Far too many shop owners are so determined to make a certain percentage of gross profit on each job, that they lose sight of profitability, as well as customer service. I’m talking about the people who judge their success by percentages rather than dollars. These are the shop owners who are so busy trying to squeeze every last penny out of every job that they forget about the dollars that are being lost at the same time. Sure, your technicians can take that transmission apart and rebuild it, but with rare exception, most shop owners will install a replacement, right? Does the replacement cost more than the sum of the parts and labor it would take to rebuild or repair or the customer’s transmission? Typically it does. But with the exchange unit, you don’t need technicians who are skilled at rebuilding transmissions, they have typically been dyno-tested so there is less risk of initial failure or a comeback, the warranty is off-loaded to the remanufacturing company, and your customers are happier since they get their vehicles back faster.

Now here’s the part that most shop owners miss. With the installation of exchange remanufactured components, whether it be drivetrain components, brake system components, or steering components, the vehicles and the customers are out of your service bays faster, which means you can now start on the next jobs sooner.  While there is typically less profit on the “job,” by installing the exchange component, there is a whole lot more profit per hour, and there is no doubt that profit per hour is the real secret, in any business. Just look at companies like Costco. They operate on razor thin margins, but they generate staggering per hour sales, and happy customers, both at the same time.

Over the years I’ve helped many shop owners realize that time is money, and understand just how profitable it is to install exchange remanufactured units. Not only have they been thrilled with the results, but today the overwhelming majority of the transmission shops that Elite works with have now made exchange remanufactured units a large part of their businesses. Why? Because they realize that in today’s world, turn-around time is critical to most customers. Exchange units skyrocket tech productivity, and they lessen the shop owner’s dependency on highly skilled labor. When you think about it, you’re actually outsourcing a good part of the labor that’s required, and for those of you who are in areas where you are dealing with high labor cost, the associated cost of workers compensation insurance, etc., this in itself can save you a fortune. In essence, your shop may be in New York or California, but your technicians are working…in the Midwest.

So let’s look at some numbers. If you are working on a 15% net, and if you sell an in-shop transmission rebuild for $3,000, you’ll earn $450 ($3,000 X .15). But what you’ll need to give up for that profit is ten hours of time (R & R, rebuilding, etc.), plus you’ll have the liability of the warranty. Divide that $450 profit by the ten hours you spent on the job, and you’ll see you’re earning a net of $45 an hour. Now imagine that instead you decided to install a remanufactured transmission that brought a $250 net rather than the $450. At first it might not sound like the right choice to give up the $200 in net profit, but then you consider the all-important profit per hour. In this case, the vehicle was in your shop for only four hours (vs. 10) so your profit per hour is $62.50 rather than $45. A nearly 39% increase!

And good gets even better, because while your competitors are busy trying to figure out why the rebuild kit they just received doesn’t have all the right parts, you have a happy customer back on the road, and you’re now helping your next customers solve their problems.

So in conclusion, for those of you who are interested in generating a higher “percentage” of profit, there’s no doubt that the old way of doing business may still work for you. As a matter of fact, you may be able to tell all of your friends that your profit percentage is a really good number.

But for those of you who are interested in generating higher incomes, what you need to do is find the right suppliers and take advantage of the benefits of installing exchange remanufactured components whenever possible, because one thing is for certain: No matter how you run the numbers, the one thing that you can’t take to the bank… is percentages.

For additional help running a more profitable auto repair business, the Elite Coaching Program offers 1-on-1 guidance from the top shop owners in America

Let’s talk about cleanliness. I mean really clean, not just on the surface. Ever walk into a business that looked clean initially, but really wasn’t? You could just tell. The next thing you know you’re looking closer at the places under tables and chairs, and then it’s pretty obvious it’s not very clean at all.

I have very fond memories of my paternal grandfather. I called him Papa. He and my father were both barbers. I remember one time a customer asking my grandfather if he could use the men’s room. It was only a two chair shop with one small restroom. My grandfather responded with humor, as he always did, that there was no men’s room, but feel free to use the ladies room.

After the customer emerged, he looked my grandfather in the eye and said that was the dirtiest ladies room he ever saw, and proceeded to leave. I stood in shock and watched Papa walk into the restroom and come out and announce, “He’s right, it’s filthy.” He was actually embarrassed.

That day I saw this man do something I never saw before. He got cleaning supplies and cleaned the restroom. This lesson was repeated when I got my first real job, at age 14 or 15, at the Exxon gas station across the street from that barber shop. My duties were clean up, and that included the ladies room. I remember old Pat Beatty telling me how important it was for the ladies to have a clean restroom to use.

Fast forward a few years and I’m at the Sunoco gas station that had two restrooms, one for the owner’s wife and one for customers. Richard Brady never let his wife used a dirty restroom, do you? I cleaned that one, too.

I remember my mom visiting me at work one day and using that restroom, and then making the comment that it was the cleanest gas station restroom she had ever been in. She asked who cleaned it (I don’t think she believed me when I told her I did, after all she still remembers my bedroom growing up).

Why did I bore you with my history lesson in a clean restroom? Because it matters today even more than it did 35 years ago. Only now I don’t stop at the restroom. The entire building inside and out needs to set the tone for our customers.

We don’t call the landlord to paint the fire lane curbs red, we get the paint and do it. Whatever we can control, we do. We clean the exterior windows on a regular basis, not when you can’t see out of them. The counters, the customer chairs, the coffee bar, everything should be spotless. For us, we’re in a building with multiple tenants and it helps us stand out, you can too.

