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Confessions of a Shop Owner is hosted by Mike Allen, a third-generation shop owner, perpetual pot-stirrer, and brutally honest opinion sharer. In this weekly podcast, Mike shares his missteps so you don’t have to repeat them. Along the way, he chats with other industry personalities who’ve messed up, too, pulling back the curtain on the realities of running an independent auto repair shop. But this podcast isn’t just about Mike’s journey. It’s about confronting the divisive and questionable tactics many shop owners and managers use. Mike is here to stir the pot and address the painful truths while offering a way forward. Together, we’ll tackle the frustrations, shake things up, and help create a better future for the auto repair industry.
Mike [00:00:00]:
You know what my loss leading methodology is, and we can talk about it because it's one of my favorite rage bait topics for the podcast, right, is free diag. Um, and I do free diag to drive car count, but this store doesn't need car count help. This store has all the cars. Can I charge for diag at one location and a mile and a half away not charge for diag at the other location?
Speaker B [00:00:22]:
100%.
Mike [00:00:23]:
You think?
Speaker B [00:00:24]:
I know McDonald's does it. McDonald's runs regional specials.
Mike Allen [00:00:31]:
This show features a bunch of doofuses talking about the automotive aftermarket. The stuff we, or our guests, may say do not necessarily reflect the beliefs of our peers, our sponsors, or any other associations we may have. There may be some spicy language in this show, so if you get your feelings hurt easily, you should probably just move along. So without further ado, here's your host, Mike Allen, with Confessions of a Shop Owner, presented by Techmetric. The best software in the history of ever.
Mike [00:01:02]:
I did just realize that I made a mistake. Um, I did not get anything to drink pre-recording, and it didn't even have to be booze. I just need something to, you know, wet the whistle so that I don't get all parched.
Speaker B [00:01:14]:
It doesn't even have to be booze.
Mike [00:01:17]:
I mean, it doesn't even— I mean, it typically is, but it doesn't have to be. We are recording during the workday right now, so It is not 5 o'clock.
Speaker B [00:01:27]:
What did Jimmy Buffett say?
Mike [00:01:30]:
Somewhere it is. In Paris right now, it is prime wine time. So, you know, there is a direct flight already to Paris.
Speaker B [00:01:39]:
I did not know that.
Mike [00:01:40]:
Yeah, absolutely. You can just hop over for dinner and be back in the morning, you know?
Speaker B [00:01:45]:
Yeah.
Mike [00:01:46]:
When are we doing that? I mean, I feel like that that's a little bit too romantic for you and I. Uh, you know, our, our relationship isn't about romance. It's just about—
Speaker B [00:01:55]:
Definitely not.
Mike [00:01:56]:
You know, it's just about getting things done.
Speaker B [00:01:58]:
So, I mean, by we, I, you know, I was more or less giving the royal we. When are you doing that with you and Amanda? When are y'all hopping on the plane and doing that? Not, not we as in me and you.
Mike [00:02:14]:
I didn't know that you spoke in the royal we, but, uh, now I know. Um, how you doing, man?
Speaker B [00:02:20]:
Doing great, man. Hope you are.
Mike [00:02:23]:
I am. I just had a conversation with my children about how, uh, I don't care that you've been home all summer and that you've been tasked with making sure the dogs get to go out on a regular basis. It's not okay just to leave the back door open all day when it's 95 degrees outside, um, because I got a $734 power bill.
Speaker B [00:02:44]:
Um, that's always fun. Wait till you pair that with a $1,000 water bill.
Mike [00:02:49]:
How do you get a $1,000 water bill?
Speaker B [00:02:51]:
I don't know that it's $1,000. That might be a slight hyperbole. But my wife got— we have deer that get in our yard at night. And she has nice flowers that she works really hard to keep up in the garden out front. And she got one of these solar-powered sprinkler systems that has a motion detector on it, that when the deer come, it sprays them with, you know, water and runs them off. Well, the problem is, gnats set it off. A slight breeze sets it off. A shadow from a cloud sets it off.
Speaker B [00:03:26]:
So when we were going through this wonderful drought, when everybody else's yard was dead, you know, I got a, I got a full-on Amazon jungle out there that's getting mowed twice a week, along with whatever the water bill is.
Mike [00:03:39]:
You know what, you just need to get the NVGs and the rifle out and just hang out on the back porch.
Speaker B [00:03:44]:
And I'm not allowed— our, our, our yard is an animal safe zone according to my wife, because I do, I do hunt. And she has told me that rabbits, deer— the only thing I'm allowed to kill is snakes and rats, which we don't really see very often, obviously.
Mike [00:04:02]:
You know, a deer is a forest rat.
Speaker B [00:04:04]:
I mean, That's a good point, Mike.
Mike [00:04:08]:
So we should, we should go out to dinner with our brides, and I'll convince her that you're allowed to kill Bambi in the front yard and watch, and the kids have to watch you clean it.
Speaker B [00:04:18]:
And now our older neighbor that lives beside us, she begged me to kill him because they've been eating all her hostas. And she says, you can kill him anytime you want to. But I figured, I say, you know, that's going to be a weird scenario where, you know, because they're They don't die instantly. Anybody that's ever hunted before, you know, it's kind of a— you're not— we're not shooting a rifle in a neighborhood. So we're probably bow hunting here. And when you shoot them with a bow and arrow, they run. And then it takes some time for them to expire. And I said, here, it's gonna happen.
Speaker B [00:04:52]:
It's gonna run across the street into a neighbor's yard that has 3 little kids that are under the age of 7 years old. And it's gonna die right on their front porch screaming and hollering. So we're probably taking that off the table. We're not going to traumatize the neighbors.
Mike [00:05:11]:
You get like a .300 Blackout and put a can on it, it'd be pretty quiet. It's about like a .22.
Speaker B [00:05:15]:
I'm not worried about the noise with the rifle. I'm worried about the, the neighbor's house.
Mike [00:05:22]:
Details. So anyway, how's business?
Speaker B [00:05:27]:
Business has been good. It's been a, uh, it's been an interesting year for us. We've had some, a lot of growing pains. Which is you know is good. You know, I'd say all of our months this year except for two or three have been either record months or would have been record months last year, which is great. But you know, there comes a little bit of pain that comes along with that and and trying to you know tidy up some of our core processes that don't really fit the volume that we're doing now, and then trying to figure out the best. puzzle pieces of the team to put together to be able to still provide the same level of customer experience that we're used to providing with the volume that we've pushed to here in the last 8 months.
Mike [00:06:16]:
I gotcha. It has been an interesting year for us. I know that we're going to talk about July at the Hillsboro Street store here in a little bit, but we've finally kind of Gotten some momentum digging our way out of the hole that was the last half of '25 and the first quarter of '26. And in the last 4 weeks, we've had 4 new hires and they've all been additions. Nobody's been a replacement of anyone. And so that's been good. So we're getting— starting to get back to the staffing levels company-wide that we want to be at. But it's kind of a seesaw, right? As you add people, you need to add car count.
