#49 - Matt McMurray - Fixed Operations

Alright, guys and gals, we have one of my really good friends in the car business here, former 20 Group brethren, I guess, and a guy who really has a mind for service and for anything to do with repairing cars. He sells a few cars here and there too, but he's going to walk us down the path of how to make money in our fixed ops. And what should our, you know, what should our labor rates be? What should our tech makeup look like? How many bays do we need? All these type things that every one of us have questions about. Because, Jeff, you and I know how to sell cars, but you know, run a repair facility, I'm not sure we're good for that.

I've got more notes on this episode than I think any other episode. This has been awesome. So stay tuned. This is going to be great, guys.

Welcome to the Independent Dealer Podcast, the.

Podcast for auto dealers to learn and grow together.

Here are your hosts, Luke Godwin and Jeff Watson.

All right, Matt, give us all just a quick overview of where you came from, what you do, you know, maybe your day to day responsibilities so we can all kind of have a background before we jump into this discussion.

Yeah, so I grew up in the service business. My dad had service stations. I ran a service station for him from 2003 until 2010. Went out on my own, opened up my own independent repair garage, towing service, and now I have a body shop.

And what's the name of that place?

Campus Automotive in Blacksburg, Virginia.

And guys and girls, if you ever get a chance to go to this place, it is the freaking Taj Mahals of service centers. I mean, just a beautiful place, spotless, clean everywhere. You know, the outside is beautiful. There's no junk laying around. I mean, it's the way it's supposed to be done.

Yeah, we try to keep it nice. As nice as we can anyways.

Yeah, yeah, we need to post some pictures on here. Matt, you'll have to send us something. We can hook it up to this episode. People can kind of get kind of a visual idea of the kind of operation that Matt runs. So Matt, tell us again, so how many bays do you have, how many mechanics, what kind of service are you getting through, like volume wise? Just so we can kind of have a basis of this conversation.

Yeah. So in total we have 30 employees, have five technicians, three service riders, a shuttle driver, general manager, four tow truck drivers, three dispatchers, and in the body shop we have 10 people, two estimators, a painter, three body man, prepper, sander, detailer, and a production manager.

Geez wheeze.

Yeah. So 30 people in total.

He has a Mako franchise, but it's not your typical Mako. Again. When Matt does something, he does it ridiculously beautiful and the work is pristine.

It's.

It's a real body shop with just franchise as another company.

Yeah.

Okay. That's on location, right?

Yep.

It's all okay.

Okay.

And we do a little used car. We sell a few used cars too.

Oh, okay. Do it. All right. So what would you say your makeup is? I mean 99, 95% retail stuff you're doing just customers off the street, individual customers or do you have accounts with new car used car stores or so.

On the repair side? It's all retail, every bit of it. Other than what the little bit of recon I do when I do some used cars. So it's all retail on the tow. Inside we do private property towing. So we have business to business accounts. We do work for aaa. We have contract with the police departments for accident towing. The body shop side, of course we have relationships with insurance companies, direct repair program relationships with them. Do some retail customers there too. But the majority of it is retail and business to business. Cool, cool.

So what I'm really interested in Luke, and maybe we can go down this avenue is you know my thoughts as an independent dealer. Some of us have service shops that are on site, Some of us have service shops off site. Some of us don't do it at all. But for those of us that are putting our toe into service, where do we need to be focusing on? How do we gauge that and to set that up. I've always been of the opinion that my repair shop and I just have four bays that are attached to the back of my retail facility. And I've always looked at it as just a straight up cost saving effort. The only reason I have it is because then I can pay these guys X amount as opposed to going down the street paying someone else. I've never really looked at it as a profit center or a place to actually build in services and get outside work. I mean where is that balance and how do we need to be looking at that as an independent dealer?

I think that's a huge problem with independent dealers is we don't think of it as its own business and it needs to be run as a business. Talk about that man. Is how. Because you've seen both sides. He's been in a 20 group with me. How important is it to run a service facility like a service facility?

