that's where we get the, you know, the average shop is probably losing somewhere around 40 a year on their parts market. It's not marking parts up correctly now in a webinar, number one, which by the way, the QR code that we had on the screen earlier, we'll get you that webinar. We went through a few different things.
Cecil Bullard: One of those is the idea that parts margin is really easy to fix in the shop. You put a parts matrix in place and you stop getting emotional about pricing. This is what it costs. Think about going into a local restaurant and haggling over the price of the steak or wanting to bring your own steak into that restaurant.
Cecil Bullard: It just doesn't happen. The automotive industry is one of the few places where people can in a way haggle over whether they bring their own parts in, which is against the rules completely. We're not going to cover that here, but there's a whole series on that. And then also about what we're going to pay or what we're going to mark the parts up.
Cecil Bullard: And most customers don't understand what you're doing. They just know what the final price is. The other thing that we did talk about in number one, that you're going to want to make sure you know, is, is how to financially balance the business that I'm making the gross profit and the dollars that I need now.
Cecil Bullard: This is a QR code that will get you the workbook that goes for one and two. And so I'm going to leave this on the screen for just a minute. And then we're also going to have this on the screen at the very end. So if you don't get the, you should get the workbook because it'll help you with the formulas and, and other things that we, we have been talking about.
Cecil Bullard: So please, again, ask questions. You're going to want to get the workbook. So I'm going to take this off the screen here in 5, 4, 3, 2, 1. All right. This is a parts matrix. So all the lead up before you need to put a parts matrix into your shop. This is a particular matrix that's been developed and modified over the years to get a shop about 58 percent margin when you mark things up.
Cecil Bullard: And so when you're. Dealing with a parts matrix what you're doing is you're basically saying if I buy a part from say zero to two dollars and fifty cents, I'm going to mark it up times four, so it's a 400 percent markup. And that's the multiplier, and that's a 75 percent profit. And because of what your average part is we want the average part to fall right in the, about 60 percent range.
Cecil Bullard: And so, you know, 24 years ago when I was first started doing all of this, I was looking at the average part price that we sold in the industry. And it was at the time it was about 26 and change. So just between 26 and 27. And so this matrix has changed over the years. And the markup has changed a little bit over the years in order to maintain the right parts margin in my shop.
Cecil Bullard: So, if I buy a part that is say today, if my average price on a part is 55, then if I buy that part at, say, 55, I'm gonna mark it up types two and a half, which is a 250 percent markup and a 60 percent margin. Don't, don't confuse markup and margin. Markup is the multiplier that you use to get to the price.
Cecil Bullard: Margin is the difference between what I paid for the part and what I received for the part. So, if there are any questions about Matrix, now's a great time to ask those questions. 
John Heller: And I might just mention here, Cecil, sorry there's just some comments here in the Q& A. Please put your questions into the Q and a section and not the chat.
John Heller: I may have misspoken to lead us up. So please put your questions in the Q and a thank you. 
Cecil Bullard: Okay, and you'll notice here that there's a parts matrix for a dealer and there's a parts matrix for a jobber. And one of the questions that we get a lot is, do I have to follow the manufacturer's suggested list that the dealer charges?
Cecil Bullard: And I don't remember if we answered this question in part one, but I'm going to answer it again. And that answer is absolutely not. If you follow the manufacturer's suggested list, most of your dealers are going to give you 20 percent off of that. And so I'm going to, you know, buy that part for 80 and sell it for a hundred and I'm going to have no real margin in that it's going to be very, very small.
Cecil Bullard: And at the end of the day, I won't have any profit in my parts. And parts of profit is about 45 to 50 percent of my profits. That's helped helps me pay my bills and, and my utilities and my rent and, and myself and, and have a net profit in the shop. And so you'll notice on the dealer matrix that the dealer matrix is it starts.
Cecil Bullard: Whoa, love this mouse. It starts at a, at a, a little. Little higher, but it, it fizzles out a little faster. So, in my shop, the shops that I have run, last shop that I, I ran the, the lowest matrix part we had was a 45.9%, so a 1.85 multiplier. And I would tell you also that there are certain parts that I might not put in a matrix that I might buy.
Cecil Bullard: Things like tires. Tires don't have the same margin as other. Parts and also a lot of shops don't put batteries in a matrix. They have a different matrix for a battery So they're charging a a lower markup and a lower margin on things like batteries in order to be competitive now, I will also tell you that out of the All the shops that we work with, there are a certain percentage of shops, probably some in the neighborhood of 10 or 12 percent that basically mark up dealer parts exactly the same and even batteries the same as they would mark up a parts on the jobber matrix.
Cecil Bullard: Jobber would be a world pack, a car quest, a Napa, and of course dealership. We should know exactly what that is. Now John, I hope you're monitoring questions, and if we get some that you ask the question. So go ahead. 
John Heller: There are, and right on topic with the various parts here, we had someone raise the question around oil changes.
John Heller: So oil, air filters, cabin filters do you have any guidance on that type of job and where that fits sort of in the parts matrix? 
Cecil Bullard: I will tell you that when I was running a shop, the last shop I actually personally ran was 2009, 2010. That's when I started 100 percent coaching and I kind of got out of the running a shop business.
Cecil Bullard: I marked up my oil filters, my oil and my air filters exactly the same as any other part. I did not do anything special, but we did not sell an oil change. So this is a Kind of a different thought process. I think I, I always had a minor service in my shop and I did not have an oil change because I didn't want to compete with the oil changers.
Cecil Bullard: Right? And so if I look at the quote unquote oil change companies, I think my part is a superior part. I buy a more expensive filter that has, you know, it's better on the inside. Just get a cheap oil change and cut that filter apart and then grab one of those good filters that you would put on the customer's car and you notice that, you know, the, the filter from the cheap oil change place is not the same.
Cecil Bullard: The other thing is my technicians, I think we're better than the technicians at the cheap oil change place. And so I did not want to compete with an oil change. I had a minor service, and at the time, I know everybody's going to say this is nuts, but at the time, my minor service was 165 when oil changes were going for 29, And I know we're not there now, the local cheap oil change place here is 89 for a oil change today.
Cecil Bullard: And so, I don't necessarily want to be competitive with those people. And if I don't want to compete with those people, I don't sell an oil change, I sell servicing the car. So I don't, maybe that doesn't answer the question. I have shops that feel like they need to be priced competitive on certain items.
Cecil Bullard: And we're going to talk about that a little more as we go. And so they have a less expensive oil change, and they mark their parts up less, which is fine. And as long as you make up for it somewhere else. So at the end, I want to have a 58 percent parts margin is my goal. If I have 50, I always tell my clients, if I have 55%, I'm not going to fight with them or, you know, I'm not going to get too busy.
Cecil Bullard: If we get down to 52, I'm going to, I'm going to start talking about it. And if we drop below 52, then I'm going to have a serious conversation. When you think about like a typical shop might do 800, 000. And about half of that is parts about 400, 000. If I'm off by 10%, if I'm at 48, instead of 58, that costs me 40, 000.
Cecil Bullard: And that's the 40, 000 that we're talking about. So if you, if you work for a, a big company Walmart, big corporate Walmart store Walmart's going to sell certain items cheaper. Then you can buy them somewhere else. So they've got discounted items. And if you read the book that was written about Walmart, Sam Walton it's probably 25 or 30 years old now, but at the time, and today they knew exactly what you're going to come in and buy, if you are a customer that walks in their door, you know, why do they change oil so cheaply?
Cecil Bullard: Or why do they have cheap you know, batteries, cheap, cheap tires, because they know when you walk in the store, you're going to buy a certain number of items that that happens to be three on average. That was. Before they put grocery stores in most of the Walmart. So that number has probably changed, but they also know that you're going to buy one cheap item and two marked up items.
Cecil Bullard: And so, I don't care if you decide, look, I want to be competitive on oil changes. So my oil change is going to be inexpensive and I'm not going to have a great margin on that. But what, what gets forgotten in the automotive industry is the other side of that. And so if I'm a corporation, I know that if I don't get my margin, that my stockholders will be upset and my stock price will go down and I'll be out of business.
Cecil Bullard: That's how that works. In an automotive shop, little mom and pop shop, which is most of us are independents, et cetera. We often go, okay, I'm going to bring that down because I want to be competitive, but we don't think I need to bring everything else up by one or two points to make up for that. So, as long as your pricing is part of a a methodology or a thought out methodology so that you get the margins you need, I'm absolutely fine with that.
Cecil Bullard: And so I'll tell certain clients, I mean, I have some clients, by the way, probably again, 10 to 15 percent of my clients they mark up their parts. They don't care. They get what they need. They carry a 58 to about a 62 percent parts margin and they don't get a, their customers don't leave them and they don't hate them and they don't say, Oh, they're too expensive.
Cecil Bullard: They just, they, they believe the service is great. They believe they've got a good product. They're willing to pay for it. So 10 to 15 percent of my clients do nothing. About, I don't know, 20 to 30 percent of the clients that we get in, usually when they first start, they're very nervous about marking parts up, so they go in tears.
Cecil Bullard: They go, okay, I'm gonna do it on oil, oil pumps, and I'm gonna do it on oil pan gaskets and water pumps, but on brakes and oil changes, I'm not gonna mark up the parts the way I would. And I'm, I'm like, okay, fine. That's fine. Just if you're going to pick out 10 things that you want to be price competitive on in your marketplace, then be price competitive, keep your prices inexpensive, whatever.
Cecil Bullard: I hate to use the word cheap because that's a different connotation. Keep your prices down on those 10 items. But you have to raise the other, you know, 985 items that you sell by one or 2 percent to make up for the difference. And that's, that's what you do and that's how you manage it. So are there any other questions here before I move on?
John Heller: Yeah, I, let's, just one quick one and then I know we've, we've still got a decent amount of material to cover here. Alon, just one last question on the parts thing here. Several questions revolved around sort of the 750 mark and up, we sell and install transmissions, engines, clutches, turbos, some of the higher dollar parts in there.
John Heller: What's, what's some of the advice around that type of strategy? 
Cecil Bullard: So I work, I've worked with so many different businesses over the years and, and all it brings to mind a Subaru shop that was doing a ton of Subaru motors, probably doing four or five Subaru engines a week in this particular shop in a big area and our parts margin was terrible.
Cecil Bullard: And so I come in and I'm like, okay, we're really losing a lot of money. I mean, they were probably 28 percent because mostly what they're selling are these giant items, these big items. And so I went to the owner and I said, okay we need to increase our margins here on parts. And so we're selling all these engines and those engines are very expensive.
Cecil Bullard: So number one, what's the bottom line profit margin that you're willing to accept. Now here it's, it's 45. 46%. Now, but I used to be in some shops, we had a 35 percent was our bottom line margin when I was running a shop, you know, 15 years ago. The lowest I would mark up a part. Would be 35%. So if I'm buying an engine, I'm marketing up 35%.
