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Discussion Starter · #1 ·
I am currently working on a senior project and looking for a shop owner to answer a few questions about owning a shop. First about how mush do you spend on parts annually, along with about how much you would spend in repairing, replacing tools and other kinds of maintenance to keep the shop up and going? Any input helps thank you for your time.
 

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I am currently working on a senior project and looking for a shop owner to answer a few questions about owning a shop. First about how mush do you spend on parts annually, along with about how much you would spend in repairing, replacing tools and other kinds of maintenance to keep the shop up and going? Any input helps thank you for your time.
How many parts I buy, depends on how many jobs I do. And I always mark the parts up a little bit so you actually make money on them, and don't have to spend any unless you make a mistake!
Tools, and upkeep depends on what you are starting with. I worked for other people for about 30 years, so I had a pretty good arsenal when I opened my shop. And again, the tools pretty much pay for themselves.
Finding people who want to work, and are not constantly tearing stuff up and making mistakes is another problem. But I work alone so I don't worry about that stuff...
 

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There are several more here who run their own place, and a bunch more who used to.
My place is very small, and probably shouldn't be used as a model. I try not to take on too much work, while others grab too much and end up stressed out with people getting angry about slow service.

The Field of Auto and Diesel Repair is ripe for the picking, but it is a young mans game.

I am approaching the senior years myself, and am really glad I learned what I did long ago. I cant imagine having to work anywhere big today. So many Corporate pencil pushers trying their money saving techniques out, and it seems like it just drains the pocket of the guy who actually does the work...
 

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Hates: Liver. Loves: Diesel
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General repair, or something specific? I never owned, but managed about 15 over my tenure with two different independent chains and one nationwide chain.

General repair you'll probably want to pay flag/book hours. Something specific can (carefully) be hourly as long as you have steady work to keep them busy. Flag hours puts it on the tech to be efficient. Hourly puts it on you to make them efficient. The only place I really had hourly work was in transmission repair. As long as I did my job as manager and kept work flowing in, hourly was the ticket.

Adjust these numbers for inflation (this was 15 years ago), but I paid labor about $25/book hour and charged $95/hr labor. Parts I marked up 20% or so. In my shop, our overhead was such that our magic number was 50%.... meaning we couldn't go out of pocket more than 50% of the total invoice. That paid the bills and put a tiny profit away for repairs, warranty claims, etc. I offered scaled percentages to my service writers. If their weekly cost basis average was 50%-55%, they were paid 20% of the profits on their invoices. If their average was above 55% they got 22%. If their average was below 50%, they still got their 20%, but if they consistently dropped below 50% they were kinda put on probation.

At another shop (national transmission chain where we paid hourly) my service writers were paid 10% of their total invoices they closed for the week. Similar pay, since we operated on an approximate 50% margin. Close 10,000 at 50% margin, and it doesn't matter if you're paid 20% of the profit or 10% of the total. Both equal $1000. Either way, service writers are encouraged to get the best money without pricing us out of signed R.O.s.

Just fair warning... your approach will really dictate its success. The first place I managed lasted 6 years until the owner decided to put the profits up his nose. The second place went for a few years until the owner went to jail for illegal possession of weed (a lot of it) and the third place was good until the owner was put on house arrest for forging a prescription for Adderall. It seems like there is a sliding scale of ambition vs psychosis. The more successful shops tend to be operated by unscrupulous narcissists who are willing to really push the boundaries of legal business operations and the nice, honest shops sometimes have trouble making a dime.

Long story short.... after watching the nice guys struggle and the evil ones thrive.... both scenarios driving owners insane and placed under intense stress.... is why I never aspired to own my own shop.
 

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Discussion Starter · #6 ·
There are several more here who run their own place, and a bunch more who used to.
My place is very small, and probably shouldn't be used as a model. I try not to take on too much work, while others grab too much and end up stressed out with people getting angry about slow service.

The Field of Auto and Diesel Repair is ripe for the picking, but it is a young mans game.

I am approaching the senior years myself, and am really glad I learned what I did long ago. I cant imagine having to work anywhere big today. So many Corporate pencil pushers trying their money saving techniques out, and it seems like it just drains the pocket of the guy who actually does the work...
A small business is what I would be going with, thanks for the advice.
 

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Discussion Starter · #7 ·
General repair, or something specific? I never owned, but managed about 15 over my tenure with two different independent chains and one nationwide chain.

General repair you'll probably want to pay flag/book hours. Something specific can (carefully) be hourly as long as you have steady work to keep them busy. Flag hours puts it on the tech to be efficient. Hourly puts it on you to make them efficient. The only place I really had hourly work was in transmission repair. As long as I did my job as manager and kept work flowing in, hourly was the ticket.

Adjust these numbers for inflation (this was 15 years ago), but I paid labor about $25/book hour and charged $95/hr labor. Parts I marked up 20% or so. In my shop, our overhead was such that our magic number was 50%.... meaning we couldn't go out of pocket more than 50% of the total invoice. That paid the bills and put a tiny profit away for repairs, warranty claims, etc. I offered scaled percentages to my service writers. If their weekly cost basis average was 50%-55%, they were paid 20% of the profits on their invoices. If their average was above 55% they got 22%. If their average was below 50%, they still got their 20%, but if they consistently dropped below 50% they were kinda put on probation.

