Ratchet+Wrench - November 2024

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LEADING SHOP CULTUR E

Brian Moak, Tim Swiontkowski, and Keith Perkins have all succeeded
creating the culture their shops want, and being the leaders their people need.

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STRATEGIES FOR YOUR SUCCESS

NOVEMBER

LEADING SHOP CULTURE

CULTURE SHOCK, OR MAYBE NOT

The Merriam-Webster Dictionary of the English language defines the term culture as the customary beliefs, social forms, and material traits of a racial, religious, or social group. So how does this relate to auto repair shops? It does not per se, but when we interpret this definition as a way of conveying what we want our shops to be in a pragmatic manner, we can develop what we can call a shop culture. And again, what makes a shop culture? And why is this important?

It is important because as humans we need to feel a sense of belonging, a sense of understanding that we are in the place that we should be, physically, emotionally, and financially. Large multinational organizations have been talking about their culture for decades now, and those shops that have been successful through time, also have a culture. But let’s get to the nitty gritty, what is shop culture? Well, there’s not one correct or incorrect answer to this, and as beauty is in the eye of the beholder, so is shop culture. What is easy to tell is what is not shop culture. A pizza party once a month is not shop culture, and neither is making and employee use only their own equipment. Shop culture is creating a work environment that helps employees thrive, that makes them feel comfortable enough to ask questions and not be judged for it, that helps them achieve both personal and professional goals.

Now that we’ve briefly but succinctly defined culture, not shop culture though, let’s move on to culture shock. What exactly is culture shock? This one is a bit more difficult to define, but colloquially used to describe the situation of a person when they arrive in a place that is quite different than where they came from. Seasoned travelers

from Western countries will usually use this term to describe their arrival into less developed Asian countries, or even African countries. The idea is the understanding that even the most common of things is diametrically different. This is of course, a very broad example, and we could go into a lot of exhaustive detail, but we shall not. Culture shock can happen when a new employee joins your shop. And sometimes it’s not so much about the shop culture that you’ve established, but from the shop culture that the new employee is coming from. Culture shock can be good, or it can be bad. Hopefully every time you hire a new employee, he or she can have good and positive culture shock, they can feel that they have joined a place that inspires them to be better, to grow, and to adapt into the shop culture that you have created.

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JUMP START

It’s been hard to ignore the conversation surrounding electric vehicles in the automotive repair space. Sooner or later, they’ll begin rolling through your bay doors—if one hasn’t already. As a business, it’s important to prepare yourself for a growing consumer demographic.

Krystyna Kubran, a motorcycle racer and mechanical engineer, founded her company 352 Innovations to help shops with just that. After years of studying EVs and working with them, she believes that independent shops play a crucial role in the EV transition; the question is, where will yours fit in that?

Repairing the Training Gap

Having a career as an engineer in which she built, designed, and serviced dieselelectric locomotives, Kubran knows her stuff. She began to realize that the vehicles she was working on operated similarly to most electric vehicles, having a control system that manages the power.

Leading up to the pandemic, her brother was thinking about opening his own auto repair shop. Kubran—who swears by his talent to work with vehicles—had an interesting proposition.

“I told him, ‘Hey, I’ll help you run it.’ And I said, ‘Let’s do custom clean energy conversions,’” recalls Kubran. “‘I’m an engineer, you’re a talented mechanic; and I wrench on things too.’ We grew up helping dad work on cars, you know? And so he was like, ‘Alright, cool.’”

Once the COVID-19 pandemic hit, the two ended up not pursuing the idea. But Kubran’s interest in EV repair would only grow.

A couple of years later, Kubran told one of her friends, a shop owner, about the idea. When he said he was unfamiliar with how to perform any sort of service on an EV, she eagerly invited him and his crew to let her train them.

As she began working with her friend and his techs, Kubran realized she had stumbled upon a huge gap of knowledge in the industry—one that she was equipped to combat.

“I thought, ‘Oh my gosh, what if other shops need help figuring out EVs?’ And so that’s how the whole thing kind

of exploded,” says Kubran. “It turned into something far bigger than I ever anticipated.”

A Whole New Animal

Kubran began reaching out to every shop owner she knew in the area, predominantly in rural areas of Northern California, Mendocino County, and Southern California, and asked them what their concerns were surrounding EVs.

She used this as the basis for the Roadmap to the Clean Vehicle World: a 500-page guide on how repair shops can expand their services to include not only EVs, but other clean vehicles such as hydrogen fuel cell cars. With the guide being updated quarterly, it’s constantly expanding, too.

The Roadmap begins with an overview of what EVs are, followed by what the major components of an EV are. Then comes what an EV’s service needs are.

“I figured they can see what’s out

there, (and) get a big picture of what’s out there,” explains Kubran. “And then from there, they can kind of figure out, ‘Alright, what do I want to offer as a shop, and what kind of service can I do?’”

Once a shop understands and knows what services they’d like to offer to EVs, there’s lots more to know. Kubran’s Roadmap includes data on regulations related to EVs and different resources for shop owners and their technicians, such as training opportunities.

It concludes with a final section for those who are skeptical, providing consumer and market data on EV ownership.

“It’s kind of the snapshot of the tsunami that’s going to hit them in five years,” describes Kubran. “And right now, they have a three-to-five-year window to figure out their place, make their decisions, and then implement all the work that needs to be done to get there.”

Essential factors for being able to competently perform EV work will take years to iron out. Training is the most

obvious need, and something else shops may not realize is the different safety protocols and policies that will need to be in place for EVs.

For example: say someone brings in their EV for a simple brake job. While a conventional gas car wouldn’t need the fuel tank drained, an EV will need to be de-energized; otherwise, its regenerative braking could become re-energized upon a tire being spun, creating an unsafe situation.

It’s something a shop won’t want to ignore. Kubran recalls a conversation she recently had with her insurance agent about whether a shop would be held liable if an EV suffered a spontaneous fire overnight—something rare, but possible, in an event called thermal runaway.

“If the shop owner takes in the vehicle, takes it into their possession, and the battery has a problem that nobody knew about and burns the shop down, is the shop liable for that? And all the cars in their shop that burned up? And he said, ‘Yes, yes they are,’” Kubran says. “That is kind of terrifying.”

