Profitability Roadmap

The Journey

Brian Weeks rifled through the shelves looking for titles he’d recognize. His brother, Chris, did the same; book after book after book. Their flight back to Georgia would board soon, and the Weeks brothers were scrambling.

This was their moment, their defining moment—each standing with an armful of business-building books at a newsstand in Salt Lake City International Airport.

“Well, it was an odd moment for us, at least,” Brian Weeks says, laughing through his thick, Southern drawl. “But that was the day we decided that things needed to change.”

Don’t misunderstand: Since he and Chris fully bought the business from their father and his two brothers in 1999, Weeks felt like he’d done nothing but make constant changes to Augusta Transmission Center. For one, the shop no longer specialized in transmissions; since 2004, it no longer even rebuilt transmissions, instead partnering with Jasper Engines & Transmissions for remanufactured ones. It allowed Weeks to step away from the bench and focus on the business. He slowly transitioned the shop’s focus to full service, and built out its staff and equipment accordingly. He and Chris began new marketing tactics to attract additional customers, and in 2009 had attempted a complete rebranding of the business—which flopped.

Although the Weeks brothers became debt free for the first time, the business was stagnant, stuck under $900,000 in annual sales. And overall net profits were too low, fluctuating between 6 and 8 percent.

All of that brought them to this awakening of sorts in 2009 at the airport in Utah. Their entire purpose for being in Utah helped deliver the wake-up call.

“Let’s start with this: I never planned on running the shop for a living,” Weeks says. He and Chris had focused on auto racing since their teenage years, and were in Salt Lake City for a competition when Weeks says they became aware of the absurdity of what they were doing. “We wanted to grow the business and really succeed, but we were balancing that with racing. It was one of those moments where you ask yourself, ‘Who are we? What are we trying to do?’”

So, about those books: Weeks says he and Chris needed answers, and he found it in a simple premise that’s part of Michael Gerber’s renowned The E-Myth: Revisited.

“We wanted to grow, but how do you grow if you don’t know who you are?” Weeks says. “If you’re going to be profitable, you must have a firm vision for your company. You can’t be profitable without knowing who you are, what you stand for and where you’re going.”

Finding a Mission

Taking a step back for a moment, Weeks says his initial rebrand didn’t work for a very specific reason: He worked with a company that simply offered new logos and colors—and nothing more. It did nothing to change the course of the business and did nothing to help the shop better connect to its customers and community.

Upon his return from Utah, though, Weeks connected with two people who owned a local marketing company. They met through church, and an instant connection was made. Essentially, Weeks says it came down to the exact philosophies laid out in The E-Myth.

“They said they wanted to work with us, but couldn’t offer any advice before knowing our company inside and out,” Weeks says. “They basically shadowed us for three to four weeks before really starting.”

“And when they came to me after that time, they basically laid it out and said, this is who you are and this is how you need to show it to people,” Weeks says. “They were spot on, and I hadn’t even realized it.”

Together the Weeks brothers and their new marketing consultants drafted a mission statement, a vision for the company and its core philosophies. They created long- and short-term goals and the principles they will follow while achieving those.

Implementing a Vision

“Once we had a firm handle on who we were, everything just fell into place,” Weeks says.

His marketing consultants suggested a full rebranding, including a tweak to the company’s name: It became [atc] AutoCenter. The “[atc]” is in reference to the original name “Augusta Transmission Center,” makes it easy to remember, and also doesn’t effectively limit the business’s market appeal by advertising that it is, in a sense, “Augusta only,” Weeks says.

The new name came with a new logo and a color scheme to match. The concept was to carry it out across all aspects of the business. They developed guidelines for advertising and marketing, and systems and processes in the shop to match the new image

“We created a guide for us to follow in all decisions we make in all aspects of the business,” Weeks says. “Once we did that, we had this roadmap to actually see improvement.”

Seeing Results

Including an overhaul of their original building on Gordon Highway, the Weeks brothers spent roughly $200,000 on the rebranding effort that concluded in 2012.

And as the changes set in, the shop thrived. Sales grew each year, topping $900,000 for the first time in 2009. The shop topped $1 million the following year, and in 2015 hit $1.5 million. That’s with the same staff (seven people total, including the Weeks brothers), and a $719 average repair order. Net profit, meanwhile, doubled; it hit 16 percent in 2015.

In September, the Weeks brothers opened a second location across town. Using the same principles, philosophies and processes, the shop instantly thrived. Focusing on more maintenance and service work than the original location (all transmission work goes through the Gordon Highway facility), the shop had an ARO of $444 in its first month and sees more than 40 vehicles per week.

“There’s a lot that goes into being profitable; you need a whole roadmap of strategies to get there,” Weeks says, before referring back to that day in Salt Lake City. “But, if you don’t have a starting point, if you don’t know where you are, what you stand for and where you want to go you don’t have much of a chance. You have to give yourself that chance.”

