We’ve all heard how we have to run our shops. Otherwise, mom-and-pop aftermarket shops will not survive in today’s aftermarket.
Today’s reality requires owners to remove themselves from the bays and operate their businesses with a CEO-type mentality. Our business requires 20 bay facilities with 15 of the best technicians money can buy, along with a commission pay structure that includes health care benefits and bonuses.
We need one advisor for every five technicians and a shop foreman to communicate between the advisor to the tech and then from the tech back to the advisor.
Our facilities need to be equipped with the best equipment and latest technology to diagnose, maintain and repair today’s complicated vehicles. Our waiting rooms must be clean and inviting with fresh coffee, cold drinks, snacks and free Wi-Fi. Don’t forget a play area for children to also help ease the stress of our customers waiting. Loaner cars and shuttle services to help maintain customer retention are a must.
Owners must manage production and efficiency while micromanaging and measuring the numbers. If you cannot measure it, you cannot manage it. Watch your gross profit margins, your parts matrix and parts-to-labour ratios. You need to watch your average repair order cost and coach your team to increase your average repair order by upselling work. You need to promote manager positions in every department so your business can eventually run itself without your presence.
Then and only then will you be able to spend your winters down south and the summers at your cottage.
Aftermarket vs dealer
Owning what I believe to be the oldest family-owned aftermarket shop in North America — dating back to 1890 — my family operates businesses in both the aftermarket and dealership sectors of the automotive industry. Understanding the differences between these two sectors within the same industry is important. The manufacturers use their dealerships to help increase one’s lifetime car count, while the aftermarket’s objective is to reduce one’s lifetime car count and make it affordable for the average consumer to manage the cost of this necessary commodity.
With the complicated technology and expense of today’s modern vehicles, it is very difficult for the aftermarket to compete against the manufacturers’ push to get the consumer into a new car. The more expensive a vehicle becomes to keep in service, the sooner it becomes replaced with a newer, more complicated expensive model — which will need to be replaced sooner than the last one. This helps the manufacturer achieve their objective.
But for this industry to survive and flourish, we need to remain in the bays and keep our costs down. This is a very difficult industry but perseverance and dedication will allow you to provide well for your family.
Math does not lie, so let us finish the equation. It is obvious the aftermarket shop described above is copying the dealership business structure. The cost of operating a facility of this magnitude is actually helping the manufacturers meet their objective. While we are being coached that this is how we will compete against the manufacturers, I believe this business model is instead helping manufacturers take us out of the market altogether.
Our customers are the ones paying for that facility to operate. In turn, this is increasing the cost of keeping their vehicles on the road. That leads to either pushing them into DIY or back to the dealership for a newer, more expensive vehicle.
How I run my shop
I run my shop from the bays. I take on the worst jobs myself. My technician efficiency is poor because the aftermarket has too many one-off vehicles with one-off repairs. It’s just the truth that we all have to accept — we are going to lose money on labour unless we have common vehicles with common problems.
So, while I am dealing with the jobs no one wants to do to keep that vehicle on the road, my fellow tech is capitalizing on creating enough revenue to operate the entire shop. I make more revenue off repairing older cars than maintaining newer ones.
I don’t need advisors; I don’t need to upsell and I don’t need to advertise. I keep my facility costs low. The cheaper I run my operation and the longer I keep a car on the road, then the more money I make over a longer period of time. And the better it is for my customers’ financial well-being.
I believe most of the aftermarket industry is run more like my business model than the new and improved business format. Seventy-two percent of aftermarket shops have revenue of less than $1 million per year while 60 per cent operate with five bays or less.
No free ride
We are being told that we do not know how to run a business properly, that we are crazy, that we won’t last, and that we are doing more harm to our industry than good. Our industry would be better off if we all closed our doors.
I am offended by these accusations. These people are just selling ‘delusions of grandeur,’ and I personally am not buying into it.
I understand that we all opened our businesses with the goal of removing ourselves from the bays one day. But for this industry to survive and flourish, we need to remain in the bays and keep our costs down. This is a very difficult industry but perseverance and dedication will allow you to provide well for your family.
If you’re expecting a free ride in life with winters down south and summers at the cottage, I would highly recommend you pick another career choice.
Rob Nurse is the owner of Bob Nurse Motors in Peterborough, Ontario