Calm Before the Storm

A business can try to ignore the existence of EVs all it likes, but if a growing part of its consumer base is transitioning to becoming EV drivers, a shop refusing to service them will be forced to turn away an increasing number of customers.

It’s easy to imagine a consumer feeling frustrated upon arriving at a professional, reputable repair shop and learning that they’re unable to work on their 2014 Nissan Leaf; especially when the availability of shops being able to safely operate on EVs can be few and far between. When a driver is in dire straits, stranded on the road, you want to be the one that can help them.

Kubran recalls a conversation she had with one shop owner, in which she asked him what he would do if a potential EV buyer came into their shop with questions about EVs. His response was that the shop has already had to do just that— several times.

“Somebody’s traveling through and their EV breaks down. What are you going to do? Say, ‘No, sorry, you gotta have it towed 200 miles to the nearest

dealership?’” Kubran continued. “And they say, ‘Yeah, we’ve already had to do that.’” Demand for repairers that know how to safely handle EVs will only rise, and it isn’t something that is necessarily an obstacle; rather, an opportunity to capitalize on one of the biggest changes the automotive industry has seen. That’s part of what Kubran has tried to communicate with her Roadmap.

Especially as more EVs age out of warranty, and consumers look for affordability and trustworthiness, repair shops that are ahead of the curve may be laying the groundwork to make themselves a vital business in their community.

“There’s a huge opportunity here for a shop to grow into this new market; and especially since it’s so brand new, being one of the first shops in town to support these vehicles could lead to tremendous success and a good reputation for the next 40-something years,” Kubran says. “Don’t be afraid. Embrace it. It’s already here. There’s 150 different makes and models that are hitting U.S. markets by the end of this year.”

Abandoned Tesla Cybertruck Becomes Landmark in Seattle

An abandoned Cybertruck in Seattle has caught the attention of many in the area, according to Jalopnik.

The truck, left sitting in a busy area of the city, appeared to have damage to its left rear and suspension. It was left sitting there for days before it was finally towed away, but in that time photos of the vehicle were shared online.

Interest in the deserted vehicle grew so much that a Google Maps pin was even created for the site of the truck at one point. Google has since removed the entry.

Though the conversation isn’t verified, one user on Reddit claimed to have encountered the vehicle’s owner, who said someone had hit his Cybertruck, and he has since been figuring out what to do with his insurance company.

“I went by there this evening on my way to dinner. The owner was outside and was not happy we were there,” they wrote. “He said people have been harassing him and his wife the past few days and he didn’t understand why.” We told him his truck was all over Reddit and he got even madder.

AutoLeap Shop Management

Software Integrates With Worldpac Parts Catalog

Shop management software AutoLeap has integrated its software with Worldpac speedDIAL, according to a press release.

Worldpac will now allow AutoLeap users to browse and search for parts through the AutoLeap software, as well as manage parts inventory and track vendor payments.

The parts search function allows users to filter their searches through keywords, part numbers, and categories, and will directly import the data to the related repair order.

“We are thrilled to partner with Worldpac to bring our users access to an even broader range of parts,” stated AutoLeap Co-Founders and Co-CEOs, Rameez Ansari and Steve Lau. “By simplifying the parts ordering process, we continue to bring to life AutoLeap’s vision of helping shop owners save

time, reduce errors, and operate more efficiently.”

General Motors, Hyundai Team up to Combat High Vehicle Prices, Supply Chain Issues

General Motors and Hyundai Motor Corp have signed a non-binding memorandum of understanding to collaborate in developing vehicles and improving the automotive supply chain, Reuters reports.

As part of a framework agreement signed by Hyundai Motor Group Executive Chair Euisun Chung and GM Chair and CEO Mary Barra, the two automakers announced yesterday they would come together to reduce costs and get products to customers faster.

Some specific areas of collaboration outlined included developing and producing passenger and commercial vehicles, internal combustion engines, and clean energy technology together. They also detailed plans to integrate their sourcing for supplies, like battery raw materials and steel.

The two companies added that they will immediately begin discussing the possibility of, and working towards, potential binding agreements.

“Our goal is to unlock the scale and creativity of both companies to deliver even more competitive vehicles to customers faster and more efficiently,” said Barra.

Michigan Tech University Brings Electric Vehicle Training Directly to Technicians

Michigan Tech University’s mobile EV training lab is helping prepare technicians across the state, without them having to travel, reports WLUC.

According to the university’s website, the mobile lab is houses in an expandable, double-wide trailer, transported by a class 8 semi truck with a Detroit Diesel DD15 engine.

Within the lab is a powertrain test cell, configurable hybrid electric vehicle along with three other hybrid vehicles, a portable chassis dynamometer, a “smart” interactive microgrid, and more.

The school offers its mobile lab to anyone seeking out training on EVs or

hybrids, including businesses wanting targeted employee training.

Most recently, the mobile lab trained the city of Marquette’s facilities and maintenance team as they prepare to work on the city’s growing fleet of EVs.

“This class goes over safety, proportions, dynamics, design, disabling and just things we need to know with having electric vehicles around,” told City motor pool supervisor Duane Suckow.

The class also went over potential pitfalls with EV performance, such as the performance of their batteries in colder weather.

“Does it fit into our lives?” pondered technician Nick Blankenheim. “I don’t decide on that, but I will be the one fixing the vehicles when they come in. I think it’s certainly good to know what our options are and what’s available.”

How Wisconsin Trade Schools are Working to Bridge the Auto Repair Technician Gap

The technician shortage has hit auto repair shops in Wisconsin, but local tech schools are working hard to fill the gap, reports Wisconsin Public Radio.

TechForce’s 2023 Tech Supply and Demand Report shows that techs have been on the decline since 2012, with the number of students completing automotive postsecondary programs dropping by 21% between 2012 and 2021. In addition, more than 100,000 technicians will need to enter the workforce by 2025 to keep pace with consumer demand.

But there are many barriers standing in the way for entry-level technicians. For one thing, as vehicles become more complex, kids aren’t working on them at home with their parents as much, who need increasingly expensive tools to even perform many tasks.

“(Car maintenance is) a lot more complicated than it used to be, so now the parent doesn’t quite understand it,” explained Tyson Larson, an automotive technician instructor at Southwest Wisconsin Technical College in Fennimore. “You need special tools to be able to diagnose this stuff now. Since the parent doesn’t have the information, they can’t share that with the student.”