Mike [00:06:57]:
As you add car count, you, you gotta add the marketing budget to make the phone ring and get the cars. And so, um, I've got a call tomorrow with, uh, Turnkey to talk to them about, uh, adjusting kind of our budget as a percentage of expected revenue to, to drive a little bit more phone traffic and car count at the big store, which is where we've been doing some of the additions. So just, it's a neat puzzle, you know, you got to go in and work on it every day. It's something different.
Speaker B [00:07:26]:
So yeah, and it's, you know, one of the things I tell my clients is, you know, and when I started in this, you know, I thought to myself, man, if I just get to a million, everything will be easy after that. And then you get there and, you know, you're like, man, if I just get— once I get to 2 million, everything will be easy after that. And then you're like, well, once I get to 3 million, it'll be a breeze. And at every stage, you know, at every stage of growth, you just unlock new problems that you didn't have before.
Mike Allen [00:07:53]:
Mm-hmm.
Speaker B [00:07:53]:
And so it's, it's a never-ending It's a never-ending cycle, and, um, which I mean, which is what keeps me, you know, keeps me going with it. Uh, if it, if it was easy, I'd probably just wrap it up and sell it and move on to something else because I just, I get bored too quickly to, you know. But that's what I love about our industry so much. It's, you know, anytime you're dealing with retail and, you know, the challenge that we currently have in the marketplace just with employment, and, uh, it's a, uh, it's a unique puzzle piece that we, you know, that we have to solve just to get to the next level. And then when you get there, not necessarily rebuilding, but you're reshuffling and, and trying to figure out the, you know, how to climb up to the next step. So it's been, uh, it's been a fun year. It's been a challenging year. But, um, you know, it's one of those that it kind of feels like it's been worse than what it was.
Speaker B [00:08:37]:
And every time we had to have a reset last week and we had a nice, uh, we had a steak lunch, you know, went and catered out some steaks and everything. And I was like, look, I've, I've done a bad job of coming in here and reminding you guys how, how much of ass we've kicked this year. Because, yeah, you know, we've sat down and talked about all the things that we could have done better for, you know, so much. But, um, you know, we kind of did a reset and took a look at each month as it was and, you know, celebrated some of the personal wins that we had inside of the company. So it was a, it's a good little exercise for us to do because sometimes I get too focused on, you know, where I want to be and not celebrating where we are and where we've come from.
Mike [00:09:14]:
Yeah, I, um, I think I'm guilty of that as well sometimes. Uh, I feel like Monday we had, like the store that we talk about on these episodes had a great week last week and blew the goal out of the water. And so we were celebrating that a little bit on Monday and in our morning team meeting. And then I immediately went into something that we didn't do great last week and that we should be working on more. And I'm like, am I being too focused on the shit that we fall short of and not celebrating the wins enough? So, striking that balance, I sometimes tend to hyperfocus on areas where we can improve rather than, you know, recognizing and supporting the areas where we succeeded.
Speaker B [00:10:05]:
Yeah. And it's definitely a challenge for me, you know, as a numbers guy. And I think the more of a numbers person you are, that's kind of the trap that you get into is, you know, we get hyperfocused on the numbers and the KPIs and Um, you know, what the spreadsheet says it should be, and, and we lose touch of the human aspect of it and making sure that we're being there to support everybody, you know, the way that we should as a leader. And, uh, I know that's definitely— that's 100% my shortcoming, and, uh, it's something that I try to, try to reset back on every now and again if I can.
Mike [00:10:39]:
Sure. Well, so what can I tell you about Car Fix?
Speaker B [00:10:44]:
Yeah, so kind of my agenda for today, um, I'd like to, you know, we're— hard to believe, but, you know, we're, we're closing in on the end of Q3, uh, which means we have Q4 popping up on us pretty quickly right around the corner here in September. Um, I know that summertime is usually your downtime because of, uh, just the dynamics of your customer base in your area there with it being a college town and the students being out of session there during the summer. And so I wanted to have a conversation about, you know, projecting out what that 4th quarter means, or needs to be and what that looks like. And then how do we put a marketing plan together for next year that eliminates some of the valley that we have during the summertime? So I just want to talk about, you know, what the area is, how do we, you know, how do we fill in some gaps? when those students leave. And we have a couple clients across the country that, you know, that live in vacation areas that deal with the same thing, whether that be in, you know, snow, you know, like ski reservation towns, or down in Florida where it's, you know, snowbirds coming in. So there's a lot of people out there that kind of deal with that same seasonality and their customer base moving in and out. And then the last thing is, is I know you've added new staff members. uh, to that store because we were kind of talking offline.
Speaker B [00:12:07]:
So I wanted to talk a little bit about, um, how we can set good expectations for that staff and then also make sure that we tie that back to some of the numbers, um, that we're, that we're looking to get. So, uh, we'll do a quick recap, if you don't mind, on kind of where we were last month, uh, with, uh, with the store.
Mike [00:12:30]:
Okay.
Speaker B [00:12:31]:
Uh, on both the month-end reporting and the P&L side of things. Okay.
Mike [00:12:35]:
Um, so we'll start with month-end reporting because that's what I've got pulled up real quick. Um, just over 400 hours in labor build-out, um, 404. Um, that equated into, um, $114,900 and change, so just shy of $115,000 in revenue. 217 cars at $530. And, you know, effective labor rate was $130. I know that's an area of an opportunity of improvement. Closing rate was 24%, which puts tech average quote or average written repair order, however you wanna phrase it, at like $2,200 and change. So closing rate was— Pretty low overall.
Mike [00:13:26]:
You know, there's certainly opportunity there for more. As we were talking about, you know, that of our stores, that store, no matter who I've had in there, has always had the lowest ARO. And that, I think, is partially a factor of we're dealing with college students, right? And some of them have mom and dad's credit card, but a lot of them don't.
Speaker B [00:13:44]:
Right.
Mike [00:13:45]:
So just the kind of the nature of the animal there. But At the same time, we have easier— more cars more easily attained there than I have at any other store. So especially as a ratio of car count to bay count. Uh, so that's, that's from the tech metric side and reporting. Let me pull up QuickBooks real quick.
Speaker B [00:14:09]:
So the 2 things that I'm most— 3 things that I'm most interested in with your Uh, month-end numbers there on the QuickBooks side, uh, what your total gross profit percentage was, uh, for last month, just what it said versus what, uh, TechMetric said. And then also what your operating expenses were.
Mike [00:14:33]:
Can do that. I know that, uh, gross profit in QuickBooks is a little bit higher than it was in TechMetric. And I think that's a factor of, um, how labor gross profit can never be 100% accurate in, uh, TechMetric because it doesn't account for, you know, minimum guarantees and, and tiered, uh, you know, hybrid pay structures.
Speaker B [00:14:59]:
Yep.