Cecil Bullard: Now that's about a 1. 6 1. 62 multiplier, something like that. And so, I might buy a 1, 000 motor and sell it for 1, 600 and get myself a whatever it's 35 percent or whatever that is. It, it, you have to determine where you are. Now back to my engine shop. I went to the owner and I said, okay, can we change the price of engine?
Cecil Bullard: They were like, no way our clients will leave us. And, you know, we won't be doing motors. And, and so I was like, okay, what can we raise the price by 500? So we're currently selling an engine for, I don't know, 3, 500. Can we sell it for 4, 000? I said, no, we can't do that. I said, okay, well, what about 400? I said, no, we can't do that.
Cecil Bullard: So what about 300? Nope. What about 200? No. What about 100? Can we just raise the price of an engine job by a hundred bucks? And they said, okay. And so I, I said, okay, we're going to raise the price tomorrow by 200. And we raised the price 200 an engine. Now nobody stopped. Nobody that was going to buy a 4, 000 engine or a 3, 500.
Cecil Bullard: Motor said no, because it was 200 more. And I think in, in my experience, and it is pretty vast, I've done this forever. The buyers are the buyers and the not buyers are the not buyers. Now, depending on your marketing, maybe you brought a lot, a lot of not buyers in your shop. You've been running a lot of discount coupon marketing.
Cecil Bullard: You're attracting a certain segment of the market. That's looking for discounts and coupons. And if you're not, and you never have, then you're. You're looking for, you know, you're attracting a segment of the markets looking for relationship and quality. And so, if I want to, if I want, you know, if I'm, if I've got relationship and quality customers in my shop and the job's going to be 3, 700, if it's 39, the people that were going to say yes at 37 will not say no at 39, it really doesn't matter.
Cecil Bullard: Because they're, they're not price in every survey that's been done on what do customers want prices in the top nine or 10, but it's always nine or 10, it's never first, second, third, fourth, fifth is the highest it, it ever comes up. It's always about convenience and quality of product and, and trust and relationship before it's about price.
Cecil Bullard: So, Long, long answer is maybe I have a lot of engines and I have to say to myself, well, maybe I'm never going to have a 58 percent margin, but I am going to bring my motors up or my transmissions up by X dollars, by the way, back in the day, the transmission shops were the shops that made the highest margin because the parts on transmission rebuilds, there was huge margin in the parts.
Cecil Bullard: I know because I ran a big transmission concern for years. And, and we made better margins than any automotive service and repair shop. Things have changed over the years a bit, but those are, are good margins. And I think you have to decide, you know, Cecil's telling you 58%. Some of you are going to say, there's no way in heck.
Cecil Bullard: And some of you are going to decide, well, what if I do 52? Okay, then set it for 52 and then manage your matrix to get 52. That's your decision. What profits you make is your decision. I'm going to tell you what I think best practices are. I'm going to tell you what not only me as a coach and consultant teach in the industry, but probably out of the 40 other guys that do this that I know, probably 39 of them teach the same numbers.
Cecil Bullard: All right. So you can't just put a matrix in place. You'd think to yourself, Oh, I'll just put a matrix in place and leave it. And that'll be fine. You actually have to monitor it and you may have to adjust it. Reasons that you might adjust it is it might not fit your business. So you take my matrix, that is more for a general repair shop or a specialty shop, like, not specially like transmission or, or heavy duty engine, but more for European cars.
Cecil Bullard: When I talk specialty and you put that in place and your prices are just too high for the customers that you're attracting and you say to yourself, okay, I can't use that matrix, but what you do is you make minor adjustments to the matrix. And until you get to where you feel like, okay, this matrix is working for my shop and it's getting me the margins that I want.
Cecil Bullard: And the reason why the matrix might not work is because of the type of jobs you do. So if you're a you know, a tire store where you're doing tires I don't have tires in this matrix. I have tires in a different matrix. You know, we, we set a goal for 40 percent on tires. Most of the tire stores that I would be working with are probably in the 37, 38 percent on their tires.
Cecil Bullard: There's some other things that would, would qualify based on buying and so some of the big guys that are buying millions of tires can get their tires at a better price and, and mark them up a little less. I can't compete with those people and I'm not. My clients buy tires from me because it's convenient for them and they don't want to have to go somewhere else and, and deal with that.
Cecil Bullard: And so they're willing to pay a little more for the tires from my business. I might have that business, the tire store business where half my business is tires, and I'm gonna have a lower margin on those, but on the things that are not tires that are service and repairs, I'm gonna set a goal for 58 percent and I'm gonna track that and try to, you know, make adjustments to my matrix to get there.
Cecil Bullard: I might have a shop where I'm doing a lot of engines. We are working currently with a lot of diesel shops. And for some reason, our diesel shops have much higher average repair orders and they're doing motors and, and other things that some of our general repair shops are just not doing. And so we may make adjustments to the matrix for the type of jobs that we do so that we maximize our margins and hit the targets that we want to hit.
Cecil Bullard: A quick question there. Come up. It's come up a little bit in the chat here. The Q and a when we're saying margins. I know we covered this just briefly in the last one. But can you just sort of reset the audience on some of the terminology, you know, when you're in margin and markup and gross profit, things like that. 
Margin is the difference between what I paid for the part and what I charge for it. And you will see margin a little later in the, we're gonna go through it so you really understand it. And then one more slide or two slides down. Markup is the multiplier. So if I want to get a 50 percent margin, I have to use the 200 percent multiplier.
Cecil Bullard: So I have a dollar part. I sell it for 2. That's a 200 percent markup two times one equals two. And but it's a 50 percent margin. And, and I'll explain that exactly in a moment with a slide. Gross profit, you have, you have you have gross profit. So in an automotive business, we sell parts and labor.
Cecil Bullard: That's on another slide coming up real soon, but I pay for the part and I pay for the labor. And then what's left in the pile is my gross profit. So gross profit is what's left after you take your variable expenses. And I know some shop owners and some people are saying, well, what's a variable expense variable expenses, parts and labor?
Cecil Bullard: Because if I don't do any jobs, I don't pay for any parts or any labor, but I still have rent. I still have utilities. I still have some staffing costs, management costs, etcetera. So those in a way, don't. You know, those are later, those come after, below the line, after my gross profit. So, I have my, here's my sales, I pay for my parts, I pay for my labor, I have money left in that pile, that is my gross profit.
Cecil Bullard: And then I take out all my fixed expenses and everything called net profit after I pay all the bills. But before I pay taxes, I have what's left in that pile. And we're going to target 20%. Now we went over all of that in part one. So if you're, if you're fuzzy on that, you can view part one, and you can see all of that with all the math.
Cecil Bullard: Number three If you decide to discount some items, you've got to raise others, and we've already kind of covered that, so I'm not going to spend a ton of time here, but the more items you discount, the higher price the rest needs to be so that I make the margins that I want. It's kind of funny. We talked about three different ways of marking up parts in number one.
Cecil Bullard: One of the ways is to double every part. So we have people that say, I'll just double the parts. That'll give me 50%. I'll make all the money I want. And then I get a 4 oil filter and I'm okay to sell that for 8. But I get a 4, 000 motor. I'll never sell it for, you know, an engine that I won't sell that for 8, 000.
Cecil Bullard: I'll sell a 4, 000 engine for maybe five or maybe 4, 800, but I'll never sell it for 8, 000. And so I end up with a, I don't know, on the engine, which is now this huge part of my parts, it's, you know, 4, 800 worth of my parts sales. I end up with a 22 or 23 or 24 percent margin. And then I bring this 50 percent from this oil filter that's 4 and I still emit 23, you know, 0.
Cecil Bullard: 1. I just, how many oil filters do I have to sell at 8 that make up for one engine that I sell at 4, 800 if I paid 4, 000 for it? And, and so there's always this idea of paying attention to your numbers and, and trying to balance things out so that you're sure of, you know, where you really are in the long run.
Cecil Bullard: If you're doing it the way that I would suggest, you're probably looking at your matrix. And you're, you're looking at your margins monthly, parts margins, and you, you have a system, a matrix in place, and you have some processes around how you mark up parts so that your people know how to do it. And then you look at your parts margin at the end of the month and you say to yourself, Oh, we were great.
Cecil Bullard: We're great. I don't have to look anywhere. I don't have to go anywhere. Or you might look at your parts margin and you're trying for 58 and you're getting 38 and then you say, Okay, well, what did we do? Is the matrix broken? Are we not following the matrix? So it kind of gets us to our another slide. If we're our goal is 58, but our actual margins are 48.
Cecil Bullard: Again, the difference between what I paid for the part and what I mark, you know, what I got for it. Then I might have one of three problems. It really comes down to three things. I got a broken matrix. So I might need to adjust it based on the fact that I'm buying more dealer parts than somebody else.
Cecil Bullard: I mean, in certain shops believe that only dealer parts are the right parts and you need to put those on. I, I don't subscribe to that myself. I do, having been a tech and And rant run shops and own shops. I do know that in some cases, the dealer part is the better part and I need to use it, but it's not every part.
Cecil Bullard: Some shops actually believe that they're going to buy a much higher percentage of dealer parts. And so they need to look at their matrix and make adjustments for that, or they won't make the money that they should. The second thing is that I'm doing more of those bigger jobs. That was the question.
Cecil Bullard: You know, if I'm doing engines and transmission, see, so you're telling me to make 58%, ha, ha, ha, not going to happen. There's also a thing called gross gross profit per hour. And if I'm making enough gross profit on a job, I might look at. An engine, I'm gonna do that engine in 20 hours, and I don't know, my profit on that job is say, $3,000.
Cecil Bullard: So I'm making $150 an hour in gross profit after I pay for the parts and the labor. I have $150 an hour. You know, I made whatever that, you know, that $3,000 profit on that job. And then I do a break job, which is only a $600 job, but it costs me three in parts and labor. And so now I've, I've got a $300.
Cecil Bullard: profit for an hour's worth of work or 150 profit for an hour's worth of work. As long as I'm bringing the right gross profit. And this is not a class for that. We're just talking about parts margin here, but I do need to think about my gross profit. It's an important part of making sure that my shop is, is making money.
Cecil Bullard: And so I might run an engine shop where I'm doing a lot bigger jobs. I might have a lower parts margin overall. But when the dollars are done, I'm making the same amount of dollars at the end of the month. Right. And so either I've got a plan to make dollars gross profit dollars and, and therefore net profit dollars cover my expenses and leave me money in the pile.
Cecil Bullard: Or I have a plan to make sure I'm marking my parts up correctly and getting that margin because when that's all done, then I still make 20 percent net. That's the plan. Right. 
John Heller: And you, you alluded to this a little bit in your response a minute or so ago here. One, one individual asked the question, why should we run a lower margin on dealer parts where we source the part shouldn't affect my needed margin?