The price of these tools will continue to be a problem for prospective

technicians, as they often end up needing to pay thousands out of pocket just for the tools they need, on top of education and training.

Rising costs pose a problem for shops seeking new talent, too. For now, J & S Auto Care in Janesville has decided to focus on its existing team, with manager Nick Robinson adding that bringing on new employees would require him to raise rates for his customers.

That, combined with the fees the shop has to pay to access data in newer vehicles, it isn’t surprising when the consumer price index shows a near 20% increase in repair costs between 2023 and 2024.

“Chrysler vehicles 2018 and newer, they basically have us locked out of them,” said Robinson. “We can pay to get on certain subscriptions and be able to log in and see data, but for just the average guy, they have you locked out of it.”

He’s also seen techs come through that lack adequate training, such as not knowing how to diagnose a vehicle beyond using a scan tool. But training technicians has become an increasing difficulty, as the cost of equipment needed has led to many high schools doing away with auto programs altogether.

Southwest Tech is working to combat this with its apprenticeship program, Pistons to Pathways, which allows high schoolers to earn college credit while interning at real auto shops, saving costs for the student, shop, and high school.

“I think that the industry needs to understand that if we’re not paying these students, we’re going to lose that high quality talent to other industries and other jobs,” told Larson. “The key is that we need to be proactive and not reactive.”

Auto Technician Shortage Leads Family’s Maine Repair Shop to Close Doors

After 64 years of business, a struggle to recruit qualified technicians has led to Pat’s Automotive Center of Caribou, Maine closing its doors, reports The County.

First established in 1960 as Al and Pat’s Sunoco, Patrick Belanger passed the business down to his son

Wayne in 1985, who has operated it since then alongside his wife, Mary Lee, and son Scott.

Though Scott was willing to take the business over from his parents, a struggle to identify techs in the region has proved to be a continual roadblock for the family business. In the past two or three years, the shop went from having five employees to now being just the Belangers.

The problem points to a larger issue the region has had to contend with, which is its struggle to attract and retain young workers to Aroostook County— something that was highlighted during a forum in Presque Isle, Maine, last year.

Throughout the years, Pat’s Automotive Center has worked to keep pace with automotive technology, expanding its offerings to include automotive diagnostics. The shop has also seen significant growth, having added three new shop doors to expand their capacity.

However, the more advanced technology becomes, and the more business they see, the higher their need is for highly trained technicians.

“When we started, you used to change the exhaust, oil and tires, but now you also have diagnostics and electronics. Newer vehicles have many gadgets on them,” told Mary Lee.

The business is set to cease operations on Oct. 1, but the family is keen to pass the business on to someone that will preserve the reputation they’ve built in the community.

“Someone whose priority is to take care of customers first. The most important thing is to be honest and treat them fairly,” Mary Lee stated. “Based on the feedback we’ve received [since announcing the closure], that’s what people liked. They trust us.”

Leads Near Me CEO Releasing Book on Auto Repair Shop Marketing Strategies

Ryan Burton, CEO of Leads Near Me and founder of the High Gear Auto Repair Marketing Conference, has announced a new book he’s releasing on marketing for auto repair shops in a recent press release.

Set to release on Nov. 5, 2024, Burton’s 176-page paperback book, “High Gear: Marketing Strategies for Auto

Repair Shops,” will contain insight from Burton on effective marketing strategies for repair shop owners.

Burton goes over how to build relationships with customers, help them identify their needs and goals, promoting your shop, common mistakes with marketing, and deciding if you may benefit from outside help.

Shortly after the release of his book, the High Gear Auto Repair Marketing Conference will take place Nov. 14-15 in Atlanta, an event aimed at repair shop owners looking to improve their marketing practices.

“The book shares what I see as the fundamentals of good marketing and the most effective ways to reach new and returning customers—along with the precise steps you can take to make that happen,” shared Burton. “I’ve put my best ideas in this book so auto repair shop owners can have it at all at their fingertips.”

Hybrid Car Sparks Overnight Multi-Vehicle Fire in Virginia

A defect in a hybrid vehicle caused a massive fire to spread across multiple vehicles overnight in Woodbridge, Virginia this week, reports FOX 5 DC.

Around 3:43 a.m., crews arrived at the Summerland Heights Apartment complex to find multiple vehicles on fire.

Though the flames were extinguished quickly, eight vehicles were destroyed, with an additional three damaged. Officials said that the fire was first sparked by an electrical malfunction in a hybrid vehicle, with leaking gasoline helping it spread.

EV and hybrid fires aren’t common— but when they happen, they can be dangerous, especially with them typically occurring when a vehicle has been left unattended. This past August, more than 50 Rivian vehicles caught on fire while sitting at a manufacturing plant.

As safety officials attempt to establish standards for preventing and combating vehicle fires, there has been much conversation on what action needs to be taken to minimize the likelihood of these fires and the damage they can cause. Work is underway to achieve just that by improving aspects of battery technology, such as the self-extinguishing EV battery currently under development by researchers.

A trained team outperforms an untrained team. Our award-winning digital training program prepares service advisors and technicians to educate customers on the value and benefits of proactive automotive maintenance.

Contact your BG Rep to get your team certified: bgfor.me/distributor

WHAT EMPLOYEE BENEFITS ARE YOU OFFERING?

Conventional benefits sometimes can be complemented with creative and alternative benefits

Retention starts by providing your team with benefits that incentivize work and offer peace of mind. According to the 2024 Ratchet+Wrench Industry Survey Report, the following are the most common benefits shop owners reported to offer, but some shop owners also find creative ways to compensate employees:

CREATIVE COMPENSATION

Small- and medium-sized shops sometimes can’t match the attractive benefits packages that larger shops or franchises offer. To level the playing field, survey respondents reported offering these perks:

• Parts at cost

• Shoe/boot allowance

• Evening and weekend access to work on personal vehicles (with permission)

• Vacation allowance

• Quarterly sales bonus

• Accident insurance

• Eight paid holidays (and a floating holiday)

Should I Add My Spouse to the Payroll?

The fiscal structure and company classification of your shop can help you develop the best tax strategy for you and your employees

Nancy J. Williamson is the founder and CEO of Williamson Advisors, as well a seasoned certified public accountant. She brings over two decades of expertise in aiding business owners and entrepreneurs. Ratchet+Wrench spoke to Williamson to find out how auto shop owners— with shops that bill over $100K—should approach payroll solutions to maximize their profits.