Mike [00:15:00]:
Um, so profit and loss. Last month, percentage of income gross profit was 57.8%, so $66,600 and change, whereas in TechMetric it was Uh, 55.9%. So it wasn't too far off. It was off 2%, you know, 1.9%.
Speaker B [00:15:39]:
Yep, I'm good with that.
Mike [00:15:43]:
Um, total fixed expenses were, uh, $47,009, leading to a net operating income of $19,639. It was 17 points net profit. And that was frankly the best month of the year so far.
Speaker B [00:16:02]:
Okay. And do we have any debt service that we're servicing on that business?
Mike Allen [00:16:08]:
Yes.
Mike [00:16:09]:
Let me go back to the balance sheet real quick. So the short answer is yes. What information, uh—
Speaker B [00:16:20]:
Uh, just a roundabout number there. Um, what I'd like to do here and kind of what I'm trying to do is get the numbers that I need to— for us to get a, um, a break-even to your net profit goal. Um, so we had a, we had a 16-17% net last month, which is, you know, which is strong. I'd like to try to plan out for a 20% or better.
Mike [00:16:40]:
So I've got a note that was, uh, Hunter equipment purchase for an aligner and a Road Force balancer and a tire machine. Um, and then, uh, my total debt service per month out of that store is about $5,000.
Speaker B [00:16:55]:
Okay, perfect.
Mike [00:16:56]:
Counting rent and whatnot.
Speaker B [00:16:58]:
Yeah, perfect. All right, all right, so I'm just going to run through these, uh, these numbers again with you. We've got year-to-date gross profit, or what last month was anyways, at 58%. Uh, average, uh, monthly operating expenses, we're going to plan out around that $47,000 number. Uh, monthly loan payments around $5,000. We're going to put a net profit goal somewhere around $25,000. That sounds good to you? Um, I've got you down as having 2.5 technicians. Uh, I know when we were talking offline you had an A-tech, strong A-tech, a strong B-tech, and then just a general service technician.
Speaker B [00:17:35]:
Usually with those general service technicians, we're seeing somewhere between 50 and 70% productivity. Is that kind of what you think?
Mike [00:17:42]:
No, he's like a 10 to 12 hour a week guy, but he's doing most—
Speaker B [00:17:45]:
yeah. Okay, that's fine. Yeah, so the other 2 obviously are making up for that to some extent.
Mike [00:17:50]:
Okay.
Speaker B [00:17:51]:
Yeah. All right, so hours, uh, worked per technician, I'm assuming they're on a 40-hour schedule?
Mike [00:17:57]:
40 to 45.
Speaker B [00:17:58]:
Okay, so 42.5.
Mike [00:18:02]:
That'll work.
Speaker B [00:18:06]:
And you guys are just open Monday through Friday, right?
Mike [00:18:09]:
Yes.
Speaker B [00:18:10]:
Okay.
Mike [00:18:12]:
Only evil shop owners are open on the weekend.
Speaker B [00:18:14]:
Well, you've crossed the line, Mike. Uh, looking at last, last month's numbers, we were averaging around a $530 ARO. Effective labor rate was $130. Um, if you'll just verify this for me, I'm assuming a parts-to-labor ratio somewhere around 52%.
Mike [00:18:39]:
Hold please. With tires, it's almost exactly 1 to 1. I had $55,000— I had $56,000 in labor. And was that $58,000, $59,000 between parts and tires and batteries?
Speaker B [00:19:00]:
Okay, so we'll call that— we'll call it 50/50 and be done with it. Alrighty. And closing ratio is at 24%. We're gonna have a conversation about that as well. Um, current monthly sales is at 115 from last month.
Mike [00:19:19]:
Mm-hmm.
Speaker B [00:19:20]:
So, um, what I would like to see is kind of breaking down, uh, with all of these numbers, we're able to get a break-even analysis with net profit added to the goal. So to get a break-even, I know we've talked about this before in some of our earlier episodes, But this is, this is good to rehash over. To get a breakeven, we need to know what our gross profit percentage is. We need to know what our monthly operating expenses are. We need to know what our debt service is on a monthly basis, and then what our net profit goal is. If we have all of those things, what we can do, we're going to add together our average monthly expenses for operating expenses, our loan payments, and our net profit. So when we add all of those together, we wind up with $77,000 is what we would need to generate in gross profit dollars to overcome our operating expenses, our debt service, and generate that $25,000 of net profit.
Mike [00:20:25]:
Okay.
Speaker B [00:20:27]:
Then we take that $77,000 and we're going to divide it by our current standard of gross profit percentage at 58%. And when we do that, we get a total of $133,200— $200,000, we'll call it $250,000 for monthly revenue.
Mike [00:20:49]:
Okay.
Speaker B [00:20:52]:
And that puts you at a $25,000 net on $133,000, puts you at 18.8%. We're just too close to 20. I'd like to go ahead and bump that up a little bit. Those are rookie numbers. So I'm probably going to try you at a $30,000 net, and that gets us to 21%.
Mike [00:21:15]:
Okay.
Speaker B [00:21:19]:
So if we do that, that leaves us with a GP requirement of $82,000. And a monthly requirement of 140.
Mike Allen [00:21:33]:
Okay.
Mike [00:21:35]:
So could I then say, well, here's what my labor inventory looks like, or do I—
Speaker B [00:21:42]:
So that's what we're going to do next. We're going to back into, is it even possible to get to those numbers with where we are currently at, uh, with our staffing levels? And if it's not, then we Then we can back down, obviously. So what Mike's asking there, essentially what you're asking is you have three technicians that only have a certain amount of available labor inventory for capacity, and we need to figure out what we can sell for their capacity to be able to to generate that. So from a build hour standpoint, we would need to to generate that. 20% net, we would need to bill out about 10 hours per day per technician. All right.
Mike [00:22:30]:
So, so my gross sales per hour last month were $286. So $140,000 divided by $286 is 489.5 hours a month, which is, uh, 114 hours per week, which is very doable with the team that I've got there.
Speaker B [00:22:52]:
Okay.
Mike [00:22:53]:
Um, that's not the direction you were going. That's not how your formula is written, but we're coming to the same conclusion.
Speaker B [00:22:59]:
That's fine. Yeah, we're coming to the same conclusion there. Um, you know, I take a look at it and say, you know, yeah, so our, our— what we would do to get our billed hours there is, um, You know, we're trying to factor in our our parts to labor ratio there is 50/50, right? So we're taking that ARO and saying that you know $250 of it is parts, $250 of it is labor, right? Because you got a you got just over a $500 ARO. So then with that, we're dividing out that five you know that $250 by our effective labor rate, which is 130. So we'll do that math really quick. If we did 530 divided by 2, and then did— that's 265. We're going to take our 265 and divide it by 130. That gives us— we're averaging 2 hours per RO.
Mike [00:23:55]:
Um, yep.
Speaker B [00:23:56]:
And so if we know that we're averaging 2 hours per RO, then we can figure out from there how many, um, How many build hours it's going to take?
