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THA 061: Know Your Daily Sales Break Even Number

Carm Capriotto, AAP — Wed, 04 Apr 2018 08:19:30 +0000

Your Learning Curve Never Sounded So Good!

Helping automotive aftermarket professionals improve; one lesson at a time.

Learn from your industry peers in a round-table forum. Get new ideas, perspectives, trends, insights, best-practices and expertise from aftermarket professionals.

The Academy Panel:

John L. Francis has over 50 years of industry experience and has owned and operated Francis Automotive Services Inc. in West Chester, PA, for more than 35 years. John’s most important business philosophy as a shop owner is to “be honest, speak from your heart, and always be authentic”, so it’s no mystery why he’s been so successful.

John is a past National Chairman of the Automotive Management Institute. He has served as the Chairman of ASA CARS. John also served on the ASE Board of Directors for 8 years and served as an AMi trustee for many years as well. He’s been featured in AutoInc magazine and is a two-time runner up for NAPA Tech of the Year. John is a recipient of the AMi Alpha Award. Not only is John an extraordinary business professional, but his commitment to the industry and his peers is second to none. Listen to John’s previous episodes HERE.

Rick White has been working in the automotive, software & coaching industries for greater than thirty years and is currently an AMI-approved training instructor. He owned and managed several successful automotive repair shops. Currently, Rick is President and Lead Coach for 180BIZ, an auto repair shop training and business coaching company proudly serving the independent auto and truck repair owner since 2006.Rick has been acknowledged as an industry expert and has been featured in many automotive trade publications. Rick has been training and speaking at industry events across the country including AAPEX, Vision and for AASP PA just to name a few. Find all of Ricks contributions to the podcast HERE.

John Cooper is a partner at ECP Auto Repair & Service in Cuyahoga Falls , OH. Before becoming a business owner John worked in manufacturing for 23 Years. That is where he met his future business partner, Nate Winston in 2008.

Talking Points:

Knowing your break-even point — the point at which total cost and total revenue are equal is important to running a business. It is not just good enough to reach your daily break even, you must exceed it if you are to stay in business.
Knowing the break-even point is helpful in deciding gross margin on parts, labor rates, setting sales budgets and preparing a business plan. If you do not reach your daily break-even then there is a great chance that you had a loss of profit for the day.
Find the worksheet calculator for break-even, a promised in the episode, at the end of the talking points.
Critical to know you’re breakeven so you know if you’re digging a hole.
Include monthly loan payments in expenses to have the cash flow to pay them.
Calculate your break even at least every six months, quarterly preferred.
Watch for expense creep. You must pay attention to your expenses closely.
1. Health insurance.
2. Fuel costs.
3. Energy costs.
4. Waste/Recycling costs.
5. Subscriptions and fees.
6. Shop supplies, gloves, eye protection.
7. Phone and internet invoices.
8. To name a few.
Gross Margin Creep and accuracy.
1. Costs of oil and staples. Review supplier invoices and be sure that you are making the right margin.
2. Inventory on the shelf, is your computer cost reflected properly?
3. Credits for cores, alleged defective, new returns.
Know your break-even number but don’t focus on it. Don’t focus on surviving, focus on thriving. Calculate a growth number and focus on that.
We are activity driven and feel that fixing more cars per day will raise your sales and margin.
John Cooper valued his business coach, John Francis in showing him the light for break even and to create a sales goal that included a strong profit.
Components of a Break-Even Calculator
1. YTD Gross Profit Percentage
2. Average Monthly Expenses
3. Monthly Depreciation
4. Monthly Principle Payment (loans)
5. Days Open Per Month
Power of gross profit in break-even number. Run the calculator and see the impact margin makes to your break-even. The higher your Gross Margin the lower your Break Even will be.
Gross Margin management is important. Be sure your costs are correct in your SMS and your margin on labor has been reviewed quarterly or at least twice a year.
You must normalize your expenses and be sure there are only expenses directly for the business in your P & L.
Expense creep. You must watch your expenses if not they will grow. Carefully review all expense invoices before they are paid.
Be careful if you are installing an engine that will carry lower margins. You will make your sales nut but may not hit your gross margin goal. Those anomalies happen. Be aware. This demonstrates that break-even is not an exact science.
Billed hours per day is a strong indicator.
1. What are your potential billed hours per tech?
2. Your labor inventory.
Goal setting must include stretching your number. Incredible growth happens when you intelligently stretch beyond the norm. You may have to include more people to accomplish this and keep watch on when that new hire many need to happen.
1. You need to have the people to reach your stretch goal.
2. A good idea to plan out three years ahead.
Michelangelo said: “The danger in setting goals is not setting them to high and missing them; it is setting them too low and hitting them. “
1. It must be your goal, not your coaches, and it must be a stretch.
John Francis: If you are hitting your goals 60% of the time you are doing good in having set stretch goals.