At another shop (national transmission chain where we paid hourly) my service writers were paid 10% of their total invoices they closed for the week. Similar pay, since we operated on an approximate 50% margin. Close 10,000 at 50% margin, and it doesn't matter if you're paid 20% of the profit or 10% of the total. Both equal $1000. Either way, service writers are encouraged to get the best money without pricing us out of signed R.O.s.

Just fair warning... your approach will really dictate its success. The first place I managed lasted 6 years until the owner decided to put the profits up his nose. The second place went for a few years until the owner went to jail for illegal possession of weed (a lot of it) and the third place was good until the owner was put on house arrest for forging a prescription for Adderall. It seems like there is a sliding scale of ambition vs psychosis. The more successful shops tend to be operated by unscrupulous narcissists who are willing to really push the boundaries of legal business operations and the nice, honest shops sometimes have trouble making a dime.

Long story short.... after watching the nice guys struggle and the evil ones thrive.... both scenarios driving owners insane and placed under intense stress.... is why I never aspired to own my own shop.
Thanks for all the great information, I never have taken anything of mine to a shop, I can fix dang near anything.
 

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Hates: Liver. Loves: Diesel
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Thanks for all the great information, I never have taken anything of mine to a shop, I can fix dang near anything.
You're welcome. There are no unimportant members in a shop. You need honest bullshi#ers as service writers and 90% of your techs need to be really good. You'll always have that one tech who is a bit of a waste of oxygen, so they do things like oil changes and brakes. Shop runts like that are great to keep the tedious jobs away from seasoned techs who live for the more challenging work. The profit numbers (like my 50% example) you'll have to figure out based on your overhead, your market, and your competition. Invest in two important things: Good R.O. software, and an AllData subscription. You'll make accounts with local parts suppliers. Depending on your population density, you might have a wholesaler known as an "undercar" dealer. There used to be a company called WorldPac and I think they're still around. Fantastic for import parts. If there is one near you, you'll want to have an account there. They also have software for parts lookup that integrates with many of the R.O. software flavors so you can click to import and it automatically fills the fields. Once you sell the repair and move it to the "approved" or "ready to repair" status, it will automatically order it if you set it up to do so.

You'll find out who is good for parts and who sucks. FLAPS are hit or miss. Sometimes you get one that is great, other times you get the one staffed by a college kid who asks "does it have A/C?" when you're ordering brake pads. Either way, most of them have a high employee turnover rate so the Auto Zone that is good today might be terrible next month. You'll likely be approached by some companies who want to stock maintenance items; batteries, oil filters, etc. Use them, don't use them, up to you. If your customers are maintenance-heavy, it might make sense to stock that stuff so you can do quick in-out stuff.

Always check your tech's repair recommendations until you've developed trust in them. Some techs will recommend things to pad their paycheck. I had one tech try to say that the injection pump was bad on a diesel truck when in fact it was just a clogged fuel filter. I fired him on the spot. That's the kind of stuff that even if you sell the customer on the work, it only takes one customer who knows their stuff to sue you to oblivion. Also, keep the old parts until the customer has paid and left. If you can show them "here are what new brake pads look like and here the ones we took off your car," it closes the psychological loop in their brain. They have sat at home for a day wondering if they just got taken. "Did I really need brakes or are they lying to me?" I also urge writers to offer customers tiered repairs. Two or three columns of 1) this needs to be done right now to prevent death and dismemberment, 2) this really should be done while we're in there (like doing a water pump while doing a coolant flush) and 3) this optional stuff will need to be done soon so it's up to you if you want it done now. Sell it as hard as you want, but this way THEY are choosing, not blindly taking your advice. It also sets up deniability for you. "Yes your honor, we recommended replacing that floppy tie rod end that caused the deadly accident but they declined the repair." The key is to diagnose everything to CYA and let the customer deny it.

Get in bed with a local, preferably large towing company. Negotiate a flat rate for up to X mile radius. The one I used was $50 up to 15 miles. Offer free towing with repairs and be clear about the "with repairs" part. Build the tow fee into your quote's profit margin. That way when they learn that what they thought was a dead battery ends up being a $3000 broken timing belt and a new head, they can come retrieve the car and they only owe you tow fee.

Get very well-versed in your state's mechanic's lien process. That sounds shady, but it's a reality. A small number of people approve repairs then fall on hard times and can't afford to pay so they abandon the car. Having your I's dotted and T's crossed is your only financial protection for getting a title and being able to sell the car to recover your costs. Most of the time it's a no-hassle thing and it's actually rarely confrontational. Usually it's just a face value "I can't pay," rather than "come pay up or I'll steal your title" kind of thing.

One term you want to get familiar with is "un-a$$ing." You want the customer's butt out of the car. That's not a sales tactic (unless you use it that way) but unless you're a Jiffy Lube, you don't want customers hanging around. You need to put them on your schedule, not the other way around. It's not a liability thing, it's a scrutiny thing. It doesn't matter how flawless and honest your shop is, customers are trained to not trust anything. They're also going to be asking questions (perfectly normal) and there will be plenty of times that you don't have time for it. Get the keys, give them a ride home, put the repair in the queue and when it's done, it's done.
 

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I tied the service tech thing myself. It didn't work out for me though as I was too busy(distracted really) on the road racing plus I didn't like the culture in general. It was a high end luxury ford dealership. Luxury enough most would drop off a car with either a credit card in the cup holders or one already on file. They didn't have a clue or care about pricing.
My father and uncle both owned shops, seperatly and together for lots of years as well.
Everything listed up there is great advice. Very solid stuff.
 
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