Well, I think you need to Run it as a profit center, because it is a profit center. And when you look at your utilization of your building and your. And your employees, you need to make sure that you're getting a return on investment for what you have there. So first get your return on investment on your technicians or employees, and then return on investment on your entire facility. And then once you start to figure out, you know, how many hours am I working, how many hours am I billing for my technicians, and how much money am I collecting, then you start to see, well, you know, if I added a little customer payback into this like this, this can be some real money because I'm already paying my expenses now with my recon work. Now if I add in retail, off the street customer pay work, now, all of a sudden there's a. It's a profit center, if that makes sense.

And that's where so many dealers I think, miss that is that if you set up, and I did this, I set up, my original plan was just to do internal work, right? But then as you go to 20 groups and you see other dealers doing it, you realize real quickly that it is, it's a huge profit center.

How do you make this switch from being.

Internally focused to getting that customer paper? What should we do there?

So it needs to go from. Your mindset has to shift, number one. But it needs to go from being an expense, which, which a lot of people consider that as an expense. So it needs to go from being an expense to, to a profit, retail profit center. But I think it's all in your mind. And so if you decide, hey, I want to diversify my business, do a little bit more. If I figure out what my margins should be like, I might be able to turn a profit on this, and I might be able to get this service center to pay the entire fixed expenses for the entire dealership and then turn a profit too. Then, like you see, the magic starts to happen.

And that's, that's so important. And a lot of people won't know this, but in a new car store, your fixed ops are supposed to pay your fixed expenses. And we talked about fixed expenses last week, so I think that's so important, we would all be scared to think about how to do that, but lead us down a path of how we get to that point.

So I think the first step is, which they call it absorption rate right away for the new cardios, they call it absorption rate. But I think that the first step is saying, okay, sit, you know, sit down and say, okay, how many bays Do I have to work in? And how many technicians do I have? First step. So if I have.

Give us three. Me that math, Matt, you were about to do it. Okay. All right, I got four bays. How many techs should I have?

If we're going down a path, you gotta. You gotta stay with me.

We're going down the rabbit hole.

Okay? So first we need to figure out what we have, what we currently have, how many technicians we have, how many bays we have. Okay? Once we've determined that, next step is we need to determine what a fair rate, a fair labor rate for our market is. A prevailing rate is what they call it in the body shop business. So let's find that prevailing labor rate, and then we need to find out how many hours our technicians are working per day. So if one technician works eight hours a day, theoretically, we should multiply that eight hours by that prevailing labor rate. Let's say $100. So that's $800 is what you should be collecting from that technician every day. So if you have three technicians, multiply that by three. That's $2,400. Now, all you're thinking about right now is what you currently have. So you're multiplying a prevailing labor rate by how many hours are on the floor by how many technicians you have. Then you can come up with a baseline number of. Okay, this is what I want to get out of these three guys per day. Then you multiply that by five. So what I say 24, 2400. 2400 times five.

So we're gonna do that number real quick.

Do that, do that, do that math. That's.

Something.

Yeah. So this is why you can do a week.

A week. That's what you should be doing in labor a week. And most of the time, in an independent automotive aftermarket world, we usually do 50, 50 labor to parts mix. Now, you know, 60, 40, something like that. So we would say, you know, if we're doing 12,000 in labor, we should be doing another 12,000 in parts. So that puts us at about $24,000.

And that's gross. That's net gross money.

Total sales. Total sales.

So I should be doing.

We don't think of gross like what you think of gross, because you're thinking of gross like tp. Yeah, yeah. And so I'm thinking of gross. I'm thinking of total sales first and then gross second. So once you figure out that math, that gives us about $24,000 a week in sales. So benchmark for our margin on our parts which is the next piece of it. We should be getting somewhere between 50 and 60% margin on those parts. I'm just talking about retail customers. I'm not talking about your internal stuff, just your retail customers between 50 and 60%. So if you want 60% margin on a $4 spark plug, you multiply it by two and a half. You see what I'm saying? Because margin is different than markup. So we're getting. Now we're getting the correct margin for our parts, which is between 50 and 60%, between 12 and 18% on our tires. And now we're starting to make a little money. So if our labor cost, if our labor cost stays about 30% of what our labor sales is, then also we got labor margin too. So on a $24,000 sales week, our gross profit goal is somewhere between 10 and $12,000, if that makes any sense. Wow. So now you start to see how that compounds when you add bays, add techs, add these different things, and how you can add that retail on top of your reconditioning work and create that profit center.