Download The Break Even Calculator Spread Sheet offered by John Francis Here.

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THA 037: Multiple Labor Rates & Matrix Parts Margins in your SMS

Carm Capriotto, AAP — Wed, 18 Oct 2017 09:41:58 +0000

Learn from your industry peers in a round-table forum. Get new ideas, perspectives, trends, insights, best-practices and expertise from aftermarket professionals.

Watch like a DOCUMENTARY … Learn like a SEMINAR.

Helping automotive aftermarket professionals improve; one lesson at a time.

Maylan Newton from ESI – Educational Seminars Institute is a business coach and trainer. Maylan is no stranger to the power of the customer as he speaks and trains on Professional Business Development, Service Writers School of America and In Shop Training and Support. He is an approved AMI Trainer.

He is a much sought our speaker at industry events. Maylan is no stranger to the podcast having paid it forward in episodes … 108 and 140 and on Town Hall Academy’s 14 on Customer Retention and in Academy 25 on Disaster Planning and in Academy 30 on Why Labor Rates Need To Increase.

John Francis has over 50 years of industry experience and has owned and operated Francis Automotive Services Inc. in West Chester, PA, for more than 35 years. John’s most important business philosophy as a shop owner is to “be honest, speak from your heart, and always be authentic”, so it’s no mystery why he’s been so successful.

William J. DeBoer (Bill Jr.) is Co-owner and Vice President at DeBoer’s Auto Sales & Service.Bill has been responsible for bringing innovations in daily operations to the full-service, high-tech auto repair facility for 20+ years. Bill was able to fuse his passions for technology and cars with a Certificate in Automotive Technology, followed by a B.S. in Business Management from Penn State.

He joined his family business, founded by his father three decades ago, shortly after. Today, Bill runs business development, sales, customer services, process improvement, human resources, and technician education programs.

Bill is an Accredited Automotive Manager from the Automotive Management Institute as well as a CERTIFIED MASTER DEALER® from the National Independent Automobile Dealers Association. His National Institute for Automotive Service Excellence (ASE) credentials include: Master Technician, L1 Advanced Engine Performance, P2 Parts Specialist, and X1 Undercar Specialist. Listen to Bill in Episode 185.

Talking Points:

These are opinions not rule for setting labor rates or parts margins.

Multiple Labor Rates can make a shop competitive depending on jobs. A base brake job would have a different rate than diag work.
- Fleet work can have special rate or discount so SMS manages
  - Could be based on GVW.
- Discounts can have a discount based on specific customer
- Diagnostic rate. Your most expensive technician using the most expensive tools with the most training.
Knowing your effective labor rate lends your true labor rate.
- Jobs creates in SMS can reflect different labor charges by job
Once size pricing may not work anymore.
Key to understanding your current margins is you must have your actual cost of labor and parts reflected accurately in your Shop Management System.
You set you hourly rate on your cost of doing business. Never set it based on your competitor.
If the industry stopped quoting over the phone and quoting labor hour price we would be better off. You never ask your cardiologist what his labor rate is.
Every car is different. Some have rust. We should consider the condition of the car. Every vehicle should be charged what time is invested in it. Yet the Flat Rate labor program is the standard bearer. You must add a cushion when you are dealing with a northern vehicle that has rust.
Panel believes that on third of shop owners are using their SMS to its fullest capabilities.
If an average shop 0owner billed a 1/1oth of an hour it would bring a big number to the company. Use your SMS correctly, estimating properly and mark-up book time. Many ways to improve.
Bill DeBoer is quoting a complete job.
It is easy to set up parts matrixes.
- Find article from Bill Haas from Ratchet and Wrench to explain the proper use of the parts matrixes.
Power of SMS are not being valued because information and training is not strong enough. This is not saying the entire industry or companies, but it is a problem why SMS’s are not being utilized in a more comprehensive way.
Parts Matrix’s can vary depending on where you acquire the part. Ideas can be:
- WD/Jobber
- Dealer
- First Call
A big fear in our industry is we fear someone questioning our price. We need to be proud of why and what we do.
Become the CEO of your company and you’ll start to see the differences in your sales, costs and profits when you pay attention to what the CEO must do for the company.
Parts margins may change in the future.
- We may have to lower our margins on parts and increase on labor because of the changing business models and transparency of pricing.
Total ticket margin is important because of the market changes.
You must know your effective labor rate. Know your numbers
Your SMS is a huge partner in your margins and profit of your company.
Implement what you learn so you can move your business forward.
We must understand the value we do for our customer.
Transparent pricing can be a pushback because it so easy to find the cost of the part that was installed on a vehicle.
Never seen a shop go out of business if his labor price was too high. A quote from Cecil Bullard.
The foundation of our businesses must be on relationships and trust.
We must be paid for the knowledge we have.
- Many in our industry are underpaid for what we do. Everyone.
We must add value to every transaction and relationship.
- Get paid for what you know and what you do.

