Hack Your Shop
It was 1997 and there I was at around 2 a.m. when the project car I was working on finally fired up for the first time. The next-door neighbors were not pleased. At 18 years old, I had developed a need for speed. Perhaps you’ve heard of it? This need had netted me a suspended driver’s license, the ire of residents near my home and work, and one totaled car. This particular late night project involved transplanting the engine from that totaled car into another car in the interest of cost savings and added performance. The experience ended up shaping my future more than I would realize at the time.
The foundations of my auto shop ownership are as a technician, but I was also fascinated by high performance and efficiency. Most people and shops repair a car and keep it as the manufacturer intended (usually a good plan). Others can’t help but tweak and modify that same car for efficiency, appearance or performance. A common example might be welding in a universal flexible coupling to spare a customer from having to purchase an entire exhaust downpipe or catalytic converter. As the years went on, I applied the same philosophy of increased efficiency to my automotive service shop just as I had done already with so many cars.
That philosophy is analogous to hacking.
Many people think of malicious computer users when they hear the word hacking but there’s also a positive version. Hacking means you are in control and getting better results. Hackers solve problems using ingenuity. Those solutions may not be well-known or the most straightforward. That creativity is vital to a high performing business.
In the early days of my shop, there wasn’t much shop hacking. I was running my shop like the person repairing a car to the manufacturer’s standards. I was honest; I did quality work; I had invoices that looked professional; and customers paid. I was also tired and worn out! Running a shop is hard work, and there never seemed to be enough time to get everything done. I wanted the next level and needed a better work-life balance. I had to prioritize and also define what hacking a shop for high performance would look like. There needed to be enough profit to keep the shop sustainable, but I wasn’t willing to give up any customer or staff satisfaction. Here are three areas I chose to prioritize in order to begin hacking my shop and regain control:
Hack #1: Get out of the day-to-day
If it was easy, everyone would do it. In the early days of your shop, you grind and work; it’s all you really can do at that point. You work as hard as you are able to and hope for some traction. As growth happens, more staff is hired. There will come a point, (somewhere between $300,000-$700,000 per year in sales depending on your situation) where the thing takes on a life of its own and often begins to run you.
You must get yourself out of the day-to-day operations. Keep your tools, but understand that you will be laying your wrench down as a way to make income directly. And if you’re still service advising, you’re going to have to let that one go, too. Don’t have enough income to hire an advisor? You’ve heard this one before no doubt; you’ll need to begin valuing your services as you grow. Raise your labor rate, implement a parts matrix, and stop discounting. Then you’ll have the income to hire an advisor or additional front of the house staff.
You’re going to give some of that income back to your customers in value such as a better warranty, offering free shuttle/Uber rides, and mostly by being able to afford to hire the best people in the industry who provide the best service. Getting out of the day-to-day is an income issue for most. When you have great qualified staff who are well paid, you’ll find it much easier to delegate and trust them in their roles.
Hack #2: You can’t manage what you don’t measure
Instinct alone served me well until somewhere around $500,000 per year in sales. I worked long hours, had back pain, and had a regular therapist. You just can’t keep it all in your head forever, and you’ll take years off your life trying. Data will help you see what you could never see before on your own. Would you try to correct a failed emissions test without a gas analyzer or scan tool?
Every Monday, I fill out an excel sheet with KPI’s from the previous week. Sales, part/labor split, hours billed, car count, number of new customers, ARO, total opportunity per car, tech productivity, cost of parts/labor, fixed costs, and staff costs to mention a few. There are many automotive-based management systems out there with these reports built in. Between online information, social media groups, trade magazines, 20 groups, and coaches, there is no shortage of help to get these measurement systems set up and in place.
Once in place, you can begin to compare your numbers to other shops. If you’re new to it, your numbers may be inconsistent and not what you had hoped for. In an instant gratification world, I always had to remind myself that change takes time. When I first started measuring, most of my KPIs were way off and swung wildly from one week to the next. I chose the KPIs that I thought would make the most difference and started working on those issues first. With real numbers in front of me, I could finally see what effect my changes had.
Hack #3: Real management
I remember years ago feeling irate when I would see a part core that hadn’t been returned for a few weeks or a tech on his or her cell phone. Management to me was more of a supervisory role. I made decisions based mostly on instinct and fear. In hindsight, it was more akin to throwing darts blindfolded. Sometimes I made some good calls, but I missed so much. That $150 in parts cores was nothing compared to thousands lost on parts margin trying to compete with a made-up MSRP.
When I finally took notice of the total opportunity per car, it became obvious that our inspection process was very poor. Our $15/hour techs did the best they could, but with no training budget, there was a high comeback rate. I ended up hiring a coach. I learned how to interpret the data I measured and truly manage my business. I was able to set goals based on other shops my size, rally the team, and make steady progress. Unrealized potential and additional income from our existing cars fixed many of our issues and put us on a much more sustainable path.
Now that I don’t have to fulfill the role of a technician or advisor, I have time to work on marketing, finances, human resources, and I have the time to manage our goals based on observation and data. If you take these steps, you will see positive results. I’ve seen our highest customer satisfaction numbers ever, assembled a great crew that enjoys the work and is paid very well, and the business is profitable. This insures our long-term survival. It has to be win-win, or it’s not sustainable.
Twenty years after having my license suspended, I’ve learned to slow down a bit. I still can’t help hacking my car, my shop and other areas of my life though. I just turned 40 last year. Life is short so there’s no time like the present to work smarter and enjoy the results on a daily basis.