Cecil Bullard: And you remember, I told you that, that like 15 percent of my clients, that that's their attitude and they just mark up parts. It's kind of funny. And there's a, a very big metro area. And if I mentioned the area, you probably would know the guys I'm talking about, but there's two pretty big players up there, maybe three.
Cecil Bullard: And they happen to be clients. One of them is a big European area. He's got multiple shops. And every time that I talked to him, I'm like, your parts margin sucks, right? It's at, at 48%. And he explains to me that where he's at in his community, you can't make 58%. You have to shoot for 52. And if you shoot for 52, you end up with 48.
Cecil Bullard: So he goes, I'm happy with that Cecil. And I'm like, okay, great. That's what you've chosen. Yeah. I'm far be it for me to argue with you too much. I have another client up there that actually runs two shops. He does he'll make 2 million net out of these two shops. One of the vish shops we'll do, I don't know, six or 8 million this year.
Cecil Bullard: And then the other shop does 3 million and he'll make 2 million in profit. He does all the time, and his parts margins are like 60%. And by the way, these two businesses are within 15 miles of each other, and they're literally kind of competitors. Well, I've got one guy that tells me, well, you can't make money on parts in this area.
Cecil Bullard: I've got another guy that tells me, I just mark them up. And the customers pay for it or they don't. I've got a guy in the San Francisco area. He's a mobile mechanic and he gets 64 to 67 percent margin on his parts. He figures I'm mobile. I'm coming to them there. They better, they need to pay for it. And that's how I mark it up.
Cecil Bullard: And by the way, his clients pay it. I always say when I'm, when I'm teaching, I'm going to write this book and the book's going to be titled Cecil, You Don't Understand. Because I have people telling me all the time, well, you don't understand where I'm at, or you don't understand the business I'm in, or you know, you don't understand.
Cecil Bullard: And so you, you know, if you're in San Francisco, you can't make parts margin because people are, you know, this, or if you're in Utah, you can't make parts margin because people are this. And I got to tell you, that's all hokey. That's all hokey. It's whatever's in your head, biggest problem you have is here in your brain.
Cecil Bullard: If you believe you can make parts, margin, you mark them up. The majority of clients are going to pay it. You're going to lose a couple, but the majority will pay it and they'll be happy to pay it because you're, they're not there because you're the cheapest guy in town. They're there because they believe that you're giving them a service that they.
Cecil Bullard: that they, there's value in it. Okay. Someone's not following your matrix. This is the problem we find most of the time. Someone, usually the owner, is feeling for the customer and saying, ah man, this is awfully expensive. I'm gonna, Lower this part by a hundred bucks because it's not real dollars. It's not like you're taking money out of your pocket, right?
Cecil Bullard: It's on paper right now. It doesn't mean anything. It's not real dollars. And what I tell owners and service advisors is go to the bank, get yourself some brand new 20 bills. And when you decide to lower the price on a part, because you feel bad for the customer, Just take some of those 20 bills out and hand them over the counter and have the customer pay you with those.
Cecil Bullard: Because every time you discount the part or anything else, frankly, you're actually giving away dollars that you should make. And, and I think we are very emotional in this business. We really feel for our clients, which is wonderful, but I will tell you that I didn't build the car. I didn't buy it. I didn't drive it.
Cecil Bullard: I didn't break it. I shouldn't have to supplement the customer's repairs. When I go to the grocery store, They don't look at me and say, Oh, that's Cecil. He's been living here for 25 years. He's had raised four kids and 14 of their friends over the years. And he's bought, you know, millions of dollars worth of groceries.
Cecil Bullard: And so we're just going to lower his prices because he's a good guy and we don't want him to feel bad when he checks out and pays for those milk and eggs. They don't do that. When I go the. To the nice restaurant over here, which I'm in quite a bit, get myself a steak. They don't say, Oh, that's Cecil.
Cecil Bullard: We know him really well. You know, normally our steak would be, you know, 55, but we're going to lower it down to 35 because Cecil's a nice guy. And we feel for him. They don't do that. We only do that pretty much in the automotive industry. So, if I'm managing the business, number one, I'm going to have a matrix in place if I'm managing the business, I'm going to look at where my margins are and I'm going to make adjustments to my matrix based on.
Cecil Bullard: The type of parts I'm buying, type of jobs I'm doing, where I'm getting those parts, so that I get the margin I need to. And if I'm managing the business, and we have a matrix in place, and that matrix is adjusted, and we're not getting our margin, I'm going to start looking for heads to cut off. And no knives are used and no people are hurt.
Cecil Bullard: But I'm going to find out who's discounting. And I'm going to go find out if they want to actually pay for that themselves. Because when they're discounting, they're actually taking money out of my pocket, their pockets, and believe it or not, my customer's pocket. Because if I have no profit, I can't take care of a customer that has a problem.
Cecil Bullard: So that's, anyway, that's it. I, I, I, I am going to come out of this really quickly. I'm not going to spend a lot of time here. The matrix that you will get the, the, from PartsTech from the QR code is a lot like this. You can put the price in here. We have a 34. 95 part. That's what we paid for it.
Cecil Bullard: And based on the matrix, we're going to charge 96. 11 for it. We could put in a 14, 000 part. Let's see 0. 00. So it cost me 14, 000. I'm gonna sell for 2, 800 in this matrix. It 1, 400. Eh, it ain't working right. That should be Lower. I have to look and see what, why that isn't doing what it's supposed to.
Cecil Bullard: Let's see if we can put it down here and make it work. 1, 400 2, 590 is what I'm going to sell that for. Ignore that particular one, the lower thing isn't working. I know it is on your calculator. I, I patched this together for the last minute so I could show it. I'm going to buy a, I don't know, a 12 part in 30 cents from my local job.
Cecil Bullard: I'm going to sell that for 33. 83. I'm gonna buy a 22 part from my dealership and I'm gonna sell it for 49. 50. Depends on which matrix, but the matrix that you guys have all works properly. I know that. We've looked through it. And if you have that little tool, you can just put the prices in and it'll tell you what.
Cecil Bullard: Also, almost every point of sale that I know of, I always say almost because I don't know of all the point of sales. But everyone that I know of has a matrix built in that I can manage. It might even have multiple matrices that I can put in for different vehicle types or different types of jobs or where I got parts.
Cecil Bullard: And it will do the calculations in and of itself. Any questions here, John? 
John Heller: I think we have some that we'll get to at the end here. I'd like for you to keep on going. 
Cecil Bullard: All right. So I have to understand how I make profit in an automotive business. I only have two things to sell.
Cecil Bullard: I sell, I buy parts from someone and I resell them. I mark them up. I buy labor from someone and I resell it to my customers. That's how I make money in the automotive business. So, if I don't mark up my parts correctly, that's about half of my business, maybe 45%, then I might lose 10%. And if I lose 10%, I might lose 40 to 70, 000.
Cecil Bullard: Labor's difficult to fix. That's a whole nother webinar. Parts is easy because it's just follow the matrix or don't follow the matrix, adjust the matrix so that it gets you where you want to be. Labor's a lot harder because we're dealing with productivity and, and other issues and costs. That's another hour long webinar.
John Heller: Well, maybe, yeah. And let's we won't dive into the details of that, but along the lines of labor, we had a really interesting question here asking, what do you think about charging the customer cost on parts? Like if they walked into an auto part and then just raise the labor that way you don't have to pay more money on tax because the parts are high and taxable.
Cecil Bullard: I think number one, the sales tax board, at least serving California is going to come down on your Fannie and you're going to end up paying some extra taxes because they know what you should be marking parts up because they know what the average shop marks parts up. And so you, you, you do put yourself at risk of a sales tax audit and trouble.
Cecil Bullard: I'm not saying that's actually going to happen necessarily, but it could. Number two, I think it's kind of chicken. Mark up your, your parts like you mark up your labor. You should be making profit on parts as well as labor. I hate to see our industry go that way. There is a contingent that's basically saying let's just sell parts for what we bought them for, for what the normal list is, and then let's mark up our labor.
Cecil Bullard: I guess in the long run, as a consultant, I don't care. As long as you make the right net profit and the right gross profit, it doesn't really matter. And I think that in some states where you have to define parts and labor maybe you're more apt to do that. In other states, you don't have to, you just have to say this is what the job costs.
Cecil Bullard: It always makes me Me laugh. I was working with a client today and I said, you need to raise your labor rate by 20 bucks. He said, I can't do that. Cecil and I said, well, what if we put a labor matrix in place and we just add 20 percent of the labor time. He was all over that. Oh, yeah, I can do that.
Cecil Bullard: And the funny thing is, is that. Basically, I'm doing exactly the same thing. It's, it, it, it, it's funny to me where emotionally sometimes we're tied up in other places where not I don't know if I answered that question. Basically, I'm not going to do it. I'm not going to recommend it to my clients or the industry because I, I just don't like it.
Cecil Bullard: I can't tell you anything other than that. As long as you make the profit that you need to gross profit per hour and gross, you know, margin, net margin, gross profit margin, net margin, you're fine. How do I calculate margins? Margin is calculated by taking the difference between what I paid for the price and what I, part, and what I sold it for, and then dividing it by what I sold it for.
Cecil Bullard: If I bought a part for 3. 50 and I sold it for 11. 50, I made an 8 profit, so my profit, 8 divided by 11. 5 is 70%. That's a 70 percent margin on that part, okay? So there's the math for you the math behind the, the thing. Now labor we're also gonna, I'm just gonna do a labor one. If I bought the labor for 42.
Cecil Bullard: 50. So that would be maybe paying a tech, you know, 40 an hour. And then I got a 12 and 50 percent load parts FICA, feudal workers, comp P PTO, et cetera. And I sold it for one Oh five. I made a profit of 61, actually, geez, that's supposed to be 61 50. I've changed that in five different slides which is about a 59 percent margin.
Cecil Bullard: So if I'm supposed to make 64 percent on my labor. I'm supposed to make 58 percent on my parts. I did really well on my part here, but I didn't do really well on my labor. I did, I didn't get there. Okay I'm gonna die over this slide being wrong. Last slide of all and we'll ask, we'll answer questions.
Cecil Bullard: I have a sales volume, a shop where I have a sales volume of 65, 000 a month. I have a 60 percent gross profit that gives me 39, 000 in gross profit dollars to pay my bills. So I have a 500 average repair order. That means I need 130 cars. So assuming that I lower my margin because I'm not paying attention or I'm not using a matrix or I'm getting emotional by down to 50 percent on that same 65, 000.
Cecil Bullard: Now I'm, I've got 32, 500. I'm 600, 6, 500 short to pay my bills and leave money. And if I have a 500 average repair order. It means that I need 156 cars to do the same to do the same business. And so I need 26 more cars. And the more cars you bring into your business everybody thinks it's all about car count.