As told to Ivan Rioja-Scott

As founder and CEO of an accounting firm that services the auto repair industry, I talk to many shop owners who believe hiring their significant owner (“S.O.”) is a great way to reduce the taxes paid to the IRS.

Listen to me carefully—the most expensive way to pay taxes is to pay yourself and your family members W-2 wages. Let me state that another way: there are many ways that you can legally remove money from the company. Paying a W-2 wage pays the most tax to the IRS.

So, let’s review how to take funds from the company. We will focus primarily on the two most common entity structures: sole proprietorships (including LLCs that file as disallowed entities) and the famous S-Corp.

If your shop is organized as a sole

proprietorship, you will pay yourself by removing money from the company and recording it as an owner draw. This works great until the business’s net income reaches $100K (on average.). At that time, you should consider electing S-Corp status or forming a new entity that can be taxed as an S-Corp. This will save the self-employment taxes paid on your net income. If you currently employ your S.O. in the business, ensure that your S.O. receives health insurance and has access to any retirement plans in the company, but don’t pay them a W-2 salary.

Once you elect S-Corp status, or if you are already organized as S-Corp, the owner must be paid a reasonable W-2 wage. The IRS requires this, and a particular line item on the S-Corp tax return shows how much is paid to the owner. Now, “reasonable” is subjective, and remember that paying yourself too much in W-2 wages will unnecessarily cost you. There are many ways to determine what is reasonable. Still, the bottom line is that you should consider paying yourself only what you would consider paying another employee to complete your job duties, and not a penny more! There are also reasonable compensation studies that can be completed to support the market wage that you are paying yourself. If your shop is profitable enough and you would like to pay yourself more, then take the money out as a shareholder distribution (like the sole proprietorship option). Remember to make quarterly estimated tax payments because when you take a distribution, no taxes are paid to the IRS.

If your S.O. is currently working in the business, consider paying them enough to allow them to contribute to the company 401(k) plan fully. Many shop owners start offering a SEP (simplified employee pension) or Simple plan because it is cheaper to implement. However, the benefits of the 401(k) plan far outweigh the administrative costs due to the much higher contribution limits allowed for each employee. Each employee can contribute $23,000 in 2024 towards a 401(k) plan and an additional $7,500 if the employee is over 50. The company and the employee pay social security and Medicare taxes on the wages paid and contributed. However, the savings from deducting the wages from the company’s net income should outweigh the cost of these self-employment taxes. If the company

matches the 401(k) contributions of the employee, the S.O. will also receive this benefit. This option would allow the S.O. to take advantage of group life insurance plans, education assistance, and other benefits offered by the company. Further, if both spouses are employed, you may be able to take advantage of the childcare tax credit. The childcare tax credit requires both spouses to have compensation. On the downside, remember that you may have to pay workers’ compensation insurance on your S.O.’s salary.

MANAGING DISRUPTION INTO OPPORTUNITY

Nancy J. Williamson, a seasoned certified public accountant, brings over two decades of expertise in aiding business owners and entrepreneurs. Her personalized approach ensures cost savings, resource optimization, and relief from tax-related stress, with an emphasis on tailored financial strategies.

Nancy’s accolades include the prestigious Certified Tax Coach designation, attained in 2017 through the American Institute for Certified Tax Coaches, placing her among the top 500 tax professionals in the nation. As one of a select few certified Profit First Professionals, she amplifies business strategy and tax planning, enhancing clients’ bottom lines.

nancy@williamsonadvisors.com

The first mainstream hybrid vehicle was the Toyota Prius. This very distinct hybrid-flagship model debuted in Toyota showrooms in the year 1997. Hybrid technology was all the rage in 1997, and while the gas mileage was never its main selling point, the first public displays of mass concern for the environment were starting to show. Prior to this, the automotive industry really hadn’t faced an industry disruptor since the mass adoption of fuel injection over the traditional mechanical carburetor. Fuel injection, and more precisely, electronic fuel injection created a massive challenge for independent shops, who now not only had to have trained technicians and personnel, but also the equipment required to diagnose, and fix these issues. In turn, the management of independent shops also had to adapt to younger personnel, to newer systems, different workflows and diagnosis, and a different way of charging the customer.

The right management saw in this an opportunity a way to serve a newer customer base, a younger customer base, and a wider range of services. The EV revolution started then, and is now our reality. It comes with challenges and opportunities alike, and proper management is always the key aspect in making disrupting situations into revenue-generating opportunities.

MANAGE & MASTER

Budget, Effective Labor Rate, and Cost Savings

Your effective labor rate is one of the best measures with which to help your technicians

Here we are, already deep into the fourth quarter of 2024, and beginning to plan for 2025! I feel like I just wrote out my goals for 2024! Where did this year go?

As you look forward, here are a few things to consider and plan ahead for in 2025.

I prefer to begin building my gross sales goal by looking at the data from the previous 12 months. I analyze where we met our goals and where we fell short, taking extra time to analyze why we weren’t able to meet the mark we set. For my shop, that has included staffing challenges and unforeseen closures due to the weather. (Thanks a bunch, Helene and Milton!)

I set my BHAG (Big Hairy Audacious Goal), and then sit down with my team to gain buy-in and strategize how we can get there. Looking at each month and the fluctuations, then dividing the sales goals down into small parts is a great way to ensure your staff understands what part they play in the grand plan.

Each month should have a sales goal. I like to set goals based on the seasonal fluctuations of my area rather than taking the annual goal and dividing it evenly by twelve.

For this example, our monthly goal is $150,000. That figure is divided into parts and labor: 40% parts and 60% labor. In dollar figures that means $90,000 in labor and $60,000 in parts.

The next step is to calculate my Effective Labor Rate (ELR). This es the total labor dollars collected, divided by the total hours billed to collect that amount of dollars. This number will tell me how many billed hours I will need to meet the monthly labor dollar goal. If my ELR is $155, and my goal is to bill $90,000 in labor, I will divide $90,000 by my ELR— that is $155—equaling 580.65 hours.

Dig deeper into the number of hours needed per day. This month has 21 business days. I can then divide those 580.65 by 21 days—which equals 27.65 hours per day. If I have 4 technicians, I divide those 27.65 hours per day by 4—equaling

6.9 per day, per tech.

