Or, maybe you’re not so cynical and would like a couple of tips on how to improve. Either way, I believe that your investment of the next couple of minutes will be well worth it!

For the first 25 years in my career as a shop owner I tried every kind of training for myself and for my employees I could find. Of course there was a lot of technical training out there and we pretty much did it all. We could fix cars well, but the rest of the operation was not performing as I would have liked. In fact, it was in chaos most of the time.

Why Training Didn’t Work!

It seemed that every management or sales class we went to created some hope and motivated us to change. However, after a few weeks, things had drifted back the way they were except everyone was even more frustrated. I was angry because my team couldn’t or wouldn’t make the new ideas and systems stick. And they were upset because I expected them to do things they were incapable of doing – because of their lack of aptitude, or because of my poor communication/teaching skills or my inability to manage or lead them properly.

It was the little things that drove me nuts: parts returns and credits, parts not billed, customers not taken care of, things forgotten, and many other broken rules or procedures. I didn’t know it at the time, but I was not fit to lead. Yes, I got very upset every few months and threatened everyone in a fit of anger, but that only produced a momentary improvement in performance. They all understood my routine and knew within a few days they could slack off again…AND I LET THEM!

On the surface, it appeared I was the only one who understood what I wanted. However, the truth was that no one was committed to making new training knowledge stick. I repeatedly stated I did not want it this way, but the proof of my actions (or should I say inaction?) and those of my staff overpowered any thoughts, feelings, or vision of sticking to a better way of doing things.

Why couldn’t we pull this off? What was missing?

The Missing Piece of the Puzzle

It wasn’t until I discovered a way to measure performance that the light went on. Let me caution that measurement by itself will not ensure sustained improvement. However, I found that just by measuring, improvement occurred in every part of the business we tried it in.

The next task was to figure out exactly what to measure and how. We worked for years at perfecting this process using reports, spreadsheets, management checklists and duties checklists. It was many years later I found that replacing myself with a strong manager/leader in my shop and establishing a solid chain of command were the last missing pieces to this puzzle of sustaining improvement.

Today, we have established a firm baseline of performance in every aspect of our shop. Each manager, supervisor and service writer operates from a set of metrics every day. Even the techs know what is expected of them and that management is measuring their daily performance and will hold them accountable for any under-performance trend. Everyone on the team clearly knows the duties, processes and policies for their job position through the use of forms and checklists that must be turned in with each job or, as the case may be, daily.

This is absolutely necessary in each area you wish to apply a training program. Unless you know where your current level of performance is in that area, you cannot measure improvement after training. Any evaluation of improvement you attempt is meaningless without honest, objective measurement…unless you like to guess or continue to lie to yourself like I did for years!

The Bottom Line

The bottom line is you have to lead, or you must find a leader who has the strengths you lack (either by promoting within your organization or by hiring one). No one is perfect. We all have strengths and weaknesses. Do you know yours? Have you honestly thought about it? There is no shame in recognizing your weaknesses – only in continuing to ignore them!

There are dozens of necessary traits in the overall leadership team of any successful organization. It’s impossible for one human being to have them all. The smartest and best leaders out there know this and hire and delegate around their own weaknesses.

Once you begin to address this issue and implement a good set of measurement systems, your training programs can be elevated and improved.

If you want to know more about how we do this in our shop, contact us at contact@autoprofitmasters.com.

Because we see a huge need out there, I wanted to dig much deeper into this subject. If you are honest with yourself while reading this, it might hurt a bit. But as my fellow Marines say, “Pain is weakness leaving the body!”

Ready to start?

Ask yourself: are you a controller, a weakling, an esteemed, effective leader, or…? Let me clarify. What is your main style when it comes to operating your shop?

There are many styles or approaches shop owners demonstrate when it comes to running their shop, but most have a predominant style.

What are some of those styles? What is your style?

• Over-controlling: using anger, intimidation, manipulation, threats, big promises, rigidity (unyielding dominance), dictatorship, insensitivity, ruthlessness, guilt, or withholding things…
• Complacent: Don’t care attitude, burned out, leave it up to whoever will take charge, go with the flow, adverse to change, irresponsible, ignorance…
• Timid, Fearful: Avoid confrontation at all costs, adverse to change, owned by one or more employees, a victim, guarded or secretive…
• Too Nice, Too Trusting: Don’t want to impose on others, will avoid confrontation at all costs, slow to see improper motives or actions of others, willing to let others lead or buck the system, allows certain employees to break the rules without consequence…
• Don’t Really Believe Success is Deserved: it’s just the way it is, resigned to poor organization and profits, don’t know or believe in a better way for themselves…
• Effective Leadership: sets a good, consistent example, complies with all company rules and systems, teaches correct principles and systems, holds self and employees accountable for conformance to procedures and for good sales/production performance, empowers the team through:
  • Setting clear expectations
  • Buy-in and commitment by team
  • Good, consistent training
  • Delegates authority to supervisors to do the job
  • Measurement of performance to targets
  • Daily accountability reporting
  • Incentives
  • Follow-up
  • Discipline (as necessary)
  • Building trust

There are other styles and combinations that I could spend hours discussing. However, the above contrasts will facilitate the discussion I want to have here.

Think about these statements:

“You can’t push a rope up a tree.”

“Lead, follow or get out of the way.”

“The only trait of a leader is that others will follow.”

“Performance can be demanded and controlled up to a point, but RESPECT must be earned over time.”

“Employees will do what the boss does much longer than they will do what he says.”

“Training will never stick unless the ‘Why’ is understood and embraced above the ‘What’ and ‘How.’”

The whole concept of leadership is to be out front setting the vision, meaning, pace, standards, and attitude toward the work at hand – the mission. Most “would-be” leaders understand this at some level. Great leaders live it!

Out of all the things I teach our clients, this point may be THE MOST IMPORTANT and the most difficult to get across.

WHY?

• Denial or Ignorance! None of us likes to be shown a personal weakness we do not recognize that others see clearly!
• Arrogance! It can be embarrassing and humiliating. “How dare you?” “I own this business!” “I am the Boss!”  “It’s my way or the highway!”
• Resignation to mediocrity. It’s just the way it is. I’ve tried to get them to do things right, they just won’t do it.
• Just not built to lead. Recognition of weakness but not sure what to do about it.
• Burned out (or complacent). Just don’t care any more.
• Can’t make decisions to change stick. Cynical or have just given up.
• Can’t afford to change or upgrade personnel. Poor performance results in poor profits and inability to invest in organizational and systems improvement.

As you read through this list, did you recognize your main obstacles or weaknesses? If so, there is hope! If not, and if your business is not running well or is not as profitable as you would like, you are probably in denial or worse – unaware or ignorant of what is causing your problems.

A good acronym for D-E-N-I-A-L is “don’t even know I am lying.” This first and foremost means lying to yourself. How can you change if you don’t accept responsibility? How can you fix something if you don’t know it’s broken?

YOU CAN’T!

Can People Change?

What if you believe the personal traits you have that are contributing to poor performance and possible business failure cannot be changed? What if you’ve already really tried to change and it didn’t work?

Then you have to openly and honestly ask yourself:

• Do I understand the problem?
• Am I really willing to change?
• Have I done everything I can to change?
• Why am I still stuck?
• Should I continue to be a business owner?

There is much proof among human history that change is possible. If after doing all that is possible you still have fatal leadership flaws, then you must consider hiring around those flaws and filling those duty positions with new or existing employees or out-sourced resources. Or…you must seriously consider getting out of business ownership.

This is what I finally had to do almost 12 years ago. My leadership skills had some big holes in employee relations, customer service and marketing strategies. After 27 years of suffering, I recognized this and delegated some things to a young service advisor named David Rogers.

I was too intense or aggressive in some areas and too weak in others. I did not clearly understand what people (customers or employees) really wanted or expected. And I had a very hard time holding my people accountable and using consistent follow-up. On the other hand, David had the perfect skill-set to manage and lead these areas and many more. It took lots of soul-searching and ongoing introspection for me to evolve into the type of person who could delegate and lead others who were even better than I was at their duties.

Are you getting the picture? You don’t have to know it all and be it all to be successful! In fact, I don’t believe anyone can be it all! You just have to make sure all the bases are delegated and covered with good people (see my blog on Hiring and Retaining Quality People) and that you empower them to do their job and report their performance daily!

So, do you recognize your style yet?

Do you have more than one contributing style? What are your strengths? Where are you weak? What are you going to do about it?

We all know it’s one thing to understand something and quite another to use that knowledge to do something to improve. That’s the nasty part of it: once you gain an understanding of a correct system, principle or law, you are now accountable to follow it. You can no longer live in the bliss of ignorance or denial or be a helpless victim! It’s now up to you to finally change the things that have held you back, that sabotaged you (maybe with your permission) for all these years!

One Suggestion for Change

Take 10 minutes a day during a quiet time to reflect and ponder on this issue. If you don’t feel you have time, turn off the stereo while you drive to work and make that your quiet time of reflection and decision making. You will be amazed at how powerful this tool will become for you! I have done it for years early in the morning and can tell you it absolutely works!

If you have questions or comments on this blog, click “comment” below and/or email us at contact@autoprofitmasters.com.

Good luck and much success!

Learning from my Many Mistakes

As I state in many of the articles, blogs, and classes I write and teach, I have learned most of my lessons in life and in business from making mistakes and comparing those experiences to better ways. I have probably made every mistake you could think of when it comes to employee relations and compensation.

For example, back in the ‘70’s I had a crew of 12 full-time and part-time employees in my 3-bay Texaco station. At the end of one of those years my bookkeeper sent out 102 W-2’s. It would be difficult to cover all of the ways in which I had a poor grasp of how to hire, lead and compensate team members here in one blog, so let me focus on what works and why relative to incentive pay.

Better Employees Start with Better Pay Plans

In a recent blog I detailed the principles of Hiring and Retaining Quality People. Making the transition to better, more capable employees changed my business and my life forever! But this change could not have been sustained without applying true incentives and compensation plans that worked!

I suspect some of you are still resisting this idea.

Why?

Could these be some of the reasons? Maybe it’s that…

• You have been taught by someone that incentive pay plans cause too many problems.
• You tried it and it failed.
• You have concerns that your measurement systems are not accurate enough to sustain this type of plan.
• You might believe plans like this can become a source of misunderstanding because they are complicated.
• You think incentive pay plans are too much work.
• You’re not sure what to put incentives on for each type of position.
• Certain employees have resisted or even threatened to quit if you take them off salary or hourly (and isn’t it always the case that these are the same employees who don’t follow the rules or who “own you” in other ways?).
• You’re afraid you’d have to pay your people too much.
• As a shop owner who is or was a tech, you’re afraid your techs won’t make enough to pay their bills.
• You feel like an incentive pay plan will create motivation for your employees to over-sell.

The list could go on, I’m sure.  There’s always reasons not to do something, so let’s change focus…

Why should you install the right incentive pay plan in your shop?

• Producers thrive on incentives. High-quality, responsible employees thrive not just on motivations like incentive pay, but also on other incentives, like: the chance to be heard and have a say; the possibility for training and advancement; recognition by management, peers and customers; and even the opportunity to fit in with the rest of the team. In other words, they want an opportunity to grow in every way using a clear career path set forth by company leadership.
• High-quality people want to excel. They love competition and want to know if they are winning or losing the game each day. Keeping score and having targets are important to them.
• Incentives create team enthusiasm. There is no better way to promote team enthusiasm than through team incentives.
• Incentives sustain high production. Unless your team is on a good incentive program you cannot sustain high production over time. Without incentive, your team simply will not go the extra mile when you need them to do so like on big days or during the summer months.

In other words, using incentive pay plans in your shop can make a huge difference when it comes to hiring and retaining quality employees, and for growing your shop all year long.  But an incentive pay plan isn’t without its pitfalls.

Here’s what to watch out for…

• Don’t make the plan too complicated. Each employee should have a very good understanding of where they stand each day and exactly where they stand each week. You must have simple daily reporting that allows them to know this within a couple of minutes of review.
• Only incent people on what they can control. Don’t pay them on things they cannot control or on things you have not given them full authority to manage.
• Don’t set targets (bonus trigger points) that are too low. Doing this turns incentives into entitlements.  If it’s just part of their “regular wages,” an incentive pay plan will have little impact on their behavior or motivation.
• Don’t set targets that are too high (unrealistic or unattainable). This creates discouragement and resentment, which is exactly the opposite of what you want!

As with every other system in your shop, you must measure to see if you are getting the improvement and the results you want. There are many voices out there telling you “what to do” and “what not to do,” and it can get pretty confusing at times. Doubly so because the advice offered by “experts” often has some validity to it.  What it comes down to is this: if the expert you’re taking advice from does not teach simple ways to measure results or offer real life solutions for fixing things that aren’t working (in this case, your pay plan), then it doesn’t matter how valid their theory seems.  In the end, it’s just a theory that doesn’t work, and your sincere effort to follow it won’t ever make it work.

I have seen many, many pay plans that didn’t work. Some of them backfired and became disincentives, others were so weak or confusing there was no motivation to work. To develop exactly the right pay plan for every position in the shop is an involved, delicate and even dangerous proposition. If any piece of raw data is not considered correctly or is left out, it will cost you money and production, and can wreak havoc with your team.

On the other hand, in my years of trial and error, I’ve developed a handful of pay plans that do work well, and have continued to work well over several decades. I am still proving and improving them in my shop and in dozens of client shops today.  In other words, it is well worth the time, effort, trial and error you spend working on a pay plan that works for you.

One Final Word of Caution

You must develop incentives and incentive pay plans for your entire team and install them together (or at least within days of each other). Otherwise, the different positions or departments may work against each other. This will create production bottlenecks and chaos, and will kill morale. Be careful not to install personal production incentives that create too much competition between each tech or between service advisors. You must also install checks and balances to insure integrity and honesty in every job position so that over-selling does not occur and is not rewarded.

I could go on and on, covering topics like when to and when not to install minimum guarantees and how long they should remain in place; or how to address the timing and method of resetting targets as your business grows over the years; or how to keep your total payroll cost in correct proportion to total sales as monthly sales fluctuate or as they grow over time.  But really, there isn’t enough space here to detail everything you must consider.

You Can Do It!

Let me leave you with a word of encouragement: I can tell you from years of experience that these and dozens of other “unseen” hazards or disincentives can be avoided so that your pay structure protects you, your profits, the business and your employees.  If done correctly, an incentive pay plan can transform your shop, grow your profits, build an incredible team, and change the way your do business!  It’s an exciting thing, once your hard work creating an incentive pay plan starts to pay you back!

As I’ve said, there’s not enough space in this or dozens of blogs to write about everything there is to know about incentive pay plans.  If you want to know more about what I’ve learned about creating good incentive pay plans, leave me a comment below or drop me an email over on the contact page!

OK…you’re still here and so am I! 2008 and 2009 are now behind us. Are you in better financial shape than you were in 2006-2007? Or just treading water? Or are you slowly sinking?

I am no renowned economist, just a business owner and turn around specialist who has been making payroll, paying bills and living within my means for over 35 years. I’ve survived six recessions, and I’ve seen this scenario play out time and time again. Can your business take what is coming? Can you take it?

You’ve heard the news reports about the deficit, maybe even heard that Congress recently voted to allow themselves to go even deeper into debt. This isn’t the first time that Congress has done this, and certainly won’t be the last, but this has always had consequences. We’ve never been this deep in debt, however, and never faced consequences so grave.

The consequences that a steeply growing Federal debt brings include (but are by no means limited to): higher taxes, less available credit for loans, higher interest rates, devaluation of the US dollar and increased inflation (perhaps the most relentless tax of all). Left unaddressed all these will increase your cost of doing business and lower your take home pay. When it’s all said and done, the times we’re living in make it almost impossible to imagine that small business will survive.

So, what will you do?

What Will You Do?  Your Three Choices

• Give up now. Try to sell your business for enough to cover part of your debts, and get a job that pays your bills (if you can find one).
• Keep doing what you’ve been doing. Hold off making a choice for as long as possible.
• ATTACK! Do what we’re doing in our shop and beat this recession!

What do I mean?  I mean we’re going to…

• Continue to improve our internals (by that, I mean execution of shop systems, customer service, product and service value, and production and profit numbers)
• Dominate our market and drive the kind of new, quality and value focused customers we want into our shop
• As we improve #1 above, we will retain a higher percentage of our customers and beat the attrition game!

We have no other acceptable choice! The business environment dictates that we must follow those 3 keys! These keys brought big time growth and profits for my shop in 2008 and 2009 despite it being the worst recession I have ever experienced. I expect more of the same as we continue to apply and fine tune those keys!

Ready to Fight?

Recovering from the crippling debt we’re seeing on the Federal level (and even in some States!) can’t be fixed overnight.  Things won’t get better quickly.  This isn’t a game for the faint of heart. You have probably tried to make some changes with moderate to little success. I experienced the same thing for the first 25 years of my career as a shop owner. People say change is hard – for many it is impossible without the right kind of help!

If you’re not ready to give up, if you’re not willing to let your business die a slow death, then let me show you how to find some real answers…

• Do your homework. As hard as it is to study, you must commit to as least ½ hour per day on your business.
• Read our blogs (Click here to visit David’s blog, and click here to see the other entries in my blog)
• Review industry web sites for “How To” content – ours and others (click here to visit our shop’s website | click here to open the Auto Profit Masters homepage | click here to visit the Automated Marketing Group’s website)
• Access training material (like our podcasts, classes, CDs, DVDs, laser coaching, etc.
• Compare what you learn with what others in our industry are teaching.
• Compare credentials and shop ownership and management track records.
• Pick your horse. Pick someone to help you who knows today’s business environment and who knows first hand what you are up against.
• Follow their example. Don’t dilute your chances for success by dabbling in several different programs from many different trainers. Pick one that is comprehensive and that works in today’s economy. Pick one that’s right for you!
• Don’t let your ego get in the way of asking for help. No single person in business today has all the answers. That means you don’t either. It is not a sin to admit that. It takes a team with diversified background and experience, made up of individuals who have had their teeth kicked in several times by business, who know the dangers and pitfalls, who have risen above adversity and failure to help you avoid those same types of failures and learn their pattern of success.

What’s the Secret?

There is nothing secret about this stuff. After you have done your homework you will know what to do to prepare your business for the coming torrent of consequences the US economy is facing.

However, knowing what to do and actually doing it are two different things.  If you need the right system or greater discipline to turn knowledge into results, we will be happy to help you. How do we know our stuff works? Because we use it in our proving ground – our own successful shop and in dozens of clients’ shops every day!

Good luck with your studies. Let us know how we can help in the comments section below or via our contact page!

For 25 years, I really struggled with this one. Because my shop was not consistently profitable during that period, I was always looking for ways to hold costs down including the wages I was willing to pay. Even though it seemed necessary at the time, much later I discovered it also caused a very serious self-perpetuating problem. It wasn’t until I woke up one day so sick of the chaos and failure of my employees to follow through that I realized my approach — where I was the most proficient person at every position in the shop — was not working. Right then and there I decided things had to change.

When David Rogers came on board 11 ½ years ago, I was already making strides towards upgrading my personnel.  But as you can imagine, it was very difficult to do…the business was losing money most months and I just didn’t have the budget to replace everyone at once with top-notch employees.

As David took over the management duties the business, profitability began to turn. This provided us the opportunity to slowly change our business model. We decided we had to stop being all things to all people. No longer could we attempt to be the big discounter in the market and still try to be the most skilled, the most trusted and the best at customer service. We had to choose which type of customers we wanted to cater to.

The dilemma was that our medium- to low-quality people could not provide the value, the level of competence or the customer service that the upper-level customers expected. I could not afford to hire and pay new, high-quality, top-producing employees unless we continued to improve the quality of our customers and our profitability…almost a catch-22, right?

After much soul searching we made the commitment to hire and train the best people we could find at every position. Over the next couple of years here is what we learned…

1. A significant segment of almost every market is willing to pay for a high level of quality, honesty, ethics, and customer service.
2. This can only be delivered and sustained through high-quality personnel who are well-trained and well-compensated through incentives to do so.
3. Performance standards and expectations must be set during the recruiting, screening and hiring processes.
4. A high level of accountability must be sustained through daily measurement, reporting, training, and discipline. Consistent follow-up and follow-through by managers and front-line supervisors must be established.
5. Quality control and customer satisfaction systems must be monitored and reported to the team.
6. Positive and corrective feed-back — along with regular performance reviews — must be part of the regular management routine.
7. Production systems and rules must be thorough, synchronous with all other systems, and simple enough to be understood and sustained by everyone on the team.  Once these are in place, then…
8. You must train and train and train, and hold everyone accountable for high performance, maintaining the systems and following all the rules all the time!
9. Where appropriate (and within the bounds of company policies and boundaries), management and ownership must reach out and support or help an employee or their family in special need or circumstances.

Under these conditions, high-quality people will thrive! They will go well above and beyond the norm to please customers and the boss. They will even help to establish a self-governing attitude among coworkers where rules and systems are followed at levels not possible under any form of command and control style of management. A bond of cooperation and concern will become the culture of your business.

This will produce an environment under which the highest-quality employees will find and make a “home” for themselves! High quality employees and customers will be attracted to this environment, and low quality people will be repelled and replaced. I have seen this process unfold and work in my shop and in dozens of our clients’ shops.

What are the benefits and value to you the business owner, of experiencing such a transformation in your shop? How would you like to have a life again, with low levels of chaos in the shop, happy employees, thrilled customers, high take-home profits, and more freedom to spend your time how you want? How would that affect your family and finances?

Only you can put the actual value of these things into perspective for you and your family. I have successfully remote-managed my shop for almost 8 years now (I’m at the shop maybe a half-hour per month), and I can tell you it’s worth any amount of effort and pain to make this transition! Your ego may suffer a little like mine did at first as you hire people who are smarter and better at their jobs than you are. So what?!

It should be about having what you desire and deserve as a business owner, not about your need to be the go-to guy, the final authority, the micro manager, the only one who knows, the only one who can fix cars…right? With lower-quality people you had to be all those things to survive. I can tell you for sure that it can be different!

It’s your choice! What do you really want?

I really welcome your feedback and questions in the comments section below!

The Numbers Don’t Lie!

There are many issues and problems every business owner, CEO and manager has to confront when analyzing sales, production and profitability:

• Is the data accurate?
• Is it current and up to date today?
• Are the right things being measured?
• Am I using the right comparative benchmarks and standards for my type of business?
• Am I drawing the right conclusions from my numbers?
• Has my team employed and sustained corrective solutions as needed?
• If all of the above has been implemented, where is the cash?

There is also another very prevalent problem many of us have when we read our numbers: we embellish, compensate, or justify things in our own minds to make us feel better. We say or think things such as:

• “If we didn’t do so many oil changes the average ticket and tech efficiency would have been where it should be” or,
• “If that rack hadn’t blown up I would have made a profit this month” or,
• “If it wasn’t for this recession my car count would be up” …and dozens of others!

If you think about it, you could name several things you use as excuses many times a year, or a month to explain away your bad numbers and profits, couldn’t you? Speaking from experience, I know I have! It’s been interesting as I notice this characteristic in our clients. The more intelligent a shop owner is, and the more they’re capable of analyzing their numbers, the more prone they are to justify or explain away a bad number.

Why it that?

Why are they not willing to just take responsibility for that poor performance and finally do something about it? It is impossible to address all of the reasons and the personal issues behind them here…but every business owner or manager falls prey to this kind of self-deception and deflection to one degree or another, at one time or another.

Understanding the following principle and recalling it often has been a helpful remedy for me and for the most successful shop owners I have coached:

We all certainly acknowledge there are things beyond our control in the economy such as the unemployment rate or interest rates, etc., but why become paralyzed by things we can’t control? Why not spend your energy and take responsibility for all the things you CAN control like fixing your numbers and your profits? When shop owners decide that some of their numbers cannot improve they might as well close the doors. That attitude is doomed to failure – especially in this economy!

What can you do?

What should you be measuring and improving or sustaining at the right level each week and each month?

Here are THE most important ones:

• Jobs Written per RO (recommendations per ticket)
• Closing Ratio (Jobs Written / Jobs Authorized or Done per ticket)
• Average Repair Order
• Car Count
• Each Gross Profit category percentage
• Total Gross Profit percentage
• Parts to Labor Ratio
• Billed Hours
• Average Daily Sales
• Technician Efficiency

These should be measured for the shop, for each service writer, and for each technician and general service technician. Then this data must be arrayed in a line graph comparing week to week, month to month and year to year. You must also have the capability to compare the service writers within your shop to each other…same goes for the techs. Then you must have the ability to compare all of this data to the best shops in the country that are similar to your shop.

The worst thing in the world is to go to all the effort to set up tracking and to understand you data and then be told to compare your numbers to other shops who are struggling or failing just like you are…or to shops that are much different than yours! Why would anyone with any intelligence teach you to do that? Why would you buy into that?

The definition of a winner is to consistently beat the competition. You can go too far in the other direction though.  It’s no more useful to compare your shop to tiny, failing shops in a market that is nothing like your own.  After all, would you consider it a worthwhile win if the Boston Celtics beat your old high school team?

The true definition of a champion is someone who consistently wins against the BEST teams!

Are you lying to yourself? Do you truly want to change and become a champion? If so you must tap into resources and training that will empower you to do just that. When you get to the point you want to know the truth, just remember, THE NUMBERS DON’T LIE!

If you want to know more about how I measure my shop and what I am doing to make this process available to my fellow shop owners, contact my guys at contact@autoprofitmasters.com or at 1-866-520-3030 or click here to use the APM Contact Us page!

Good Luck…and Go Win!!

WHY? What is missing?

You’ve tried being nice — maybe even resorted to begging them to do their jobs. You’ve tried kicking their butts — at times you’ve lost your temper and really let them have it…but nothing seems to work consistently the way you want.

Are your employees tougher or smarter than you are? Or are they just no good? What is the problem?

After overcoming these kinds of issues in my shop to a high degree, and after training many other shop owners to do the same I can boil it down to one concept – LEADERSHIP!

What do I mean? Let me explain.

Can you identify with either of these traits in your management style?

• No one wants to follow a weak leader. Just like the mutt in a litter of dogs, the weak one is always taken advantage of or maybe even starved to death. Are you too weak or wishy-washy to lead? If so, you have given the leadership of your shop over to someone else. Do they have your shop’s best interest at heart? Probably not if you really look at it.
• You can only force someone to do what you are not willing to do yourself up to a certain point. Command and control only works in military type organizations because of the threat of jail or worse for disobeying a command. It simply does not work in a civilian setting where good employees will not tolerate being threatened, controlled or manipulated without destroying morale, inciting subtle or open rebellion, or causing them to eventually quit.

Establishing Accountability

When hiring new employees it’s simple (and imperative) to set clear expectations with them right from the start. Not having a history with you gives them a clean, unburdened starting point.

However, it is a little more difficult to install new expectations with existing employees who have experienced poor leadership in their workplace. As you begin to do so it’s important to meet one-on-one with each person and express your new vision and approach for the shop and for him or her.

Getting their attention, helping them realize you truly intend to change things, and overcoming the trust issues they have with you are difficult things for most shop owners to tackle and maybe impossible for some. You need to think about the ways you have violated trust with each individual on your team and be ready to come clean with them. However, don’t even start this process unless you intend to change, be honest and follow through. You must set the example of how you want your team members to act and to be.

Once clear expectations are set (through examples and consistent training) and you have empowered each individual team member (by giving them the systems, tools, measurement and reporting process, incentives and authority to do their job), a new level of accountability is established.

For owners who have never thought in these terms this approach may seem complicated or impossible. It really takes an even mixture of assertiveness and firm resolve on the one hand, and delegation, respect and trust on the other. The best leaders have ample doses of both traits and know when to apply each. You have to stop being their daddy and holding their hands so THEY can do their jobs, while still being willing to give them a licking if necessary.

Knowing when to apply each trait is the key. And never discipline an employee without showing them some love soon after. The best time to teach what you expect is as you show genuine care and concern for their welfare and job proficiency right after a butt kicking. Good leadership by you and high accountability from your team will be worth your effort to grow these traits and skills.

Consistency

A daily reporting process (of production and performance) from team members to their supervisor is the glue that holds each component of accountability together. Consistent feed-back – on both good and bad performance – must be communicated regularly. Good employees want to do well and need a forum to report this. They also must be required to report under-performance and how they plan to fix it. We use the online program WebTools™ for this reporting and feed-back function. Less-capable employees may not like to report and will either learn to conform or will find another place of employment to hide.

It has now been 8 years since I worked on-site at my shop. The first few months of delegating, trusting and completely letting go were very difficult for me, but I can tell you it was worth it! I now feel like my team is pulling me along at a nice safe pace instead of me having to drag them kicking and screaming all the way! The really interesting thing is now that they have full accountability for the smooth management of the shop and total control of its profitability, they are performing better now than they did when I was there every day and at my best — and I don’t have to be there to make them do it!

We all know the importance of having good policies and procedures in our shops. Things just go better when everyone knows what to do and how to do it correctly. All well-run businesses have systems and standards that every team member knows and follows consistently!

What's your morning routine at home? What about in your shop?

Many of us have personal “routines” we follow that bring order and happiness to our lives. We have all done things that result in chaos and unhappiness, and over time have chosen better ways. I love my personal morning routine of study, prayer, pondering, and planning. When I travel this routine is sometimes disrupted and I soon can become disoriented. The best thing about coming home for me is getting back into my safe place with both feet flat on the ground of routine.

Of course some routines continue to promote chaos and frustration. Only your desire and commitment to change this will produce good results. Your level of peace, safety, efficiency and prosperity will demonstrate progress in improving your routines. This is also true for your business. If you are not getting what you want, if your business is in chaos to any degree, it is by your choice that it is so!

Now if you are like I was for the first 20 years as a shop owner, you have introduced dozens of policies and procedures that could have brought some order to things, but fizzled out after a few weeks. WHY? What are the causes of this fatal flaw in your business?

Over the next few weeks I will blog on the twelve most important components of “How to Make Systems Stick” in your shop. Today, let me share with you what I have found to be a foundational process for making all policies, procedures and systems stick with individuals and organizations. It’s how we help our clients actually change permanently!

A certain level of consistent accountability must be established between a supervisor and a subordinate. With our clients it begins between us as their coaches and themselves. In your shop it must be between you and your team members (or in larger shops between you and your department heads and then between the department head and his or her team members).

We have developed a method of follow-through and follow-up called “The Ten Minute Meeting™.” This simple process is a reporting meeting on systems conformance and production performance on yesterday’s business. It is conducted by 10AM every workday and should never take more than ten minutes.

The Ten Minute Meeting™ is not a forum for complaining, blaming or excuses. It is simply a time for workers to return and report yesterday’s performance by identifying any variances in following established systems and hitting production targets, AND what they have already done to bring those two things up to reasonable standards.

If a team member is weak in their ability to find solutions to their own underperformance, the supervisor (leader) receiving the report coaches them toward the best solution for improvement. A simple but accurate measurement system must be in place. (We use an online system we created to help run our shop and dozens of client shops called WebTools™ so that daily performance and short term progress can be monitored.)

Within the first two weeks of following this daily process of return and report, most underperformance takes care of itself…but ONLY if you have good employees who have the ability and desire to improve. If not, adjustments to your employee training routines and accountability are in order.

My next blog will review this training and accountability process in detail and will discuss how to hold you team accountable in healthy, positive ways. Future blogs will address what to measure, training and incentive plans, and hiring and recruiting processes including how to know when it’s time to replace an employee.

Here are some key things to watch for and do with your bookkeeper:

Learn Bookkeeper/Accounting Speak

Just like technicians who say things that your customers do not understand, bookkeepers have their own language. You must learn enough of their language to understand what they are saying to you. When they get all technical with you, have them stop and teach you what they mean. If you do not know how to read your monthly Income Statement and Balance Sheet, AMi (Automotive Management Institute) has a couple of great courses that will teach you how to do this. It is critical to the survival of your business over the long haul, that you learn how to do these two basic things! Keep working at it until you know enough to communicate well.

Set Clear Job Expectations

You should have a Bookkeeping/Accounting Checklist with duties for your in-house (or external) bookkeeper and your tax accountant listing all daily, weekly, monthly, quarterly and annual duties. You can set this up yourself over time or you can use modify the one I use. Have the bookkeeper give you the checklist regularly as tasks are completed with the date done and by whom recorded. Now you can hold them accountable for performing the minimum expectations of the job. You should also set higher expectations of watching out for your cash and expenses. This will take a little training to teach what you expect, but it is well worth the investment.

Qualify Them Going In

You must test the bookkeeping skills of each prospect. If you are not capable of doing this yourself, hire your tax advisor or tax accountant to test the math and accounting knowledge of your finalists during the screening process. Check references and make sure they can perform and are reliable. Longevity in past employment is a good sign, but not if they owned their previous employer (read on to learn more about this one!).

Good Cash Controls

There must be separation (checks and balances) within your organization to control cash properly. Daily cash reconciliation is critical and must have at least two people in the loop. Do not trust your bookkeeper to do the deposit with no oversight AND at the same time manage your checkbook – DANGEROUS, DANGEROUS, DANGEROUS!!! And never have your bookkeeper as a signer on your bank accounts! You must talk with your outside accountant to set up proper controls and then never vary from them under any circumstances!

Bookkeepers Are Not Managers or Customer Service People

Keep them away from your other employees and customers! They should answer to you and have no authority to interact with employees or customers in any way other than necessary actions that you direct. The more invitations (and thus control) you give them to meddle in other areas of the business, the more they will own you! They already know more than anyone else in the business (probably including you), so why give them opportunity to use that knowledge to begin manipulating or playing games with other employees? Stop the insanity and get them out of everything else! It is dangerous!

Hire the Right Personality or Suffer

Should you hire someone who is strong or weak? That is the age-old question about bookkeepers. If they are too weak they can’t get everything done you need. If they are too strong they will tend to be an “empire builder” who will take control of more and more things. This will happen very naturally as they offer to do things for you that aren’t getting done outside of their area of responsibility. Since these types of people tend to perform at a high level it will be easy for you to give them more and more to do. You must resist this if you have one of these people, and instead keep pulling the reigns in hard from time to time. The best bet when hiring a new bookkeeper is to hire a personality somewhere in the middle – a little less aggressive than you might want, but with less tendencies toward controlling everything. If your current bookkeeper is one extreme or the other…it might be time for a change.

Don’t Pay Bookkeepers an Incentive

The bookkeeper is the only position in the shop that must not be paid an incentive. Remember, you do not want to give them any reason to “cook the books!” Pay them an hourly wage and then load them up with work and manage them with the Bookkeeping Checklist!

Pet Systems Are Dangerous

Everyone on the team must create “institutional memory.” That means nothing is hidden, confusing or inaccessible to others who need to know. As the owner, you must always maintain control of all knowledge, systems, passwords, accounts, customer lists, reports, metrics, documentation, etc. Allowing a bookkeeper to develop and control pet systems that are not transparent and accessible is giving them permission to dominate you or hurt you should they leave. They can also use this power to manipulate undeserved raises, benefits and/or favors. Have your outside accountant help the bookkeeper set up a good Chart of Accounts that you all agree on, and then hold your bookkeeper accountable to using it correctly and consistently.

Monthly, Quarterly and Annual Review by Outside Accountant

Your tax man must review the work of your bookkeeper regularly. They need to know they are being supported AND WATCHED! As your outside accountant finds areas of concern, have him communicate them to the bookkeeper until you can speak the language and lead them on to better conformance. Expect batter and better quantity, quality and understandability as time goes by.

Set the Example

Don’t demonstrate any level of dishonesty in any way. If the bookkeeper (or any other employee) sees you being dishonest with a customer, employee or vendor, you just gave them license to be dishonest or steal from you. Remember, in many cases your bookkeeper knows your financials and systems better than you do. They know where the holes are! If you give them reason enough, they can hide their own dishonesty from you for a significant amount of time – maybe long enough to really hurt you or even put you out of business!

These are just a few of many lessons learned from over 35 years as a shop owner. You don’t have to make all the mistakes I have made. I hope this will help you avoid all that pain and lost money I have experienced! If you are an auto repair shop owner, and would like to access this information at a higher level, please contact me. I enjoy helping my peers.

The Numbers Don’t Lie

Growing or shrinking profits and cash flow in your shop don’t lie. They are growing because you are doing enough of the things you can control right, or they are dropping like a rock because you aren’t. There should be no mystery in this. It’s science based on finite, predictable principles.

Formula for Success

I first became a certified master tech in 1974. That same year I bought my first shop. Prior to this in automotive school I discovered three of the most important things I have ever learned about repairing automobiles and about running a business. The principles are: 1) measurement; 2) comparison to specs; and 3) determining best corrective solution. Good techs know this process and instinctively use it in every repair they perform. When it comes to business the vast majority of owners do not understand or do not master this simple formula for success.

Real Life Examples

Many of us as techs learned to inspect a rod journal on a crankshaft and became aware that we must take several measurements at different points on the journal to understand its size, shape and condition. We immediately realized that this knowledge alone did not reveal all that was needed to determine serviceability or proper repair procedure. Comparing our measurements to the precise specs and tolerances was the only way to do this. Once the comparison was made the proper repair procedure could be selected and employed as indicated.

The same process holds true for diagnosing a bad fuel injector. After following proper procedure and you arrive at the point of testing the wave form of the injector, the pattern is observed. Then it is compared to the known good pattern. The comparative finding then determines the recommended repair or next step in the diagnostic process.

Applying This Process To Managing Your Shop

After running my shop for nearly 40 years and helping hundreds of other shop owners grow their business I am still in awe of the power of this simple process. I have been on a life-long quest to determine the most significant indicators, develop the easiest to operate measurement tools, find the most valid specifications and standards, and identify the best repair solutions. Here is an overview of my top recommendations on how to protect your shop and make it more profitable starting right now this month!

Comparing Apples to Apples

We all know that gross profit is important. It’s what we use to pay our overhead and ourselves. How do you calculate it? What categories should you measure? What percentage should it be to sustain a solid operating profit? How do you fix it if it’s off target?

You must determine how the benchmark or target you plan to use is calculated. For example, if you measure labor gross profit based on a “non-loaded cost” (not adding in other employee benefits) you’d better be sure the target you are trying to hit has been derived using that exact formula in all participating shops in the sample making up the average benchmark. Otherwise you are comparing apples to oranges. You must also use a sample of shops with similar sales mixes, markets and demographics. Comparing your small, general service shop numbers to a high-end European shop is pointless and could be dangerous.

Ease, Accuracy and Consistency of Reporting

The reports you use must be easy to read and analyze. We all have computer programs that produce reports. Which are most important to review regularly? What do they mean? How should you organize them to tell you what you really need to know?

Unless your data is displayed in a way that you can see the big picture and the trends, as well as easily discover a seemingly small bit of data that is a key indicator of a problem, pages of reports can lose their value very quickly. Comprehensive analytical summaries and graphing are the best ways to absorb and understand the data you want to review.

Inaccurate measurement or misunderstood data most times results in a misdiagnosis. And if the measurement process is too difficult to sustain, it’s just a waste of your time and money to even begin and then let it fizzle out.

“The Present” – Having Instantaneous Knowledge

If you don’t know something is wrong today, or what to do about it today, how can you fix it today? Use of “To Date” numbers, “Averages,” and “Projections” are vital to understanding what is wrong – TODAY. The Present: If you think about it, the only time you can physically do anything to fix your business is in this instant called NOW! You can analyze and learn from the past and you can plan for the future. But you can take action only in the present. If you don’t have accurate current data in the present how can you determine or take the best corrective action today? This is the single biggest cause of procrastination to change by shop owners – the lack of reliable, up-to-date information when it is needed most! If we aren’t sure what to do, we do nothing!

What Does It Really Mean?

We have all been confused and maybe overwhelmed at the amount of data we can pull from reporting systems. But, what does it all really mean? You must have a way to instantly see what it will cost you on a monthly basis (at any point during that month) if you allow any profit or production area of the business to slide. I have seen dozens of shops lose thousands of dollars a month from ignoring even the most basic benchmarks due to not understanding what it was really costing them in hard dollars. Looking at some low percentage or number is one thing, but feeling the heat of a stack of $100 bills on fire is another!

Taking and Sustaining The Right Corrective Action

Once you have the most significant accurate data to date and have then compared it to benchmarks personalized to your shop, you can begin to understand where you are burning money and take the best corrective action. The only way to sustain change and improvement is through your team. Knowing “how” to fix something and actually fixing it for good are two different things. I know certified master techs who passed the tests but can’t fix cars – so do you!

If all of your team members are not engaged and genuinely enthusiastic about improving their performance and the profitability of the shop, you must empower them and get buy-in from them to do just that! Empowerment includes:

• teaching the “what,” “why” and “how” of every expectation;
• committing them to those expectations;
• ongoing training including instant access to self-coaching and solution tools;
• daily reporting of performance;
• accountability to return and report their assignments including any variances;
• regular performance reviews, incentives for hitting the targets you want;
• personal coaching as needed;
• and when necessary disciplining or replacing unacceptable employees.

An empowered team will want to sustain change and improvement.

Which Category Are You In?

Where are you in your own growth process as the leader of your business?

1. Don’t know how to fix my business and couldn’t fix it if I did.
2. Know how to fix some things but can’t make them stick.
3. Know how but have only been able to make a few things stick.
4. Know how and get ‘er done everyday!

From my experience with hundreds of shops, less than 1% fall into category 4! What you don’t know and what you don’t make stick can put you out of business!

Most Important Decision

The next decision you make could be the most important one of your business career.  It could determine whether you succeed or go out of business! Do you have the information you need to make it? Consider the following:

1. Am I measuring the right indicators in my business using the right formulas?
2. Do the benchmarks (targets) I am trying to hit match up with my type of shop, my market and my demographics?
3. Does my reporting system give me current, accurate data and easy to understand analytics so I can make adjustments and measure the results? Does it map out trends and projections so my team and I can learn from the past and see into the future?
4. Do we have instantaneous access to solutions and self-coaching tools that provide a step by step roadmap so we know the “what,” “why” and “how” of each needed change?
5. Is my reporting and solution system built on principles that create empowerment, buy-in and accountability within my team so they make solutions and new processes stick?

There are many old ways of doing business that have become so cumbersome it’s impossible for them to work anymore. And recently I have seen some new theories introduced into the auto repair market that are just plain dangerous under most circumstances for most shops. How do you know the right way to go? Who should you follow?

Whomever you choose to access or guide you must have hands-on, current experience in working with shops in similar markets and demographics as your shop is in. They must have extensive experience in the full spectrum of shop management and not just in some specialization or one-faceted area of focus – because they simply will not understand how all the other areas of the business affect each other. And if they don’t have any of their own money in the game, if they don’t currently own a shop and successfully remote manage it you have to wonder if they understand today’s problems and if they are teaching things that are effective in today’s economy and business environment?

It’s up to you to make good decisions and to make them stick. No one can do that for you. And you must quickly and carefully measure the effectiveness of all changes. How will you know if you have done the right things? How will you know if you’ve stopped the bleeding before it’s too late? The numbers don’t lie!