How …
Aaron Stokes transformed his business and his life
A pivotal shift in thinking led Stokes to build one of the industry’s most respected shop networks
Every business owner has a defining moment—or needs one, Aaron Stokes says.
“Yeah, let’s rephrase that, actually: Everyone needs that one moment that pushes them toward reaching their potential,” he says. “For all of us, there’s something that holds us back. Maybe it was something someone said to us once. Maybe it was a bad experience we had—we failed at one point. Maybe it’s our circumstances, where we came from. All of a sudden, we have this in our head, that this—whatever that this happens to be—is all we are capable of. You set a ceiling for what you’ll accomplish. You put a limit on what your potential is.
“All of us, to reach our full potential, need that one moment where we break down that barrier, where we realize there is no limit on what we can do, when we truly believe in ourselves. Once that happens, man, your whole life changes.”
If this sounds a bit dramatic, well, that’s because it is; Stokes’ story of total transformation is dramatic. At the time of his “defining moment” (and we’ll get to the story of that moment later), EuroFix was sputtering. This was a business that, after Stokes founded it in a residential one-car garage in Franklin, Tenn., in 1999, built its reputation by grinding out work on the dirt floors of an old tobacco barn for five years. Stokes and his wife lived in front of that barn in a single-wide trailer, which was just about as narrow as Stokes’ view of the business’s future. Make this small business successful enough to support my family—that was his goal, and that was the ceiling he placed on his success.
Then came his moment in 2007, and the complete change of course shortly after. His business model changed, he overcame a nearly disastrous expansion, he roughly tripled sales, he quickly built his second location into a powerhouse, and by March of 2011, Stokes no longer saw a limit on his business’s potential.
To quantify it in dollars, in mid-2007, EuroFix (then called The Saab Shop) approached $70,000 in monthly sales. That March of 2011, that original facility did $164,000. The second location (which was roughly the same size as the first) did $224,000. And with his unique operational model in place, Stokes netted roughly $100,000.
“I called my wife freaking out, because we’d just moved out of the trailer and I didn’t even know what to do with myself,” Stokes says. “I was this poor, white-trash kid growing up in trailer parks with stains on my jeans and T-shirts. What do I do now?
“I didn’t know what to do, so I started wearing ties.”
STATS: EUROFIX/AUTOFIX LOCATION: NASHVILLE, TENN., AREA Size: 2,400–19,000 square feet Staff: 56 (25 technicians) Average Monthly Car Count: 1,200 Annual Revenue: $8 million
The Moment
Stokes’ laptop died; bad timing. As each of the other nine members of his group took turns, he squirmed, knowing that when his name was called, he’d have to start with explaining the dead laptop.
“We were going up, one by one, and showing him our shop websites and explaining our business models,” Stokes explains. “And I’m just waiting until the very end for my turn to meet with him.”
“Him” was Greg Sands, who at this point in the story wasn’t the same industry celebrity he is today.
“He was like this secret, underground guru or something at the time,” Stokes explains. “His business was already incredibly impressive and he was extremely successful, but it wasn’t really out there in the public then. And our [20 Group] had the chance to go to a special event at his house—just the 10 of us—to meet with him about our businesses.”
When it’s Stokes’ turn, they retreat to an office at Sands’ home (dead laptop, remember?), and in the privacy of a secluded room, Sands pulls up EuroFix’s website and stops abruptly to study a photo of the shop floor. He asks for some numbers; Stokes gives them.
“And he looks me in the eye and says, ‘You’re too smart to go out of business. You have no reason not to be successful,’” Stokes recalls. “It sounds simple, but this was a huge turning point for me to have someone else believe in me. I still remember it like it was yesterday. Having someone else show that confidence in you changes the way you think of yourself, it breaks down all those other limits you placed on yourself. It was what I needed.”
The Key to Hiring Correctly
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Aaron Stokes refers to it as a “gut feeling” when he knows a job candidate is right for his team. But, really, it’s more tangible than that.
“We look for red flags—bouncing around a lot, or overselling yourself and your abilities in an interview,” he says. “That eliminates people really quickly. Then it just comes down to personality, and the way I look at it is that if they are a person I’d be happy to have a beer with, then they’re the right fit personality wise. And I don’t even drink.”
Stokes also believes in promoting from within. He identifies employees willing to go above and beyond in their roles, and increasingly offers them more responsibility. Today, all six of his store managers started as service writers.
A Budding Empire
If you haven’t heard of Stokes before this story, let’s just skip ahead a bit to where his business is today: With six total locations (four under the name EuroFix and two named AutoFix), his business did more than $8 million in 2016 with just 25 total technicians. The business’s net profit sits at 18 percent—and that’s a true net, after accounting for taxes, owner/corporate salaries, etc. He’s considered by many to be among the very top operators in the country, an innovative guru, who now has many shop owners seeking his advice.
How’d he get there? Well, it wasn’t a smooth progression. There were stops and starts—a new location for his original facility, already with the foundation poured, that had to be scrapped when the recession caused the bank to pull its loan in spring 2009. There was a learning curve in managing two facilities. There were bottlenecks that arose in implementing his workflow model.