[atc] AutoCenter: Who We Are

[atc] AutoCenter

Two locations in Augusta, Ga.

Owners: Brian and Chris Weeks

Size: 7,800 square feet (Gordon Highway); 7,000 square feet (Grovetown)

Lifts: 10 at each location

Staff: 9 at Gordon Highway (3 techs, 2 owners, 1 service advisor, 1 bookkeeper, 1 parts person, 1 facility manager); 7 at Grovetown (4 techs, 2 service advisors, 1 helper)

Average Monthly Car Count: 329 (combined)

Average Repair Order: $719 (Gordon Highway); $444 (Grovetown)

Net Profit: 16%

Annual Sales: $1.5 million*
*Gordon Highway facility only as Grovetown didn’t open until September 2015

[atc] AutoCenter: Annual Sales Growth

2010 - $910,000
2011 - $1,00,500
2012 - $1,154,300
2013 - $1,190,000
2014 - $1,404,000
2015 - $1,501,000

The Weeks brothers created a “Company Philosophy” document off of which they now base all decisions. some aspects are highlighted below:

Mission Statement
“It is the mission of [atc] AutoCenter to change the way people think about the automotive service and repair industry through our commitment to quality, integrity and community.”

Company Vision
“We want all drivers in the CSRA to have trust in their vehicles and peace of mind in their travels.”

Company Culture
“We always do the right thing, even when no one is watching.”

The Roadmap

Kevin Vaught spent the majority of his career building his four-shop, Indianapolis-based auto service business into a profitability powerhouse, before selling and retiring at age 41. Not one to sit idle, Vaught began a consulting and business-coaching career shortly after that. Today, as a coach with Elite Worldwide, Vaught helps his clients find their own paths to profitability, mapped out through what he says are the foundational pieces of operational success. There are many stops and starts on that path, Vaught says, but it’s one all shops can take.

START

Put Your People First.
Repeat this mantra: People first, then processes. The foundation of every single successful business is great people. You must have the right people in the right places. There is no other option. For all else to work, you need the people to make it work. We’ll get to how you manage them properly later, but everything starts here.

ROADBLOCK: Unsuccessful Hiring. There are two reasons a hire fails. The first is the obvious one: You hired the wrong person. The second, and far more common one, is that you didn’t give them the proper opportunity to succeed.

NEW ROUTE: Hiring the correct person comes down to having a firm grasp of what the role entails and how that fits into your company culture, as well as utilizing proper interviewing strategies to identify those desired traits. One suggestion is to take candidates out to dinner. You learn a lot more about who they really are in a more natural environment. Now, for the bigger issue at hand, most shop operators take a new hire and “throw them to the wolves,” so to speak. You hire a tech, and you just slot him into a bay and tell him to get to work. There’s no onboarding, no orientation, no training—nothing. They don’t know who you are as a company, they don’t understand your vision, and they don’t know your mission. My suggestion is to not allow them to touch a vehicle for the first day, at a minimum, and implement an orientation program that sets them up to learn all those aspects I mentioned.

Stop 1

Hone in on Your Numbers.
When I first talk to shop operators, almost every single one will tell me right off that their problem comes down to a lack of car count. And almost every single one of them is wrong. In the vast majority of shops, more cars simply equals more chaos. What they do need is a better understanding of all the numbers and key metrics that, if met and handled correctly, allow a shop to flourish.

Let’s not get ahead of ourselves here as there are many, many numbers that should be tracked and looked at. Instead, let’s start with the ones I feel are absolutely critical to your success. (Note: Almost all of you have access to all of them through your management systems; you just need to know where to look and what you’re looking at.)

Parts gross profit: An absolute minimum benchmark is 50 percent.

Labor as a percentage of sales: Keep this between 60 and 65 percent, but—and I cannot stress this enough—this needs to be based on your loaded labor costs, which include all of your costs associated with that technician (benefits, uniforms, etc.).

Service advisor salary as a percentage of sales: To keep your company balanced, your service advisor salaries should come out to roughly 8–9 percent of total sales; you don’t want to go any higher than that to maintain margins.

Technician efficiency: A solid benchmark for a strong tech is 130 percent.

Technician productivity: You need to keep your techs busy. Productivity is on the front office; it relies on jobs being available, parts being ready, etc. You must keep your techs at 90 percent productivity.

ROADBLOCK: Lack of Proper Goals and Expectations. Let’s say you have all these numbers down and you closely monitor them. Great, but does your team know exactly what you expect in terms of metric performance? Do they know why you expect it and, more importantly, need to hit those numbers? In the vast majority of shops, the answer is no.

NEW ROUTE: People often think that their teams are motivated by money; throw a higher hourly wage at them, and they’ll work harder. That couldn’t be further from the truth. Your team wants to actually be part of the team. They want to be a part of something. They need to be kept in the loop on your numbers, they need to know the benchmarks, and they need to know why. You can’t have buy-in without their full involvement.