Cecil Bullard: It's not about car count, it's about margin. It's about making profit. If I lose 5 on every car that comes in, how many more cars do I want to work on today? I don't want to work on any. If I'm losing money and, and the whole point is here that there's a whole contingent out there saying, lower your price, lower your price, get more business in.
Cecil Bullard: Well, you can do that. You can lower your margins and get more business in your shop. You can lower your margins by, I don't know, 15%. And you'll have 10, almost 10, 000 less, and you'll need 43 more cars to get the same money in your bank. And then, here's the other, here's the other part of that, it's literally talking about your fixed expenses.
Cecil Bullard: Let's, let's look at the 32, 000. Let's say I have a 32, 000 worth of fixed expenses. That's me, the, the owner, I get paid for being a manager, etc. That's my rent, my utilities, my truck. My gas, my electric, you know, my insurances, my banking costs, all of that stuff costs me 32, 000 in a month. And I have a 60 percent net profit.
Cecil Bullard: Then I'm going to make a gross profit of 53. You know, 5, 300 and 53, 000. Ha ha, Cecil, get tangled up here. 53, 333. That's my I need to sell 53, 333 to pay that 32, 000. And if I have a 500 average imperative, it means I need 106. 7 cars in my shop, and that would be to break even. That would be not making a net profit, it's just paying the bills.
Cecil Bullard: Now 15 points. And so I'm losing 10 on my my parts. I'm losing five on my labor, which we see this all the time. I still have 32, 000 in expenses. Now I have to do 71, 000 in business. Now, by the way, because my margins are lower, it's actually going to lower my average repair order. So now I'm going to, instead of having a 500 average repair order, I'm going to have a 425 average repair order, 15 percent less.
Cecil Bullard: And it means I'm going to need 167 cars, or an extra 60. 7 cars, in order to make the same, to break even, be zero. And so you, you gotta be really careful about margin because the more your margin slips, the more business I have to do to pay the bills, the more cars I have to bring in the business and it's, it's risky.
Cecil Bullard: Okay. All right, now we're ready for questions. And we'll leave this up while we ask questions, and then we'll go I'll turn it back over to you sir. 
John Heller: Yeah, absolutely. Thank you, Cecil. Man, yeah, just some great questions. That's a great way to wrap it up. I, I love the, the diving in there and actually looking at what gross profit does to the business.
John Heller: Very valuable information. There Cecil. Thank you. A couple of things around mobile mechanics. You alluded to it a little bit in your illustration about someone in California doing that as well. This one says I'm a solo owner operator of mobile mechanic called shops around in the area. They said they're all at 30%.
Cecil Bullard: On their margins? 
John Heller: Yes, on their markup. 
Cecil Bullard: Where are you? In the southeast somewhere? In Mississippi, Missouri, Arkansas? I'm sorry, I've been dealing with shops for 42 years, going on 43 now. And we don't, we have shops that are at 30 when they start. We don't have any shops at 30 when they, they end working with us.
Cecil Bullard: And by the way, if you, if you are mobile, and you're going to the customer's home, And you're charging cheap to get that job. Shouldn't you be charging more because you're actually creating convenience for them and going to their home instead of charging less? The, we, we work with several mobile mechanics as well as, as you know, brick and mortar shops several hundred of them actually.
Cecil Bullard: And Most of our guys are probably, if we average margin between all of our people new coming on and our people have been with us for a long time, we're probably averaging somewhere around 52 percent parts margin amongst all the shops that we work with. Think about a 22 percent difference in your parts margin.
Cecil Bullard: And if you're gonna sell, I don't know, 100, 000 worth of parts, that's 22, 000. That's, that's a lot of money. Sorry, John, I interrupted you. Go ahead. 
John Heller: No, that's great. And along the lines of mobile here this individual says I do flat pricing for things like oil changes and brakes. Do you think this is a mistake?
Cecil Bullard: Yes, absolutely. Are you kidding me? Flat pricing. So I'm going to do the same brake job on a Corvette as I'm going to do on a Camry or a Honda. Or a I don't know, a Jag, a Jaguar a Jaguar. You know, I'm going to have the same price. There's no way in heck I'm doing that based on my costs is, is what you're going to pay.
Cecil Bullard: It's never going to be, I just set the price. I mean, it's just. Are we, are we going to the lowest common denominator? Are we building a business that's going to be successful financially and an industry that's going to be sought at and looked at like professionals and be profitable? Yes, that's a big mistake.
Cecil Bullard: Don't do it. 
John Heller: Right. Here's, here's another one for you. If I sell a job that includes parts, such as a job for 300, part cost is 40. How do you back calculate for the part? 
Cecil Bullard: Well, I'm going to take. I take that 40 part and I put it in the matrix and it charges whatever it's going to charge. Which by the way, if you're running your business correctly and you're estimating correctly, you have about 55 percent of your sales is going to be labor and about 45 percent is going to be parts.
Cecil Bullard: Parts margin should have a 58 percent margin. Maybe you don't stick to see, you're not as tough as I am and you're going to be 52. Labor should be, if it's loaded, we want to see a 64 percent labor margin or a little higher. Unloaded labor, we want to see 74 to 80 percent margin on, and the load is the FICA Feudal Workers Comp, whether you look at it either way.
Cecil Bullard: I would back into that and say that 55 percent of that 300 which is 165, is going to be labor. And so my part with is going to be the difference, which is 135. That 40 part is going to go out for 134. 95. That's going to be you know, a $300 job all in. And by the way, I bet you that's about 60, 60 to about 60 percent margin on that part.
John Heller: All right. Here's one. How would you matrix parts for commercial customers? Any different? 
Cecil Bullard: It depends on what part of my business is commercial and what my commercial customers are looking for. If my commercial customers are looking for price We, we work with several different commercial fleet type customers.
Cecil Bullard: One guy does 200, 000 aluminum tank repairs. Another guy is taking care of the. You know, the air conditioning guys, fleet of cars and of trucks. And so when I'm selling the, the customer, I'm going to sell them on the idea that for every hour, their truck is not on the road. It's costing them four to 400 to a thousand dollars.
Cecil Bullard: Depends on what you're doing. If you're. If you're taking, you know, hazardous chemicals around the United States or Canada, then it's going to be a higher cost if you're just, your air conditioning guy's not out fixing air conditioning units because the truck won't get him there. Probably costing you around 400, 450 an hour.
Cecil Bullard: And so I'm not selling a cheap price, I'm selling, get it in, get it out fast, get it back on the road, make money. And so, the way I handle, Pricing for those guys as I talk about the value of what I do, like I would for any client and I make some agreement with them. Maybe you've told them you'll only mark up parts 20 percent or 30 percent and so now I have to start playing games with labor and try to make that extra money up in labor or maybe I reach out to my guy and say, look, we need to make 40 or 45 and they decide, hey, I don't want to work with them or I will.
Cecil Bullard: I hate the fact that we would go, look, it's 30 percent to you because you're a fleet and you're going to bring me all this business. So now the bulk of your business is people paying a lower margin. So how many more cars do I have to work on? And I don't know if that answers that question. It's not my business is never going to be about price It's always going to be about what we can do for you How quick we can get that vehicle back on the road and and the quality of the product that we offer And so i'm always going to charge a little more than probably somebody else will yeah You get to decide what you want to do.
John Heller: Absolutely. All right I think we got time for just one or maybe two more here. Cecil and I I know we've got a lot of great questions in there, and unfortunately, we won't be able to get to all of them. Just, I know you touched on it briefly, I just want to reiterate, there's several questions in here about tires.
John Heller: And I think you mentioned tires is somewhere in the 40 percent you would recommend? 
Cecil Bullard: We shoot, we shoot for 40 in tire stores. It's funny I've worked with all the different major tire chains or guys that had shops for different tire chains, and I went into one. We were about 24%. I told them we were gonna get 40%.
Cecil Bullard: They thought I was nuts. Nine months later, we were 38%. There are different things you can do to increase your. tire margins. Not enough time to actually do that here, but I'm shooting for 40 percent on tires, especially in an independent shop. That is not a tire store. My customer is gonna pay a little more for the tires, but it's about the convenience, not the cheap tires.
Cecil Bullard: They can buy cheap tires anywhere. But their cars in my shop today, they for the convenience, they're going to pay a little more from us and, and shopping tires and how you sell tires. It's a different game than selling water pumps or brake jobs. It's a completely different sales process. 
John Heller: And one last question here, and maybe I'll ask you to, to stop sharing so I can throw it one closing slide up here.
John Heller: See, so in closing we talk a lot about emotion here and you know, we just got another couple of questions in here today around what what do I do when people are out price shopping my parts on Amazon and they bring in, I found this part on Amazon for X, Y, Z, how do we, how do we handle this emotional tag that all of a sudden parts are a commodity and that people expect the lowest price anywhere on parts?
Cecil Bullard: So, think about going to your local restaurant and bringing your eggs, your bacon, your, your steak into the restaurant and saying, would you cook this for me? I guarantee you if you try it. Take a steak or take a bag with with a steak and a potato in and ask the restaurant to cook that for you and see what happens.
Cecil Bullard: Okay. So what, what's going to happen in our industry, like every other industry is people are going to do what we allow them to do. Now, there's three reasons not. To let someone bring their own parts in your shop. Actually more than that. So one is you make me crazy. You're the person that complains the most.
Cecil Bullard: You bring me the cheapest parts that don't fit. And then when your car is here for three weeks, because you had to go back to Amazon and try to get the right part. It's sat here in my way. And now you're mad at me because your car's not fixed because you didn't supply the part. In most States.
Cecil Bullard: Your warranty on parts, no matter what you write on the work order, you have the customer sign is exactly the same as any warranty on any part that you would give to any customer that comes in your shop and you supply the parts. So whether you like it or not, if you're giving a three year 36, 000 mile warranty to your regular customers who let you supply the parts and make your margin, you're giving the same warranty to the person that brings their own parts to your shop.
Cecil Bullard: Because when you go to court, And that judge says, why did you do this or why didn't you, you know, they think you're the professional and you will lose that court case, plain and simple. That's just how it is. Number one. Number two, if the insurance company that does your liability insurance finds out that you are letting people supply their own parts and creating that liability, not knowing the quality, the provenance of the part they can and might cancel you or raise your rights.
Cecil Bullard: Okay, because you're creating additional liability for them because you do not know where that part came from. You do not know what's in that part or how it's going to work or anything. Now, number three, I have to make a certain margin or I go out of business. I cannot let you bring your own steak into my restaurant and cook it for you because then I don't make the money I need.
Cecil Bullard: And I still have to pay for the lights and the overhead and everything else and make a profit. So the answer would be no, I don't allow it. Think about this. What if every shop was like every restaurant and we just said, no, I won't take those parts. Yes, I know you can buy them cheaper, but I don't know the, I don't know the quality.
