I own a small shop that’s just over 3,000 square feet. In order to maximize every square foot of the building, it’s critical that I have policies and procedures in place so that everything runs efficiently. In a nutshell, this boils down to working smarter, not harder.
Rewinding to a little over two years ago, I had a tendency of spreading myself too thin, as is the case with most shop owners. I would spend 50+ hours per week in my shop working on cars, answering the phones and trying my best to add that personalized service my customers deserve. I didn’t have a service manager; it was just two technicians and me.
As shop owners, most of us are trained technically, but we’re not always as astute with business-related issues. So, once I made the decision that something had to change, I knew I needed to seek help. I hired a consultant and the first thing he had me do was to take a step back.
I came out from underneath the cars and observed my shop in its entirety, both in real time and by reviewing security camera video footage. I really paid attention to my technicians — how they prioritized their work, which equipment they used most and how my customers responded. I was then able to identify where the “holes” were in my shop.
The first thing I noticed was that production was being held up. My techs were fighting over the two-post rack and while one worked, the other would have to sweep the floor. I also was paying a tech to come in early to move cars. It was a lot of these little things that had been costing my shop time and money.
Once I added a second two-post lift, there was an immediate boost in production. I had previously thought about hiring a local high school student to move cars in the morning. Instead, I expanded my team to include a third tech, a service manager and a service writer. Now, my shop literally runs itself and I work maybe eight hours per week. Plus, I haven’t touched a car in two years.
Working smarter, not harder means having to slow down to go fast, and this new mentality encompasses nearly every aspect of your business. It definitely wasn’t easy getting to this point. It requires organization, efficiency and constant monitoring. However, if I had to point out two areas that produced the greatest results for me, they would be improving communication within the team and understanding what the shop’s key performance indicators (KPIs) are and how to leverage them.
Encourage a Little Healthy Competition
I like to make up games as a fun way to motivate my team. I started a game with my techs — if they earned a certain amount of money within a given period of time, I bought them a lift. There are other games with cash prizes within the shop that are geared to keep my team motivated and productive.
In addition, when I first hire on a technician, I give them a $5,000 signing bonus. The catch is, I don’t give them the money until after they have completed a year of employment. This $5,000 is put into an “account,” so to speak, and will be used to compensate for any mistakes that are made within that first 12 months. For example, if a technician rushes through a procedure and it costs my shop $2,000 to fix the mistake, but it’s the only mistake that technician makes all year, he would receive $3,000 instead of $5,000 on his first anniversary with us.
With this bonus program in place, I’m finding that my technicians are more careful and don’t rush through their work. They are more detailed and focused and make significantly fewer mistakes.
Watch Your KPIs
Your KPIs are truly key. I touched on this earlier, but one of the best things you can do for your shop is to know exactly why it’s running the way that it is. If there is a particular part of your business that is performing well, you need to know the reasons why so you can keep doing what you’re doing. But, it’s equally critical to know what’s causing the downtrends in your business so you can fix them before it’s too late. The best way to do this is to observe, track and measure.
When I first started working with my consultant, I thought that measuring my KPIs was pointless. I really didn’t want to do it, but I started tracking them simply to prove that I didn’t need them!
Well, that turned out to be a very humbling experience. I went into my books and analyzed my numbers for the previous year. That is when I realized that I was doing everything wrong. There was some major miscommunication issues that caused ups and downs in my numbers. The biggest realization for me was the knowledge of how much I had been spending on parts. I also didn’t have a good grasp on how to raise my percentages. The cost of parts was affecting my bottom line, so I really needed to reassess this aspect of my business.
I now check my books weekly, sometimes even daily. Some people may think that’s a little extreme, but it’s important that I know my cash-to-bills ratio on a daily basis. I also want to know my cost-of-labor percentage and my cost-of-parts percentage. In order to stay in touch with my finances, I have to evaluate my profit and loss statement, as well as my balance sheet. Staying on top of these numbers allows me the opportunity to make changes. Otherwise, time passes and money is lost, but it’s too late to do anything about it.
In addition to tracking numbers, I also make it a practice to document everything. This is an essential step if you’re trying to get your shop to the point where it can run without you. In my shop, we have a procedure for everything, even the basic stuff like making a deposit at the bank and changing a car’s oil. As I communicate to my team how I would like my shop to run, I tend to get pretty detailed and even include pictures and screenshots of videos so that anyone at any time can perform any procedure that needs to be done, the way it should be done.
Once you make the decision to work smarter, not harder, you’ll notice an immediate change in your shop’s productivity and its profitability. Your business will essentially run itself, allowing you the freedom to be the shop owner and not the jack-of-all-trades responsible for everything. By working smarter, not harder, I have more time to spend with my family.
I consider my entire team to be an extension of my family and never could have achieved this level of success without their support.
I’ve gone through my fair share of pain points that were all driven by hiring the wrong employees, ignoring the red flags in my bookkeeping and working with a lack of proper communication. By identifying and addressing these issues, my shop now nets more than $1 million per year. Learning how to work on my business versus in my business was the turning point. Getting the systems and the processes in place takes some effort, but the results put you solidly on the road to a stable and profitable future.