Your shop may have technicians that can bill out 8 to 10 hours per day, or more, and you may also have some that can only produce 4 to 6 a day. Gaining the commitment from each technician on how many daily/weekly/monthly hours they will be responsible for is a critical, and often skipped step in this part of the process. Don’t forget to ensure your advisors have the proper training, skills, and tools to gain authorization to be sure all these hours are available.

Another critical part to look at is the net profit percentage. My target is at least 20%. How is this calculated? Take your total gross sales minus all your costs and that will give you your net profit. Then, take that net profit, divide by your total sales, and multiply that number by 100. If you aren’t happy with this result, start looking deeper into your adjustable expenses (Note: The last place I cut expenses is in salaries and advertising). These line items, if tracked and allocated properly, actually make you money, and cutting them could have a negative impact on your gross sales and car count. Slashing negotiable expenses by even 10% annually adds straight to your net profit. It is important, when setting goals for sales, to look at the bottom half of your Profit & Loss Statement, too.

Some other places to look:

• Can you negotiate a better rate with your internet/phone provider?

• Are you paying for software or tool subscriptions you don’t use or that are redundant to another software?

• Look at your credit card fees and ask for a rate reduction. Also, ensure you aren’t paying a PCI compliance late fee. I see many people that don’t do the annual questionnaire that are paying unnecessary fees for not filing this.

• Insurance coverage and premium review.

• Uniforms and Laundry —Negotiate this bill. They almost always have wiggle room.

• Office Supplies—Can you move more to a paperless business model by asking each client if you can email them their invoice instead of printing a copy? This small ask can compound to a decent savings over a year.

• Trash Disposal—Often, you can negotiate a better deal for garbage or recycling. If not, evaluate whether you could get a smaller dumpster with a more frequent pick-up for a better cost. Locating a metal scrapping company to take used rotors, radiators, and any other parts without cores really saves space in the landfill and potentially puts some money back into the shop.

Kathleen Callahan has owned Florida’s Xpertech Auto Repair for 20 years. In 2020, she joined Repair Shop of Tomorrow as a coach to pursue her passion for developing people and creating thriving shop cultures. Callahan is the 2018 Women in Auto Care Shop Owner of the Year, nationally recognized by AAA for three consecutive years, testified for Right to Repair on Capitol Hill, and is vice chair of Women in Auto Care.

kathleencallahanfl@gmail.com

PHOTOS

Creating a shop culture through solid leadership is one of the biggest challenges that shop owners and managers face. Helping employees, technicians, and other staff become aware of the importance of creating and maintaining a culture in shops, can only come from consistent leadership practices. Harvard Business Review published in March of 2000 the article, “Leadership That Gets Results”, by Daniel Goleman. This piece outlined six distinct forms of leadership, and while all six may not be relevant completely in an auto repair shop setting, parts from each style certainly are. The deep understanding of the type of leader that you are, and adopting the leadership capabilities and skills that your circumstance requires, are fundamental to creating a winning shop culture.

Becoming a Leader and Determining Your Role

Understanding the needs of your shop and determining what type of leader you want to be is a question of trial and error. At the same time,

knowing and choosing one type of work over another type that may seem like easier money is also a key management decision. As Tim Swiontkowski, owner and president of Stellar Autoworks, states, “You know, if you’re the one that has to fix everything, and do the work, you’ve got the wrong management and leadership style. I just had to figure out what I wanted to do.” Brian Moak, CEO of HEART Certified Auto Care, an Illinois shop with three locations in the Chicagoland area, approaches his staff with education and execution, “I think a lot of people have a lot of great ideas, and I think a lot of people have those ideas and do nothing with them. Our belief is to help our people take action on these ideas.”

Part of the leadership process is being able to identify talent and skills within your team. Moak refers to one of people from his staff: “This guy is probably one of the smartest people I’ve ever met in my life, let alone in a shop. He’s brilliant. He sees things in such a unique way where he can see past the problem. I love it. So, I visit that location, and I just talk to him for like 35 minutes. Take his time. Then what I’ll do is I’ll take a guy that we see has potential, and we put him next to this guy. And then the head guy knows that he wants to pay it forward and we incentivize him to do the same.” Creating a system that allows for mentorship within the shop setting helps technicians reach the next level. In the case of HEART Certified Auto Care, the average tenure is 14 years.

Being able to identify personnel with potential is a learned skill, as Keith Perkins, CEO of L1 Automotive Training comments, “I find that a lot of shops that struggle are run by technicians that were good, but they’re not exactly the best leader.” It’s often a challenge for owners to appoint managers when they elect to have a hands-off approach to the business. When Swiontkowski moved back into the business at Stellar Autoworks, he had a newly cleared vision of what his role should be. “I don’t want to take on the big work anymore because I don’t like it. I’m not efficient as a technician, but I’ve got the mind game so what I need to be here for is being a mentor and showing tips and tricks to the younger technicians,” Swiontkowski says. Letting go of the day-to-day hands-on approach is more difficult for some shop owners and managers. In some instances, it’s challenging for them to know how to maximize their time when they aren’t running a bay. In some cases, it’s just the innate desire to continue to be present

and involved. “I don’t do it as much anymore, but I would say every two to three Thursdays I would go around and I hand out payroll to every person in the company. I shake their hand, and I say thank you. And then we talk. I know about their kids. I know about their spouses. I know I want to be involved, and that’s how I stay connected,” as Moak says. Moak is a partner in a variety of different businesses in which he’s active, as well as a coach for some other phenomenally successful shops across the country.

Efficiency

Being an efficient leader will influence almost every area of the working order of a shop. Perkins’ style is very straight to the point: “I think my leadership style is kind of stern, but it works pretty well. I’m more interested in making sure the business succeeds.”

Heading a shop isn’t always a natural skill and knowing where time needs to be spent with

the customer can sometimes seem inefficient, says Perkins: “Everyone talks about the 300% rule. Every car gets an inspection 100% of the time, and gets 100% of the things written up, and 100% presented to the customer. We have over $1,000 average repair order.” Perkins emphasizes that taking care of the business is how he can also take care of his family, and his employees. He’s quite candid and open regarding his leadership style, honed over a partial career in IT, and as a fourth-generation technician. Perkins aims to create his shop culture through direct communication and transparency with his employees. Not all shop owners or managers are or can be as clear about topics such as remuneration. Perkins prefers to be candid about this topic as well: “I pay myself, I pay my own insurance, my own phone out of my personal bank account, which is what allows us to hire a W-2 employee.”