Stop 2

Fine Tune Your Processes and Systems.
So, how do you consistently hit your numbers week after week, month after month, year after year? Well, by providing your business with consistency. Systems and processes ensure that tasks are completed and handled in the same way each time. Predictability and consistency lead to efficiency—which will lead you to profitability.

These systems should represent your best practices for every aspect of business, from checking in a customer to handling phone calls to performing an inspection—all of it. Every aspect of your business should have a process and guideline for your team to follow. Without it, they’re lost, and so is your business.

ROADBLOCK: There is no time—or dedicated person—to manage your systems. This is usually the very first reason I hear for shop operators not having and/or monitoring their systems and processes. And in some cases, I get it. You might have a smaller business, and it’s difficult to get out of the day-to-day grind. But, it has to be done.

NEW ROUTE: Start slowly. If you’re still involved in much of the day-to-day operations, start by dedicating one hour every day to the overall operations of your business. Use that time to evaluate your systems, the direction your business is heading, and any other “bigger picture” items that are on your plate. The more you do this, the more efficient your business will become, and, eventually, the more time you will have to dedicate to this. This is your job as an operator; don’t ignore it.

Stop 3

Always Evaluate—Then Make Improvements.
So, you have the numbers, you have the processes. Now, you need to regularly evaluate your business’s performance. If you have those other two elements in place, this portion is simple. You look at the numbers; if they meet your benchmarks and your shop is making money, you’re doing great. If an area is lagging behind, you need to look for a fix.

Now, each of those numbers can be directly related to processes you have set up. Here’s a simple one: If your parts gross profit is too low, your prices are off. You need to create a parts-pricing matrix (which are available in almost every electronic management system) with presets to reach that 50 percent minimum gross profit. Another: If your service advisor salaries are above 10 percent, it could be related to selling processes, phone-answering policies, or even your service advisor pay plan (hint: they should be on a performance-based pay plan).

ROADBLOCK: Not understanding labor inventory. Labor is an included piece of our product for customers—we sell labor. Actually, let me rephrase that: We’re supposed to sell our labor. Most people don’t realize that labor has an expiration date. If you don’t sell your technician’s hours today, you’re never getting them back, even though you paid that tech for it already.

NEW ROUTE: Look at it this way: If I have four tires to sell on a Monday, and only sell two, I still have two tires I can sell on Tuesday, right? You can’t think that way with labor. If your tech is working eight hours today, you can only sell those eight hours today. Put a priority on selling labor. If you do one thing to improve profitability, it should be not throwing away valuable labor hours that you are already paying for.

Finish

Never Be Complacent.
None of this is overly complicated, but it requires an attention to detail and it requires the motivation needed to push for improvement. I’ve never seen a shop that can’t improve in some area of business. You can always get better, and you should never stop this self-evaluation process.

The Rule of the Road

The Secret to Selling: Ask Better Questions

Does that make sense?

Barry Barrett lets the words hang out there for a moment, the silence demanding a response.

By the time you do respond—inevitably saying that, yes, it indeed makes sense—he’s ready with the next question.

“That’s great,” Barrett role plays. “Those repairs will keep your vehicle safe and reliable in the most affordable way. What day works best for you to bring it in? I have an appointment available tomorrow morning at 9:15 a.m. Does that work?”

And, as Barrett will explain, he has you locked in.

“‘Does that make sense?’ ‘Does tomorrow at 9:15 work for you?’ Those are tie-down questions,” he explains. “They force a response. If you make a statement, the customer can be silent or change the subject. A tie-down makes them at the very least acknowledge what you said.”

And that’s the key to what Barrett refers to as “question-based selling,” a strategy he says will completely change your team’s ability to close sales.

“For any shop, you have to be able to sell work in a way that builds long-term trust with customers and creates a long-term customer relationship,” he says. “Do that, and you’re going to see profits skyrocket.”

That is the philosophy that has guided Barrett’s 16-year career in sales (a good portion of that spent at his brother’s Kentucky shop), and is at the center of his coaching work at RLO Training, where he has quickly earned a reputation as one of the industry’s top sales trainers.

“Sales situations are not about you; they’re about the customer. You can’t be the star of the show.”
—Barry Barrett, Sales Trainer, RLO Training

“It’s funny, though, because I’m a very extroverted person, people assume I’m a ‘natural’ in sales,” he says. “That couldn’t be further from the truth. It’s just the opposite.

“Sales situations are not about you; they’re about the customer. You can’t be the star of the show.”

“If you ask better questions, you get a better customer,” he adds. “You empower them to make the decision—often in a way that leads to the sale.” Barrett says that in a typical selling situation, he might ask a customer between 50 and 80 questions—mostly of the small, tie-down variety.

“It’s just a mindset and a way to make the conversation all about the customer,” he says. “You can, and should, make statements to help build the value of the proposition, but you need to follow-up with questions. Keep it open and honest and helpful, but you’re directing them to the sale proposition and building trust. Does that make sense?”