Tired of feeling out of control at his shop, Express Tire & Automotive in Berea, Ohio, shop owner Dave Justice started routinely tracking his labor dollars by hand.
His meticulous approach to tracking not only turned around his shop, it also created a side business: Labor Profit Management, a software system that allows owners to manage productivity, efficiency and effective labor rates.
By creating processes based off these reports, Justice has expanded his business to three locations that generated $5 million in total sales in 2013.
I bought my first shop, Express Tire & Auto, in Berea, Ohio, in 2001. We made money, but it was exhausting. It came to a breaking point in 2003, when I told my wife either something had to change or I was going to get out of the business.
That’s when I realized I needed to get more education. I took every seminar I could get my hands on, I joined 20 Groups, I worked with consultants. Every one of them spoke about how our money was made in our labor dollars.
With that, I started to track my labor dollars by hand. The problem was that I realized I was spending way too much time crunching all of these numbers by hand.
While getting the education, I met another shop owner, John Fowle. Together, we created a software called Labor Profit Management. It’s a cloud-based system that integrates with your management system and lets you quantify employee productivity, efficiency and effective labor rates.
I believe in measuring and managing your business by creating accountability through your processes. It’s the accountability that comes through the processes that really changes your whole shop. It’s not just tracking stuff. It’s how you do it and what you do with it. The one thing I know is that the processes never fail you.
The minute we started to track the labor dollars in our technicians, it started to turn around our shop. Although at the time, the system was pretty elementary, I started tracking each individual technician’s clock hours, billed hours, actual hours, miscellaneous hours, productivity and efficiency. By doing that, you can find your effective labor rate. With our shop management systems, we have always had a way to quantify the profit made from parts, but this new system allowed me to quantify the labor side as well.
As we started to get the processes together, I started thinking about opening a second store. In 2009, we built a brand-new, eight-bay store. I knew at that point that our processes were like the McDonald’s cheeseburger: We could take what we did and duplicate it. I knew we’d be profitable and in its second year, that store did $1.6 million. In 2012, we built a 10,000-square-foot shop and again duplicated those systems and processes. In 2013, we did just short of $5 million as a company. But what’s even better is that, unlike the first store, there was no trial and error with these two. We knew what we had to do, we knew we could duplicate it, and it was no problem.
In July 2013, Labor Profit Management launched nationally with NAPA. That was really when my daily routine changed. They asked me to go out and share the system, so now a lot of my time is spent going all around the U.S. doing seminars, speaking in front of groups, doing demonstrations, working with 20 Groups. I educate shop owners on where their money is made and let them know we have this solution.
I don’t go to my stores every day but if I’m in the shop, I get in somewhere around 10:30. I start by looking at all my numbers from the three stores. I go through emails, do repair audits, and then I discuss those audits with my general manager.
We’re very transparent with these reports. Each week we post a weekly labor report on the wall. In any labor organization, there’s a winner and a loser. This creates a little bit of friendly competition.
I also have a daily manager’s sheet. What that does is show total service, percentages on what you made in the day, and our goals for where we want to be.
Once a month, we have our manager’s meetings. We’ll go through our marketing, we do a SWOT analysis, and discuss wins, challenges and goals. Everybody is encouraged for full participation. It’s an open forum.
Thanks to the system and our manager’s reports, everyone has their goals in front of them.
Because of the fantastic people I work with, they really allow me to be flexible. My main office is at my Strongsville store, but even if I’m in, I only stay until 1 p.m. At that point, I’ll go back to my office at home and work on whatever I need to work on for the business.
When traveling for LPM, everything is still relayed to me. Every day, I get an email with all of our shops’ numbers and manager’s sheets.
Another thing I do is that each of my service advisors has their own checkbook. If I’m out of town and I have someone come in who needs parts, they can write the checks immediately.
There’s a certain amount of dollars in that account and each morning, our accounting person lets me know of the transfers via email.
My business partner, John, does a lot of the backend stuff, whereas I do the speaking engagements. It has worked out so well because we are able to divide the work very nicely and it plays to our individual strengths. When we’re not in the same place, we communicate through email, but we also have an office in Middleburg, Ohio. He also owns a shop, Willoughby Hills Auto Repair, located in the same area.
When I’m not traveling, I often go over there in the afternoons to work with the support staff. They do all of the uploader implementation, training, and support.
Again, it’s all about collaboration and making sure everyone knows the goals they are working toward.
I get a lot of ideas from other shop owners. That’s really one of our best resources. You have to remember that this system was built by shop owners for shop owners. We’re always open to new thoughts and ideas.
As I travel across the U.S. visiting different shops, common problems or mistakes become very apparent. I can see what shops are struggling with, or where they’re excelling. That spurs ideas.
For example, I noticed that a lot of shops are struggling with an up-and-down scenario throughout the month, instead of steady growth. So now what we’re working on and testing right now is trending analysis. That will give you the ability to look at your best/worst month or week, and even what your best technician’s worst day is. What that allows you to do is put another marketing piece in the pipeline that starts at your worst week, for example. You’ll be able to forecast and tell what’s going on with your business.