Mike [00:24:07]:
How many cars we need?
Speaker B [00:24:08]:
How many cars we need? And and then how many how many total inventory hours it's going to take to be able to generate those cars. So what I'm looking at here is we're looking at about 127 build hours per month to be able to hit that, which is about 120 20% productivity. But kind of when we were talking off camera.
Mike [00:24:32]:
I say that again.
Speaker B [00:24:33]:
I'm looking at about, I'm looking at about 120, 127 build hours per month. I'm sorry, per week, per week.
Mike Allen [00:24:45]:
Okay.
Mike [00:24:45]:
All right. All right. There we go.
Speaker B [00:24:46]:
Sorry, per week, 127 build hours per week, about 545 per month.
Mike [00:24:56]:
Okay, I know how you came to that. I came to 490 per month by dividing the target sales by my average sales per hour. You came to it by parts-to-labor ratio. So if our numbers are that far off, then that means that my parts-to-labor ratio, I reported it inaccurately to you.
Mike Allen [00:25:19]:
So—
Speaker B [00:25:19]:
It's possible.
Mike Allen [00:25:20]:
Yeah.
Mike [00:25:21]:
Yeah. Okay. But 500 hours a month is gonna get us in a good, in a good healthy spot.
Speaker B [00:25:25]:
Yeah, so we'll change that really quick. Let's just make it 55%. See, so that brings us down to 139 build hours per week. Hold on, let's do— That's going to bring us down to— yeah, so we're right at about 120 build hours per week. With about $500, right at about $520 per month. Um, if I put us at a 48%, because you're saying— what you're saying is you're probably slightly heavier on the parts side once you add in tires and everything else.
Mike [00:26:05]:
Batteries. Yeah, yeah, I think so. That's got to be where the— it's the only— we went about the math in 2 different ways, and that's the only thing that could diverge to cause that difference. So that makes sense.
Speaker B [00:26:15]:
I agree. All right, so we're gonna put you at a 45, you know, 45/55 ratio parts to labor, uh, with a heavier lean to the parts side. Um, and that's gonna put you at about 491 hours per month with about 114 hours per week. Um, which that's very doable 'cause that's putting you at 8.9 hours per technician per day or 107% productivity.
Mike [00:26:41]:
Yeah.
Speaker B [00:26:42]:
Um, which I think is doable. Absolutely doable with these guys.
Mike [00:26:45]:
With these guys, 100%.
Speaker B [00:26:46]:
Yeah.
Mike [00:26:47]:
Um, so what I'm hearing you say is, uh, I got no excuse for not putting $25,000 to $30,000 in the bank every month with this crew.
Speaker B [00:27:00]:
I feel very confident. We talked about this last year. Um, you know, I love the size store that you have. I think it, it's set up to keep overhead low. I love the location that you have because it drives car count without you having to spend a lot on, uh, on advertising for it. And so I'm a, I'm a big fan of this location for you on paper, and it should be a, it should be an easy-to-manage money printing machine. Um, and I don't think that you've done anything wrong with it. I think you've had some turnover in the greater, or, you know, greater side of the organization.
Speaker B [00:27:34]:
You've tried to move pieces around to To make up for that. And this is the smallest location that you have, and therefore it, it appears as if it's the least important, you know, sometimes because the other ones have so much more capacity. And sometimes—
Mike [00:27:52]:
I can kind of ignore it. I can kind of ignore it and not pay a lot of attention to it and not give it a lot of TLC, and it still does— it still makes a little bit of money, you know. And if I just paid a little bit of attention, I feel like it would do really well.
Speaker B [00:28:05]:
Yeah, so I mean, it's a 30% store for you once you get it dialed in. I feel very strongly about that. Um, so I know we wanted to talk about— so again, let's, let's go through and talk about some of the other KPIs just to, um, just to put a plan together for that. So your breakeven sales Uh, per, per day we need, uh, $4,100 in break-even sales, uh, $21,000 for the, uh, for the week, and we're looking at $90,000 in break-even sales, um, for the month. For the month.
Mike [00:28:46]:
Yep.
Speaker B [00:28:48]:
All right, again, I think all of those are very doable. Yeah, um, for sure. So the only other one that I'd like to highlight with you is GP per build hour, making sure that the team understands what the target is there. So, and I know you're— I know you understand the concept of GP per hour, we've talked about it before, but just to make sure if somebody— this is the first time they're listening to it and haven't heard it— gross profit dollars per build hour is going to be total gross profit required divided by the estimated number of build hours that we have. And that's going to give us what our target for GP per billed hour should be. So based off the math that we've done here, we're looking at $167 of GP per billed hour as the target. Another fun thing of math to do would be to take our operating cost per billable hour, which we can do with our— we can add in our $47,000. So we have $52,000 between our debt service and our operating expenses.
Speaker B [00:29:56]:
And we can divide that out by our—
Mike [00:30:00]:
Labor inventory.
Speaker B [00:30:01]:
Our labor inventory, which we're saying we're looking at about 490. So that's $106 of operating expenses per billable hour. So that means anything below one, you know, anything below $107, you've you've officially you effectively lost money on the job. And so great tool for service advisors to use, great tool for for business owners to use and managers to use just to make sure that we're positioning ourselves to be profitable. So when we add in that net profit target and the GP that's going to be required to hit that net. That's where we get that, that extra $60 from, uh, to get to the $167. So essentially you're hoping to make $60 per billable hour off of everything, parts, labor, the whole deal, right?
Mike [00:30:55]:
Yeah.
Speaker B [00:30:56]:
Um, which sounds a hell of a lot, a hell of a lot less sexy when we break it down like that, right?
Mike [00:31:02]:
But I mean, that's the reality, you know?
Speaker B [00:31:03]:
It is.
Mike [00:31:04]:
And so, um, I know that it's killing you not to beat me up on my effective labor rate, but, uh, you know, also kind of what's digging into that. But it would be a lot easier if I had the exact same car count and everything, uh, without some of the loss leaders that I do, for sure.
Speaker B [00:31:23]:
So my only concern with it is I don't like seeing that and a 23% closing ratio.
Mike [00:31:29]:
That's right.
Speaker B [00:31:30]:
Yeah, right. Because I mean, the whole reason that we're doing that is to help out the closing ratio, right? Because we're—
Mike [00:31:36]:
well, we're doing that. To get car— yeah, we're doing that to help out car count. Uh, but I think it's gonna naturally also drive down close ratio to a degree because it's gonna pull in some cars that are just shit piles that we total, you know, that we end up giving them an $8,000 estimate and, and, and they don't fix anything, right? Um, whereas, you know, I recorded yesterday with a guy whose episode won't probably be released until October, but Um, he's a mobile guy and his deal is the van doesn't show up until they've already put a deposit down for $250. That's his, that's his base diag fee and it's $250 to show up and they've paid it before he shows up. And so we think of, uh, mobile guys as dealing with a lot of bottom feeders, but he weeds out all the bottom feeders before he ever puts the key in the ignition to his van, right? Um, or a lot of them. So, um, I think I've driven down my effective labor rate to drive up my car count, uh, but it also has driven down my close ratio some. Does that, does that track, or is that just me making excuses for mediocrity?