Financial and economic efficiency are also applied to the books at L1 Automotive

LEFT: Brian Moak, CEO of Heart Certified Autocare BELOW: L1 Automotive Group staff

A LOOK AT THE 2024 OWNER

The face of the auto care industry is ever-changing. Survey results indicate that leaders are taking more time off, spending less time in the bay, and working standard hours. When it comes to connecting with their team members individually, a little more than half made time to hold one-on-ones.

SCHEDULED CHECK-INS WITH EMPLOYEES

Source: The 2024 Ratchet+Wrench Industry Survey Report

Training: “That’s part of our success, too. All of the real profit from the shop goes back to the shop, and that’s how we grow. I want to have more people here, but that’s just so I can take care of more people.” Leadership is a key aspect for addressing one of the biggest problems faced by the industry at-large; qualified technician shortage. Implementing systems that allow shops to attract the correct technicians for their shop is an industry qualm. Perkins priorotizes his company’s public image as atool for attracting talent: “I want to employ more technicians and keep them happy by giving them all these perks, because every time I post on one of those groups, if someone asks, we create a way of keeping our people and attracting new ones.”

Vision and Coaching

There’s a common saying across the industry with shop owners—I’ve worked myself out of a job—in reference to the way that they have grown their shops and allowed their systems, coupled with the personnel hired, and they now find themselves with less workload on a day-to-day basis. Moak went through an indepth personal transformation that allowed the business he had purchased from his father—at age 27—to strive and grow exponentially. Moak emphasizes a much-overlooked aspect of the business, the psychological aspect: “I actually work with all the leaders in the company to figure out what their personal head trash is and remove it. That’s where I specialize. I’ve grown up in the business, it’s almost like I’ve become a therapist with them.”

Many shop owners have grown their shop to the point where they face the conundrum of having worked themselves out of a job. A few others have worked this scenario into the business plan from the start. Swiontkowski went through this same issue, “I had a big staff, a big crew. I was supporting everybody in their roles and kind of stepping out of their way. But there just wasn’t enough money to go around, so some ended up leaving. I ended up having to let some go, but I kind of hit the restart button again and now I’m back on site. I have my office on the 2nd floor.” Swiontkowski spent about four years as an off-site owner, and when the business hit the rough times, he valued his options, “I got to the point where I hated this place, and I didn’t really want to come back. I almost thought about giving it away, I don’t like it anymore. But I made myself get back here and I found my passion for it again. I’m really lucky for that.”

FIX DESCRIPTION:

When vehicle wouldn’t start, most of the time only the PCM was offline. Using the network test, we can see that all other modules were talking at the time of the fault. The high speed can network resistance at the timeof the fault was 61.5 ohms which tells us that the CAN circuits to the PCM are likely okay. The PCM communication problem needs to be diagnosed before any further testing can be done. Disconnected PCM connectors and found ground circuits terminals 69 & 70 on connector Cl 75B were burnt/

melted. The terminals on the PCM side are melted as well. Removed and cleaned terminals on connector side and added stabilant 22 to the terminals and re installed. Cleaned male pins on the PCM the best I could. Vehicle now starts every time, however with the terminals on the PCM being melted, I would recommend replacing the PCM. Make sure vehicle no longer acts up before replacing any parts as I am unsure why those terminals were melted. Fretting could cause it, but on the ground side it’s less likely.

HOW AI IS REVOLUTIONIZING

SERVICE SHOPS: A SHOWCASE OF CUTTING-EDGE FEATURES

The market now offers a variety of AI tools for auto care professionals in many areas of the shop setting

Meet our fictional shop owner, John Patterson. He is 46 years old and owns a family-run auto repair shop. He finds himself overwhelmed by the rapid changes in technology. Every day, he hears buzzwords like “AI” and “machine learning” being tossed around at industry conferences and in trade magazines, but the concepts seem more like sci-fi than practical tools for his business. With years of experience and a strong reputation in his community, John knows how to fix cars and keep

his customers happy, but he’s mystified by how artificial intelligence could help his shop.

Understanding AI in Automotive Service

Artificial intelligence is reshaping the automotive service industry, enabling shops to streamline processes, enhance customer engagement and improve technician efficiency. From digital vehicle inspections to AI-driven service advisors, platforms leverage AI to tackle challenges like scheduling, communication and marketing. To help shop owners like John Patterson, we decided to explore the topic of AI to aid shops to operate more efficiently.

What is AI in Auto Care?

To begin this discussion about how AI is being leveraged in automotive service, let’s start with a working definition of AI, generated from a ChatGPT prompt: What is the definition of AI related to automotive service and auto care?

Here is the definition ChatGPT provided: Artificial intelligence refers to the use of advanced algorithms and machine learning techniques to enhance diagnostics, repair processes and overall shop efficiency. AI helps in tasks like identifying vehicle issues, predicting maintenance needs, optimizing workflows and improving re -

pair accuracy, leading to quicker, more reliable customer service. AI tools in automotive shops can include automated inspection systems, predictive maintenance software and intelligent repair guidance systems.

Exploring AI-Driven Solutions for Automotive Shops

Can AI-driven tools improve every area of a shop? We posed that question to representatives from the following technology companies:

• Shopgenie

• AutoTechIQ

• Dynamo AI

• AppFueled

• AutoOps

Here is what they shared. While AI is growing in popularity with shops as they get more comfortable, just like digital vehicle inspections many years ago, its adoption may take some time. Yet the development and tools are underway, and the exciting features and potential are revolutionizing and transforming the auto care space.

Below is a breakdown of AI-enabled features across various platforms designed for automotive service shops. In a couple of cases, the representatives quickly point out that while their technology may seem like “AI,” it is more

based on logical circumstances that mimic AI.

Shopgenie:

AI-Powered Service Advisors

Shopgenie, with its AI assistant Jasmine, has redefined customer interaction for auto shops. Kieran O’Brien, Shopgenie’s founder, highlights Jasmine’s ability to handle repetitive tasks such as answering FAQs, scheduling appointments, and managing customer communications. Jasmine also powers CRM systems by automating workflows, providing a comprehensive tool for shops to enhance customer engagement.