Cecil Bullard: I don't know the provenance. I don't know if they're a counterfeit part. I don't know if they're quality part. If the part doesn't fit now, the things your bay, your area is going to be tied up for weeks at a time while the customer goes and gets another part. Now, you think this is a new thing. Parts pricing and parts.
Cecil Bullard: We've been fighting this same battle for 42 years. Long, as long as I've been in the industry, people have been coming in my shop with, I can buy that alternator cheaper at, at Pep Boys, AutoZone. I can buy that alternator cheaper at Napa. You know what the answer to that is? Absolutely. Yes, you can.
Cecil Bullard: But it does not come with a warranty. It does not come with a guarantee that it's fixing your problem. It does not come with my customer service. So think about that steak. I can buy it cheaper at the local grocery store. You bet you can. But it doesn't come cooked perfectly on your plate with a guarantee that it won't be tough and that you'll enjoy it.
Cecil Bullard: And it doesn't come with someone that cleans up the dishes. Okay? We have to stop. Playing the games that the cheap people in the world want us to play so they can save a few nickels. We have to start being business people in our industry. If we want to be treated like professionals, we have to act like professionals.
Cecil Bullard: One more comment here. Big, it's a big area. The guy that brings his own alternator, his own water pump, and you write on the ticket, hey, no warranty, 30 days later when that thing goes bad, you want to know who he's going to blame? Not the company that made the part. He's going to blame you because you're the one that put it on the, on the vehicle, and he's gonna, he's gonna be the one that's in your face, demanding that you put another one on and not the guy that says, Oh, I bought the part, so it's my fault because I didn't buy a good part.
Cecil Bullard: I know I've experienced it many, many times over the years. We have to stop letting people bring their own parts into our shops. 
John Heller: Excellent. Well, thank you, Cecil. Again fantastic information here. I hope everyone on the call here, this webinar, found it extremely helpful and useful. Closing here, up on your screen, you'll see QR codes to learn a bit more about the Institute and the services they provide.
John Heller: Also, you'll see QR code there for signing up for a parts tech demo. And I'd encourage anyone who's curious about how parts tech is helping shops understand and monitor gross profit as they're looking for parts and building ROs we'd be happy to show you how parts tech is solving those problems for you.
John Heller: So again, thank you all for joining today. We will send this recording out to everyone here on the call and those that may have missed it as well. Cecil, again, thank you very much for coming on and imparting your wisdom. Everyone have a great day. We'll talk to you soon. Thank you.
 
 

95 - Mastering Parts Markup Strategy for Auto Repair Shops with Cecil Bullard (Part 1)

95 - Mastering Parts Markup Strategy for Auto Repair Shops with Cecil Bullard (Part 1)
March 27th, 2024 - 00:51:17
 
Show Summary:
In this episode, John Heller from PartsTech is joined by Cecil Bullard of the Institute for Automotive Business Excellence to discuss one of the biggest missed profit opportunities in the auto repair industry; parts markup. With data showing that many shops are leaving between $40,000 and $70,000 per year on the table, Cecil breaks down why most shops are underpricing, how to implement an effective markup strategy using a matrix, and why emotional pricing and fear of customer pushback are holding many shop owners back. The conversation is filled with real-world examples, tactical advice, and encouragement to take control of your margins and profitability.
 
Host(s):
John Heller, PartsTech
 
Guest(s):
Cecil Bullard, Founder & CEO, The Institute
 
Episode Highlights:
[00:01:24] - 67% of shops are losing money by underpricing parts; a problem easily fixed with the right strategy.
[00:02:18] - Many shops leave $40K–$70K on the table annually due to weak parts markup.
[00:04:00] - The Institute has helped 3,000+ shops improve parts margin, aiming for 58% average.
[00:06:15] - A 15% drop in margin on $400K in parts equals $60K in lost profit, math doesn’t lie.
[00:07:17] - Using manufacturer’s list prices leads to 32–38% margins, far below the 58% target.
[00:09:23] - The only consistent way to hit strong margins is by following a parts matrix religiously.
[00:10:31] - Customer pushback is often in your head; shops around you are likely getting 58% already.
[00:11:17] - “Parts are expensive” is a universal reaction; it doesn’t mean customers won’t pay.
[00:14:10] - If you're buying a shop with no markup, go straight to 58% and replace unprofitable customers.
[00:18:20] - Emotional pricing is dangerous: remove fear, build value, and focus on delivering solutions.
 
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=Do2_b119jsA
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________________________________________
 
John Heller: Hello, everyone. Welcome. We'll give a few seconds here as more are joining. We've got a lot to cover today. Very exciting topic. So we'll jump into it here in about 10 more seconds.
John Heller: All right. Again, welcome, everyone. We're extremely excited that you've joined us for this very important topic of parts markup. I'm John Heller, product marketing here at PartsTech. And we'll be bringing together with you our guest who I'll introduce here in a moment. Cecil from the Institute, a couple of housekeeping items.
John Heller: We'll use our chat function in this webinar to allow you to post your questions there. We'll be monitoring these questions as we go along. I know a lot of you will have questions as Cecil goes through this information. So please put those in our chat box and we'll do our best to get to as many of them as we can during the course of this conversation.
John Heller: So a brief intro about PartsTech for those of you who are new to PartsTech, we are a platform that makes it fast and easy for auto repair shops to find and order parts and tires across all of your suppliers. in one lookup. We are completely free to get started. No credit card required. And we allow you to connect an unlimited number of suppliers through parts tech so you can quickly find and order the parts you need across multiple, multiple suppliers at once.
John Heller: We recently ran a survey and found that nearly 67 percent of shops are leaving money on the table when it comes to profit. on parts. That is an astounding number, especially as Many of us are looking for ways to save money, make more money in today's economy a very important topic. And so as we put this report together, we thought, hey, let's, let's really dive into this a little bit deeper.
John Heller: And let's bring in an expert who can shed some light into maybe what the thought processes are around getting started with a parts markup strategy. It's not as big and cumbersome as many think, and hopefully Cecil will show us how easy it is to get on your path to better profit margins on your parts.
John Heller: And so without further ado, Cecil made this very interesting statement here that many shops are leaving around 40 to 70, 000 per year on the table due to an insufficient part markup practice and or strategy. And so we are pleased to have Cecil join us today and dive into a little bit more of the specifics behind what he's seeing in our industry and some very practical ways that shops can get on their way.
John Heller: To a more profitable parts markup strategy. So Cecil, thank you for joining us today. We really appreciate your time. I'll turn it over to you now, let you introduce yourself and we'll jump into this great topic and the information that you've put together. 
Cecil Bullard: Thank you, John. As John said my name is Cecil Bullard and I am I've been, you name it, I've been a tech and a service advisor, managed shops, owned multiple shops the last shop that I ran.
Cecil Bullard: We had a 62 percent parts margin, a little higher than what we would recommend because our rent was very, very high or our, our building payment about 23, 000 a month. And so we needed the, the, the profits to pay that. I'm gonna try to really kind of sail through here. I do, however like questions.
Cecil Bullard: If you have questions, we're going to try to get some of those answered. I know we can't answer them all in the time we have, and I'm going to get some foundational stuff in. I also, as part of the Institute for Automotive Business Excellence, which is our company we worked with I would say at this point over 3, 000 shops kind of intimately and improved parts margin.
Cecil Bullard: And so what I'm talking, when I'm talking about the numbers, I'm talking about numbers I've been tracking for 20, 25 years. And what my mentors taught me years and years ago and what I'm out teaching the industry and what most of the coaches that I talk to are, are also teaching. So let's, let's go. There is a workbook and there will be a couple of different calculators, including a parts calculator.
Cecil Bullard: That you can download this will come up again for someone who maybe didn't wasn't ready or didn't get prepared, but this way you can download the workbook, which will have the. More description and more information in it. Let's get her done. I make a statement and I think it's a valid statement that parts margin is costing most shops well over 40, 000 a year.
Cecil Bullard: And that's based on us working with different shops when they first come into our company. One of the things we look at is, is parts margin, labor margins, productivity, average repair order. If you are a shop, A small shop today doing about 400, 000 in overall sales. Typically we see especially for general repair 50, 50.
Cecil Bullard: So about half of what you sell is parts and about half of what you sell is labor. Technically, we would tell you that's probably not quite right. You want your labor to be higher than your parts because labor has a higher margins, et cetera. But typically, this is what we see when companies first come to us.
Cecil Bullard: They haven't had coaching or training. So if you are selling you know, 400, 000 in sales in your business, about 200, 000 in parts, and you're off by 15%, which is pretty easy to do it's costing you about 30, 000 a year. If you're selling 800, 000 this would be most shops that we would see with maybe three texts or right around there, maybe four texts, very unproductive, but about 400, 000 in part sales, if you're off by 15%, that's costing you 60, 000 a year.
Cecil Bullard: And if you're over a million, say a million, one you're selling about 550, 000 in parts at 15%. That costing costs you 82, 000 a year. So I think the statement that most shops are losing somewhere between 40 and 70, I think it's a very accurate statement based on what we see in the industry and based on.
Cecil Bullard: New clients coming into us to get coaching and training. Now again, foundationally I'm going to make some statements here and I'm going to try to build a foundation for putting a matrix in place and, and, and improving your parts margin. So I would tell you that the average shop that we look at is somewhere between about 38 percent and 42 percent has a parts margin, and we would like them to be at, at 58 now.
Cecil Bullard: I would also tell you of all the shops that we work with there's always about 10 or 15 percent are that are hitting 58 or higher. But our average in our company is between about 54 and 55 percent for our clients. And so I think that's a, a pretty accurate number based on the number of clients we have in the industry.
Cecil Bullard: Actually if you looked at the clients and the numbers we have, It's, it's, there's more people than your survey the survey that PartsTech did. So I think that number is, is, is a very accurate number. There are three common methodologies for marking up parts that we find. The first methodology is to use manufacturer's list.
Cecil Bullard: And if you are a company that use manufacturer's list, you will end up between about 32 percent and 30%, 38 percent parts margin. And this is, is fairly common. The problem with manufacturer's list is, the manufacturer doesn't know what you need to make. The manufacturer is I used to make a joke when I was training that they put a, they go into a room and blindfold a guy.
Cecil Bullard: There's a bunch of different prices on the walls. They spin him around three times, give him a dart, and he throws the dart, and that's the manufacturer's, you know, suggested list price. That has Never really meant as much as we have put into it in the industry, it really doesn't matter what the manufacturer suggests that you sell the part for it really matters what you need to make in profit in your company.
Cecil Bullard: So that your net profit is right around 20%. And that's the target. The second methodology is to mark everything up 50%. We see this a lot. Oh, if you're using many, as I said, manufacturers list somewhere between 32 and 38%. If you're marking everything up 50%, that will never get you 50 percent because you'll mark up a 4 filter, the 8 all day long, it doesn't bother you.