In the end, though, each of those those potential roadblocks led to new concepts that pushed the business forward. When he lost the new site for his original shop, he decided to open a second location—and it thrived. Juggling two facilities led to him instilling company-wide best practices, and fine-tuning the processes that made the business a success. And each hiccup in workflow led to further innovation.
Today, Stokes says the success of his business comes down to just a handful of things: hiring the right people, putting them in an environment to succeed, and a firm belief in the limitless potential that still exists.
“You can learn anything—processes and systems and things,” he says. “You can know how to do all of it, but at the end of the day, you have to have the belief to go out and make that change. You need to believe that you’ll succeed. The moment that happens for you, everything changes.”
A True Production Model
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It’s all simple math, Aaron Stokes says. There are efficiencies that can be created on the shop floor, and customer service is crucial, but setting your shop up for success is all about balancing the amount of work your team can handle.
At his four EuroFix locations, his team of techs are to average 55 vehicles per month per person. That number is 95 at the two AutoFix locations, due to its simpler, general repair model. That, he says, puts each tech on pace for roughly $30,000–$35,000 per month in parts and labor. (A-techs often average closer to $40,000; C-techs far lower.)
“You transfer that into effective labor rate, which depending on the market and the location is anywhere from $112 to $128 per hour, and I get my hours from that,” he says.
And by that, he means the amount of hours of work that should be scheduled at each location.
It makes for a high-paced environment, and Stokes says that makes the work of his front desk that much more important. He expects each writer to sell between $100,000 and $120,000 in gross parts and labor each month. To be able to sell that much work, each service writer has an assistant that takes on the more tedious tasks that eat at an advisor’s time.
Borrow from the Best
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Aaron Stokes’ approach to operations might seem innovative to many, but he asserts that it’s something anyone can make work—in his or her own way.
“I borrow a lot of ideas from other businesses I’ve seen,” he says. “It doesn’t mean I’m going to replicate something, but I look at what others are doing and think, ‘That’s really great; how can I make that concept work in my business?’”
How ...
Tom Lambert Made More Money by Focusing on Less
After lowering car count and raising labor rates, Shadetree Automotive’s gross profit skyrocketed
From the outside, Tom Lambert had finally reached the pinnacle with his shop. Shadetree Automotive had grown at a steady year-over-year pace of 10 percent, peaking at $2 million in revenue in 2013. The monthly car count easily hovered around the 400 mark for his staff of 10. Gross profits had finally breached 50 percent. Everyone was constantly busy, and the shop’s reputation was substantially growing in Layton, Utah.
Yet, if this what it felt like to be a $2 million shop? Lambert wanted no part of it.
“Our finances just never seemed to improve,” he says. “In fact, the more sales we did, the more cars we serviced, the more debt we seemed to accumulate. We had no idea how we could be doing so much in sales and still not be overcoming our expenses.”
Lambert, who worked 60-hour weeks at the time, now spots the inherent flaw in that statement: “Doing so much” doesn’t necessarily equate to making more money. He learned that lesson after attending a seminar that preached a business model of lowering car count and raising labor rates.
Over the past three years, he’s taken four steps to do just that, which has almost doubled ARO (from $435 to $736), improved overall gross profit by 12 percent, and increased revenue to $2.5 million.
SHOP STATS: SHADETREE AUTOMOTIVE LOCATION: LAYTON, UTAH Staff: 11 Average Monthly Car Count: 285 Annual Revenue: $2.5 million
Step 1: No More Micromanaging
Pre-2013, almost every process had a role in which Lambert was involved: selling, ticket writing, repairing, parts ordering. It got to the point where processes were inefficient and employees were easily irritated by log jams.
“Almost every vehicle write-up a technician did passed through my desk for review, notes and alteration before going to a service advisor,” he says. “This severely slowed down the estimating process.”
So, to reduce stress overall, Lambert made the decision to remove himself from several of those processes, allowing his service advisor to deal with customers and his technicians to work without a shadow hanging overhead. That way, Lambert could focus on the initial stages of lowering car count, and preach the importance of that new model to his employees.
Step 2: Eliminate Waiting Appointments
One of Lambert’s earliest changes has stuck through to this day: no more waiting appointments filling up the lobby.
Back in 2013, Shadetree was taking 6-10 waiting appointments per day. By discontinuing the practice and asking each walk-in to schedule an appointment, Lambert was able to do three things:
- Improve shop productivity. Because of waiters, certain stalls needed to be kept open, instead of constantly filtering in scheduled appointments.
- Raise ARO. “Waiting customers want their service done as quick as possible and then to leave with their car,” Lambert says, meaning they were less likely to approve a $700 repair. The ARO for his waiters hovered around $100.
- Reduce stress. “Advisors have an extremely difficult job,” Lambert says. “Answering phones, estimating, ordering parts, talking to technicians, paperwork, etc. Having a customer pacing around your office and interrupting your advisors is extremely disruptive.”
