Management training turns former technician into successful businessman
Olathe, Kan.—Like most “overnight successes,” Anderson Automotive faced its share of growing pains to get to nearly $2 million in annual sales from the 21-bay, nearly 15,000-square-foot shop.
“Making the transition from technician to owner is probably one of the hardest things for anybody to do,” Owner John Anderson said. “And that’s where training comes in. You don’t have to start out as a businessman, but you have to become one.”
Anderson said he learned some of those skills through his membership in ASA-Midwest and attending its Vision Hi-Tech Training & Expo, March 2-5, at the Overland Park (Kansas) Convention Center (www.visionkc.com).
While a busy flat-rate technician is guaranteed to make money, he said, a shop can easily become “unprofitably busy” if they don’t know their cost of doing business.
Many business owners don’t grasp even the basics of business, such as figuring their gross profit margins, he said, which prevents them from being able to afford to make investments, such as in equipment and training. In effect, they actually own only their job, not a business that gains value and can be sold at retirement.
“Succeeding means having enough management skills to stay in business, and that your technicians have the technical skills to keep your customers happy,” he said.
Starting out moonlighting in a two-bay storage building from his job teaching high school automotive students at what was then Johnson County Area Vocational Technical School, Anderson said he was like many shop owners in that he was a talented technician, but not all management skills came naturally to him. With the added expense of new equipment and a move to a second, larger building, he laughs when he recalls that in 1997, the first full year of business, he turned a $42 profit.
Vision training showed Anderson that customers are not as price-sensitive as owners often fear them to be.
“If you’re offering good quality and service, lower on the list of things they care about is price,” he said. “I didn’t need to be scared to charge enough to survive.”
It was after doing some calculations that he concluded years ago he needed to raise the labor rate by $15.25 per hour for the business to survive, and despite his service advisor’s protest, no customers complained about the change.
Anderson said he continues to see the value in having trained technicians, and even with four out of his five technicians being ASE Master technicians, with the fifth nearly Master-certified, there is always something new for them to learn.
Some shop owners are reluctant to spend money for technician training, afraid they will leave the business with their investment, Anderson said.
“But there are two choices: you train your employees with the possibility that they take that training and leave, or you have untrained, incompetent employees,” he said.
The shop will shut down Saturday, March 4, so technicians and service advisors can attend Vision. In 2012, the shop went to a schedule of six days a week, 7 a.m. to 7 p.m., with a full staff. Shops that try running skeleton crews on half-days on Saturdays find they are not profitable, with mostly unprofitable “waiter” oil changes and no time to perform heavier work, Anderson said.
The work rotation is configured such that technicians work four 10-hour days per week and service advisors work four 11-hour days, with alternating days off. Every three weeks, employees have a five-day weekend. It took only three weeks of the new schedule for the Saturdays to have much the same work makeup as any other day, he said, with the same gross profit.
The business has nearly tripled its annual sales since its 2011 move to its expanded third location, Anderson said. Eight bays currently are used for indoor storage, and the shop’s quality has attracted owners needing service and repairs on their collector cars. Anderson said he’s looking at demographics studies of the hybrid car population, which as it ages will increasingly need battery replacements.
Daily accounting provides real-time business tracking
Anderson used to rely on monthly reports from an accountant, but he’s since switched to using QuickBooks and can pull a profit-and-loss statement for each day, allowing him to quickly spot any issues.
“Now, I know what all the numbers mean, where they come from, where they’re generated, and what they should be,” he said.
Those numbers are also scrutinized by fellow members of his R.L. O’Connor Bottom Line Impact (“20”) Group, like-minded automotive service business owners and managers across the country who work together.
“That’s something most shop owners – and most business owners – don’t have, is somebody experienced looking at these numbers and being able to look at them and say, ‘This is out of line. Why is this out of line, and what are we going to do about it?’”