NOLN - July 2020 by EndeavorBusinessMedia-VehicleRepairGroup

CRITICAL KPIs FOR INCREASED PROFITS

From Exec to Franchisee Former Take 5 executive Pete Frey took his knowledge to open his own franchise.

PAGE 30

YOUR NEXT MOVE THE PLAYBOOK EVERY OPERATOR NEEDS TO KEEP PUSHING FORWARD PAGE 24

LEVERAGE THE POWER OF YOUR PEERS

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BECOME A BETTER DELEGATOR JULY 2020 / NOLN.NET

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2020

VOLUME NO.

ISSUE NO.

JOEL TREADWELL

CONTENTS

J U LY

COVER STORY After a tenure as Take 5 Oil Change

president, Pete Frey wasnâ€™t going to rest on his laurels. Read about his jump to franchisee. PAGE 30

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CONTENTS

09 ONLINE

The goal-setting triangle 10 EDITOR’S LETTER

Introducing our Editorial Advisory Board 11 BY THE NUMBERS

2020 NOLN Operator Survey first look

QUICK HITS 14 INDUSTRY INSIGHT COVID-19 brings new OSHA rules 16 AROUND THE INDUSTRY

PPP gets another revision 19 ADAPT

Battery basics 20 SHOP LOOK

The classic quick lube and car wash

SERVICE 43 PIT STOP

Documentation information 44 LEADERSHIP

The 20 Group difference 46 CASE STUDY

How this waiting room came together

24 FEATURE

KPI Collection

The definitive quick lube guide to measuring the business BY M AT T H U D S O N

30 PROFILE

Executive to Operator

Pete Frey could have fully retired. Instead, he opened a shop. BY A B BY PAT T ER S O N

35 SPECIAL SECTION

TOPS

A look at the top companies in the industry

52 FINANCE+OPERATIONS

The smart way to borrow money

COLUMNS 23 FROM THE SHOP

Teach, educate, ask—TEA! BY A DA M TAT U M

54 AOCA CORNER

Message from the new board president BY MARK BOCHNOWSKI

58 LEADING EDGE

How to set up employees for success BY LENNY SAUCIER

NOLN, VOL. 35, NO. 7 (ISSN 1071-1260), IS PUBLISHED MONTHLY BY 10 MISSIONS MEDIA, LLC, 571 SNELLING AVENUE NORTH, ST. PAUL, MN 55104-1804. COPYRIGHT ©2020 BY 10 MISSIONS MEDIA LLC. ALL RIGHTS RESERVED. NOLN CONTENT MAY NOT BE PHOTOCOPIED, REPRODUCED, OR REDISTRIBUTED WITHOUT THE CONSENT OF THE PUBLISHER. APPLICATION TO MAIL AT PERIODICAL RATES IS PENDING AT ST. PAUL, MN. POSTMASTERS SEND ADDRESS CHANGES TO: NOLN, 571 SNELLING AVENUE NORTH, ST. PAUL, MN 55104-1804.

GETTY

FE ATURES

Metric Math You know car counts and ticket averages, but what else does it take to fully measure a quick lube shop?

NOLN.NET

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S E R U T A E F NEWORE APPS RT M T SUPPO A E R G

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EDITORIAL VP CONTE NT AND E VE NT S

Bryce Evans

E DITORIAL DIRECTOR

Anna Zeck

AS SOCIATE E DITOR

Matt Hudson STAFF WRITE R

Abby Patterson

SPECIAL PROJECT S E DITORS

Nora Johnson, Jordan Wiklund CONTRIB UTING WRITE RS

Mark Bochnowski, Lenny Saucier, Adam Tatum

EDITORIAL ADVISORY BOARD

Lenny Saucier, Consultant Pete Frey, Operator Matt Webb, Operator Jim Harrington, VP of Operations Bill Floyd, Operator

SALES VP AND PUBLISHE R

Chris Messer, cmesser@10missions.com AS SOCIATE PUBLISHE R

Andrew Johnson, ajohnson@10missions.com ADVE RTISING SALES & MARKE TING

Kyle Shaw, kshaw@10missions.com CLIE NT SE RVICE SPECIALIST

Jen George, jgeorge@10missions.com CU STOME R SUCCES S RE PRESE NTATIVE

www.RothLubeTanks.com 1.888.266.7684

Shayna Smith, ssmith@10missions.com

ART AND PRODUCTION ART DIRECTOR

Zach Pate

GR APHIC DESIGNE RS

855-879-9995 Shinn Buildings

Mitch Bradford, Morgan Glisczinski, Nicole Olson PRODUCTION ARTIST

Lauren Coleman

10 M I S S I O N S M E D I A PRESIDE NT

Jay DeWitt

GE NE R AL MANAGE R AND PRODUCTION MANAGE R

- Nationwide - Free Estimates - 30+ Years Experience

Mariah Straub

MARKE TING SE RVICES MANAGE R

Miranda Jama

MARKE TING COMMUNICATIONS SPECIALIST

Kasey Lanenberg E VE NT PRODUCE R

Kate Fahlen

SE NIOR DIGITAL ME DIA STR ATEGIST

Tiffany Fowler

BOOKKE E PE R AND CLIE NT SE RVICE SPECIALIST

Meghann Moore

ADMINISTR ATIVE AS SISTANT

Corey Steinhoff

QuickPit (TM)

www.ShinnBuildings.com Car Washes

Equipment

Lube Buildings

HOW TO REACH US

571 Snelling Avenue North, St. Paul, MN 55104 tel 651.224.6207 fax 651.224.6212 web 10missions.com The annual subscription rate is $72 (U.S.A. only) for companies not qualified to receive complimentary copies of NOLN. Past issue single copies are $8. Go to noln.net/backissues Send letters to news@noln.net. For high-quality reprints or e-prints of articles in this issue, call 651.846.9488 or email reprints@noln.net. Opinions expressed in NOLN are not necessarily those of 10 Missions Media, and 10 Missions Media does not accept responsibility for advertising content.

NOLN.NET

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BY T H E N U M B E R S

07.20

VISIT

NOLN.NET TODAY

PODCAST

THE NOLN PODCAST Curious about joining or creating a 20 Group? Wondering how other shops are innovating in 2020? How does somebody get into the hand sanitizer business, anyway? Those topics and much more are all covered in recent episodes of The NOLN Podcast, which can be found at noln.net/podcasts. You can also download them through Apple Podcasts, Google Podcasts and Spotify, as well as other platforms. Be sure to rate and comment on the podcast on your favorite platform, which helps us reach you better!

BLOG

WHEN GOALS TAKE SHAPE

UNSPLASH

There’s always a bit more to every story. NOLN’s reporters’ blogs and story content have been expanding on what you see on the magazine pages. Sometimes it’s easiest to visualize a problem in order to work through it. NOLN is all about finding efficiencies not just in the shop process, but also in management and personnel challenges. For this, check out a recent blog on The Goal-Setting Triangle. It just might change the way you approach goals. It’s all at noln.net/triangle.

N O L N . N E T/ L I N K E D I N

N O L N . N E T/ F A C E B O O K

N O L N . N E T/ T W I T T E R

N O L N . N E T/ P O D C A S T S

NOLN NEWS Twice per week, NOLN sends out the latest news, strategies and keys to success straight to your inbox. Head to the website to sign up for the NOLN newsletter. Sign up at noln.net/subscribe.

N O L N . N E T/ B L O G

N O L N . N E T/ V I D E O S

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EDIT LETTER

AT NOLN, WE TAKE A LOT OF PRIDE IN

WORKING TOGETHER Introducing our first Editorial Advisory Board

the mindset that this isn’t our magazine; it’s yours. Every single aspect of NOLN, from its digital content to the stories you read on these pages each month, is designed with the intention of providing you, our readers, with information and strategies to help you lead your businesses. The only way we succeed in achieving our goals as a publication is to help you reach yours. With that in mind, I’m excited to announce a new step we’ve taken to make sure we stay on that path. This issue of the magazine is the first since the formation of our Editorial Advisory Board—a group of five quick lube industry leaders who have volunteered their time, knowledge and energy to help ensure NOLN stays true to its mission and provides the most timely, valuable and actionable content possible. You can find that list of folks in our masthead moving forward (p. 8 this month), but for quick reference (and a show of thanks to each of them), here’s the complete list: • Bill Floyd, owner, Lucas Oil Center • Pete Frey, owner, Take 5 Oil Change of Covington, La. • Jim Harrington, executive vice president, Victory Lane Oil Change • Lenny Saucier, vice president of human resources and training development, Victory Lane Quick Oil Change • Matt Webb, owner, Premier Oil Change First, I’d like to thank all five of them for their commitment to not only helping NOLN and our readers, but also to the industry as a whole. It’s both exciting and inspiring to see people so dedicated and engaged to paying it forward.

The timing is somewhat unintentional, but you can also read about a couple of our board members this month in the magazine: Pete Frey, profiled on p. 30, shares his story of launching into a second career in the industry, and Lenny Saucier highlights leadership strategies in his column (p. 58). Also in the magazine this month, you can find “NOLN’s KPI Handbook” (p. 24), which showcases an in-depth look at the state of the quick lube industry through data from our annual Operator Survey. All of our content is aimed at helping push your business forward. Our new board will be a huge asset in doing that, but our eagerness for feedback, information and suggestions doesn’t end there. We want your voice to be represented in each and every issue. Again, this is your magazine; tell us what you want to see. Tell us how we’re doing. Let us know how we can improve. Let’s improve together.

B RYC E E VA N S

VP CONTENT & EVENTS, 10 MISSIONS MEDIA

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BY T H E N U M B E R S BY T H E N U M B E R S

THELATEST LATEST INFORMATION THE INFORMATION The 2020 2020 NOLN NOLN Operator and National OilOil and Lube The OperatorSurvey Surveyisiscompleted, completed, and National and has been the data. eye an outeye for out full for stories related NewsNews Lube has compiling been compiling theKeep data.an Keep full stories to the survey later this year, but for now, here is what the average shop related to the survey later this year, but for now, here is what the averlooks like in the dataset. age shop looks like in the dataset.

PROPERTY STATUS:

GROSS SALES:

62% 64% OWN

$500,000 to $1 million

FIND FIND MORE OUTOUTMORE

(34%)

SHOP NETWORK:

QUICK MAINTENANCE IN OVERALL SALES:

QUICK MAINTENANCE BAYS:

YEARS OWNER EXPERIENCE

IN WAITING ROOM (60%)

CUSTOMERS WAIT:

THE AVERAGE SHOP (BY THE NUMBERS)

Shops were watching their numbers closely in early 2020, as shutdowns related to COVID-19 Shops were watching their numbers closely in early 2020, as shutdowns related to COVID-19 slashed car counts across the country. slashed car counts across the country. To help operators understand how the industry worked to bounce back, NOLN compiled stories To help operators understand how the industry worked to bounce back, NOLN compiled stories of three outstanding operators. It all went into the June cover story: “Remarkable Rebound.” of three outstanding operators. It all went into the June cover story: “Remarkable Rebound.” To revisit this story, head over to noln.net/rebound. To revisit this story, head over to noln.net/rebound. J U LY 2 0 2 0 J U LY 2 0 2 0

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AROUND THE INDUSTRY

ADAPT

SHOP LOOK

GETTY

QUICK HITS

INDUSTRY INSIGHT

INDUSTRY INSIGHT No surprise that COVID-19 is changing workplace safety

policies. Get the lowdown on new OSHA requirements. PAGE 14

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INDUSTRY INSIGHT

THE NEW NORMAL

How to navigate OSHA’s new COVID-19 safety guidelines

RECENTLY, THE U.S. DEPARTMENT

of Labor’s Occupational Safety and Health Administration (OSHA) adopted revised policies for enforcing their requirements due to the changing scenery caused by COVID-19, all in an attempt to decrease the risk of transmission. Now, under new record-keeping requirements, coronavirus is considered a recordable illness. Many workers return to an environment that is far from normal. At the NOLN office, for example, hand sanitizer can be seen in virtually every room, coworkers sit six feet apart or

more from their normal desk buddies, and arrows line the walkways to avoid running into oncoming people traffic. At shops, the processes changed almost overnight in order to remain open and safe for customers. According to Colette Bruce, owner of Team Safety LLC, however, many workers are coming back to work to find no precautions in place whatsoever, which has resulted in many complaints piling up on OSHA’s file cabinets. To avoid future OSHA citations, Bruce lays out the groundwork on the new guidelines operators need to follow.

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considered a recordable illness, as they have determined COVID-19 can be transmitted in the workplace. This means these employers are now responsible for recording cases of COVID-19. However, there’s a fine line between what is considered recordable and what is not. According to Bruce, the employer is only required to report it to OSHA if he or she is certain it came from the shop. In other words, the employer would have to determine through tracing that the shop is actually where a customer or employee contracted the virus. Bruce gives the example of Tyson’s factory workers; about 500 employees at Tyson tested positive for COVID-19, a pretty good indicator that the outbreak occurred in the workplace. But if an employee calls in and says he or she has tested positive and the employer isn’t able to trace it to the shop, it’s not distinct proof that the outbreak came from the shop. Essentially, it’s under the employer’s discretion whether the outbreak actually occurred in the shop, and if an employer does record an illness that occurred outside of the workplace does not mean the employer has violated any OSHA standard. “Just like they’d have to have a reason why it started there, they’d have to have a reason why it wasn’t,” Bruce says.

Defining a Recordable Illness Employers with 10 or fewer employees and certain employers in low hazard industries have no recording obligations; they need only report work-related coronavirus illnesses that result in a fatality or an employee’s in-patient hospitalization. But for employers with more than 10 employees, they are required to report any illness or injury, typically beyond first aid, that occurs within the workplace and log it in OSHA’s 300 Log throughout the year. Now, under OSHA’s record-keeping requirements, coronavirus is

Reporting an Illness or Injury According to OSHA guidelines, an employer is required to record injuries and illnesses if: • It is confirmed as a coronavirus illness; • It is work-related as defined by 29 CFR 1904.5; and • It involves one or more of the general recording criteria in 29 CFR 1904.7, such as medical treatment beyond first aid or days away from work.

Preparing for the Changes To protect your employees and customers from contracting COVID-19, OSHA is requiring shops to develop an Infectious Disease Prevention program, incorporating protective equipment and new workplace procedures to prevent the spread; keeping six feet apart, requiring masks and gloves be worn, providing specific equipment for each employee, even providing a procedure on entering a customer’s vehicle. Bruce says there are a lot of requirements employers can implement that would meet OSHA requirements, but having a general plan makes an employer think about the workplace and the best way to avoid transmission. In fact, Bruce is working with all of the Take 5 locations to come up with new policies and procedures during the pandemic and creating a formalized document for anyone to access. “Every employer, besides quick lubes, needs to have a plan in place,” Bruce says. As of right now, there’s no legislation stating businesses are not responsible for the transmission of COVID-19, so having a detailed plan in place and standard operating procedures (SOPs) can help avoid any liability. For example, going to a quick lube without leaving the vehicle is far safer than an employee getting in the vehicle and the customer getting out of the car. All of those touchpoints increase the potential for transmission, and there would be no way to trace a customer testing positive to the shop when they never left their vehicle. All in all, having new policies, procedures, and a plan in place ensures all employers are taking all of the necessary steps to prevent the spread of COVID-19.

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AROUND THE INDUSTRY

WAL-MART CLOSING CANADA SHOPS

On June 3, the U.S. Senate passed the House version of Paycheck Protection Program legislation, effectively tripling the time for loan recipients to spend the funds and still qualify for forgiveness of the loans, as noted in a report by the Journal of Accountancy. The Senate passed by voice vote the House-passed Paycheck Protection Program reform bill, clearing the way for President Donald Trump’s signature. The bill, which passed the House last week, offers business owners more time and flexibility to use loan money while still getting it forgiven as part of the PPP. “We can’t wait any longer. Businesses are really suffering for lack of these changes,” Senate Minority Leader Chuck Schumer said on Wednesday, per a CNN report. “We must get this done. Businesses are going under every day.” The vote in the House approving the

legislation was nearly unanimous, passing by a 417-1 tally. The legislation, titled the Paycheck Protection Program Flexibility Act, is intended to make loans more accessible under the program by making its terms of use more flexible. The legislation would give small businesses more time to use emergency loans under the program by extending the eight-week period in which they must use the money to qualify for loan forgiveness to 24 weeks. The bill figures to give small business increased flexibility by altering the “75/25 rule,” which requires recipients of funds under the program to use three-quarters of the money for payroll costs to limit other costs to no more than 25 percent in order to be eligible for loan forgiveness. The new ratio would be at least 60 percent on payroll, and no more than 40 percent on other costs.

MEINEKE REOPENS AFTER TORNADO

A Meineke Car Care Center in Sioux Falls, S.D., has reopened after being hit by a tornado nine months prior, reports KELO. According to the report, a trio of tornadoes touched down in Sioux Falls last September, with a number of local businesses affected. Instead of tearing the Meineke down, Advance Auto Parts, who owns the building, decided to rebuild the business. After nine months of rebuilding, Meineke Car Care Center’s return was again slowed by COVID-19. However, owner Doug Olson has managed to keep the same four employees from before the tornado on payroll.

UNSPLASH, GOOGLE

SENATE APPROVES PPP REFORM BILL

Wal-Mart is officially closing all of its tire, lube, and express car repair shops throughout Canada, reports Motor Illustrated. A group of 106 stores across Canada is set to close as Wal-Mart sets to move away from automotive maintenance and repairs, and focus more on food, consumables, health, and general merchandise. Some stores, however, will continue to offer car maintenance services through its partnerships with Mr.Lube. This move will affect 550 employees, but most will be retained, the report said.

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TECH STARTS MOBILE OIL CHANGE SERVICE AMID COVID-19

While the auto repair shop in Great Falls, Mont., was closed due to COVID-19, one of the shop’s workers decided to create his own mobile oil change service to meet customers’ needs, reports KRTV. Darrell Miller started Darrell’s Mobile Oil Change Services because he saw a need in his community during the pandemic. “I work at a shop here in town, and they were closed during MAY the COVID. So I just DIRECT INJECTION wanted to bring a mobile altering service to HAVE UNINTENDED EFFECTS Great Falls because no one was able to get their oil Nearly changeevery done,”automaker Miller told KRTV. has Miller told the news station that itintakes direct-injection technology him to 20 minutes to complete theirabout latest15 engines. The controlled an oil change once spray he shows up tointo the bursts of gasoline directly customer’s housechamber and grabs keys the combustion aretheir supposed from them. to lead to more efficient burning and,

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RROSIVE

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Available Available ArizonaPetroleum Petroleum Arizona From: From: 1-800-580-5823 1-800-580-5823 Available From: A I Distributors A &&I Distributors

E N ON BL

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came with extra valve deposits. Now a A recent college graduate held a new issue has emerged that presents fundraiser at hercoming family’sout carofwash concern about what’s the and quick lube,than asking for donations engine, rather what’s inside. instead of usual gifts, reports A Green Car graduation Reports story says the Daily News. thatWinona a recent study suggests that direct According to the report,more Emelia Schininjection engines produce black deldecker, a recent graduate carbon aerosols, which couldfrom add Conto cordia University - Wisconsin, celebrated atmospheric warming. The short-term her graduation at herof family’s business, “social cost” effects the aerosols Gilmore Avenue the Car long-term Wash and emissions Quick could outweigh Lube, Winona,efficiency, Minn. savedinthrough the study says. Schindeldecker toautomakraise The story noteswas thatable while $1,000 Feed the Kids,and a fund that ers likefor Mercedes-Benz Volkswahelps guarantee students atparticuWinona gen have tried toallincorporate Area Publicinto Schools continue to receive late filters the exhaust system, that access to nutritious school meals. While may reduce the fuel-efficiency gains Schindeldecker asked for donations desired in the first place. instead of graduation gifts, proceeds from the shop’s car washes purchased went to the fund as well. Get more industry news at noln.net

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APRIL 2020

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3/24/20 9:09 AM

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HOW WILL TECHNOLOGY TRANSFORM THE QUICK LUBE INDUSTRY? FIND OUT WITH EDUCATION HELPING YOUR BUSINESS THRIVE, INCLUDING: “THE CHANGING LANDSCAPE” • “TECHNOLOGY AS A PROFIT CENTER” • “ADAS—A DEEP DIVE”

L E A R N M O R E AT A DA P T S U M M I T.C O M

Tomorrow’s Industry—Today

THE ADAPT: AUTOMOTIVE TECHNOLOGY SUMMIT IS A THREE-DAY EVENT PROVIDING SHOP OWNERS AND OPERATORS WITH A UNIQUE, UNMATCHED OPPORTUNITY TO LEARN DIRECTLY FROM INDUSTRY LEADERS ON THE MOST PROGRESSIVE AND PRESSING TECHNOLOGY TRENDS DISRUPTING THE AUTOMOTIVE AFTERMARKET

DECEMBER 6-8 • NASHVILLE

PLATINUM SPONSOR

GOLD SPONSORS

Covering the entire aftermarket industry with topics on legislation, repairability trends, training and the modern technician and much more. S I LV E R S P O N S O R S

NOLN.NET

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K E Y I N S I G H T S , T R E N D S A N D S T R AT E G I E S F O R T O M O R R O W ’ S I N D U S T R Y—T O D AY

THE ADAPT INTERVIEW

GET THE BATTERY BASICS

GETTY

What is a hybrid or EV battery made of? More importantly, what are the risks involved in working on or around those parts? These are crucial questions that shops will need to ask as more and more hybrid and electric vehicles come in for repairs and maintenance. ADAPT has an excellent primer on the subject with ASE master technician Bob McGinn, who is a safety author for the Coordinating Committee for Automotive Repair. McGinn goes over some of the essential information, like what modern batteries are made from and what processes techs will need to be aware of when working around them. These are concepts like stranded energy, thermal runaway and liquid fire. To read the article and learn more, head to adaptautomotive. com/repairEVs.

DECEMBER 6 – 8 • NASHVILLE, TENN.

Check out the growing list of multimedia on the ADAPT site. They include a useful podcast episode with the founders of Termageddon about why businesses need website privacy policies and how they are updated over time. This is essential information for shops to have a strong online presence. Plus, take a look at an interactive, informative talk from the 2019 Ratchet+Wrench Management Conference featuring shop owner Greg Buckley. He talks to a packed room about technology trends and how to best introduce these ideas and practices to your shop.

ADAPT TREND REPORT Head to the ADAPT website to sign up for the ADAPT Trend Report newsletter to have the latest news, strategies and transportation trends sent to your inbox every week. Visit adaptautomotive.com/newsletter

JOIN US ONLINE ADAPTAUTOMOTIVE.COM ADAPTAUTOMOTIVE.COM/FACEBOOK T W I T T E R . C O M /A D A P T_ A U T O M O T I V E

Registration and hotel accommodations are now open for The ADAPT: Automotive Technology Summit. Head to adaptautmotive.com/Summit to learn more about the event, who can attend and the schedule of the two-and-a-half day event.

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S H O P LO O K

CORNHUSKER AUTO WASH OPERATOR:

BRIAN FOX

LOCATION:

BELLEVUE, NEB.

STAFF SIZE:

SHOP SIZE:

2 BAYS

AVERAGE CAR COUNT:

TICKET AVERAGE:

$60

BY TESS COLLINS PHOTOS BY COLIN CONCES

MORE THAN A CARWASH The company started as a carwash and added a quick lube in 1996. Having both under one roof has helped with attracting customers and keeping those customers under one umbrella, says site operations manager Nick Toyne. The car wash, which remains the company’s “bread and butter,” according to Toyne, is a great opportunity to reach customers for quick lube. Toyne says that, when there’s a line for the carwash, the quick lube staff will hand out coupons to customers and pull them out of line to do oil changes and get them in and out more efficiently. In addition to the carwash and quick lube, Cornhusker also offers detailing, remote starts and a gas station.

NOLN.NET

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H AV E A N O U T S TA N D I N G S H O P T O S H A R E ? E M A I L N E W S @ N O L N . N E T

TEAMWORK PAYS OFF Toyne credits a lot of the success of the quick lube to the way the staff works, which is together. The staff always tag teams, meaning they’re always checking one another’s work and making sure that nothing was overlooked, keeping the customers happy and business running efficiently. “We always have someone double-checking,” Toyne says.

NO PRESSURE SALES Toyne points out that the quick lube’s philosophy of “zero pressure sales,” has really helped when it comes to bringing customers in, as the quick lube does very little marketing. By letting customers make the decision and not overwhelming them, it’s helped keep them coming back.

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EOLCS

THE NEXT GENERATION OF GASOLINE ENGINE OIL IS HERE INTRODUCING NEW ENGINE OIL STANDARDS

ILSAC Standards for Passenger Car Gasoline Engine Oils

GF-6A

GF-6B

U R RCE VI NG

API SP

SO R E NSE CO

SAE 5W-30 SN

Applies only to oils having an SAE viscosity grade of 0W-16. Introduced in May 2020, designed to provide protection against low-speed pre-ignition (LSPI), timing chain wear protection, high temperature deposit protection for pistons and turbochargers, stringent sludge and varnish control, improved fuel economy, emission control system protection and protection of engines operating on ethanol-containing fuels up to E85.

Standard for Gasoline Engine Oils

SERVICE S PI

™

Introduced in May 2020, designed to provide protection against low-speed pre-ignition (LSPI), timing chain wear protection, improved high temperature deposit protection for pistons and turbochargers, more stringent sludge and varnish control, improved fuel economy, enhanced emission control system protection and protection of engines operating on ethanolcontaining fuels up to E85.

Introduced in May 2020, designed to provide protection against low-speed pre-ignition (LSPI), timing chain wear protection, improved high temperature deposit protection for pistons and turbochargers, and more stringent sludge and varnish control. API SP with Resource Conserving matches ILSAC GF-6A by combining API SP performance with improved fuel economy, emission control system protection and protection of engines operating on ethanol-containing fuels up to E85.

ASK FOR API-LICENSED OIL WHENEVER YOU HAVE YOUR OIL CHANGED LOOK FOR API CERTIFICATION MARKS EVERY TIME YOU BUY MOTOR OIL

LEARN MORE AT: API.org/EOLCS • MotorOilMatters.org • DieselOilMatters.com 22

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ENGINE OIL LICENSING & CERTIFICATION SYSTEM (EOLCS)

6/24/20 7:54 AM

FROM THE SHOP

Sweet or Unsweet, It’s Still All Tea! What you carry is important. How you carry it is just as crucial OVER THE LAST FEW MONTHS, I HAVE RECEIVED A

ADAM

TATUM

Adam Tatum is director of operations for the Virginia Group, a Jiffy Lube franchisee with 11 locations. He has over a decade of experience in the industry with a proven track record of building customer counts and sales, as well as using innovative ways to bring a new look to the automotive field for both the customer and the employee. Performance comes from growing your business through people.

ATAT U M

LUCAS MOORE

@VALUBE.COM

few emails regarding additives and how they can upgrade your business. So rather than just respond to each one, why not just write a column about them? The biggest questions that I get are “what” to carry and “which” company. Now, I can lead you toward my preferred vendor in electric blue, but these are decisions that you need to make on your own. Also, what to carry really comes down to how you set up your business. Are you doing just oil changes or are you doing fluid exchanges? Are you doing mechanical repairs? Answer these questions before you move forward. Now that you have determined that additives could be the next step in your business, what are some of the best things to carry? In my opinion, customers like packages. Put together a fuel and oil additive, add a conditioner to a transmission fluid exchange or radiator service and you add $20 to $30 to that invoice. If you are jumping into the arena, simply choose three things to start and add on from there. Get yourself a good engine oil treatment, a good fuel additive (especially for GDI motors) and a good oil system pre-change cleaner. Make them reasonably priced, and watch them fly off your shelves. From there, add the stop leaks, the service conditioners and more. After you determine the what and the who, we move to the most important part of the additive business, what I call the TEA method. If you haven’t noticed before, I like acronyms. Below, I will outline the method and get you on your way to making more money for your bottom line.

T: Teach your staff. If your customer facing employees do not understand what they are selling, then they will fail in adding the value that you are seeking. Some of the additive companies have online training modules; others may have videos on YouTube with helpful information. My brands of choice have in house training that they can send to your

markets to get hands on training. No matter who you choose, you need to teach your staff.

E: Educate your customer. Now that you know what you are selling, repeat that information to your customer. Develop multiple plans of getting this message out, as well. How many of your customers, or your staff for that matter, know that GDI motors require fuel cleaners every couple thousand miles? It’s in the vehicle manual. Every one of these engines is an opportunity to grab that fuel additive sale. Maybe think about finding that info online and laminating a copy to show your guest. Knowing their mileage habits helps out as well. If you see that they are going consistently over their oil change intervals, drop in that clean and protect package on them. More sales! So now, you know what you are selling and what triggers you are looking for from the vehicle. It is time for the absolute most important thing that you must teach your staff to do. Are you ready for the key, the holy grail of sales? A: ASK for the sale. And there you have it. I really can’t even go much further in this section of my acronym, because it's just too simple! I used to have a boss that made a joke regarding sales. He spoke of when he was younger and at the bar. If you wait until the end of the night to talk to a girl, you are likely to go home alone. He’s a big guy. So, he used to tell us that you got to go around and ASK. What’s the worst that can happen? You get a no. But what if you don’t? He will read this and laugh out loud knowing that I’m talking about him. Go ahead and sign that page and send me a screenshot! I hope that this helps you understand what you are looking for in a vendor and how to make it successful in your stores. If you want to get contact information from me to get my vendors, feel free to reach out and I will send you some electric blue and lime green websites and the digits! Keep reaching out and emailing me. I just might write a column on what you are looking to improve in! Remember: Teach, Educate and Ask!

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NOLN ’S KPI HANDBOOK 24

THE NUMBERS YOU NEED TO MEASURE SUCCESS

(AND HOW TO CALCULATE THEM) B Y M AT T H U D S O N

Each year, NOLN asks in its Operator Survey whether owners are answering questions based on memory or by going through their records for reference. More often, operators are working from memory—55 percent said this, according to the 2019 survey. That’s not necessarily a bad thing. It reflects the level of attention and recordkeeping that’s increasing in the industry. What shop numbers can you recall right now? If you ask Jimmy Grant, a 32-year industry veteran who runs East Ridge Fast Lube in Chattanooga, Tenn., there’s one performance metric that all operators need to know like the back of their hands. “My big thing is my cost of goods,” Grant says. “This is something every owner should know.” There are lots of different numbers to track in the quick lube business. But the bottom line is that operators who track their key performance indicators closely tend to have more success than those who don’t. This was the theme in Steve Good’s case study last month in the magazine (“No Number Too Small”), when a renewed focus on KPIs turned a struggling shop into a profitable one. When you know where the numbers are going, at different levels of the operation, you know better which levers to pull when a change is needed. Just ask Chris Cotton, an automotive business consultant and former shop owner with more than 25 years of experience. “Every KPI will have a cause and effect for why it’s great and why it’s bad,” Cotton says. “It’s one thing to track them but it’s another thing to actually go to each one and look and say, ‘This is what’s causing that.’” NOLN is proud to launch this KPI handbook, which should highlight the basic areas of attention and show you how to keep the books on top performance numbers for quick lubes.

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THE BASICS KPI: CAR COUNT

KPI: TICKET AVERAGE

The car count is the foremost metric by which quick lubes measure volume. It can articulate, with some degree of accuracy, an operation’s size and output with one number. For the operator, it’s also an easy target to set for staff to hit—a nice, round number that summarizes the business done in a certain timeframe. Of course, the figure can vary greatly, due to a shop’s market location, number of bays, size of staff and other factors. A review of NOLN Operator Survey data from the last 13 years, as well as information from featured shops in the magazine, found that most participating operations have two or three bays. The average car count among those shops is 36. The car count also indicates a business strategy. To Grant, profits are found by seeing many vehicles. “I like the car count. I like the volume,” he says. “What happens is if people feel pressured to buy on the ticket average, they’re not going to want to go back there.”

The ticket average is the average amount of money that a customer pays in a visit. Individually, it’s where the customer’s eyes land when they receive the invoice. The pursuit of a higher ticket doesn’t need to be a pushy sales endeavor. With growing drain intervals, many shops are experimenting with added services to boost tickets and offer more to customers. The lube-plus operations already do this. In that sense, a careful eye can look at a ticket average and surmise what sorts of things a shop might offer. A pure quick lube will have lower tickets and higher car counts; shops that have a bigger service menu might take longer on cars and see fewer of them. But they might offer more intensive and expensive services to boost tickets. The ticket average represented in the 2019 NOLN Operator Survey was just over $81, with submissions ranging from well over $100 from lube-plus operations to less than $50 for smaller quick lube shops. How is ticket average calculated? Just add up all the service tickets for the day and divide by the number of paying customers.

AVERAGE $81.06

GETTY

AVERAGE: 36 HOW IT’S CALCULATED: Add the number of vehicles ser-

viced per day

HOW IT’S CALCULATED: Add up all the service tickets for the day and divide by the number of paying customers. $2,918.16 daily sales / 36 cars = $81.06 ticket average

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GOODS AND LABOR KPI: PARTS AND LABOR PERCENTAGES

KPI: PROFIT MARGINS

This is what Grant keeps at the top of his mind. The cost of goods in particular is what he pays attention to in order to maintain strong sales. “They just need to know that,” Grant says. “Anytime you can keep your cost of goods 25 percent or less, then you’re good.” That means that the operator’s cost for a single service should be 25 percent or less than the retail price. Don’t forget that it’s all about averages. Some higher-priced services should help balance the services at lower price points, and add-ons and retail items like wipers should help lower the cost percentage. “Usually you’ll have an air filter or a cabin air filter or wiper blades or something like that that will help,” Grant says. Grant likes the same target percentage for labor. But when estimating the cost of labor for a single service, like an oil change, take care to calculate the true cost of labor. Cotton advises operators to take the hourly wage and add in the tax, insurance and benefit loads for that employee. “That is going to be at minimum at 19 to 20 percent, depending on the state and everything else,” he says. That means that for an hourly wage of $12.50, the actual cost per hour for that employee might be $15.62 when considering an additional 25 percent for taxes, insurance and benefits. In a highly competitive market, the actual cost might come at a higher percentage of the hourly wage. “What I’m finding in the good repair shops, the good quick lubes, is in order to keep their employees happy and giving them benefits like a 401(k), insurance, gym memberships, whatever you’re doing, those shops are spending almost 40 percent above to almost 50 percent above what the person’s pay is in order to keep those people,” Cotton says.

The margin determines where you set your service price and how much profit your shop makes. “When we’re looking at just dollar amounts and how we pay the bills and everything, our labor profit or the labor gross profit,” Cotton says. “Once you add the tax and benefit load in, I always like to keep that at 75-to-80-percent profit.” He says that quick lubes, with hourly labor and a higher volume of car counts than mechanical repair, are better suited to reach those labor margins. Using the actual hourly cost, an operator would take into account the number of employees working on a single car and estimate the number of services per hour to get the labor cost per vehicle. With a target of at least 50 percent margin on parts, a shop should be in a good place to reach its overall profit goals. “On the parts, I try to be at 50 percent minimum,” Cotton says. “And the more, the better. If I can get an 80 percent gross profit on labor and I can get to 60 percent profit on the parts, then that leads me total shop-wise at about a 70 percent gross profit.”

TARGET: <25% each HOW IT’S CALCULATED:

GOODS: Take the example cost of $6.50 for five quarts of oil and $1.50 for a filter. That’s $8 in goods for an oil change. Multiply by the average car count of 36 to get $288 per day. For this example, the average retail price for a five-quart oil change is $55.65. Divide parts cost by daily oil change sales: $288 / $2,003.40 = 14.3% LABOR: With $15.62 actual cost per hour for labor at 10 hours, the daily labor cost per day is $156.20 for one employee per day. With four employees on the job, that’s $624.80. Divide labor cost by daily sales: $624.80 / $2,918.16 = 21.4%

TARGET: 80%: The target for a labor gross profit margin 50%: The target for parts gross profit margin HOW IT’S CALCULATED: For this KPI, you want to figure out a

labor cost per service. If the actual cost of an employee is $15.62 an hour and you estimate four oil changes per hour, that makes $3.90 per oil change. With two employees on a car, that means it costs $7.80 in labor for an oil change. Using $7.80 in labor for an oil change with two techs and $8 in goods, use the margin multiplier to reach a base price to achieve the desired margin. The table helps to make sure you’re adjusting for margin, rather than a markup. Goods at $8 x 2 = $16 base price Labor at $7.80 x 5 = $39 base price An operator should sell at least $55 to achieve the desired margins for parts and labor.

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PRODUCTIVITY KPI: PERSON-HOURS There are multiple ways to gauge productivity. In a mechanical repair shop, where service is done in longer intervals, productivity is measured by the hours worked divided by the hours a tech is available. That can be more difficult to calculate in a quick lube, where service is measured in minutes and techs can go from active to standby in the same amount of time. For the April issue, NOLN spoke with Michael Meuret, co-owner of Einstein’s Oilery in Boise, Idaho. He uses a person-hours productivity metric to determine how much of a car is being serviced per person, per hour. A higher number means more cars are coming through, but he notes that services that take longer, like fluid exchanges, may bring the productivity number down. This is expected as long as the ticket rises. “Our goal is 0.95 cars per man hour,” Meuret says. “But as our ticket averages have increased, for every dollar over $75, we’d like to see our ratio come down proportionally. So we focus on our ratio more than our labor percent, which is naturally going to decrease with an increased ticket.”

TARGET: .95 HOW IT’S CALCULATED: Divide the car count by the num-

GETTY

ber of labor hours that day: Vehicles / Workers x Hours. So for a 10-hour day with four workers and 36 as the car count, the equation is: 36 / 40 = 0.9

HOW DOES THE MULTIPLIER WORK? — Use this table to make sure you’re calculating for gross profit rather than markup.

Multiplier for Profit Margin

Gross Profit Margin

Markup from Base Cost

80%

400%

3.5

71%

250%

67%

200%

50%

100%

1.75

43%

75%

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KPI: FILTERS AND FLUID EXCHANGES For fluid exchanges and sales of engine and cabin filters, his target is to sell one to half the vehicles that come in.

TARGET: 50 percent of services HOW IT’S CALCULATED: One of every two tickets should include one of

these items.