Speaker B [00:32:48]:
It shouldn't be that low. Um, and, and I, I understand what— so the answer is yes, that can happen. Um, again, and we've talked about this in the past, I think if that is happening, there needs to be, there needs to be a real conversation at the front counter about what is our avatar vehicle. And, you know, so there's nothing wrong with, there's nothing wrong with running ideal customer promotionals, right? In other words, your free your free loss leaders don't have to be for everybody, right? You, you get to pick and choose your criteria to be able to, to partake in this free loss leader, right?
Mike [00:33:30]:
Mm-hmm.
Speaker B [00:33:31]:
Um, so if you identify a segment that's just not it, you know, when you're— whether it's car or customer, um, you know, you can start putting parameters on it. Um, so I'm, I'm very aggressive with loss leaders as well, uh, but we put those loss leaders around a parameter of what, what we're trying to drive into the store. And so I'm not going to do a big loss leader on a car that I know— we don't do any Euro work. I just gave up on it. We, you know, I might— we might put a set of brakes or a set of tires on it for you, but I'm not touching anything else. It's just not happening.
Mike [00:34:03]:
Yeah.
Speaker B [00:34:04]:
Um, and so why would I do a loss leader for a customer that has zero potential opportunity for me as a business? So we just put in our— all of our promotionals that These cars were excluded from this offer. So something that you might want to look at doing, and again we talked about doing an audit on we called them push cars where you know we're seeing those diag come in. We did a you know we did the free hour worth of diag for them. We wrote up this exorbitant estimate which killed the cars engine transmission drivetrain related in some way shape or form. Along with everything else we find on the multipoint inspection, and they said no, and we pushed it out, and they towed it away. Right? So if you, I think right now you feel like that's the problem, but I would put you know I would put the work into finding out if that is the problem or not, and if it is again just some some simple things in there as far as who we're presenting these offers to. might change that. And what you're gonna find is, is that it, it helps raise your effective labor rate.
Speaker B [00:35:13]:
It helps reduce some of the time sucks that you have, so it'll increase your productivity. Because those push cars, there's a lot of productivity loss across the front counter and in the shop for a car that comes in and gets a testing service only or an oil change only and nothing else, right?
Mike [00:35:31]:
Yeah, for sure. And I'm just looking at, you know, this month, $0 cars. And we're, I don't know, we're 110 cars into the month right now. I've had 23 tickets bill out at zero.
Speaker B [00:35:54]:
That's a lot.
Mike [00:35:55]:
Yeah.
Speaker B [00:35:59]:
And so, yeah, I mean, I would want to do an audit of those 23 and figure out, I mean, what kind of cars are, are they, you know what I mean? Are we bringing in 1995 Nissan Maximas, you know, and it's just, they're, they're already on their last leg when, you know, last leg when they get to us, you know, we're not hospice for cars, you know, we can't. Yeah.
Mike [00:36:18]:
Do you have an age limit on cars in your shop?
Speaker B [00:36:20]:
So we do. And, you know, again, we talk about it in the scientific definitions Of, you know, there's rules and laws, and law says that we will never, ever, ever, ever, ever break this rule. And a, a rule is a rule of thumb. We don't like to break it if it's at all possible, right?
Mike [00:36:40]:
Yeah.
Speaker B [00:36:40]:
So we have a 20-year rule on cars. Um, will I work on something older than a 2006? 100%. But it's going to be for the right customer. Correct.
Mike [00:36:50]:
A known buying customer or a car that you've been working on exclusively since before it was 20 years old.
Mike Allen [00:36:55]:
Yeah.
Mike [00:36:56]:
Yep.
Speaker B [00:36:56]:
We have a client that's got a 1998 Honda Passport. It was his daughter's car in high school. He's emotionally attached to the vehicle. We begged him not to fix anything on it for the last 5 years, and he continues to just, you know, play trash can basketball with $100 bills on this '98 Passport. If he was a first-time customer walking in the door, we wouldn't touch it, right? But, you know, we have a known good relationship with him. We've had this conversation several times. He understands exactly what the situation is. We begged him not to, 'cause we can't even find good parts for it anymore, right? It's just a—
Mike [00:37:33]:
You wanna hear a mistake that I made today?
Speaker B [00:37:36]:
Tell me. I love hearing other people's mistakes, Mike.
Mike [00:37:38]:
Make sure you go on the podcast. I got a customer who, so he's a first-time customer to us, but I've known him for a decade or more because I do business with his small business regularly. You know, I've done— he owns an events facility, and I've hosted events there for the company. I've hosted events there for the Chamber of Commerce. You know, I've spent a lot of money with his organization over the years. Well, he's got a 15-year-old G63 AMG wagon that he brought in, and he's had a small equipment mechanic that works for him working on it. And it's, it's in a bad way, and it needs $5,000 pretty much to be able to roll safely. Uh, and I haven't had anything to do with it.
Mike [00:38:29]:
I've known that it was here, uh, and he hasn't talked to me and I haven't talked to him. Well, he called me today to ask about working something out in trade, uh, so that, that we can do that because it was a lot more than he was intending to spend on the vehicle. And I was, I was like, I mean, are you just gonna get rid of it or what's the plan? And, and here's the thing is I know he's gonna spend $4,500 and expect it to be a brand new $150,000 G-Wagon. Uh, and it's not, I mean, it's got all the other problems that come with a 15-year-old G63, right?
Mike Allen [00:39:08]:
Yeah.
Mike [00:39:08]:
Uh, and, and, uh, It's— I should— I shouldn't be fixing it for him, but I am. So, but it's— hey, it's under 20 years old. So I guess—
Speaker B [00:39:27]:
Well, you're a nice guy, Mike, and very few good deeds go unpunished.
Mike [00:39:33]:
Yeah. So when next we record, we'll talk about how the AMG went sideways. Um, but I did agree to work out a deal in trade for him for at least a portion of it. So $3,000 of it is being worked out in trade. So not only did I make a poor choice, now all my service advisors are mad because it's, uh, cutting a lot of gross profit out of the, uh, out of the week.
Mike Allen [00:39:57]:
So I'm, uh, I'm very sure.
Mike [00:40:03]:
It's gonna be a mistake.
Speaker B [00:40:07]:
Alrighty, so sorry for the distraction. No, you're fine. Um, so let's talk about capacity a little bit. Um, we talked about putting our goals together for, you know, for next quarter. Uh, so kind of we've settled on somewhere around that $140,000 a month, uh, trying to get us, get us over that 20% net profit. Um, if we take a look at 3— you got 3 bays there, right?
Mike [00:40:31]:
Yes.
