Do You Know Your Customers’ Business? Test Your Knowledge

Jobbers across Canada are doing everything they can to secure first-call loyalty from the best shops in their trading area. Too many, unfortunately, go to market with price and price alone. If they knew how to differentiate themselves from the competition, they would take a different approach.

For those who offer price alone, that is all they offer because they have never learned how to differentiate themselves within their market area.

The best jobbers in this country understand that they need to be in the relationship business, not the sales game. They always stand out from the crowd. They think differently, they act differently, and they execute differently, but more importantly they made the effort to change and were determined to see it through. Today they enjoy enhanced margins, enhanced net income and much lower stress levels than the average within our industry.

There is a saying in business that you had better know to whom you are selling. The better jobbers definitely do. If you don’t understand your customer’s business, how would you expect to secure first-call loyalty? Today, in the competitive jobber business, perhaps the most important value a jobber can bring to his customer base is basic shop business management knowledge. In order to offer that, the jobber had better understand the shops’ business, or he will lose credibility with shop owners.

There are a number of important basic shop management questions that you as a jobber should know about your client’s business. In turn, it is very important that your client, in order to sustain and maximize business profits, should also be capable of answering these questions. Take the test and then go to www.aaec.ca and click on the tab that says “Jobber News” to see a link to submit your answers on-line.

Considering the jobber business climate today, you should get 90% of the answers correct. If you don’t, well, I think it is time to hit the books and learn about your customers’ business. The top shops demand a knowledgeable jobber today, not one who runs a business with smoke and mirrors.

If you achieve 90% or above on the test, you will win access to the Automotive Aftermarket E-Learning Centre for one full year. This site has a tremendous amount of shop business management information that you can use to train all your store personnel on. (Prize as awarded, no cash value). Winners will be announced, and the correct answers given, in the January issue of Jobber News. Good luck!

The quiz has a maximum score of 50 points. If you are on top of your game as a jobber, you should achieve at least 45 points.

1. In a properly managed general automotive maintenance and repair business, what should the gross profit percentage be on each of the following revenue categories? (Score maximum of 16 points – 2 points for each category)

(A) Oil and Fluids

(B) Tires

(C) Batteries

(D) Aftermarket Parts

(E) Dealer Parts

(F) Maintenance Labour

(G) Diagnostic Labour

(H) Total Sales of the Shop including Labour

2. Shops sell tires from walk-in sales (customers coming in and looking for tires) and from technicians properly inspecting the vehicle in the bays during normal vehicle maintenance or a vehicle repair, and noticing that tires are required. In a properly managed general repair shop, how many tires should staff find for replacement, as an average per hoist, per month? (Score 2 points)

3. What are the total retail dollar sales required in a shop with a gross profit demand of $37,522.00 operating at a total shop gross profit of 63.5% and netting 3.0% of sales? (Score 2 points)

4. What is the minimum percentage of sales a general automotive maintenance and repair shop should net today after paying a professional management wage to the owner, but before corporate taxes? (Score 2 points)

5. What are the appropriate benchmarks for the following? (Score maximum 6 points – 2 points for each)

(A) What is the minimum average total shop efficiency percentage that is required today?

(B) What average efficiency percentage range do the best shops operate within today?

(C) What is the average efficiency percentage range that “burns out” the shop technicians?

6. Johnny Smith is a terrific technician. He is presently earning $1,200.00 gross per week. If the shop payroll percentage is to remain at 30% of total gross profit, and the overall gross profit earned in the bays is 67.5%, what total dollar sales would Johnny have to produce to earn $1,500.00 per week? (Score 5 points)

7. What is the minimum employer wage burden for a typical automotive repair business for 2004? (Score 3 points)

8. A shop has four licensed technicians currently earning $17.50, $18.00, $22.00 and $28.00 per hour. What should the door rate(s) be for this shop? (Score 10 points)

9. In an automotive maintenance shop that has accounts receivable, what is the maximum percentage of sales the shop should have on the books in accounts receivable at any one given point in time? (Score 2 points)

10. In a maintenance shop that averages a total shop gross profit of 66.2% and nets 5.8% of sales before tax, how much revenue must be produced to replace a $1,400.00 bad debt? (Score 2 points)

These are the basic questions that need to be answered to manage a shop. There are many more formulas and ratios that must also be understood to maximize profitability, but when a jobber at least understands these, then he can recognize a shop in trouble and start corrective procedures before it is too late.

Robert (Bob) Greenwood is President and CEO of E. K. Williams & Co. (Ontario) Ltd. and Automotive Aftermarket E-Learning Centre Ltd. Bob has 28 years of industry-specific business management experience. He has developed shop business management courses for independent service providers recognized as being the most comprehensive courses of their kind available in Canada. Bob is the first Canadian Business Management Consultant and Trainer to be recognized for his industry contributions when he received the prestigious Northwood University Automotive Aftermarket Management Education Award in November 2003. E. K. Williams & Co. (Ontario) Ltd. offices specialize in the independent sector of the automotive aftermarket industry preparing analytical operating statements for management purposes, personal and corporate tax returns and business management consultation. Visit them at www.ekw.ca and sign up for their free monthly management e-newsletter. Automotive Aftermarket E-Learning Centre Ltd. is a leading edge company devoted to developing comprehensive shop management skills through the E-Learning environment. Visit AAEC at www.aaec.ca . Bob can be reached at (613) 836-5130, 1-800-267-5497, FAX (613) 836-4637 and by E-Mail: greenwood@ekw.ca or greenwood@aaec.ca.