That's a big number and that's in that $10,000 profit is before our real fixed expenses come into play.

Right?

Yeah. So that's after your tax and your sales cost. Right.

Our cost of goods and.

Cause that's cost of goods. Like our sales, our service advisor, and our technicians and our parts cost is all in cost of goods. And then everything below that is just our fixed expenses. Right. So does that make sense, Jeff?

Yeah. I already burned up my first notepad, so I had to grab another one. This is like, this is just gold for me. Help me set that up again real quick. That initial question I had was, what is my tech? So you're saying, hey, this is my current base and my current techs, but what's the ratio between service bays, techs and service writers? What do you see best practices for that? I want to know if I'm utilizing my space.

Right. So what we usually, what we really like to see is one service rider for every three texts. That's about the most you can handle. Especially if these ordering parts and stuff like that.

Yeah, yeah, yeah. When I say service rider, I'm saying, you know, for a small shop like me, he's handling everything, unfortunately. He's getting parts, he's doing scheduling. He's also dealing with some customers, unfortunately. So I'd probably have him over taxed.

Normally. We would like to see one service rider for three techs and he should be able to handle all those tasks, it's not easy. Obviously.

Yeah, he's overworked.

He's overworked a little bit. May need a little help, but that's typically the ratio we like to see.

And how many lifts does my techs need? Do they need one per.

I think one vapor tech, really? I think if you get your process down, one vapor tech. Now it depends on what you do and what your mix of business is like. If I'm rebuilding transmissions, I know that one vapor tech's not gonna work because I'm, I got a, I got a R and I. The transmission, I gotta send it to another tech to rebuild and then I gotta reinstall it. So you're talking, there's a three to four day gap. So if you're doing a lot of motors, transmission, differentials, some heavy, heavy duty work, like he may need two bays but for the most part, most of your recon work you ought to be able to do in one bay for sure.

And especially if you're making, if you're doing a lot of the profit stuff like brakes and tires and tires not necessarily profitable in front of it. They can be oil changes, oil changes, flushes and things like that.

Let me stop you on that one. Oil changes, I always thought that was kind of a loss leader to get them in the door.

So you know, for some people it is. If you have a really good process for doing a complete and accurate vehicle courtesy check when it comes in the door. Like for a retail customer it's an opportunity. Number one, it brings car count in but it's an opportunity to upsell other items that the car may need. You know, wiper blades, filters, flushes. Some of the other maintenance items and.

Repair, I thought is the goal. I can't, I can't, I can't get the cars in, get them serviced. Like a place like this Jiffy Lube or the speed lubes or whatever those joints are that have got bulk oil and bulk filters and the drive, you know, they've got, they're all set up for it.

Well, I'm set up for that too.

Jeff, ten dollar an hour tech working on your car.

Well, you can't have a, I mean you honestly, you probably can't have a B tech doing oil changes. The money, it's not going to make sense. But if you go back and listen to, I think Marshall and I talked about this on one of the podcasts was about how your sales walk around by that service advisor. It should in fact be sales like you were selling a car Right.

Yeah.

And it should be, it should be number one to cover your tail if there's some damage on the car or something like that. But also and cover your tail if someone comes in with bald tires. You've got to do the same walk around every time.

Theoretically, you can pre sale. Yeah. Maintenance services at the counter before you even take the car in the back to check it. So pre selling a few maintenance services, you can, you can now you turn that little oil change into something bigger. So that's the goal. If you buy right. On your oil and filters, you can still make your margin. