Shop Operations Manual · David Striegel. It is illegal to copy or reproduce this manual in any way. Any unauthorized distribution will be prosecuted to the fullest extent of the

The information contained in this manual was compiled and authored by David Striegel. It is illegal to copy or reproduce this manual in any way. Any unauthorized distribution will be prosecuted to the fullest extent of the law.

Copyright © 2015

RightWay Automotive Solutions


Shop Operations Manual Planning For Profits And Success

The Doctor Is In!


Shop Operations Manual

2

Margin of Profit

“Margin is simply defined as the percent of gross profit obtained from the sale of a product and/or service.”

ross profit analysis is the most basic foundation of any business model, as it is the first step in determining how you will do business with your clients. If there is no sound basis for deriving how much

profit will be gained in the course of doing business, there is little hope in plotting a course for success. Consider the following business philosophy as you plan for your future:

In order to be successful, we have to sell our goods and services at a profit and satisfy our clients.

If we satisfy our clients, but fail to make a profit, our business will surely fail.

If we make a profit without satisfying our clients, we won’t have any more clients. The secret to achieving both lies in the level of service we deliver to our clients. We must find a way to consistently “Wow” them with so much perceived value, that they are willing to pay a price that allows us to make an acceptable profit.

This statement may seem very simple and basic, but is all too often ignored in many repair facilities. There is a fine line that exists in the customers mind where value and price intersect. They don’t know how much it will actually cost to perform a service until we tell them. The perception of value is something that we must deliver to them, and not assume it is understood. If a particular service costs x amount of dollars, and the customer feels this is too much money, we have failed to deliver enough value to justify the price. We can’t just lower the price to make the customer happy, we must educate them as to why it is necessary to charge this amount and how they will benefit from our services. This is assuming that we have priced our services properly in the first place.

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3

Pricing

Parts and Labor

ricing our services properly will require a basic understanding of what our costs of doing business are and what our desired net profit will be. We will address expenses in the next section, but in order to

understand how and why we need to price our services, we must first understand a basic principle of successful shop operations. Experience has shown that the correlation between profit and expenses can be summed up in this formula: Parts GP combined @ 50% + Labor GP @ 70% _________________ = Total GP @ 60%

- Expenses @ 40% GS _________________ = Net profit @ 20% This formula is the recipe for success. Understanding how to come up with each piece of this formula will be explained in the pages to come. If one line is not within the desired range, it will affect the bottom line negatively. Every time gross profit slips, or expenses go out of control, it will take away net profit. Net profit is the owners money, and it is our goal to maximize this line to at least 20%. Now that we know the formula, let’s look at what goes into each line and how it will impact the bottom line – NET PROFIT!

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4

Parts Pricing

Sales ratios and Margins

t is important to understand not only how to price your parts, but what ratio of sales within this parts mix is typical. The following parts grid is an example of a successful comparison of parts type sold and the

desired margins for each as they relate to total sales dollars. Every shop is different, but this basic comparison will give you a guide to follow as we start to look for ways to improve our operations.

Profit Template:

% GP % Sales

Parts 52-55% 36%

Antifreeze 50% <1%

Oil/Trans fluid 50% 6%

Tires 35% 3-5%

Batteries 37% <1%

Sublet- includes eng/tran 35% <1%

Labor 70%+ 47%

Supplies/Enviro 3-5% 3%

Desired Pool Margin 60%+

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5

Parts Pricing (cont)

You will notice that we have broken down some key sub-categories of parts into gross profit margin and sales dollar percent contribution. This is to give you an idea of how a typical shops’ parts mix may look. You may not currently be looking at all these groups individually, but it is an excellent way to diagnose where some problem areas may exist within your business. The important number to look at right now is total parts GP – if yours is lower than 50% combined, your net profit will suffer. Let’s begin by looking at each line and defining its contents and how it will relate to the whole.

Parts – This line includes all service and repair parts sold that don’t fit into the categories below it, and represents all vendors INCLUDING dealerships. If you are stuck on dealer list as a selling point, you need to understand that any part you buy, no matter where you bought it from, is just another part. We can get you over this problem with some coaching, just give us a call. A parts matrix should be in place that marks up different costs at different percentages. The emphasis here is to make more margin on the lower dollar parts, and less on the higher cost ones that may be more price sensitive. There is a range of parts sold that represents the most common price in everybody’s business, that can be found using your shop management software. This most common price is the key to maintaining good parts margins. Most “tweaking” of margins is done in this range because that is where your efforts will have the most impact on your bottom line.

Following is an example of a parts matrix used to achieve over 54% in one business – it may need to be adjusted a little to fit your sales mix, but the desired outcome should be between 52-55% GP on average.



6

$

COST

0

to

1.00

1.01

to

5.00

5.01

to

25.

25.01

to

75.

75.01

to

125.

125.01

to

175.

175.01

to

225.

225.01

+

% OF

TOTAL

SALES

2.34%

22.32%

16.78%

32.61%

11.75%

5.04%

2.95%

6.21%

MULTIPLIER 3.5 3 2.5 2.3 2 1.75 1.65 1.55

MARGIN 71.43 66.67 60 56.52 50 42.86 39.39 35.48

MARKUP 250 200 150 130 100 75 65 55

The aggregate profit margin for this matrix produced 56.45% in one years reporting period for the category of PARTS.

At roughly 36% of total sales, it is by far the biggest parts category profit contributor and should be given the most emphasis when looking for possible

improvement. Antifreeze – This category is one of the smaller sales contributors, but it

still will have an impact on your total profit picture. Aim for at least 50% GP here and it will help keep your profit mix in line. Especially if you are in an area that receives seasonal sales spikes from cold weather preparations.

Motor oil – All oil products, including transmission fluid that would

normally be stocked should be included here. Again, we are looking for at least a 50% margin since 6% of total sales is accounted for in this category. If you are currently getting more than 50% because of a good buying price, great – keep it up as high as you can.



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Tires – Here’s where the trouble begins, trying to get 35% or better for some shops can be difficult, or can it? I do it every month at my shop and have coached others to this point, so what is holding you back? Usually it is more of a mental barrier than anything else, but all shops have different problems, so let’s address some of them now. There is no question that if you raise your margins up to 35%, you will lose some tire sales based solely on price alone. If you are a tire store with a high percentage of sales in tires, you may not want to change too drastically. But for a general repair facility, this is a very real and obtainable goal. We want to be in the tire business for our regular clients, to be their one stop shop, but we don’t need to be a tire discounter. Your loyal clients will buy their tires from you for just a few dollars more than the tire store down the road, they don’t want to go anywhere else if you can deliver outstanding service and value. There is no need to try and compete with the big tire guys on price, beat them on service and loyalty – deliver much more value than the price and you will win most times. Set goals for gradual increases over several months and before you know it, you’ll be right where you need to be. Remember, if you lose margin in tires, you must make it up elsewhere to be profitable. It is not uncommon to achieve 3-5% of total sales in this category, so don’t give up too much. Batteries – This category is typically a lower sales contributor, but still needs to be effectively priced to remain profitable. We should be aiming for about 37-40% margin here to stay in the game. Don’t worry about what the parts stores charge, or that they sometimes provide free installation – your good clients want to buy from you. All you have to do is ask for the sale, most people don’t price shop batteries as much as we lead ourselves to believe. Again, provide the service with great value and you will get what you need. Sublet – The products that get lumped into this catch-all category can range from sublet labor like alignments, machine service, towing, windshield replacements, and some oddball parts with little or no real mark up capabilities. Parts like inspection stickers for some states that don’t allow mark up, and can also include very large items like engines and transmissions with little percent profit that can skew an important category like parts. The recommended margin for this category is about 35%, and since it usually represents less than 1% of total sales, we suggest you use this as the dumping ground for all that is consistently unprofitable so as not to throw off the more important categories that need constant care.



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Putting all these pieces together with the proper GP and sales ratios should yield about a 50% margin. If it is more, keep up the good work, but if it is less, then we have some work to do. A good place to start is to try and group your sales mix to match up as close as possible with our examples. These examples are not just a made up group of pie in the sky hopefuls. They are very real sales percentages taken from our own successful facilities, and confirmed through many other living working examples.



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Labor Pricing

Getting It Right

t is extremely important to make sure we are charging the correct labor rate, if we want to be profitable and survive. An example of the wrong way to price is what is commonly referred to as the Oreo method. Look

at what the shop on the right is charging, look at what the shop on the left is charging, and set yours right in the middle like the white fluff of an Oreo cookie. This can be a very dangerous method because it ignores what your true costs of doing business can be. Sure, you want to remain competitive in your market place, but you can do it in other ways that won’t have such a drastic affect on your bottom line. The other problem with doing it this way is, you don’t know how the other shops arrived at their labor rate. And, how do you know that rate is what they are actually charging, and for what types of service? Who cares, just don’t do it this way! The most effective way to arrive at a profitable labor rate for our shop is to use our cost of doing business as a guide. This method ensures that whatever hourly rate we charge for a given job, we can know that we are making at least 70% GP. No job should ever be sold without first knowing how much money we will gain from it. We won’t know how much money we are earning if we don’t fully understand our costs of doing business. This understanding of our labor costs does not have to be a complicated affair. In fact, it should be the opposite, or else we won’t use it every day.

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10

Labor Pricing (cont)

Labor Cost Analysis

The first step in setting our labor rates is to understand what our true cost of labor is. Let’s start with a study of what labor costs are and how we can control them. The simplest way to understand the true cost of labor is to keep it just that- simple. There are many business models out there that will have you performing very complex exercises involving many different levels of expenses. Some of these expenses include benefits like health care, vacation, holiday pay, uniforms… You get the picture. These exercises are much more difficult than is necessary to achieve an effective labor profit that will transfer to a good bottom line net. The problem with trying to address all these costs each time you are analyzing your labor GP is they can be variable, and depend on many different components that may be omitted or forgotten. A more consistent and simpler formula only looks at the actual per hour cost of paying that technician to be on the floor. No benefits or vacation pay to get in the way. We only need a clear picture of what we are actually paying the techs to perform that job. The rest of those associated costs will show up in our expense column of the balance sheet, and be accounted for in our 40% of GP dollars. The reason we want to keep this labor cost calculation very simple and refined is because many of the other costs described above can fluctuate from week to week, month to month. We want a consistent labor GP that we can use as a good baseline for detecting problems when they arise. If there are other variables, we may just dismiss some percentage fluctuations as nothing and miss a very costly trend until it has caused too much damage to our net. An example of damaging trends can come from SA’s giving away labor dollars to make up for poor estimating, or techs logging too much overtime. If not detected and corrected early, these can turn into very expensive habits that you the owner are paying for out of your net profit. Very often they start as a lazy convenience and, if not detected, can ruin months of good hard work on your part. Just one percent drop in labor GP can cost you several hundred dollars or more in a month, and since labor is the most profitable item we sell, it warrants close scrutiny every day.



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There are many ways to arrive at an effective labor rate that will give us over 70% GP on labor, but right now, we will look at the simplest model and then branch off from there. The basic idea here is to set a labor rate for the shop that will give us a pool, or combined 70% GP for all techs on the payroll. If we just add up all our techs hourly pay rate, and divide by the number of techs, that will get us close. The example below has three techs on payroll. Base hourly wages ÷ number of techs = Average cost of labor $25+$20+$15=$60 ÷ 3 = $20/hour So if our average cost per hour is $20, we need to figure what labor rate will yield a 70% return. Just divide the cost by the inverse of 70%, which is .3, and that will be the answer. $20 ÷ .3 = $66.66 To prove this math, just figure out how many profit dollars where derived from that labor rate and cost, divide the profit by the labor rate and that will be the % GP. $66.66 - $20 = $46.66 $46.66 ÷ $66.66 = 69.99 % GP Our goal is to be over 70% GP on labor, so I might take this example of $66.66 and bump it up to $72 /hour for starters. That would yield us 72% labor GP with this mix of technician. If this rate were implemented, it could be adjusted later on to accommodate some shortcomings. It is just a practical and easy starting point, but must be carefully monitored to reflect actual conditions in the shop.



12


The previous examples are an effective start, but ignore some very real daily obstacles that we will encounter. One problem that needs to be examined is in the average cost per hour calculation that we did. That exercise ignored the probability that one tech may be out-producing another on a consistent basis. If that $15 per hour tech does not produce as many hours as the other higher paid ones, our cost per hour will be much higher than calculated. Another problem that may cause you some loss is the type of pay plan you are currently using. The previous exercise assumed that for every hour you paid your tech, they billed an hour. This will only happen if you are paying a straight flat rate, or your techs are 100% efficient. If neither is the case, we have more work to do. You could just raise your labor rate enough to adjust for the lack of efficiency in the shop, asking your clients to pay for your mistakes. If we took a historical look at your existing techs performance by taking direct hourly payroll costs for multiple months, and divided them by the actual hours billed to the customer in that same period, we would achieve a rough average hourly tech cost. With this calculated cost, we can project what our new hourly rate should have been. This is a real world calculation that may surprise you if you don’t already watch labor profit very closely. A good number of shops would have to charge much more than what is feasible in their markets. Another way to fix the problem would be to drastically improve your shops efficiencies. If you are reading this, I would bet you are not currently achieving at least one hour billed for every labor hour paid. It is hard to get all your techs over 100% efficient, but it is possible and highly recommended, if you want to become profitable without having to charge out of sight labor rates. The ultimate labor platform utilizes a flat rate pay system where the tech only gets paid for the amount of hours they produce in a day. This is ideal because it guarantees the shop a fixed profit on every labor dollar spent, and also keeps the tech mindful of how they spend their time. There is no greater motivator for a tech to be highly efficient than not getting paid for standing around or wasting time on a job. However, not many shops are actually set up properly to accommodate this pay scale. There are a number of steps that must be taken to ensure your success in a flat rate system, before it is implemented. Failure to follow the necessary steps may result in some very unhappy techs, and a reduction in the quality of repairs performed. Both of these consequences may result in loss of techs and customers, that could take months or years to recover from.



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We will not go into the steps involved for a flat rate transition here, as they are very detailed and require close monitoring and supervision. There are many smaller steps that can be taken that will greatly improve your bottom line right away. Once we can see some positive results in GP and start getting a more consistent view of your operations, the more involved, fine tuning of the business can begin. The biggest gains are usually achieved from the easy, low hanging fruit, that comes from the better understanding of your operations short comings. We must first develop a baseline that is predictable. Once we can get your GP up and stable, we can recommend additional methods for achieving those final increments – the last few percentage points are usually the hardest, but very rewarding!



14

Shop Supplies/Environmental Fees

he last piece of the gross profit puzzle is the profit derived from shop supplies and/or environmental fees. This may be a philosophical discussion for some and even a legal question for others, but it

should be addressed either way. Shop supplies can simply be defined as those parts (shims, stirrers, filters, wheel weights, sanding discs, etc…), lubricants (brake lubes, anti-sieze, penetrant, grease, etc…), and materials (razor blades, lathe bits, towels, hand cleaner, brake cleaner, zip ties, etc…), that come in larger quantities than we cannot reasonably bill to the consumer, but are necessary for the completion of the job. Environmental fees are those costs that we must pay for the safe and ethical disposal of hazardous materials produced in the normal course of doing business as an automotive repair facility. Every shop is incurring these costs, and if you are not passing them on to the consumer, you are losing money on every job!

If you are in a state that restricts the charging of these fees like New York and California, then we need to find some ways around them. One possible way is to offer pre-packaged items for sale that get billed on every prescribed operation that would require them, like a brake job. We might use brake lubricant(s), cleaners, and anti-squeal products that we can provide as a packaged unit for individual sale to the consumer. As long as we have at least one of each type available for packaged sale, we can charge for that package on the repair order. We don’t necessarily need to use that same package size on every sale, we can buy in bulk and use it accordingly. We just need to make sure we have the package available for sale if someone would want to purchase it separately. You will need to check with your individual state for their restrictions on this policy. Another way is to simply increase our parts and/or labor charges to get us to the desired profit range.

The average cost of these supplies are usually about 1-3% of combined gross sales. This is a reasonable figure that we have seen in our own businesses, and has been verified in many others as well. Since they are technically a part that we have to purchase, we should be marking them up accordingly. This would give you approximately 3-5% of gross sales charged as fees to the consumer. Your costs may vary, but we recommend a minimum charge of 3%, and a more realistic charge of 5-6% on all parts and labor billed. There should be a cap put on this charge of around $27-$37 per invoice to keep it within a reasonable amount to the consumer. Most shop management software programs are already equipped to charge this fee as a separate line item.

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Shop Supplies/Environmental Fees (cont)

If you are not currently charging for shop supplies and/or environmental fees, and are reluctant to start, please call us with your questions. We can provide you with the necessary materials and reasons for doing so, to help you get over any obstacles in your path. Even if you had tried it before and received some negative feedback from your clients, we can help. If you are currently charging these fees, and are lower than our recommended range, consider increasing them today. You will be amazed that nobody will even notice, except you as the daily deposit keeps increasing. The biggest obstacle is usually ourselves, we stand in the way of our own success. Worrying over things that just aren’t worth our time, and then, after finally acting on it, find that nobody even cared. If you are charging more than our recommendation, keep up the good work- you need every profit dollar you can muster in the days ahead.



16

Expenses

Chart of Accounts and Ratios

very shop has their own way of accounting for expenses, with their own list of categories and subcategories. We are not here to try and make you conform to our way of charting your expense column, as

the really important issue here is total expenses, and how they relate to GP. If you have no idea how to account for your expenses, or desire a more structured method than currently employed, we will be happy to help with this. As you become more attuned to your business, and are looking for even more ways to strengthen the bottom line, these little details may be of some assistance. But our discussion now has more to do with how much money you are spending every month in your business, not where- at least not yet! There is only so much you can do with expenses that will increase your net profit, once you have trimmed any unnecessary “fat”, that is it. Fixed expenses like utilities, rent, insurance, etc… are just that, fixed. There is not a whole lot you can do about them, they are what they are. We don’t want it to sound like expenses don’t matter, because they are very important to control. Tools such as budgets and comparisons are valuable guides that help keep your business profits on track. And without them, these expenses have a tendency to creep up on us over time. But we won’t be spending too much time here breaking down individual expense categories like some other business models you may have been exposed to. That just takes up too much precious time and energy, that could be spent on more productive activities that need your attention right away. The most important focus on expenses is how they relate to your profit and determine what, if any, is left over for the owner. In looking at the formula for success that we showed earlier, expenses are optimally capped at 40% of gross sales. That means all of your expenses combined should not be more than 40% of the total gross sales of all parts and labor. Since most expenses are fixed, they are pretty similar from one business to the next. A shop with $60,000 in sales/month will have a very similar rent and utility bills as one doing just $40,000. This commonality is what makes it very hard for the really small shops to survive because in staying with the 40% of gross sales expense rule, that doesn’t leave many dollars for the owner. This is a perfect example of why it is more productive to focus on growing sales and profit than delving too deep into expenses.

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17

Expenses (cont)

The following chart is an example of a typical expense column for illustrative purposes. It is displayed in percentage form to show how much each expense category might contribute to total expenses in relation to sales and gross profit. It should only be viewed as a general guide, since all shops are a little different in size and sales. In addition, there is no hard and fast rule as to where each individual expense should be categorized, as long as it is consistent over time for proper annual comparisons.

Expenses % Sales % GP

ADVERTISING 1.87% 3.11%

SOFTWARE 0.52% 0.90%

BAY SUPPLIES 0.97% 1.69%

OFFICE SUPPLIES 0.25% 0.43%

TELEPHONE 0.28% 0.48%

CUSTOMER CLAIMS 0.11% 0.20%

LAUNDRY 0.37% 0.61%

DUES/SUBSCRIPTION/MEMBERSHIP 1.58% 2.75%

EMPLOYEE BENEFITS 4.69% 8.12%

EMPLOYEE TRAINING 1.74% 3.02%

INSURANCES 3.08% 6.16%

PROFFESSIONAL FEES 0.13% 0.22%

BLDG./EQPMT. - MAIN. & REP. 0.24% 0.42%

TRAVEL/ENTERTAINMENT - M&E 0.09% 0.16%

WAGES - MANAGEMENT 3.85% 5.13%

TAXES - PAYROLL 2.45% 4.26%

RENT/LEASE 4.88% 8.47%

CREDIT CARD FEES 1.19% 2.07%

SMALL TOOLS 0.02% 0.04%

UTILITIES 1.00% 1.60%

VEHICLE EXPENSE 0.32% 0.56%

WAGES - MAINTENANCE 2.19% 3.81%

WAGES - OFFICE 1.32% 2.30%

WAGES - SERVICE ADVISOR 8.17% 14.19%

Total 41.31% 71.22%



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Expenses (cont)

The important thing to remember is the total expenses needs to be about 40% of gross sales on an average over several months. It will fluctuate from month to month depending on time of bills paid, payroll overlap, and seasonal fluctuations. It is possible that the expenses for a shop could be cut to the bone and still be well over 40% due to a low sales condition. There may not be enough gross sales to support the costs incurred.



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Net Profit

What’s Left Over

hat’s left over is called Net Profit. That is typically referred to as Owners Compensation. You will notice in the expense template provided previously, that there was no mention of what the

owner was paid or compensated. If the owner is functioning as a manager within the organization, their wages would show up under management wages. The amount of these wages should reflect a reasonable salary that you would pay any manager to perform the duties you need to effectively manage and oversee the operation. It is important to show the costs involved of management as this is the best way to prove to a potential future buyer or a bank that this shop can function as a “Business”. A proper business does not require the owner to be a major contributor in the day to day operations. In other words, if the owner was absent the business should still function as needed and continue to produce a profit for the owner/investor. This format should be the ultimate goal of any successful business owner, to come and go as you see fit. Not to be tied down to a production position within the business. As an owner/investor, you should be able to realize a profit potential equal to at least 20% of the gross profit. This amount will reflect the “sweat equity” and personal investment put into owning or investing in any business venture. If your business is not producing over 10% Net Profit, you could do better with your investment by merely putting it into a long term vehicle such as an IRA instead. This is a simplified example, but it illustrates the importance of a satisfactory return on investment. No business investor in their right mind would put their money into a venture that is only returning 3-5%, so why would you?

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20

Staffing

How To Get It Right

etting the staffing equation right is critical to running an effective and profitable business. All too often we see unprofitable situations where the problem lies in the staffing model. Too many techs is

common as a good deal of shops struggle with efficiency problems in the bays and the front office. One of the biggest, if not THE biggest expense of any business is in payroll. That is to be expected, but without proper control it will quickly overwhelm any profit model. The downfall of most shops is when they get too busy, they hire another tech without knowing what it will do to their gross and net profits. All hiring should be done using a model or outline which clearly defines and accounts for the expenses incurred from that position. In addition, it should be understood how that new hire will impact net profit. The Staffing Template provided below gives a pretty good outline of a typical shops needs as they relate to production. It does not however encompass the needs of the back office. The back office needs are purely dependant on the owner/managers abilities and desires and the office systems in place. The typical shop should expect about $25K - $30K in sales from each technician. Only when you are starting to exceed $30K for all techs (not including helpers), should you consider hiring an additional tech. If your shop is staffed over what this model provides for in gross sales, there is probably an efficiency problem that needs to be diagnosed and corrected. These problems can range from office efficiency to tech efficiency or anywhere in between the two. Putting proper work flow procedures and systems in place will greatly improve efficiencies and therefore profits.

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Staffing Template

Monthly Sales $

Required Staff

SA Tech

Growth/Freetime

SA Tech

$20K 0 1 +Helper

$30K 0 1,helper +1

$40k 1 2

$50k 1 2,helper

$60k 1 2,helper +1 +1

$70k 2@12%GP 3 +helper

$80k 2 3,helper

$90K 2 3,helper +1

$100K 2 4



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Staffing (cont)

You will notice that there is a provision in the Staffing Template that provides for growth and owner’s free time. As your shop continues to grow, there will be times when it is necessary to add additional staff. This addition should be carefully considered though as it requires a considerable investment in labor costs. Once the investment has been made, there is usually another investment in growth that must be made. And that comes from increased marketing to help offset the new costs with more clients. Sometimes, depending on many factors such as shop size, desired profits, nearby populations, and local competition, to name a few; the costs involved may not be supported by the potential gains. This is a decision that should be made very carefully with all of these things considered before the step is taken. Outside help in the form of business coaching is strongly recommended to avoid possible oversight of the many variables. Fresh eyes and an outside perspective can sometimes spot the obstacles that you may miss being so close to the situation. Once a new staff member is added, it may take some time before your net profit will return to its previous levels. And in some cases, it may never pay off to add on. However, the addition of staff can offer the owner more free time away from the business, or simply allow the owner to take a more managerial role within the business. If the owner is required to be involved in the day to day operations, adding on can often be the one breakthrough point that enables the business to take off. Once you can be free to work on the business instead of in it, you can truly begin to manage proactively instead of merely reacting to problems as they occur. The ability to stand back and look at your business as a whole allows the owner to steer it in the desired direction. You start to see which parts of the business need more attention, and have the time to correct them. This is the point where systems become very important. Once a system is put in place, it should continue to function on its own with only minor oversight and correction. Leaving you to turn to and work on the next part of the business that needs attention. Think of your business in the perspective of a battle field. If you are the platoon sergeant actively involved in the constant direction of your troops, you only get to see and deal with what is coming at you this moment. Never being able to see what lies ahead. If however, you are the general standing back on a distant hill, you get to see the entire battlefield. You see the troops actively engaged with the battles of the day, and you get to see what is coming over the next ridge. With this perspective, you can plan for your next move and make much better and informed decisions that will take your business to the next level. This is the best way of controlling your business future, instead of putting out fires as they crop up – one after the other.



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Staffing (cont)

Another reason for adding additional staff is to allow for more owner free time away from the business. That is probably the reason you got started in business for yourself in the first place – right? As your business matures and becomes profitable, you should be able to step away from it for extended periods without any adverse effects.

This is where careful planning and consideration of the right people in the right seats really pays off. You should be able to work when you want to and on what you want to. Passing off the more mundane and tedious tasks to staff so that you can contemplate the whole picture.



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Work Flow Templates

Getting It To All Work Smoothly

taffing and profit models all come together when proper systems are put into place that allow for smooth workflow. In order for your business to operate within the parameters we have outlined, there

must be a clear and defined path that every person must be trained to follow. This path becomes a system when it functions automatically, no matter what obstacle is thrown in front of it. Every staff member must know exactly how they are to act and function every minute of every day. From the Service Advisor to the Technician to the Helper – each step must be predictable and repeatable, or chaos will rule the workplace and efficiency will suffer. Careful consideration should be given to the entire process to ensure consistent customer satisfaction. Think about the simple process of how a client and their vehicle is handled in every step of the transaction. Let’s follow one all the way through and look at where the most common mistakes are made, and how to avoid them. The Appointment

Client calls to schedule an appointment Is the phone answered professionally and consistently? Is all the needed information recorded in the work schedule? Has the SA repeated the requested work back to the client? Has the SA clearly determined a mutually agreeable drop off time?

SA calls client 1 or 2 days prior to confirm appointment and drop off time The Drop Off

Client shows up for appointment SA greets client promptly, even if with another client SA has completed request for work and merely reviews with client SA confirms contact numbers and times client needs to be available

SA distributes work order into tech rack for inspection All requests are clearly detailed requiring little or no communication to tech All supporting work sheets are included for tech to complete

S



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Work Flow Templates (cont)

The Work Order

Tech receives work order Test drives vehicle Performs standard Courtesy Inspection Performs work/inspection requested Completes all work sheets for clear written communication to SA Returns work order to tech rack and signals SA Takes next work order

SA receives work order Estimates work found Looks for any additional maintenance needed by mileage Sells job to client Returns work order to tech rack with revised work sheets and clear

definitions of work/parts sold Tech receives work order

Reviews SA notes and performs work sold Completes test drive Returns completed work sheets to tech rack and signals SA

SA finalizes work order and calls client with results The Pick Up

Client comes back to pick up car Is greeted promptly by SA Receives thorough explanation of work performed Is informed of future repairs/maintenance needed Is given next service appointment options and scheduled Is given next appointment reminder card Is given a Referral card with complete explanation Sincere Thank You and appreciation is expressed with handshake



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Work Flow Templates (cont)

It is important to follow a predetermined and prescribed path if a client is to experience consistently great customer service. In addition, the shop benefits by realizing a smooth transition from one step to another without having to think about each one – they just happen automatically. The ideal situation is to be able to go through an entire day without the SA and the Technician ever speaking to each other. In reality, this is not very practical but should be maximized as much as possible. Efficiency comes when there is little if any wasted time in between each of these steps. If every member of your staff could perform their duties completely without having to stop and find the other one to explain an item that should have been clearly defined in the first place – just imagine how smooth the day could be! This dream becomes a reality when good operating systems are put into place and are enforced until they become automatic. They will only be as important as you make them to your staff – and they are critical for maximum efficiency. Each one of these steps is completely outlined in our work flow systems. There are complete systems for the front office and the service bays that we can make available to you as part of our coaching program. It may take some time and modification to fit your shop environment exactly, but they will deliver outstanding results with higher profits being the biggest return.

Documents

Shop Operations Manual · David Striegel. It is illegal to copy or reproduce this manual in any way. Any unauthorized distribution will be prosecuted to the fullest extent of the