Speaker B [00:40:31]:
All right, we have 2.5 total technicians, or 2, 2 really quality technicians, and then with a GS, uh, we're working—
Mike [00:40:38]:
3.5 because I have one left outside.
Speaker B [00:40:40]:
Okay. All right. And then they're working on average somewhere around 43 hours a week.
Mike [00:40:49]:
Yeah.
Speaker B [00:40:50]:
Um, we got 5, 5 workdays. Uh, what is your posted door rate there?
Mike [00:41:00]:
216 and change.
Speaker B [00:41:05]:
We got to work on that erosion. I know you know that.
Mike [00:41:09]:
I didn't want to tell you because I knew what your reaction was going to be.
Speaker B [00:41:12]:
That hurt my heart a little bit, Mike.
Mike [00:41:17]:
All right.
Speaker B [00:41:18]:
So, but I mean, here's the cool thing. If we take a look at— and this is assuming that we're 100% productive. That we're getting 100% of our door rate, which obviously we know that we're not. But this looks at what our utilization is in the capacity of the space that we have. And so if we were able to operate, we have 3.5 bays. If we were able to operate with 3.5 lifts with 3.5 technicians, so if we added one more technician and our GS was floating right now. So we were maximizing 100% of what we had. We're going to keep that same 45 to 55 parts-to-labor ratio.
Speaker B [00:42:03]:
Um, that puts our annual sales capacity— again, not saying this is your goal, but this puts you at an annual sales capacity of $3.7 million.
Mike [00:42:14]:
Yeah, capacity calculators are just mental masturbation in my mind because they are anybody Who's that operating at full facility capacity?
Speaker B [00:42:25]:
I think you do. I think you do. There's not many. And I don't think it's not the importance of this to set that 3.7 as the goal. It's the importance of this exercise to say there's still meat on the bone. Oh, yeah, for sure. Because there's, you know, especially at a small store like yours, we get wrapped up into you know, limiting thoughts of, well, this is all this store will ever be able to do, right? Yeah, I know. Do I think you're going to capture $216 an hour of your door rate as your effective labor rate? Probably not, right? It's probably not going to happen.
Speaker B [00:43:02]:
Um, well, you want to—
Mike [00:43:04]:
Let me back up and punt and ask you this. You know what my loss-leading methodology is, and we can talk about it because it's one of my favorite rage bait topics for the podcast, right, is free diag. Um, and I do free diag to drive car count, but this store Doesn't need car count help. This store has all the cars. Can I charge for Diag at one location and a mile and a half away not charge for Diag at the other location?
Speaker B [00:43:29]:
100%.
Mike [00:43:31]:
You think?
Speaker B [00:43:32]:
I know McDonald's does it. McDonald's runs regional specials.
Mike [00:43:38]:
It's a really small region.
Speaker B [00:43:40]:
Do what now?
Mike [00:43:42]:
I said that's a really small region.
Speaker B [00:43:44]:
Okay, so in Roxboro, which is a really small town, there's 3 McDonald's. They only run the corporate specials at the main brick-and-mortar store. The other ones are inside other locations.
Mike Allen [00:43:57]:
Okay.
Speaker B [00:43:58]:
All right, so there's, there's one inside of a gas station. How that happened, I have no idea.
Mike [00:44:02]:
One in a Walmart, I'm sure.
Speaker B [00:44:04]:
One in a Walmart. Okay.
Mike [00:44:05]:
It's Roxboro, man. Of course there is.
Speaker B [00:44:08]:
So those other 2 do not run the corporate specials. And they're all inside of the same town within 3 miles of each other.
Mike [00:44:17]:
I got to question your dietary choices that you know the pricing variances between the different menu boards at different McDonald's.
Speaker B [00:44:23]:
It's not my dietary choices because I don't eat fast food. I've just had this conversation before.
Mike [00:44:33]:
You drove around Roxboro one day just checking the McDonald's menu board so you could make a point. I love it.
Speaker B [00:44:42]:
I would be interested.
Mike [00:44:43]:
Maybe that's an experiment worth running is, man, but I've spent 2 and a half years driving into the skulls of everyone in the organization. This is how we answer the phone and this is how. So it's gonna, it'll be heartbreaking if it works great. And if it doesn't work, then pulling it back will be a Hot mess.
Speaker B [00:45:06]:
Well, and I think there's a middle ground there. Um, and I, again, I think the middle ground is let's find the ones that it works for and offer it to them and not offer it to the ones that it does not work for. Right? Um, I mean, how many industries qualify customers with a credit score? And I'm not saying that that's what you're going to do.
Mike Allen [00:45:26]:
Yeah.
Speaker B [00:45:27]:
I'm just saying I can't even go— I can't even go apply for a loan for anything without doing my credit score first. And without— now, if I have an 850 credit score, my interest rate's better, right? If I've got a 420 credit score, I'm not even getting a loan. It doesn't matter what the interest rate is, I can't get one. So every single— I mean, almost all industries are going to operate off of some sort of customer qualification. And the higher qualified the customer is for what we're trying to sell, then the more things I'm willing to give them Because I know I'm going to get it back. Right.
Mike [00:46:01]:
Yeah.
Speaker B [00:46:02]:
And so I think, I think there's an opportunity here to do some of that. I also think there's an opportunity to split the gap there and say, hey, I'm not going to do full-on first 1 hour of testing for free, but I can do a free consultation.
Mike [00:46:18]:
10-minute no wrench.
Speaker B [00:46:19]:
Yeah, you know, something along those lines, you know, hey, you'd be surprised how many times You know, we pop the hood and there is a blatant failure that we can see right there with the flashlight that doesn't take any type of inspection or testing or equipment or anything like that. So, I mean, I don't think there's anything wrong with that. That still gives you some component of free. And then I also don't know that— I know that diag charges are a barrier in our industry, and I get that. But I don't think they're a barrier in every market. You know, like I found that in my market that they don't necessarily care too much about the diag charge. You know, they're willing to get that. Now the repair, the repair size is a little bit different.
Speaker B [00:47:06]:
You know, the repair order averages, you know, but the commodity items are things that they, they're very price sensitive on.
Mike [00:47:15]:
Mm-hmm.
Speaker B [00:47:16]:
You know, they know what an oil change costs, they know what a brake flush costs, they know what brake pads and rotors cost, they know what an alignment costs. You know, those things that they see plastered over every single—
Mike [00:47:26]:
Um, wait, is this where we talk about commodity flushes again?
Speaker B [00:47:30]:
We're not going to do that again because you're gonna, you're gonna misquote me and rage bait me all over again.
Mike [00:47:36]:
I'm gonna cut— Braxton's gonna cut a clip totally out of context without the full conversation.
Speaker B [00:47:43]:
Yeah, and I'm gonna, I'm gonna be the scourge of the industry that's, uh, It's sucking out fluid and putting in water.
Mike [00:47:53]:
You are the problem with this industry, Matt. You are the problem.
Speaker B [00:47:56]:
But I mean, I, you know, I just, I feel like I don't think you have to go, you know, my wife tells me I don't have a dimmer switch. And I think there's some of that with you. You know, there is some, sometimes there is some middle ground. And I think you're in a position where if you could find that middle ground, and we could get that effective labor rate up to $155, there's a massive Increase.
Mike [00:48:16]:
Well, everything else is way easier if your effective labor rate and your gross profit per hour goes up by $30, you know?
Speaker B [00:48:23]:
Yeah.
Mike [00:48:24]:
Um, so I mean, there will be fewer cars, the closing rate will go up, the ARO will go up, and the car count will go down.
Speaker B [00:48:34]:
But let's take a look at— let's take a look at what that looks like. So at 130 cars, I mean, $130 an hour with your effective labor rate, if we kept everything else the same, that's maxing out with another technician added to your team.
Mike [00:48:49]:
Mm-hmm.
Speaker B [00:48:50]:
Then we're gonna be, if I can get my screen to cooperate with me, we're gonna be capping out at about So we said $3.7 million if we were getting our full effective labor rate. $2.2 million is where you're capping out now at your $130 effective labor rate.
Mike [00:49:17]:
Mm-hmm.
Speaker B [00:49:18]:
And I know that that's adding a whole nother technician that's 100% productive to the deal, but let's just see what happens if we, uh, if we went to $155 on our effective labor rate. Right, which is, I think, is very doable. So now if we go there, now our capacity jumps up to 2.7 million.
Mike [00:49:44]:
It's half a million dollars.
Speaker B [00:49:45]:
I mean, it's a half million dollars, you know, just by fixing that effective labor rate. So I, I think the math supports— I don't think you're going to lose enough cars, especially enough cars that aren't going to turn into push cars anyways. I think the cars that you're going to lose in in this are going to be cars that were going to get the estimate and tuck their tail and run already.
Mike [00:50:13]:
So what is the what is the entry level gate to weed out some of the time-wasting cars, uh, but not run off some of the ones that we want?
Speaker B [00:50:31]:
I mean, I think— I mean, are you asking me what the price for Diag should be to, to split the middle? Is that what you're asking?
Mike [00:50:39]:
In 2024, when we stopped, uh, we stopped, uh, January 1st of '24. So in 2023, we were 196.
Speaker B [00:50:51]:
Yeah.
Mike [00:50:51]:
To look at the car. Um, I know it wasn't look, right? But to initial diagnosis and testing was $196.
Mike Allen [00:50:59]:
Sure. Yeah.
Mike [00:51:01]:
Um, I don't know what the market is right now for aftermarket, uh, drivability concern, initial testing, you know, standard stuff, not the crazy stuff.
Speaker B [00:51:11]:
Obviously it's gonna vary widely from market to market. Um, you know, I would say your posted door rate's probably on, on par with what that number, uh, probably should be if we were looking to profit, you know, profitize our diagnostic services. Um, I, I guess what I'm saying is it's still a loss leader if you do it for less, right? It doesn't necessarily have to be free.
Mike [00:51:36]:
You just don't lose as much.
Speaker B [00:51:37]:
Yeah, you just don't lose as much, you know.
Mike [00:51:40]:
Just don't lose all of it.
Speaker B [00:51:42]:
And, you know, so I mean, I, I think you You know, you modulate that a little bit. I mean, I think anything under $100 is still a ginormous value to the customer, um, you know, for, for what you're providing there. And again, maybe you sit down and you say we're still going to do it at no charge for these types of customers with these types of cars because there's a lot— we, we have proven value in, in those avatars, right? And again, our oil change plan works exactly that way. You know, I'm not, I just, I'm not gonna do a devalued oil change service on a diesel when I don't do any work on diesels, right?
Mike [00:52:21]:
Yeah, that makes sense.
Speaker B [00:52:23]:
So I mean, we're, we're, we're really trying to hone in on a specific avatar customer and a specific avatar vehicle, and then I'm gonna offer them the world to keep coming back in over and over and over again.
Mike Allen [00:52:34]:
Okay.
Mike [00:52:35]:
What do you think's the break-even where, um, I should talk about adding a 3rd technician in that building?
Speaker B [00:52:43]:
So that's a great question. Um, so my way of doing that is I think the simplest way to look at scaling staff is looking at revenue per employee. And just because it's, it's the easiest math that we can do. And I've had an opportunity to, um, over the last 2 years, take a, take a look at a lot of client data, shop data across the country. And, and kind of put some benchmarks out there for what those numbers should be. Um, and, you know, kind of what I found is, is revenue per employee, um, on the low end needs to be somewhere around $20,000. Uh, so looking at where you guys are at right now for last month, and again, what I typically see is I'm not— obviously there's outliers to everything. We talk about rules of thumb.
Speaker B [00:53:33]:
So $20,000, there's going to be some shop out there that goes and does their math And they're at 20% or above and they're at $15,000 revenue per employee. Great. There's nothing wrong with that. Okay. What I'm saying is, by and large, almost every case study that I took a look at, uh, if they were lower than $20,000 of revenue per employee, we were below 15% net profit. So it was almost impossible to get to 15% or above net profit. Most of them were in the 5% or below range. once we started getting below, you know, $20,000 revenue per employee.
Speaker B [00:54:08]:
Um, the kick-ass, you know, um, shops that I'm seeing that are doing 20, 25, 30% net, um, they're $30,000 of revenue per employee or above. Um, and there's risk in that as well. So kind of what I look at there is that $25,000 number, um, is where I'm looking to start adding team members, because at $30,000 I'm going to start capping out. Right.
Mike [00:54:31]:
And you're counting the GS just like you count the ATEC and just like you count the service shop.
Speaker B [00:54:34]:
I'm counting the shop porter in this number. So like when, when I have a— so when I have a conversation with my manager and we're looking to bring on a support member, uh, so office admin, CSR, you know, porter, what, GS, apprentice technician, whatever it may be, unless we have some benevolent reason to do it you know, like we're gonna bring on an apprentice technician 'cause we feel like it's our job in the industry to grow the next round of technicians. I might be willing to take a net profit percentage loss on that because I feel like the greater good is being served, right?
Mike [00:55:11]:
Yeah.
Speaker B [00:55:11]:
But if I don't want to take a net profit loss, then I have to design something that says, how do I get at least $20,000 of— I need a $20,000 lift in my current sales. To take on a new employee, so you're sitting at $23,000 of revenue per employee right now with the five five members that you have. You have no support staff, right? So let's say you added a CSR or a porter to the mix. You know that was going to shuttle cars around, shuttle customers home, clean the shop. How do we provide? How do we steal enough work away from the productive staff that gives them more time to be customer facing or repair facing? That allows us to generate an additional $20,000 a month in revenue. Because without that $20,000 a month in revenue lift, the business doesn't need that employee, right? Because you're gonna be absorbing the cost of it out of your, out of your net.