Step 3: Raise Labor Rates
This was the moment Lambert was sure everything would fall apart.
“I was worried about raising prices,” he says of his shop’s labor rate. “I just wanted to take care of my customers. I didn’t want to be the most expensive shop. I thought I was going to scare off 60 percent of my customers.”
However, when Lambert finally took the plunge and rose rates hourly rates from $90 to $98? He got no pushback from customers. One year later when it rose to $108? Same deal. Today, the shop charges $112, and Lambert plans on continuing to raise labor rates each year.
“We want to be nice to everyone, but we don’t want everyone as a customer,” he says. “We slowly realized we can't take care of our employees and please everyone at the same time.”
Step 4: Follow the Matrix
In 2013, Lambert’s service advisor mostly sold big-ticket jobs (engines and transmissions) and regular maintenance work (safety, emissions).
That was before Lambert inherited a parts matrix from his business coach, which identified repairs that would truly raise ARO. While big-ticket parts offered a gross profit of 45 percent, the middle portion—parts priced $100-300—took up time and consistently brought in a gross profit of nearly 60 percent. From then on, Shadetree saw more transmission services, brake flushes and A/C repairs, raising overall gross profits on parts from 50 to 57 percent in the first year.
Since, Lambert has updated the parts matrix each year, bumping parts brackets by a percentage point or two.
How …
Justin Day Infused His Business with a Youthful Vibe
A bonafide vision allowed Laurel Heights Automotive to catapult itself into the 21st century
As the second generation owner of Laurel Heights Automotive, Justin Day's father took the shop to new heights. He retained the shop’s oldest, most skilled technicians; he steadily rose the four-man shop’s revenue to $500,000; and he carried on the shop’s established, humbled brand in Raytown, Mo.
And, as the third generation owner of Laurel Heights Automotive, 27-year-old Justin Day doesn’t have time for any of that.
Not to say his father hasn’t taught him the essentials of running a business over the past three years. But, as Day has completely revamped his staff, has risen annual revenue to almost $1 million, and has broadened the shop’s demographic, he’s noticed one key trend: younger is better.
Younger employees, younger customers, and younger technology have all acclimated easily to his vision for a vibrant, evolving, up-to-date business, so he’s running with it. Here, he details how he invigorated his shop with a youthful vibe that has escalated profits and reputation.
SHOP STATS: LAUREL HEIGHTS AUTOMOTIVE LOCATION: RAYTOWN, MO. Size: 6,000 square feet Staff: 4 full time, 2 part time Number of Lifts: 4 Average Monthly Car Count: 230 Annual Revenue: $900,000
The Vision
Day knew he wanted to run everything different than his father. He knew shop technology was changing. He knew cars were becoming more and more advanced. And, most importantly, he knew future generations would expect their auto repair shops to mirror that progression.
But, as somewhat of a newbie to the industry, how would Day keep up with all those changes?
Before Day could find the right staff and customers to fit his vision, asking that question became key. He couldn’t just dream of a more youthful shop—he needed to research and network and buy equipment that would showcase his vision.
To start, he attended seminars from industry icons. Then, he networked, established relationships with top shop owners, and visited shops to gauge how their businesses were evolving. Then, he invested in some basic resources, like his management system, and budgeted a plan for purchasing diagnostic equipment and digital inspections in the future.
The Staff
When Day took over, Laurel Heights Automotive only had handwritten tickets—that didn’t quite mesh with Day’s plan to go paperless.
Just one problem: At first, those changes didn’t make the shop more efficient, as Day’s seasoned technicians struggled with new technology. Suddenly, despite all the money and effort spent, Day was not carrying out his vision.
That’s when he realized: He needed to hire people passionate about moving into the future and keeping up with changing technology. So, he did just that by training his most senior technician to become a service writer and hiring two recent technical school graduates as technicians.
To this day, that staff has remained the same (with the addition of two part-time technicians for busy seasons), and together they have perfected Day’s new processes.
The Culture
Above each technician’s toolbox rests a flat screen television equipped with Google Chromecast. At any moment, the techs can hook up with Day’s office television, display their vehicle, and ask for guidance. Likewise, Day can use the Chromecast to address any issues without leaving his office.
These sorts of innovations have not only improved and eased communication, but also produced an enormous ROI: After spending $1,000 on the televisions and Chromecast devices, Day has seen productivity and efficiency shoot up 15 and 20 percent, respectively.
To further those working conditions, Day regularly asks his staff to produce ideas, suggest training, and propose equipment that improves production.
The Customers
Once the culture was in place, the sell to customers became easy.
“Some of the changes made us a bit slower at first, but our customers didn’t mind,” Day says. “If you tell them that you’re working on a system that will make everything easier, they respect that.”
Diagnostic equipment? Digital inspections? Even the TVs that populate the shop floor? All of it can be sold to the public. While the service writer is selling work or while Day is hosting shop tours, the team takes any opportunity to show they’re constantly evolving their processes and equipment.
As a result, Day has seen his younger demographic increase drastically, raising the shop’s monthly car count from 160 three years ago to 230 today.