“Our goal was to solve real problems using AI. Jasmine isn’t just another chatbot; she powers the entire customer experience. From replying to reviews to generating content for emails, Jasmine is a practical solution,” says O’Brien.

Launched in June 2023, Jasmine uses AI to score phone calls based on customer service rubrics and helps service advisors maintain a high communication standard. Jasmine listens to calls and offers coaching feedback, ensuring that advisors are polite and efficient when interacting with customers.

AutoTechIQ:

Selecting Customers with AI

Uwe Kleinschmidt’s AutoTechIQ is designed to target the right kind of customers for automotive shops. “Our ideal customer isn’t looking for the cheap and easy fix,” Kleinschmidt says. Instead, AutoTechIQ uses AI to identify customers interested in the reliability and longevity of their vehicles. By standardizing job names across all shops, AutoTechIQ allows customers to select the shop most experienced with specific repairs and vehicle makes.

The platform also provides predictive repair. It analyzes millions of repair orders, like Fords at 100,000 miles, to predict common issues and repairs, such as transmission and electrical problems. This forward-thinking approach helps motorists understand their vehicle’s DNA and make an appointment with shops to have them inspect their vehicles and anticipate repairs before they are confronted with the aftermath of the problem.

In addition, AutoTechIQ’s BizMapIQ product allows shops to analyze their Google ranking and market share in neighborhoods with desirable household income, existing customer bases and other key demographics. With AIdriven insights, SEO experts receive recommendations on where to rank the business and what services to promote. Shops can also better understand their target audience and focus on maximizing outreach strategies with their marketing agencies, website, and postcard providers.

Dynamo AI:

Improving Technician Efficiency

Mike Duggan of Dynamo AI emphasizes the platform’s ability to improve technician efficiency by reducing “frictional loss.” Technicians often waste time on mundane tasks such as searching for parts or equipment, washing their hands, or checking inventory. Dynamo AI, designed for mobile, desktop, and tablet use, eliminates this in-

efficiency, saving technicians up to an hour daily.

“Every little bit of friction adds up,” Duggan says. “With Dynamo AI, technicians can access data faster, process orders more efficiently, and even manage invoicing and inventory in realtime.” The usage-based pricing model links the app’s cost to the value it delivers, ensuring shops get what they pay for based on the improvements in productivity and efficiency.

Duggan’s early trials have shown that Dynamo AI can significantly impact shop operations, with some reporting a $25K-$60K annual benefit per technician from the time saved. Dynamo AI has created a free and easy-to-use tool that helps facilities assess where they might find productivity gains.

AppFueled:

Smart Handling of Missed Calls

AppFueled, founded by Jeremy Glassco, takes a unique approach to customer communication by using proprietary inhouse AI-style logic to handle missed calls. According to Glassco, the platform connects incoming calls to management systems like Tekmetric, for example, automatically identifying whether the customer has a vehicle in the shop or has recently visited. The system uses proprietary intelligent logic to decide how to process the call, from follow-ups to addressing satisfaction issues.

AppFueled’s browser-based platform also integrates a range of userfacing tools, including text prompts, membership rewards programs, and task management systems. Shops can use AppFueled to send reminders to customers about upcoming services or missed appointments, all powered by intelligent logic fine-tuned for streamlining communication.

“Whether it’s a vehicle owner or a service advisor using our platform, AppFueled makes managing customer relations easier,” says Glassco. “Our inhouse built advanced logic similar to how an AI assistant can work allows us to provide customized responses based on the context of the call.”

AutoOps: Online Scheduling

AutoOps Scheduling offers a powerful, user-friendly platform that leverages conditional logic to optimize appointment bookings. Unlike systems relying on AI, AutoOps integrates with 11 different shop management systems, allowing shops to streamline scheduling and elevate customer experience.

With these integrations, AutoOps enables upselling of declined services, pushes appointments directly into calendars, and ensures that customers receive a smooth and hassle-free experience–keeping them coming back for future needs.

Steven Fafel, a leader at AutoOps, envisions a future where AI will play a role in scheduling, using behavioral patterns to anticipate service and maintenance needs. While AutoOps doesn’t currently use AI, Fafel has observed AI tools that engage with customer reviews and even generate images within the scheduling process, hinting at future innovations. For now, AutoOps delivers a scheduling system that boosts shop efficiency and profitability, offering a smart alternative to traditional, static schedulers.

Embracing the AI Revolution

The platforms showcased here are at the forefront of this revolution, from improving technician productivity to streamlining customer communication. As AI continues to evolve, shops that adopt these technologies stand to gain a competitive edge, offering faster, more accurate, and personalized services to their customers.

Are you like our fictional shop owner, John Patterson, who may feel overwhelmed by the pace of technological change? The key is to start small. By gradually integrating AI tools, whether through smarter scheduling systems or automated customer interactions, John can modernize his shop’s operations without losing the personal touch that made his business successful in the first place. With the right approach, even a family-run auto repair shop can harness the power of AI to stay ahead of the curve, delight customers and streamline daily operations.

PASS THE BATON

Sometimes, it’s better to pay more upfront to save yourself a headache and money down the road

When you’ve just opened a shop and you’re starting from nothing, you need that phone to ring! Nobody understands this more than Samantha Andrews, coowner of Wright Auto Works.

“I tried to figure it out,” Andrews says about attracting customers through Google Ad Words. “I would set a target and use words that I thought were good and I would set a budget–two or three times what it should be.”

At one point, Andrews went in and changed a few settings for Wright Auto Works’ website and got so excited when the phone rang “almost immediately.”

The first call was from someone in Texas. Her shops are located in Georgia and South Carolina. The next call was from Seattle and the next was also far away.

“I set it for the whole United States,”

Andrews says of her Google Ads. Rather than continuing to try and figure it out herself, Andrews decided to get help from professionals and immediately saw results while cutting her marketing costs in half. She learned a valuable lesson–pass the baton to others who know what they’re doing and spend more time doing what you are good at.

BACKSTORY:

Andrews co-owns two locations of Wright Auto Works in Loganville, Georgia and Charleston, South Carolina, with two business partners. Andrews has been in the industry for seven years and held many positions throughout that time and has been nicknamed the “car count queen,” as she’s quite good at driving traffic to shops. That wasn’t always the case, however.