Think about how easy it would be to hire someone part time to help with the cleaning, or hire a professional company to come in after hours, one or two times a week. Get the floors polished at least once a year, or more depending on traffic. There should not be any finger prints anywhere.

Is your shop as nice or nicer than your dentist or doctor’s office? It should be.

I challenge you to take a close hard look at your entire shop. Pay special attention to the areas the customers have access to.  I always tell shop owners to take pictures of every bench, wall, chair, door, nook and cranny. Get them printed so you can hold them in your hands. Look at the pictures away from the daily grind and pick a couple of pictures at a time to work on, that way you’re not spending an entire day on housekeeping. Walk around and imagine what your customer is paying attention to when you’re walking them to get something out of their car, or when you want to show them what you found while working on the car.

When you bring a customer to the shop, your focus is on the walk, but the customer will be focused on everything else: the shop floor, the equipment, parts shelves, and my favorite – technician work benches.  Ever notice how some parts get saved for months, except the ones you want to show a customer when the car is picked up? Are new parts on nice shelves and well organized or just thrown in there?  The oil drains and oil tanks should look perfect; we’re about to repaint ours, they’re getting a little worse for wear now. Paint the shop every few years. I prefer white walls because they reflect light better and it just look cleaner. If you must have some color, add an accent stripe, design or get some colorful metal signs from your venders. Oil companies and battery suppliers love when we advertise for them. Make sure they’re metal and that they’ll last a long time.

Believe it or not, the employees like a clean work environment. They may not admit it, but they like it. When equipment is clean and in proper working order, they will be more productive. Let’s all do a better job showing our customers we are professional and we care enough about them and our employees to provide a clean, safe and inviting area for them.

This article was contributed by Frank Scandura, the owner of two of the most successful, state-of-the art, green shops in North America, and one of the coaches who offers shop owners 1-on-1 guidance through the Elite Coaching Program.

Here’s where a lot of shops and dealerships get into trouble…. They’ll tell themselves that their businesses are doing well, and all they want to do is “fine-tune” their operations rather than grow.

There’s a lot to be said for that, but even if you’re pleased with the performance of your business, you still need to set a growth goal of at least 10%.  Why? Because not only is there no certainty in the future, but you can bet the competition is going to be tougher in the coming year. So even if you simply want to maintain your sales, we encourage you to set a 10% growth goal. That way you’ll have a better chance of landing where you want to be!

How many times during the day does a customer stop by or call, and ask to only speak with you, the shop owner? Do you know why? It’s because in general, the experience the customer has when dealing with the owner of a business is much different than when dealing with an employee. The owner goes out of his or her way to make the customer feel special and important. The owner has a vested stake in the customer relationship, and an attitude of appreciation is expressed toward the customer. The customer picks up on this, and thus the tendency is to seek out the owner. You, the shop owner, have a culture of ownership.

Think about your favorite restaurant, Deli or other business where the owner goes out of his way to say hello to you, and spend a few minutes engaging in small talk. What kind of impression does that make with you? It makes you feel great. You can’t put a price on that type of customer service.

Now, just imagine how powerful your business would be if your employees also adopted that same culture of ownership? Most employees have no feelings of ownership, and many feel disconnected from the company’s success or failure. They may value their job and may be loyal to you, but don’t always feel that their contribution to the company is recognized and makes a difference in the overall outcome of the company. If employees think that their efforts are not valued or respected, they will not develop the right culture and consequently, not care as much.

So, the question you are probably asking is, “How does one create the right culture”? First, you need to understand the term, “buy-in”. Buy-in means that the people in a company do things not because they are told to, but because they want to. You don’t want people to simply obey you; you want people who can think on their own and contribute to your company. You want to create an atmosphere where everyone has mutual respect for one another and is committed to the common good of the company.

Employees adopt the right culture when they are shown appreciation for the work they do. People who are just compliant to the rules of the company aren’t totally engaged and committed to the overall success of the company. When people are engaged and feel that the work they do does make a difference, they are committed to the success of the company.

Give people the power to make decisions, don’t handcuff them with complicated polices and procedures that have them constantly reporting to you. Let them use their talents and empower them to make decisions. Will they make mistakes? Absolutely, especially in the beginning, but in time you will build a powerful team of thinkers and decision makers.

Get people more involved with the daily operations. Ask questions and ask for help. Request their feedback on critical issues. You may be surprised by just how in tune your employees are to the inner workings of your company. By discussing issues, both good and bad, you will make everyone feel important and part of the big picture. Above all, people want to feel that they matter to the company. Money is important, but self-esteem is something that will bond an employee to your company.

When an employee feels they can act on their own, take risks, and make decisions on their own, they will begin to adopt a culture of ownership. They will feel good about themselves with the confidence that you are behind them 100%. Customer service, productivity, and quality will all improve.

One thing to remember; everything starts with you, the owner. Take a long hard look in the mirror and look at the way you treat people. The way you treat your employees will be reflected in the way they treat customers. If you walk around with a doom and gloom attitude, your employees will also. If you speak in a harsh tone or are disrespectful to employees, one can only imagine what they are saying to your customers. You set the tone in your shop, so carry yourself in a way that will cause people to emulate you in a positive way. This will insure that customers are treated with the world class service they deserve.

Building the right culture will improve the customer service experience. The customer will receive that warm reception from not only you, the owner, but from anyone they come in contact with. That culture will build strong relationships and loyal customers. The result: increased sales, more profits and positive growth.

This article was contributed by Joe Marconi. Joe is the co-founder of autoshopowner.com, and one of the 1-on-1 business coaches who helps shop owners through the Elite Coaching Program.