KPI: DIFFERENT OIL TYPES In the real world, different types of oil will influence your path to a desired margin. Most shops have at least three tiers: conventional, blend and full synthetic. “I like to track the good, better, best oil changes that we were doing,” Cotton says. “And for a KPI, I always wanted 50 percent of our oil changes to come from the better and 20 percent to come from the good and 30 percent to come from the best.” That allows the operator to retain some attractive pricing options at the bottom tier while trying to make up margin ground in the upper tier.

KPI: POP ‘N’ POURS Cotton says it’s important to watch how each service is selling, because an operator can focus on one or more of those areas to help bring down a cost percentage or boost tickets. “If you’re just doing a quick lube, you only have a couple opportunities,” Cotton says. “You can do the oil, you can do the filters—air and cabin—and also you can do added services if you have time for it for fluid exchanges.” He uses the term “pop ‘n’ pour” to describe additive treatments, which has its own target alongside other services.

TARGET: 33% of services HOW IT’S CALCULATED: A third of services should include

an additive sale. “My goal was a pop-and-pour on 33 percent of that cars that come through,” Cotton says.

HOW IT’S CALCULATED: Manually, this is done by separating out car counts by each tier of oil sold in the service. For the example of 36 oil changes, seven should be in the lowest tier, 18 should be from the middle tier and 11 should be that sweet full synthetic.

READ MORE TO BOOST YOUR NUMBERS — You can shop around for supply deals, but the most control is exerted at the shop level. Running a quick lube is a holistic enterprise. It takes success in a lot of areas to maintain that desired margin.

Check out these NOLN articles to guide you through areas like

marketing, renovation, efficiency and more.

“Why One Expert Compares Your Business Value to a Vital Sign” noln.net/vitals

“Leverage the Lower Bay” noln.net/lowerbay

“Make Sure Your Shop has an Inviting Face in 5 Steps” noln.net/face “5 Ideas for Leadership in 2020” noln.net/leadership2020

“Three Questions for a Fresh Shop Facelift” noln.net/facelift

GETTY

EXPANDING SALES

TARGET: Good: 20% Better: 50% Best: 30%

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GO FROM WRENCHES TO RETIREMENT

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How a former Take 5 execâ€™s role aided his transition into the franchising world B Y A B B Y PAT T E R S O N P H OTO S B Y J O E L T R E A D W E L L

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Lea Way In antation.

Growth Point After nearly two decades as president of Take 5 Oil Change, Pete Frey opened the brandâ€™s 500th shop.

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How do you know when it’s the right time to throw in the towel? For Pete Frey, former senior vice president of customer experience with Take 5 Oil Change, it was never an option. When Frey was 64 years old, it came time for him to step down from his executive role. But after 34 years in the business, he decided to stay with the company. Instead of easing into retirement, he opened Take 5’s 500th location back in October 2019—a good thing for him and the company. Here’s how his longtime career in the executive world has aided him in his franchising career today.

The Take 5 Model Frey debuted with Take 5 in 1984, working as a service advisor when they started out with five locations. Since then, he’s gone from a general manager all the way up to CEO of the whole operation. Throughout it all, his history was ingrained in the customer service side, where he focused on developing it to be bigger and better. One of these tasks included coming up with the new Take 5 Model. With the company’s mission statement—“To set service standards and achieve customer satisfaction that exceeds every customer’s expectation by maintaining the highest level of employee training and development.”—Frey had to find a model that exemplified it enough to differentiate themselves from the competition. The fastest way to do that, according to Frey? Disruption. And with that came the drive-thru experience, where a Take 5 customer could drive up, sit in their car while they receive their oil change, and be on their way, all without leaving their vehicle. Frey says the drive-thru experience has been critical to the success of the model. To wit: When the company was sold to a private equity firm in 2011, and Driven Brands came knocking five years later, the model and Frey remained throughout all of the ownership changes.

“To be fortunate enough to survive the original ownership and make it through two private equities—this was a model that has proved itself,” Frey says.

The Take 5 Playbook Acquisitions have always been the company’s sweet spot, Frey says. Back in the day, he says they focused on companies that have been in business since the ‘80s for a deal. And when this happened, Take 5 didn’t want their model and mission statement to be convoluted. So, Frey’s next task was to find a solution. The result? The Take 5 Playbook. Essentially, the playbook is the brand’s model, but acts as an SOP to carry out the company’s mission statement throughout all Take 5 operations. He was in charge of coming up with the whole experience down to the last detail. “The playbook diagrams every step and command for all positions associated with the customer’s oil change and their experience,” Frey says. “It creates smooth sailing and impressive results.” Along with this, Frey made sure to include a comprehensive overview and real training allowing employees to perform all Take 5 duties and prepare them for a great career with advancement potential. Frey says the Take 5 model provided the company with a platform, but its concepts and commitment to training were superior to the competition. Now, Take 5 uses Frey’s playbook to convert acquired buildings to their model and teach it to existing employees. “The success is knowing the model, understanding the model, and putting an emphasis on people because they make the model,” Frey says.

The Pete Frey Playbook Because of the previous two purchases, Frey found himself in a place where he had learned a lot from them and could afford to go out on his own, stepping off Take 5’s executive bus and driving his own: operating the 500th Take 5 quick lube. Not only did he know people that knew Take 5’s model like the back of their hand, it was perfect timing for him to wrap up his career on the exec side and make a lateral move into the franchising side.

The Take 5 Timeline Number of Franchises

5 1984

First Drive-Thru Model Opens

1996

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“It felt like a good way to end my race by ending my career by making a difference and staying in the game,” Frey says. “The most important ingredient is people. I wasn’t afraid of the challenge of staffing up on a really good crew that didn’t require me to be there round the clock.” With all of Frey’s knowledge, he was able to execute the full acquisition process. With his former role, he had a leg up on knowing how to spot a piece of property that would be a good site. Luckily, Frey knew the former owner of an old style car wash from the mid ‘90s in Covington, La., which had been out of service for a couple of years. After putting together a deal to take it over, Frey started planning out his location’s redevelopment. With two bays already in place, he was able to adapt it to the Take 5 model, making sure to keep its values ingrained in his shop and follow the playbook as suggested. As a constant reminder, the shop has the original mission statement mounted on the conference room’s wall, and their slogan—friendly people and fast oil changes—hangs on the door leading to the bays that the staff taps before they enter. But with his previous industry knowledge, he wanted to make his franchise stand out from the rest. One challenge came when he was deciding what to do with the car wash. The property wasn’t suitable for a car wash anymore—he felt car washes were on the decline—and he wanted to do something more current. He needed to find a way to use the existing building, without having to tear it down, and finding a complimentary business that would attract customers to the site. Instantly, he thought of his old high school friend, who owned and operated PJ’s Coffee, a New Orleans–local drive-thru coffee shop. It was a perfect: a strong business in the area that would attract customers and emulated Take 5’s drive-thru model. “Here, it looks like two local brands getting together to do something big,” Frey says. Before he knew it, construction crews began destroying the old car wash tunnel to replace it with a drive-thru PJ’s. Now, customers can drive up to get an oil change and get a deal on a cup of coffee all in one visit. Frey says that his years of experience working to understand what makes people tick helped in developing his location with ease.

Purchased by Driven Brands

500

2005

2011

2016

2020

Since opening in October, Frey has developed a little bit of his own playbook for his shop. In it, he requires this: no weeds in the garden, all banners must be straight, and everyone has to have each other’s backs.

‘Roll with it’ Pete Frey oversaw Take 5 during a period of rapid growth. He attributes his success to the process the company developed.

The Return on Investment With his two locations up and running, Frey says the business is starting to see return customers. And with the coffee shop opening less than two months ago, it will take a while to see the real return on his very own quick lube. Frey expects to see his return at seven years, but with approaching retirement, he knew early on that this investment would be an extra source of revenue that would aid his family for an additional 20 years. “It was laid out for us, we had a property that could work, and I had a friend to do something unique with the location,” Frey says. “It’s really full circle.” Were it not for that retirement, he says the opportunity—or even the idea—to go out on his own would’ve been unavailable to him. But with it landing at his front step, he just had to roll the dice and take a chance. “As fate would have it, you jump at the opportunity and roll with it,” he says.

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You have questions.

Valvoline is here to help. We offer independent owners like you a variety of resources to help answer pressing questions for the future of your business. Contact us for a free, no obligation consultation.

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Trademark, Valvoline or its subsidiaries, registered in various countries.

Service mark, Valvoline or its subsidiaries, registered in various countries.

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SPONSORED CONTENT

TPMS and Servicing Liability Best practices for limiting exposure Tire Pressure Monitoring Systems (TPMS) have been required systems on new passenger vehicles since late 2007. But still many shop owners remain unsure of their liability when servicing these systems and what the best method is to mitigate its exposure and ensure the safety of their customers’ vehicles. Establish a standard operating procedure, educate your staff, and develop a partnership with a trusted tool and parts manufacturer. These are the keys to limiting a shop’s exposure and providing quality service for every successful repair shop, regardless of specialty, but especially when servicing TPMS. It was the TREAD act, passed in 2000, that mandated TPMS on new vehicles. But the law most prevalent to repair shops is the Motor Vehicle Safety Act of 1966 and provision (49 USC 30122(b)) that forbids them from “knowingly making inoperative, in whole or in part, any part of a device or element of design installed on or in a motor vehicle in compliance with an applicable motor vehicle safety standard." Where TPMS is concerned, this provision mandates repair shops cannot disable the system or the malfunction light, but also, must ensure that if the system was working when the vehicle came into the shop, it must be working when the vehicle is released to the customer. Failure to meet this provision can result in a shop receiving a civil penalty of up to $6,000 for each violation.

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The Process The first key to ensuring your shop is following provisions and ensuring safety, is to develop a standard operating procedure (SOP). When developing the business SOP, the first step must include a conversation with the customer regarding the status of the system and a test of the sensors and TPMS module itself, prior to any service on tire or rim. The next step in a proper SOP is to check each wheel sensor with a proper TPMS tool that can activate the sensor. Autel offers a line of TPMS tools that can activate and read all known TPMS sensors, including displaying the battery condition of the sensor. In addition to battery life, the elements also take a toll on sensors, particularly aluminum stems that often fall prey to corrosion on the outside or inside the stem. Test these next. Autel’s MaxiTPMS TS508 handheld and the TS608 Android tablet guide the user through the test, step by step. Once the sensors are tested, the technician plugs the tool into the OBDII port and performs a quick status check on the TPMS module. A color-coded system status screen displays, identifying at-a-glance if the sensors are good, if the IDs were improperly registered or relearned to the vehicle, perhaps during a recent tire rotation, or if the fault lies with the module itself. With this knowledge, now the technician can speak to the customer about the current status of the system and what needs to be done to get it working properly.

Further Education The second key is education and proper training for each staff member. Ensure your staff understand the basics of the system and the steps to service it so they can confidently share that information with their customers. When sharing this information, the customer must know the importance of this system and its importance to safety. The NHTSA estimates 660 people are killed in vehicle accidents each year as a result of underinflated tires. Properly inflated tires not only improve gas mileage but also contribute to vehicle stability, handling and braking ability and to the effectiveness of the Advanced Drive Assistance Systems in today’s vehicles. A Trusted Partner The third key is to partner with a company making tools that can get the job done consistently and effectively, while also offering a dependable and knowledgeable support staff that’s just a call or chat away. Autel is that company. Autel’s more than 15 years of experience in automotive diagnostics software makes it a proven and trusted source and partner. The company truly offers a complete solution by offering full service TPMS tools and programmable universal sensors. In fact, its dual frequency 1-Sensor can be programmed to replace 99 percent of the sensors on vehicles today. For more information visit autel.com, maxitpms.com, or maxisysadas.com.

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F I N A N C E + O P E R AT I O N S

BUSINESS BORROWING IN 2020

When markets are disrupted, businesses still need capital to operate B Y M AT T H U D S O N

business loan in 2020, things became complicated quickly. The coronavirus pandemic roiled markets, upended small businesses and prompted some new loan products for owners. NOLN planned in 2019 to write a story about best practices in borrowing. Like most everything else, the pandemic came unexpected and required plans to be changed and adapted. For this story, it became clearer than ever that loans and borrowing aren’t done in a vacuum. According to Troy Jones, a certified financial planner at Access Financial Resources in Oklahoma City, there are many outside forces that influence the timing and strategy of borrowing money for your business. And having multiple borrowing options is an important tool. Jones specializes in helping small business owners, many of whom have around 15 employees. He said that one

thing to keep in mind is that, no matter the borrowing option, the most bottom-line factor is your capacity to repay. “One’s ability to pay,” he says. “And that has to do with cash flow. And in my opinion, pretty much everything from an investment standpoint comes back to cash flow.” This article explores four big considerations for borrowing that can apply at any time but are at the forefront in times like these. 1) Get your house in order. The bottom line for borrowing is to anticipate your ability to pay off the loan. Make sure it’s the business providing repayment and not your personal finances. Many of Jones’ small business owner-clients mingle the two pots of money, and he counsels them to separate them. “They’ve got their business cash flow and they’ve got their personal cash flow,” he says. “And what we try to do is get

them to identify each of those separately and also in preparation, especially with people within five years of retiring.” When forecasting your repayment plan, Jones says that owners should take care to make best-case and worst-case scenario forecasts. “I’d say they should test the tolerance on that to say, ‘What if our income didn’t go up that much?’” he says. “And what if you’re buying that piece of equipment just to stay even rather than go down?” That involves looking at the headwinds and tailwinds of the industry and considering whether it’s going to be a time of consistent revenues. “Do you really want to owe money?” Jones says. “And if you’re the shop that owes money, how competitive are you going to be against the shop that doesn’t?” 2) Study outside influences. When Jones is working with clients to make plans for the life of a loan, he

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FOR A SHOP PLANNING TO GET A

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encourages them to look at headwinds and tailwinds. That means taking a look at the larger industry forces and how that might affect your ability to be competitive while servicing debt. “If we’re borrowing money in a growing economic environment, then it’s easier to pay it back,” Jones says. “Because if your debt is a fixed cost, and your revenues are increasing, then the debt becomes a smaller percentage of the total.” For quick lubes, the factors that Jones would consider echo those issues that have been on the industry’s mind for years. He might take a look at federal driving data and consider trends in vehicle ownership and electrification. “The average miles driven is flattening out and the plugin and hybrid sales are ramping up,” he says. 3) Consider alternative funding sources. In times when a traditional, long-term loan might not be the best route, there are alternative forms of borrowing that might be able to bridge the need gap. One of the most common for businesses is a line of credit. Once set up, this allows for quick, accessible funds that can be withdrawn in parts. Jones says that owners should pay attention to the fees a lender might charge for the credit line even if it isn’t used. Interest rates can also be a bit higher on credit lines. Owners can also borrow against retirement accounts. Congress relaxed some of the rules around this strategy as part of the CARES Act, which was one of the aid bills passed in response to coronavirus. For expenses related to the effects of the virus, borrowers can take out up to $100,000 without the standard 10 percent penalty. This applies to individual retirement accounts and annuities (IRAs), qualified pension, profit-sharing,

or stock bonus plans (including 401(k) plans), qualified 403(a) annuity plans, 403(b) annuity contracts and custodial accounts and governmental section 457 deferred compensation plans. That program lasts through 2020. For these alternative sources, Jones says that it should be predicated on the returns being all but guaranteed to beat the gains made if those investment accounts were left alone. “If you could get a guaranteed 4 percent return on your investment, that is really desirable right now,” he says. 4) Shop around. Shopping around often means placing attention on interest rates, but Jones says that shouldn’t be the No. 1 consideration. Banks might have some fine

print that makes an attractive interest rate less desirable over time. One additional cost to consider is the requirement of additional insurance. “One of the things that is often the case in business loans with banks is they require insurance—life insurance,” Jones says. “Some of them require disability insurance.” Owners might be better off shopping for that insurance separately rather than taking the plan offered by the lender. Finally, when shopping around, consider that the best bank might be more important than the best deal. Jones says it makes a huge difference when there’s a stable business relationship. “I would prefer to use a local bank or a credit union,” he says. “Usually you’re going to end up knowing who you’re talking to and they have a more invested interest in the community.”