Cecil Bullard: You think, okay, that's, that that's fair, but when you get a 4, 000 engine. in your shop, you'll never mark it up to 8, 000. I mean, you know, most companies probably get a 4, 000 motor. They might be selling it for five but they're not, you know, and that's not. 50% margin and you can't sell, you can never sell enough filters or whatever else at at 50% and have an engine or a transmission where you made 20%, you can't get to 50%.
Cecil Bullard: So we do see shops a little higher in their overall margins between about 35 and 44% when they're using the. 50 percent methodology. The true and only way to really get your margins is to use a matrix and stick to your matrix. And you know, there are some reasons, you know, there are some parts that we don't put in the matrix.
Cecil Bullard: Obviously tires have their own matrix. Batteries are often not in the matrix. Then on the other side of that, there are some parts that we can because of what they cost us and because of what they might list for, we can actually make more margin than our matrix. So we, we need to be aware of that and we need to pay a attention to that.
Cecil Bullard: Now, if you, if you do have questions we are, someone is monitoring that. John's gonna break in and go, Hey, there's a question. 
John Heller: Yes. 
Cecil Bullard: So, what we find with shops that are following a matrix it's, it's funny to me, we'll have a, a place where we have three or four clients in the general area, and there's a place like that, I have a guy who's a really well known guy, if I mention his name, many of you might know him.
Cecil Bullard: And he's got multiple shops and he always tells me, see, so you can't make where we're at, you can't make 58%. So he shoots for 52 and his business routinely makes 48 to 49. The only problem with that from my point of view is that I have multiple other shops in and around him that are making 58%, 59 percent and even 60 percent part smart.
Cecil Bullard: And so really. What you can mark your parts up for is not necessarily based on what the customer is telling you or, or that feedback that you might be getting. It's, it's mostly in here in your head. And if you don't believe that your clients are willing to pay, they'll never pay. Yes. 
John Heller: We just 
John Heller: had a great question come in, you know, right around that topic here.
John Heller: Someone is asking the question or making the statement perhaps of yes but my customer states that my parts are very expensive. 
Cecil Bullard: Yeah, they are. All parts are expensive. I think, you know, you go to the dentist and they I go to the dentist. I needed a cap. I had to have some work done and the dentist told me what I was going to pay for a cap and I was like, holy crap, that's expensive.
Cecil Bullard: And I even said that to the dentist and. Nobody wakes up in the morning going, Hey, I want to buy brakes and I want to pay a lot for the parts. I think that that is a natural response. Even my shop today calls me and they say, Cecil, you need X, Y, or Z. And you know, it's a couple thousand dollars worth of whatever.
Cecil Bullard: And my first reaction is dang it. That's so expensive. I think you have to be careful of translating that term. That's expensive into, oh my gosh, I got a. Keep my prices down. And there's another thought here. What if you did raise your margin, say, by 10 percent your parts margin? Let's say you're currently at 33 percent and your average repair is, say, 500.
Cecil Bullard: So 25 of that you know, half of it 250 would be parts and 250, say, is, is labor. And if you raise your parts margin by 10% you would have a a 25 increase. So your average repair order wouldn't be 500, it would be 525. And, and what I explained to you, and I, I, Believe me, I've been at the counter.
Cecil Bullard: I currently have, I don't know, hundreds and hundreds of businesses that we work with that, that get it done all day long. That would equate to 525 for your customer. Now tell me what, what decent customer, I mean, not the guy that comes in and always argues with you about price or the guy that you don't really want or need that eats your time up.
Cecil Bullard: But what would a customer that would buy at 500, would they say no at 525? And the answer is no, they would not. I cannot tell you how many times we've been in a seminar and said I've been doing coaching for more than 20 years and every seminar, I'm like, raise your labor rate, every seminar. And all, many of you out there, you're going to say, yeah, yeah, that's what all coaches tell us to do.
Cecil Bullard: Well, you know, it's easy. Number one, number two, we're already. Underpriced as an industry. We have had thousands and thousands, tens of thousands of shops go home and raise their labor rate. Five, ten even. I had one guy raise his labor rate almost 50 an hour. And none of them chased away a bunch of clients.
Cecil Bullard: I mean, most of them will say, I, I, I don't even know who left. And they probably lost a few clients, but those are the bottom, you know, 1 percent or 2%, which are the ones that won't let you make money that eat up your life. You go back to Pareto's Law. So, yeah parts are expensive. Milk's expensive.
Cecil Bullard: Hell, when I go home and I buy a burrito on the way home, I think, God, that was expensive. I mean, I'm, my, my burrito is now 12, 15 bucks. Used to be 6. Of course it's expensive. Everything's expensive. So, I hope I answered that. I'm going to move and keep moving if that's okay. 
John Heller: One more, one more question on this markup.
John Heller: I think this is a really interesting question. We've got someone online who says, I'm buying a shop that currently doesn't have parts markup. What is it or what is a reasonable amount to jump to without freaking out the customer? 
Cecil Bullard: 58%. You put a matrix in place, you're going to do what you got to do.
Cecil Bullard: If you're buying a shop that never marked up a part you may lose some of those clients. You're probably going to lose some of them anyway because they're probably a bunch of people who don't want to pay for automotive repair. You come in, you raise the labor rate a little, you, you're going to lose some of those clients, but the difference that you're going to make in margin will make up for it.
Cecil Bullard: Mathematically I could raise my price by 10 percent and lose 25 percent of my, Customers in most shops and still make more money at the end of the day. I've done the math multiple times. I'm not telling you to do that. Please don't go home and okay. Cecil said, let's raise everything by 10%. But you could, if you, if you ran the math, you would have to lose more than 25 percent of your clients in most shops in order not to make more money by raising your price by 10%.
Cecil Bullard: And by the way, in most shops today, if you raise your price by 10% 95 percent of your clients wouldn't even know it, feel it, touch it, think about it. It would only be those people that are focused on price and it would also depend on your customer base. Here we go. Cecil's ADHD kicking in. If you built your business on discounts and, and more cheap customers, it will definitely affect you more if you built your business on relationships any kind of price increase or anything, it's going to almost not affect you at all. 
And there are plenty of relationship clients out there. I would say that more than 80 percent of the population would like to have a relationship as opposed to have a cheap price on, on their automotive service and repair. Absolutely. All right. Next what's the easiest thing to fix? Often when we you know, we get different kinds of clients that come to us, but we have a lot of clients that come to us that are losing money.
Cecil Bullard: You know, I can, Point to several guy came in, they lost 80, 000 the previous year. Been in business for 15, 16 years was getting worried. Felt like, Hey, I got it. I need a coaching company to help me. We turned that around right away. One of the things we did, of course, raise the labor rate a little bit.
Cecil Bullard: We also put a parts matrix in place, and then we monitored and managed that. And I think last year he came to me about four years in and he said, Hey, Cecil, I, we're going to make a little over a million dollars this year. And I need to know if you have a money manager I can work with. When you get up in those, that range, your typical accountant is not going to be able to take care of your business.
Cecil Bullard: And that's, Not the typical case. The typical case is, you know, we lost 80, 000 and next year we're going to make 120 and it's really is three or four things part smart and simplest thing to fix. So, you have to decide, though. You know what you want your margin to be and for me, there's a whole nother class on, you know, I want to determine that I want 20 percent net out of my business.
Cecil Bullard: That's fair. I don't get to keep all 20%. A third of that will go to the government. I get to pay. Uncle Biden and a third of it will go to the state of Utah. Cause that's where I live. You know, part of that third will go to the state of Utah. Whoever my uncle or aunt is here. I get to put a third back into my business.
Cecil Bullard: The, the the parking lot needs to be resurfaced refinished. The roof might need repair. I might need equipment, et cetera. And then I get to keep a third. So in a way, if I earn 20%, it's like me making 8 percent on an investment that I might put my money into. So to me, that's fair. You have to determine what's fair for you.
Cecil Bullard: If you need help with that, love to, love to talk to you. And help you understand what's, what's fair and what it ought to be. You put a parts matrix in place. We're going to give you an example of one that is I wouldn't call it super aggressive, but it's relatively aggressive. It's not mild, but it will get you to 58.
Cecil Bullard: If you're a typical shop, we'll talk about some of the reasons why we might not get there. As we go. But really, you need to remove your emotions out of this. I mean, nobody wants to buy automotive repair. Frankly, I don't want to go buy groceries. I like to eat, but I hate paying for groceries. I don't want to go to the dentist, but I go to the dentist.
Cecil Bullard: I don't want to go to the doctor, but I go to the doctor. I don't like the price of gas, but I'm gonna go fill up my truck on the way home today. And I'm going to pay it and I'm going to say, wow, that's a lot of money. Actually last time I was at the gas tank, I said, thank you, uncle Biden for these wonderful gas prices.
Cecil Bullard: And we need to get rid of all our emotional attachment. The fact is I didn't, I didn't build the car. I didn't buy the car. I didn't get the value of driving the car. I didn't break the car. It ain't my car. And there are too many shop owners, too many service advisors that are really afraid of the client.
Cecil Bullard: They're afraid the client won't love us. They're afraid the client won't like us. We need to learn sales skills, tactics unique selling proposition. How do I build value around my. My parts and my labor and how do I help the customer understand that while it is expensive, it is the right thing to do in the right way to do it.
Cecil Bullard: And we have a, holy smokes, I'm putting together a big class for SDX WorldPAC's big event. Can't wait. So also I need to understand the difference between markup and margin. If you've confused those two things, it's probably costing you that 40, 000 markup is the multiplier that we use. So I might buy a dollar part, sell it.
Cecil Bullard: Multiply it times four and sell it for four dollars. And margin is the difference between what I bought it for, the dollar and the four dollars. That's that three bucks that I made. That's margin. We're going to do a little math a little later. I want to get to the matrix, but I also want you to understand that when I'm Planning my business, I'm, I'm literally saying to myself, I want to have a certain amount of my money go to parts expense and labor expense.
Cecil Bullard: It's not really a budget, but by doing that, I get margin. So, this is a shop with three techs. They're effective labor. It's about 120. If they're three techs do 1, 960 hours, which they have the capacity to do 2, 080, if they work every week, but they won't they will do 1. 24 million in business with that effective labor rate.
Cecil Bullard: Now in this shop two things happen. They, they focus on their productivity. So they're. Well, three, they make sure their techs are 100 percent productive. That's another class. They price themselves with their labor correctly, and then they religiously follow a parts matrix. And I say religiously, because that's almost what you have to do.
Cecil Bullard: You know, when you have someone that's religious, you have someone that will come to you and, and even though you might be one religion and they're another, they're gonna tell you, you need to change, you need to come here. You need to be kind of have a religious, we're gonna follow our matrix, and you need to manage that.
Cecil Bullard: So, of my total sales, I want my parts expense to be about 18 percent. For rounding math off, making it easier for Cecil, if I did a million in sales, I would have 180, 000 to pay my You know, the people I buy parts from WorldPAC, Napa, you know, CarQuest whatever, wherever I buy my parts. And it, the way I make my margin is by only paying 18%.