Mike [00:56:07]:
Well, if I'm gonna, if I'm pushing for $140,000, what I'm hearing is the time to add a technician is now.
Speaker B [00:56:14]:
You're getting really close to it. Yeah. I mean, because any lift that you have over, you know, over that $115,000, as soon as you creep up to $120,000— not saying you're going to be capped, but you're going to be— you're going to start hitting— you're going to start getting closer to the lid. Um, because I mean, if we take a look at it, your— so revenue per employee right now, let's say you jump up to $30,000 of revenue per employee, right? We have 5 employees. Uh, that's 5 times 3, that's $150,000, right? At 150, we're probably bumping pretty close of what our capacity is with the group that we have right now.
Mike [00:56:48]:
Yeah, that'd be redline. That'd be wide open all the time.
Speaker B [00:56:51]:
Yeah. And so we can't design something that's going to operate at redline 100% of the time, right? Because eventually what happens is we, you know, that we're gonna get sick or— yeah, we're gonna burn out. We're gonna burn out a service advisor, burn out a technician. We're gonna have some turnover. And we just don't have the ability to replace those pieces, you know, anymore. So I'm not saying we want to operate at 80%, but we need to be comfortable operating at 80% for times, right? It still needs to be profitable at 80%. You know, we, we need to design revenue that's consistent and profitability that's consistent and, and But you've, you've done a decent job of that, really. I mean, you're, you know, as much as we've ignored it, it's still, still profitable store.
Speaker B [00:57:41]:
It's still performing, you know, still performing at a base level that's acceptable. Um, but yeah, if we're looking at, if we're looking at how do we grow and take it to that next level, we're either looking at, um, potentially, you know, replacing— and I'm not saying to do this, but we're either, either adding on a new technician or replacing the GS with somebody that has higher capacity. 'Cause you said he's averaging somewhere around 10 to 20 hours a week right now for you. The problem is, is when you replace that guy with a higher level guy, they don't wanna do the stuff that he does.
Mike [00:58:13]:
Yeah.
Speaker B [00:58:14]:
'Cause he's providing the work for the others through the GS level work that he's doing, right?
Mike [00:58:19]:
Well, even if he, if I added another, like a line tech, like a strong career technician, I wouldn't replace that guy. I would, I would move him to one of the other stores. Like, he's like, he's a good dude. And yeah, good dude is not a qualifier for employment.
Speaker B [00:58:43]:
No, but what I'm saying is, even, even in this, I don't think that you have to replace him in this business, even in this building, you know, for the shop. Um, you know, it's just a how do we, how do we re— how do we reorganize his duties and responsibilities That it takes enough, it takes enough load and work off of the other, you know, the other production technicians that you have, that they have more time to be production, you know, to be productive. And how do we take some stuff off the front counter, you know, that allows them to be more customer-facing? Because again, that 24% close ratio, that's another limiting, you know. So right now, I mean, I see 3 limiting factors that if we can fix inside of the business from a KPI standpoint, We can we can hit these 140, 150 months, and you're going to need another person, right? And that's how do we you know how do we orchestrate a pricing strategy that still allows us to generate you know the bulk of the car count that we're looking to that allows us to get our our effective labor rate above 150. I mean at Elite, we're really we're coaching our clients pretty much since COVID Um, that we want to— we want an effective labor rate above $120. Doesn't matter where you're at. All right, you're in a really good market, you know, that's not typical of rural North Carolina. So you're not in rural North Carolina, you're in, you know, it's an affluent area.
Speaker B [01:00:07]:
You're in an affluent area. We would like to see that above $150, right? That effective labor rate above $150. Um, because again, that's, that's also capping you out at what you can afford to pay, you know, from a cost, um, yeah, cost per technician standpoint. And, and that's what your limiting factor is right now on your, on your overall GP, right? And your GP is not bad, but, you know, 58% is not 60%. So there's a little bit of wiggle room there. And if we've tried to figure out what that was, what's going to be our effective labor rate is lower than what we're paying our technicians, right? For what it should be. Yeah.
Mike [01:00:44]:
Lower than what it should be. Yeah. Well, you've certainly given me some homework and some— something to think about. I can't wait to record with you next month and say that we trialed charging for diag and it was a huge success and everybody's going to come out online and talk about what a fucking moron I am and have been the whole time.
Speaker B [01:01:07]:
It'll be great. Or you get to take videos and post on Facebook of the picket lines that are outside.
Mike [01:01:14]:
All right, dude. Anything else? Oh, I'll see you shortly at ASTA Expo. I think our next recording, we might even record our next episode at the expo. I don't know. What do you think?
Speaker B [01:01:32]:
Yeah, I would love to. Yeah. Always love going to ASTA every year. It's something that near and dear to my heart being local to it. And, uh, we take the whole team and have a good time. So looking forward to that. Uh, yeah, this is starting the travel season for me through Elite. So we got, uh, Rhode Island coming up.
Speaker B [01:01:49]:
We got STX. Um, STX, I'll fly out tomorrow for STX and, uh, be there for the next couple of days and then come back from that. We've got ASTA and then right after ASTA, we've got, uh, Fly with the Eagles in Providence.
Mike [01:02:04]:
Yeah.
Speaker B [01:02:04]:
Uh, Rhode Island. So I'm looking forward to that. So yeah, if you're listening and you'd like to get more, you know, get more into the detail about what, you know, kind of what me and Mike talked about today as far as how to, how to project, how to, how to forecast, how to know when you're supposed to be adding team members, when you're fat, when you're skinny, um, please, you know, look us up on our events page on eliteworldwide.com. Fly out to Providence. It's right in between Boston and New York City, so Bring the wife, have a nice vacation afterwards, and, uh, learn a few things that hopefully pay for the vacation.
Mike [01:02:38]:
That's gonna be October. That's prime leaf season up there, isn't it?
Speaker B [01:02:42]:
Prime leafing season.
Mike [01:02:46]:
I already know when I'm fat and when I'm skinny. I'm fat for the last 20 years. Uh, I'm working on skinny. So—
Speaker B [01:02:53]:
Hey, 21 years ago you weren't, and you had pants that carried over for the next year, and you bent over to pick up a dog out of a sticky trap And why you gotta be like that?
Mike [01:03:08]:
I think that's a good note to end on. That's terrible. You're a terrible human being. Thanks for listening to Confessions of a Shop Owner, where we lay it all out— the good, the bad, and sometimes the super messed up. I'm your host, Mike Allen, here to remind you that even the pros screw it up sometimes. So why not laugh a little bit, learn a little bit, and maybe have another drink? You got a confession of your own or a topic you'd like me to cover, or do you just wanna let me know what an idiot I am? Email mike@confessionsofashopowner.com or call and leave a message. The number is 704-CONFESS. That's 704-266-3377.
Mike [01:03:43]:
If you enjoyed this episode, be sure to like, subscribe, or follow. Join us on this crazy journey that is shop ownership. I'll see you on the next episode. Peace.