RESOURCE UPDATE: PROGRAMS CREATED IN RESPONSE TO COVID-19 Earlier this year, the federal government passed legislation that created multiple new business loan programs in response to the COVID-19 outbreak. Now months after their creation, here’s a summary of what is and isn’t still available. One reason to check out these programs is that lenders might have a lot of resources dedicated to them at this time rather than traditional loans. Paycheck Protection Program Initially a $349 billion package but later expanded, this program was meant to cover payroll costs, mortgage interest rent and utility bills over an eight-week period. The loan is forgiven if if at least 75 percent of the money was used for those purposes. The government stopped taking applications in June.

Economic Injury Disaster Loan Assistance This loan program was made available to get money to small businesses through loans of up to $2 million. One major provision of this program was a $10,000 advance that wouldn’t need to be repaid. This was curtailed in early June but reopened weeks later for borrowers. It remains open for applicants.

SBA Debt Relief For businesses that already had certain active SBA disaster loan when the pandemic hit, U.S. Small Business Administration is providing automatic deferments through December 31, 2020. The SBA will also automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months. This is also applicable to new loans issued prior to September 27, 2020.

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AO CA C O R N E R

A Bright Road Ahead for AOCA and its Members Mark is the president of the Board of Directors for the Automotive Oil Change Association (AOCA).

INFO

@AOCA.COM O R 8 0 0 . 2 30 . 0 7 0 2

A word from the new AOCA board president MY NAME IS MARK BOCHNOWSKI AND I’M THE

president of Lube ‘n Go in El Paso, Texas and I look forward to serving the Automotive Oil Change Association as president of the Board of Directors. Lube ‘n Go was founded in 1976 by my grandfather, and I am in the third generation of family ownership. My father, John Bochnowski, is my business partner, and we operate 12 locations. I am

proud to be in a position that can help the industry that has made such a large impact on my family. As we look at the first half of 2020, we can all agree that we have weathered very challenging times and come out stronger, more certain and ready for brighter days. The industry has done a fantastic job of remaining safe and healthy through our essential designation during COVID-19.

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We have been able to adapt through unprecedented times, often at a moment’s notice. Our ability as an industry to fulfill new requirements and safety guidelines while counseling employees and encouraging them to feel safe during a time of change has been incredible. Our lube shops have served our respective communities and maintained a safe place for our customers. There has been a great deal of fear and uncertainty in the world and, by overcoming that, the industry is coming out of challenging times stronger than before. AOCA has been working tirelessly to support our members while continuing to be a source of information and assistance. Almost immediately, the AOCA and its partners got to work to get crucial information out to members and to advocate for the industry's essential status. The periodic AOCA Talk Live! events were just one way that we helped members respond to the challenges. I believe we have done a great job of showing the value of being a member. We’ve done this in several ways, especially through our work with experts like Joanna Johnson and Claudia St. John, who have worked to keep us relevant and provide endless information and guidance to our members. We’ve enjoyed

1...

planning our AOCA Talk Live! events and thank all of you who joined us via the web for those meetings. Through the crisis of COVID-19, the value of AOCA membership has become even more apparent. Our strength in numbers is invaluable. Working together, we have proven we can protect the safety and prosperity of our essential industry. If you are not already a member, I would urge you to consider joining now. Now, more than ever, it’s vitally important to be a member of our industry driving association. As we move forward, there are a lot of things to look forward to as an industry. The association will remain hard at work for you. We continue to work with Joanna Johnson on our Magnuson Moss Program, as well as the Right to Repair initiative. We are committed to updating and driving our training initiatives for both management and technicians. We will be hosting our remaining two management conferences this year. While we are hopeful the seminars will take place in person, we are working on a new virtual platform should that not be an option. I look forward to seeing everyone in Las Vegas at iFlex in June 2021. I wish you all continued success and thank you for allowing me to serve you and the industry in my coming term.

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LEADING EDGE

To Share or Not to Share?

Being a master delegator is knowing when to use that power

LENNY

SAUCIER

Lenny is the Vice President of Human Resources and training development for Victory Lane Quick Oil Change. He has 20 years of experience in automotive and technician experience in the United States, Canada and Saudi Arabia.

L E N N Y-5

@HOTMAIL.COM

Purpose As Simon Sinek would say, “Start with Why”. It’s not because I told you so. Sharing your vision not only helps with morale and buy-in, it helps with the ability to make decisions based on your end goal. If you can’t paint a picture of the end goal, the why, then the assignee can work easier towards that goal. A good phrase would be, “what we are trying to accomplish is X.”

Action This can be as general or specific as you need. This largely depends on the task and abilities of the assignee. The ultimate goal is to get the employee to a level where they can achieve tasks without much direction. To do this you will have to be willing for mistakes to be made and constructive feedback to be given. The only time failure occurs is when nothing in learned. Give the employee specific steps if needed so they can accomplish what you need them to do. Time You should agree on a time frame or whether the employee can handle the task given their duties. If you have a specific time of completion, this must be very clear. If you don’t you can lean on the employee to self-prioritize. “When do you think you can get this done?” If the answer is unsatisfactory, you should evaluate his/her list and help prioritize (which we will cover next month). Be careful of the pleaser, who will take on lots of tasks with no regard to the ability to complete them all. Hypothetically, say a master delegator has a favorite assignee, who’s very dependable. The delegator has continuously adding tasks, and the assignee started worrying about their ability to complete those tasks. When they finally sit down together, the delegator understands how long the task list really is. The full PAT would be: “What we are trying to do is X, so I need you to do Y and Z. This needs to be done by Friday. Can you do this?” You should never assume that a delegated task is the responsibility of the assignee. Ultimately, your task will always stay with you regardless of who you assigned it to. I have seen too many managers answer a complaint by saying they told someone else to do it. You should use delegation to focus your attention to other projects. Delegate to build people, but never delegate to release yourself of responsibility.

COURTESY LENNY SUACIER

WE ALL KNOW YOU’RE THE BEST. WE ALL KNOW

nobody can do it better than you. We all know that your employees can’t do what you can do. And by the end of this article, I hope we all know that it’s your fault. Time and processes are always going to stack up against you. This is why delegation is so important. When I evaluate a new manager, one thing is almost always for certain: That manager does not or will not delegate to the crew. This usually has to do with a new manager being brought up to believe that they were successful because they were able to handle all aspects at all time. While they may be right as a regular employee who has certain things to do, they are not correct when leading a group in trying to move the team forward. The number one failure the new managers is indeed the failure to delegate which will prevent the manager from executing more important tasks and also prevent people who he or she serves from learning more valuable skills. The more common things I hear is,”I can tell somebody do something, and it doesn’t get done the way I want it to be done.“ Or, “No one knows what they are doing.” These are the famous quotes of the puffy-chest leader (he almost needs a name now). It takes time to break away from that, and it also requires you to give someone a chance to do extra so you can, too. It’s not just telling someone to do something. Not at first. It will help if you start them out with a PAT.

NOLN.NET

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6/25/20 8:15 AM

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6/22/20 11:45 AM

ARRIVED. REDESIGNED ELECTRONIC SERVICE MANUAL.

ISI is excited to announce a whole new look & feel for the LubeSoft® ESM (Electronic Service Manual). • Browser-based technology • Easy access to data • Added procedures for servicing oil filters • Added specifications for diesel exhaust fluid

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6/22/20 9:29 AM