Early on in her career, she says she was terrible at getting people in the door. Her boss would pay for rings, and she was under the impression that if you had a nice personality on the phone, that’s all that you needed. She got training on how to convert calls into customers and now she has a conversion rate close to 100%.

PROBLEM:

When they first opened the shop, they hired someone to do their website and paid that person a lot of money. The problem was that they didn’t fully understand the full picture of Ad Words and because of that, they got a basic website with pretty pictures.

“There were no SEO words and it wasn’t built very well,” Andrews says.

The website looked alright, but pretty quickly Andrews knew that it wasn’t up to par and got frustrated with the person who created it. They would send new photography and the site wouldn’t get updated, or he would use stock images instead of the ones that were provided. The font and size weren’t consistent throughout the website and there were even bigger problems, such as the claim that the shop did tires before Wright Auto Works had a tire machine. “It was misleading,” Andrews says. “Not a great impression.”

Andrews tried to solve the problem by herself because she had a slight understanding of Ad Words and so she started making her own ads in Google. She set targets and used words that she thought would be good and set a budget that, in retrospect, was two to three times what it should be.

SOLUTION:

Wright Auto Works tried to make their website work. They had invested so much money into the website but eventually just realized that it was never going to work how they expected, and they reached a breaking point with the person who created their site. He was trying to get them to pay for Ad Words and either wouldn’t make the requested changes to the site or do it poorly. Finally, the team decided to reach out to Leads Near Me. From the time that they signed it was three to four weeks until the website went live in February of 2024.

“It was half the cost and we got almost immediate results with Leads Near Me,” Andrews says. “I got so used to spending so much on Google Ads that I almost didn’t trust it.”

AFTERMATH:

Once the shop got up and running, Andrews says they had between 120 and 160 cars per month with the old website and that jumped to roughly 300 cars per month. “We should have done it sooner,” Andrews says.

TAKEAWAY:

The biggest lesson that Andrews learned is that it’s better to pass things off that you’re not good at. “It’s nice to pass the baton to somebody and trust that they know what they’re doing,” Andrews says of the experience.

The cost up front might scare you, she says, but the ROI is so high and you can spend your time on something that you are good at.

If you want to try and master Google Ads yourself–or you want to see if the company you’ve partnered with is doing what they should–here are a few best practices to make sure your shop gets in front of the most eyes possible, courtesy of Perfometrics.

1.

Conduct Keyword Research

2. Choose the Right Keyword Match Type

3. Organize Keywords into Ad Groups

Leverage Keyword Insights

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November

Salesman or Advocate? A Distinction with a Difference

I recently returned from speaking at the Ratchet+Wrench Management Conference in Orlando. I had the privilege of speaking with many new shop owners who were just beginning their journey. A reoccurring question was: what can I do to make my shop different than the rest? How can I distinguish myself and my shop? My reply was simple: aspire to be more than a salesman, be a genuine advocate for your customers.”

As an avowed capitalist, I love selling. I love the process of it and the dialogue that often ensues between the prospect and the salesman. But just as sauerkraut doesn’t mix well with ice cream, there are professions where the practice of selling doesn’t mix well with the best interest of the client whose wishes we purportedly serve. I contend that the business of auto repair along with the practice of medicine, law, accounting, financial consultancy, and mortuary services have separate and higher obligations to the consumer than does a typical retail sale because of the potential for harm. I think that we can all agree that a surgeon who recommends an operation because he has an arbitrary daily/weekly/monthly income goal has committed an egregious violation of trust. So too the stockbroker who recommends stock trades based on his commissions.

In spite of all the information available on the internet, there exists an inherent information delta between us as service providers and our clients. The average vehicle owner lacks the technical knowledge to fully understand the intricacies of automotive repair. Because of this delta it’s vital that our customers recognize us as advocates for them, not salesmen and this advocacy must be genuine. It can’t be motivated by selfinterest. It can never employ false empathy as a sales technique which is common in retail sales. One of the best ways to begin this process of forging a customer relationship based on advocacy is through

a process that I implemented at my shop soon after I opened over 26 years ago.

The process begins with the initial phone call to the shop by the prospective first-time customer. After noting all of the usual contact, vehicle and requested service or concerns, the CSR reads that information back aloud (including their surname) and asks “Did I get that right?” This shows that they were listening and plants the seed that their concerns are important. The CSR sets the appointment time and makes a request. The request is that they arrive 10 minutes earlier than their scheduled appointment so that they may complete a brief form allowing us to get to know them better. If you’ve marketed correctly, there should be little to no push back.

My CSR’s desk faced the one entryway to the property. She noted the type of vehicle driving up and compared that to the mornings appointments so that she could address the customer by their surname as they entered. After offering a cup of coffee or snack, she would hand them a clipboard and pen with which they would answer the eleven questions on the form.

The form has an opening statement that reads: “Please tell us more about how you view the vehicle you own or lease. Finding out what is important to you helps us to serve you better. A plan to address your vehicle needs tailored just for you saves you both time and money while conserving valuable resources.” This information was recorded in the SMS for future reference.

The questions that follow are straightforward and include asking if the car is owned or leased; if leased will it be purchased at the end of the lease? Is this vehicle their primary source of transportation or is it a “spare” or third car? What are the plans for the vehicle in the next twelve months? Have there been any recent repairs or accidents? Do they have any service records with them? How

many miles do they drive between oil changes? Why have you brought your car in today? The CSR then reads the form, repeats the information back to verify that their responses are important. It can not be emphasized strongly enough that this process is about them.

I’ve lost count of how many times I’ve been told “Nobody has ever asked me these questions before, thank you.”

There’s a Japanese expression that states: “The nail that stands proud is the first to be struck.” Be noticed, be the nail.

R. “Dutch” Silverstein, who earned his Accredited Automotive Manager Certificate from AMI, owns and operates A&M Auto Service, a seven bay, eight lift shop in Pineville, North Carolina. Dutch was a captain for a major airline earning type ratings in a variety of aircraft including the Boeing 767/757, 737, 200, 300 and 400 series, Airbus 319/320/321, McDonnell Douglas MD80/DC9 and Fokker FK-28 mk 4000 and 1000. After medically retiring, he transitioned his parttime auto repair business into a full-time occupation.

dutch@dutchsgarage.com

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