Cecil Bullard: And I don't do that by telling the vendor, I only have X to pay for that part. I do that by marking the part up properly and following a matrix. If I follow a matrix and I earn a 58 percent margin. Then what's gonna happen is I'm gonna end up with 18 percent of my money going out for parts that year.
Cecil Bullard: Labor loaded, that's that little L, would cost me about 20%, so in this business I would have about 248, 000 to pay my technicians. Loaded is FICA, FUTA, workers comp, everything. And my margin on that would be about 64%, and that would give me a cost of goods. What does it take for me to produce one hour of parts and labor of about 38 percent and a gross profit of 62?
Cecil Bullard: So that's money left now to pay. Me, that's where my salary comes from in fixed expenses. Money left to pay the banking costs and the rent and the insurance and, you know, the truck and the gas and, and et cetera, the utilities. And, and for training 12 categories. But for training here, to keep it simple and to do it fairly quickly.
Cecil Bullard: We're gonna break it into three categories. One is sales. So whoever's selling my product we're gonna pay about 8 to 10%. That's also a loaded expense. So it includes FICA and FUTA, workers comp vacation days, holidays, PTO medical, dental, 401k, whatever I'm paying that either the tech in the labor expense or the salesperson in the sales expense.
Cecil Bullard: So here I would have 124, 000 to pay a salesperson or, or one and a half or one in an assistant. Then I would have a marketing expense somewhere between 6 percent and 9 percent depending on am I growing my company or not? And then last but not least, I would have my fixed expenses which again is my rent and utilities and my salary.
Cecil Bullard: Anyone supportive, the guy that cleans the floors or the gal that does the bookkeeping is in the fixed expense, or the guy that does the bookkeeping and the gal that cleans the floors. And that would leave me a net profit of between 20 and 24%. Now, the 24 percent happens when your business exceeds, this business exceeds 1.
Cecil Bullard: 24 million. So if this business were more than 100 percent productive and those techs actually were able to, you know, bill out 1. 4 million, then we might have 24 percent and we might pay those techs. We'd have more money to pay the techs because we'd have more profit. Now John, I cannot see the clock right now.
Cecil Bullard: So you got to tell me where we're going. 
John Heller: I have one interesting question as we're talking about this here from an individual. If a matrix raises your part price above list cost, do you leave it or adjust it down to list? 
Cecil Bullard: The answer is yes. You leave it.
Cecil Bullard: It doesn't matter. I still have to make the money I need to make. We have a lot of people that say, well, I can't like dealer prices. I got news for you. I've been in the business a little over 40 years. We've been competing with outside parts sources for 40 years. As long as I've been in the business, you know, I can go buy it at, at the parts house down the street for cheaper than you can sell it to me.
Cecil Bullard: The answer is yes. I can buy it online for cheaper than you can sell it to me. The answer is yes. I can go down the dealership myself and buy that part for less than you're going to sell it to me. The answer is yes. But what does that part come with, right? The part that comes from me guarantees it's going to fit.
Cecil Bullard: Guarantees that it's going to last. So we have a warranty. I guarantee that it's going to take care of your problem. You get great customer service. You don't have to spend your time going down and trying to get the right part. If I, if that part goes on your car And it doesn't work. If there's a problem with it, I'm going to take care of it because I have that great warranty.
Cecil Bullard: There are a lot of reasons and things that people don't consider at the dealership, most dealerships today. If you go in and buy the part in the parts house, you're going to pay less for it than if you buy it in the service department, because again, in the service department, that part comes with more.
Cecil Bullard: We also have people that are letting their customers bring their parts. There's many reasons not to do that. The, the, the, the, the biggest one is probably I don't make my margin and I go out of business. The, the second one where I starve and I keep working and I work myself to death. The second one is that if my insurance finds out that I'm creating additional liability for them, they may cancel me.
Cecil Bullard: You know, and the third is, you know, by law in, in every state, frankly, federal law whatever warranty I give, I can't not give that warranty to the person. I'm seen as the professional in the courts. So a judge will say, well, you were the professional. Why did you put that part on? You should have known it wouldn't be a good part.
Cecil Bullard: So there's lots of reasons. 
John Heller: And I'm glad. 
John Heller: I'm glad you touched on that because there's actually several questions in the chat around, you know, the demographic of this day is an online demographic. They're out there shopping parts on their own and how do we combat that? And I think the advice you just gave, you know, really speaks to that, that mentality.
Cecil Bullard: I think sales training would really help here because you have to understand what your unique selling proposition. Why can I sell that part for more? And by the way. Almost every shop that we work with, and I don't say almost because I don't know everyone, like, I, all the numbers personally, I couldn't bring them all to mind.
Cecil Bullard: Almost every shop that we work with sells their parts in general, often for more than a dealer would sell them. I, I think sometimes, We might look at that and go, wow, that's ridiculous and bring it down. But there's a whole pricing scheme that we'll get to probably in part two about how to handle that and how to still hold your margin.
Cecil Bullard: When occasionally I'm going to sell something for lower than I probably should sell it for. I'm going to, I'm going to move forward quickly here. This is a company with four techs. That doesn't follow a parts matrix. So, they're going to do 1. 2, 4 million, the same as three texts are not productive. And so what's going to happen here is my percentage of cost of sales.
Cecil Bullard: Cause I'm not following a matrix are going to go up. So instead of paying 18 percent for my parts, I'm going to pay 26 and have a 42 percent margin instead of paying my texts, you know, 20 percent out for my texts, I'm going to pay 25. Because they're not productive. So my, my cost of labor goes up in every shop that is not a flat rate.
Cecil Bullard: And I don't, we, that's another class, another discussion. I want to get into it. I'm not a favorite in favor of flat rate. Frankly, we build other type pay plans today. But if you do this and you're not following a matrix or you're too emotional and your people aren't productive, which is the average shop, 72 percent productivity in the average shop, then your cost of goods is 51 percent of instead of 38 and your gross profit is 49.
Cecil Bullard: This is more typical. Right? And this is what we see with shops coming in that have never had education classes. They don't know how to do this, right? And so we help them fix that because my sales expense then goes up because when I have more cars here and more techs, one service advisor cannot handle that.
Cecil Bullard: So I have to hire another person, buy another computer, have another kiosk, you know, have more parking, you know, blah, blah, blah. Everything goes up because of that. My marketing actually goes down because I don't have any money in the bank. So I cut my marketing when I really need that to kind of build my business and keep it consistent.
Cecil Bullard: And then my fixed expenses go up also because when I have more people, I need more stuff. Right. And so now. I have a 3 percent net now, five years ago, the average net profit in the industry was 3 percent today. It's about four. It's just a little above four. When it should be 20 percent and I, and I just want to make sure that everybody understands this is not a problem of cost.
Cecil Bullard: Most shops do really well with what their costs are. This is a problem of margin. It all happened above the line between parts and labor. And, and if parts is half of what I sell or 45 percent of what I sell, and I give away 15 percent because I don't know how to not do that. It could cost me 000 for a small shop.
Cecil Bullard: You know, 40, 000, a lot of money. It can make a big difference. Now this is the matrix that we use for most of our shops. And this is the matrix. I think, John, that we've worked with you guys on and there are different matrices. I have a different matrix for say diesel. And, and as you can see, I have a different matrix for dealership parts.
Cecil Bullard: So, with my parts, I buy oops. Backup Cecil. I keep I hit the wrong buttons. With, with my parts, like I buy from WorldPak or Napper, whomever if I buy a 2 part, I sell it for eight. That's a 70 of four times or 400 percent multiplier. Markup and a 75 percent profit margin. And what I really want to do kind of, if I could, is look at the average cost of the average part.
Cecil Bullard: And if you were to look at that, it's probably today in a shop, it used to be 26 bucks today, it's probably around 50, 55. And so you notice that the 50 to 100 is a 60 percent margin because if you have some parts lower and some parts higher cost and lower margin, what, where's the balance? And if we want 58%, we have to make adjustments kind of to our matrix dealer parts.
Cecil Bullard: Matrix is it's a little it, it goes down a little faster. And it goes down a little further if you're buying about 20 percent of your parts from a dealership or less and you're buying, you know, 80 percent from other sources which we call jobbers mostly this matrix will get you if you follow it.
Cecil Bullard: 95, 97 percent of the time, this matrix will get you 58 percent in your business. And then, you know, I think we're getting close to the time I'm looking at my watch. So I'm gonna, I'm gonna let you, John take over from this point. Hang on. I'm going to go one more. If you didn't get the matrix, if you didn't get the workbook you can do that.
Cecil Bullard: John, I'm gonna let you ask a couple more questions, and I think we're gonna stay a little longer after you're done for a minute, and then we're gonna answer some more questions if we need to. And then there's a great part two. Believe me, we haven't even, we haven't even scratched the surface here yet, so you want to be at part two also.
John Heller: Absolutely. Absolutely. Cecil and I know, you know, we've looked over the material. This is just scratching the surface. I think of, of what's available here to, to really help shops take a hold of an effective. Markup strategy. So I'm excited about this. I think we've got to continue the conversation with you let's get something on the books here and keep this conversation going 
Cecil Bullard: We will and we'll i'm sure you guys will have an announcement here in the next couple weeks for part two and we'll also run that through our people and everyone that is here and signed up We'll make sure they get that announcement you want me to hand this back over?
Cecil Bullard: There you go. You took it There you go. 
John Heller: All right. So, yes, do thank you all. I'm going to just close out here a little bit with parts tech and then I want to be respectful of everyone's time. We did say this was a 30 minute webinar. Obviously so much information to pack into it. We are going to stay online for a little while longer after I wrap up here.
John Heller: And do a live Q and a with Cecil. I know there's a lot of great questions in the, in the Q and a session here that I'd like to address. So quickly, I just wanted to show you a little bit about parts tech. As I mentioned at the beginning, parts tech brings together all of your part and tire suppliers into one screen and enables you to find parts quickly.
John Heller: across all of your suppliers. So as you see here, pulling in a disc, if you're going to go out and search for a brake pad set, you can quickly pull up all of your pricing and availability across multiple suppliers. In one screen. Now, some of the things that Cecil hit on around a parts matrix. We do provide that capability within parts tech for you to be able to come in in our plus package and be able to set some of these matrices.
John Heller: And of course, we've worked with Cecil to develop some best practices around what those figures are as a good starting point for your shop. And then how that really looks in your cart. Once you've run a search here is that as you are. Oops. Came out on me. Pardon. 
Cecil Bullard: I hate it when 
Cecil Bullard: that happens. 
John Heller: I know it.