Link to Go Fund Me Page for Shop Owners Who Lost Their Business in the California Fires in October 2017

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RR 258: John Francis from Francis Automotive Services

Carm Capriotto, AAP — Fri, 15 Sep 2017 03:47:34 +0000

John L. Francis has over 50 years of industry experience and has owned and operated Francis Automotive Services Inc. for more than 35 years. John’s most important business philosophy as a shop owner is to “be honest, speak from your heart, and always be authentic”, so it’s no mystery why he’s been so successful.

For years Francis Automotive, an industry-acclaimed full-service auto repair shop in West Chester, PA, has not only supported the YMCA and Toys for Tots but has led the industry in developing a child safety brand.

John is an Automotive Service Association (ASA) member and served on the ASA Mechanical Division Operations Committee for many years. John also represented the ASA in Washington, D.C., where he gave demonstrations to members of Congress on the importance of providing repair professionals with open access to service information. These presentations were instrumental in the information availability agreement that was eventually signed between the ASA and the automobile manufacturers.

John is a past National Chairman of the Automotive Management Institute. He has served as the Chairman of ASA CARS. John also served on the ASE Board of Directors for 8 years and served as an AMi trustee for many years as well. He’s been featured in AutoInc magazine and is a two-time runner-up for NAPA Tech of the Year. John is a recipient of the AMi Alpha Award. Not only is John an extraordinary business professional, but his commitment to the industry and his peers is second to none. John lives in Atglen PA, he is married and has 3 children, 8 beautiful grandchildren, and 3 wonderful labs.

John is also a part-time Business Development Coach for Elite Worldwide and works with shop owners to improve their financial position.

Talking Points:

He still has his oldest customer coming to his shop from 1969.
There are three Generations of Francis’s working in the shop.
His dad was a sergeant in the motor pool in the army. Vehicle repair is in their blood.
He is semi-retired but shows up at the shop a few days a week especially to see his legacy customers.
John is a part-time business coach at Elite Worldwide.
Helped start AMi with a fundraising effort.
He tells his story on when he went from working in his business to on it.
- Dick Vinet was the catalyst for this to happen.
- He gives a good tip to help make the transition to working on your business.
- You must read the E-Myth a few times and get a coach to hold you accountable.
- It is in your best interest to change your focus.
John is very proud of his ethics based business.
Everyone can fix cars. What do you want to be known for?
- Francis Automotive Services is known for child car seat services.
John learned a lot about ASE while serving as a director.
- The ASE organization and its affiliates are there to benefit the industry.
- ASE is the standard in our industry.
John tells a story about being a marathon runner and his goal to run 20 marathons and ultimately running in the Boston Marathon.
- He also completed the Marine Marathon eight years in a row.
John talks about mountain climbing and his proposal to his wife at 8,900 feet.
John explains the transition moving your business from Monday through Saturday to Monday through Friday.
John loves to fly his drone in the Pennsylvania countryside

Shop Profile
Years in industry:	50 plus years
Years business ownership:	38
Number of technicians:	3
Number of service advisers:	1
Number of lifts:	5
Number of bays:	5
Days open:	Mon – Fri
Annual estimated volume:	$750K
Percent Repair vs Maintenance vs Other:	60% – 40%
Technician training hours per year:	16
Service adviser training hours per year:	16
Specialty:	Child Seats and Child ID
Association memberships:	ASA since 1980
Industry accreditations:	AMAM
SMS:	Mitchell
Paperless:	Yes
DVI:	Bolt On
Primary supplier:	World Pac & Federated
Supplier marketing program:	Bosch Service Center
Performing hybrid repairs:	Yes
Succession plan:	Yes
Biggest challenges:	Technician Shortage:
Part-Time Business Coach:	Yes, Elite Worldwide

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This episode is brought to you by Federal-Mogul Motorparts and Garage Gurus. With brands like Moog, Felpro, Wagner Brake, Champion, Sealed Power, FP Diesel and more, they’re the parts techs trust. For serious technical training and support – online, onsite and on-demand – Garage Gurus is everything you need to know. Find out more at fmmotorparts.com and fmgaragegurus.com