Ok now we’ve dreamt it, $200k net + per year and 90 per cent productivity. Work no weekends, nights and very little stress. So what do we do about making the dream a reality?
The key to moving forward is not to forget the past, but rather, it is to remember and embrace what we did that was so successful in the past and incorporate it into our new, highly organized and professional automotive business model of the future. What we did in the past was build relationships, shake our customer’s hand and show them how much we cared. We did this consistently because we had time and profit.
Now, we are so busy fixing cars to pay bills we have very little time for relationships or shaking hands; and so we just tell them how much we care, hoping they will see beyond the stress and believe us. You know the old adage, “If you show me how much you care you will never have to tell me how much you care.”
Because of our misguided belief that we can not afford well-trained service advisors, we no longer have the two ingredients that made us successful years ago — that is, the ability to build relationships and to show how much we care about our customers, their families, their health and welfare.
In my last article, I mentioned the key to a successful independent automotive repair facility was a little term called productivity. This is our ability to have our revenue generators (technicians) generate revenue over 90 per cent of each day. Our industry stagnates at less than 54 per cent productivity. The main reason for this low productivity is not the work ethic amongst technicians. Every technician in the shop works very hard. The real problem, however, is no one, until now, has really nailed down the precise systems and procedures for management and service advisors to manage this very profitable resource.
The average technician in Canada is worth $2.92 per minute. The average independent shop has 3.5 technicians or apprentices. Therefore, we are managing $10.22 per minute. A well-trained service advisor paid $48,000 per year will cost you 39 cents per minute. However, many shop owners and managers will say they are not making enough money to hire a service advisor or multiple service advisors (an acceptable ratio is two techs per one service advisor). That leaves only one option. When the shop is really busy and is turning away work and customers, it is all-too-common to hire another technician instead of a service writer (s). But what is soon discovered is that adding another technician does not actually help with productivity (the amount of time our existing techs are generating revenue) which remains stubbornly at 54 per cent. Do you see how hiring a technician just because you are busy can destroy your business?
Can two service advisors, costing you anywhere from a total of 64 -78 cents per minute managing four techs ($11.68 per minute), out perform a shop in profitability and productivity that has just one or no service writers with few systems and procedures in place? Let’s take a bit of a closer look at the result of not hiring the right number of service advisors. The shop that has one service advisor supporting four techs, and which allows the techs to manage the shop from the back, and the service advisor only being able to identify what work can get done that day, will soon have those same techs filling in as service writers. Those techs will be answering phones, talking with customers, ordering parts, looking up labour times and providing free diagnosis. Because these techs are forced to do all of this extra work, instead of that working being done by a properly trained service advisor for 39 cents per minute, the shop with one service writer to four techs is actually paying service advisor fees of $2.92 per minute.
So the answer to the question of whether two service advisors is more profitable than one is a very definite yes: two well trained service advisors with excellent systems and procedures will out perform one service writer with unproven, inconsistent and unreliable systems and procedures in shop profit and productivity every time.
However, I believe everyone already knew that answer. The real question which is being asked is, “Do these systems and procedures really exist and can I implement them? Will they work in my two-bay shop or my 24-bay shop?” The answer is to this is yes again. First, shops must stop focusing on car count, finding surprise work and managing people. Instead, the shop and its staff should be focusing on managing systems and procedures, adding value to the customer and informing and educating the customer about the condition of their vehicle and ultimately moving to become a maintenance shop instead of a breakdown shop. The money will always take care of itself once you have those proper management systems and procedures in place.
You as a shop owner or manager will never achieve high productivity in a low stress highly productive shop if, you never take time to get away from the business and learn best management practices. I hear so many shop owners say that they cannot get away from their business for management training because they are too busy. Well then, show me a shop owner who says, “I am too busy fixing cars to send my techs for technical training,” and I will show you a failed business in under five years. As show owners and managers, you need to use the same qualifying process for management training as you do for technical training. Doing nothing is no longer a viable solution if this industry is going to survive. If we do nothing then we will be forced to continue to make profit off the backs of customers by increasing labour rates and stressing out customers by identifying surprise breakdown work. If we were to simply address the need to learn and implement excellent systems and procedures, and becoming great “mentoring managers,” we can increase productivity to that ideal 90 per cent level mentioned earlier.
For a different perspective, let’s look at our dilemma from a technical point of view. Do you believe car manufactures today have found a way to be much more productive by implementing better systems and procedures than they utilized 40 years ago? If this is true, and I believe it is, then what makes us believe we can continue to run our businesses in the old paternalistic way and still be highly productive and profitable? I believe this industry is full of highly intelligent shop owners and technicians. It is just that many are focused on being better technicians because too many are not sure if they are capable of managing the business, so it is easier to focus on such graspable things as diagnosis, repair and maintaining cars. I can tell you truly managing is not about numbers, but about utilizing the right tools and systems and procedures to diagnose and keep our business profitable, productive and worry free. I will close the same way as I did in my last article. Lets find a way to make the problems in our industry our fault and then we can work together to change it. Keep moving forward, take the necessary steps to become a better manager, and the future of the independent automotive industry will be very bright for all of us.
David Meunier, president of TACT Inc. (Total Automotive Consulting and Training), offers consulting and training to the independent service provider industry with his PROShop Manager Program. TACT can be contacted at 1-866-489-8228 and www.proshopmanager.ca.