John Heller: All right. Quickly got back in it and we'll pull up our vehicle and yes,
John Heller: all right, sorry, had this system kick me out. All right. So as you're building that cart in there, you'll be able to easily see down here at the bottom. Once you've got that parts matrix set up a live gross profit view of your cart. So this really gives you sort of that real time data of how you're tracking in this quote that you're putting together for a customer.
Cecil Bullard: John, I have to say something here because I'm looking at over here on the right here and it says my cost. It looks like my cost was 35 and the list price on this is 45. So I'm making basically 25 percent here. That's actually less than 25%. You make 25 percent profit on your parts. You're not going to be able to pay your bills.
Cecil Bullard: You're going to be hungry. So that's one of those examples of look and the funny piece too, there, it just got to. Sorry. You know, in the marketplace, I've got shops selling brake pads at 125. I've got other shops selling them at 50. If you know how to talk to your customer, build value, you can get this done and you can make a decent living.
Cecil Bullard: Sorry. Go ahead, John. 
John Heller: No, that's great. All right. So just to wrap up here, we'll pop back in here, start this back up. As we mentioned we're gonna continue this conversation with Cecil. We wanna thank you for your time. I think there's been a lot of valuable information that's been presented here.
John Heller: Got a couple of QR codes up on the screen to find out some more information. We didn't have a chance to share it, but the team here at PartsTech in, in coordination and partnership with the Institute have put together a web page, kind of walking through some of this helpful information. CECL's got some information for you to download as well, and so hopefully you'll find this very helpful for your shop.
John Heller: And, and if, if you found value here we do a complimentary evaluation and I promise you, we won't pound you and pound you, but we'll be happy to do a contra, contra, contra, complimentary evaluation of your business and your finances and tell you where you can improve. 
John Heller: All right. Thank you. All right.
John Heller: For those who are willing to stay on, I know we've still got a lot still here in attendance. So, and a lot of great questions in the Q& A. We'll get to some as much as we can, maybe here over the next 5 to 10 minutes or according to people staying on. Cecil, question here. Do you feel it's more important or profitable to increase your labor rate or do the parts markup?
Cecil Bullard: I think you got to do both. Frankly. We've had lots of shops do both at the same time. No problem. Labor is going to have a higher margin probably, but if you're giving away 40, 000 in parts, why would I let that go? I mean, I might be giving away 40, 000 in labor too. That's 80, 000. You know, if you want to do one before the other parts matrix is really simplest because labor productivity also is an issue.
Cecil Bullard: So just raising your price may not get you where you want. You have to deal with the systems processes for productivity in your business also. 
John Heller: Here's another interesting one. I have a parts matrix, but what is hurting the overall markup is oil changes. We do a lot of oil changes and do thorough inspections and get upsells, but we keep our oil change prices steady.
John Heller: So our markup is low. What would you recommend? 
Cecil Bullard: So we're going to, we're going to talk about this in, in part two, but I'll, I'll, I'll answer it briefly here. If you go to Walmart and buy products from Walmart, they know what you're going to buy. They know you're going to buy three products. They know what the pricing, what it's going to cost you when you walk out, and they know what their margins are going to be.
Cecil Bullard: You're going to buy a discounted item, most likely, and then you're going to buy two higher priced items, like you might walk out with a soda. That cost you 2. 90 or 2. 50 that you could have bought at the grocery store for 0. 50 if you bought it in the giant pack. And so it's really about balance. If you're going to do something that is less expensive, like an inexpensive oil change first of all, you could change the name of that.
Cecil Bullard: You could present it a little differently as an oil service or a minor service. You can, you can up the pricing a little bit which will get you some margin. And then secondly, On the other items in your business, the other parts of things, you have to move the margins up a little bit because like if, let's say I'm selling, I don't know, 5, 000 different things in a month and I don't know, 300 of those are cheap or inexpensive oil changes and I'm not making much margin on those, well I have 4, 700 other items that if I just raise the price by one or two percent, I That would balance that out and still get me the overall margin.
Cecil Bullard: So if you're doing this right, you're actually looking at your overall margin at the end of the day, end of the month, probably at least quarterly, and you're making adjustments to your matrix. And if you have, if you've decided, Hey, I want to be very cost effective on say 10 things. Because the market, because I think the marketplace, that's really important.
Cecil Bullard: That's fine. Be cost effective on those, but raise your margin on the other items. That's the part that gets missed by small companies. It doesn't get missed by big corporations, because if they don't make margin, then they're out of business. That's what I would, I would tell you. Plus, I'd go in and look at your oil change.
Cecil Bullard: Average oil change even at some of the least expensive places here in my town, is probably about 89. And nobody's doing the, you know, 39, 29, 49 oil change anymore. So you might be able to move the oil change price up by 10 or 15, and mark up some of your other items a little bit. And then all of a sudden you've moved your parts margin by 10 percent overall and made yourself an extra 
Cecil Bullard: 30, 000 this year. 
John Heller: Absolutely. We've got several questions. I'll try to kind of summarize into one a lot of interest in understanding what your response would be around. How do you handle the difference between aftermarket parts and dealers? So question, are you using the same matrix for aftermarket parts as you would with dealers or a less aggressive part?
Cecil Bullard: I have two different matrices that you saw in the workbook and you'll see with parts tech online and that if you download our stuff, you'll, you'll get our dealer matrix in my shops was a little different where at the bottom end, very small price parts. We had really high margin. But we had less margin on some of the higher price stuff.
Cecil Bullard: And again, you have to balance it because if you're buying 30 or 40 percent of your parts from a dealer and you do that, then you're not going to have the margins you need. So you have to pay attention to that. So yes. Most of the shops that we work with probably use three or four different matrices or matrices.
Cecil Bullard: But I do have shops really, frankly, that use one matrix and they do it for all their parts and they do just fine. They're not, they don't struggle, they don't lose a bunch of jobs because of it. So you can, you can do either one. But most shops today probably have two or three or maybe four matrixes.
Cecil Bullard: Obviously we have a different one for tires. 
John Heller: Okay. Yeah. And that's a, that's a great clarification to make. One thing I'm looking through, a lot of the questions are asking, you know, does your gross profit recommendations include tires or do you do it differently there? 
Cecil Bullard: I've worked with a lot of different tire stores over the years, and it's funny one of the more local guys, three, three tire stores we started the tire margins about 23%.
Cecil Bullard: We, we wanted to have 40, frankly, and all of his people told me I was nuts at the end of a year. We were actually at 38%. And we didn't lose a bunch of clients. So we were able to, There's, there's ways to do that around tires. Most of the shops that I'm dealing with are probably looking for a 35 to 40 percent margin on tires.
Cecil Bullard: If you're an automotive shop and you're not a tire store, the customers buying tires from you mainly as a convenience, they're there. They need tires. They know they're going to pay a little more from you. You can be a little more than the discount tire guy down the street. If you are a tire store, there are other methodologies that we can move margins up by 10, 12 you know, percent on tires.
Cecil Bullard: That have been very successful. So yes tires have a different matrix, but at the end, depending on again, if I'm a tire store where I'm selling 50, 60, 70 percent tires, then I'm never going to have a 58 percent margin. If I'm only selling 10 percent tires or, or 15 percent tires, then I want you to have a 58 percent gross margin.
Cecil Bullard: And I still want either way. I want you to have a 20 percent net. 
John Heller: Great. Well, I think we've got time for one more question. I apologize to everyone. There were so many great questions in here. We could literally price spend the next hour answering, but we are going to be back with a part two where we hope to answer more of these questions and also do another Q and a last question here.
John Heller: Cecil, how do you know if your market can handle it? Can you price yourself out of business? 
Cecil Bullard: I've never in my entire life price anyone out of business. I've never seen it. When I ran my last shop, we were in a fairly wealthy area, but we were 58 higher in labor rate than any other shop in town, and we were the busiest shop of all the shops I work with.
Cecil Bullard: And that I've had experience with the shops that have higher labor rates and fall in, in higher parts margins. actually have a better, steadier, more profitable business. I had a guy we went in and raised put a matrix in place and we actually raised the labor rate about 8 six months of really great progress.
Cecil Bullard: Then all of a sudden it's, it's, it's February and he's like, Oh my God, everybody realized that I raised my prices. And and I want to lower my prices. And I said, look, dude, just bear with it. It's February. And and all of a sudden he just raised his labor at another 15. If your customer is leaving you, they're not leaving you based on the fact that you're 5 more than somebody else on a part, they're leaving you because you didn't build the value for them, where they believe that they're getting what they need from you.
Cecil Bullard: We have a a really inexpensive grocery store in town. Din, din, din a can, you do all your own stuff. We have another grocery store that's a mid range. And we have a very expensive grocery store in town. Guess which one's the busiest grocery store? Now, they all make money. And you could do the same thing for, for, for, if I'm gonna go have a steak.
Cecil Bullard: Or I'm gonna go have a hamburger. You know, you can get a cheap hamburger. You know where that's at. And you can get an expensive hamburger and you know, they're different. If your customer is leaving you based on price. It isn't about price. Look at your service. Look at at how your shop looks. Oh my gosh, you need sales training.
Cecil Bullard: You need they're not leaving you based on price. So no, we have never priced a shop at a business in any area ever. And, and I'm also just on this point, someday I'm going to write a book and it's going to the title is Cecil, You Don't Understand because I have been in almost every city in the United States, I swear to you and everywhere I go, someone says, well, you don't understand my market or, you know, my clients are different than other clients.
Cecil Bullard: No, they're not they want value. They want to understand what you do for them. They want a relationship. They want to know that that That when you do that job, it's going to be done correctly. They want to have a good experience. If you look at all surveys, convenience and trust are at the top of the survey prices at the bottom.
Cecil Bullard: So if that's where most people go, and I would tell you 90%, that's where they go. There's plenty of people for me to make a good living on that want what I have, which is again, we're not the cheapest coaching company. We just happen to be the best. So, we deliver the best results. We have the best customers, blah, blah, blah, blah, blah.
Cecil Bullard: Right. So I, again, man, ah, I could go on for an hour on that. I'm that's all you get John . 
John Heller: We'll continue this conversation. Cecil, it has been fantastic to have you join us. Today for this conversation, such great knowledge, great input and help for shops. Hopefully you all have found this helpful again.
John Heller: I apologize. We didn't get to all the questions, but please come back for more in part two. And we'll dive into more of the specifics of the calculator, looking at some of these different strategies, as well as, you know, what are some simple steps you can start taking to really make some progress in this area.
Cecil Bullard: I promise you we'll get all, we'll get to all that in part two. So be there. 
John Heller: That's right. Again, we've got the info up on the screen. We will send this recording out. Even if you missed this webinar and you registered, we will send this out. Again, If you're looking for a better way to order your parts, parts tech is your solution.
John Heller: We put all your suppliers on one screen. Cecil and the Institute have put together some fabulous materials and they have coaches standing by ready to help you improve the profitability of your shop. As well. Thank you all appreciate your time. Have a great rest of your day. Thank you.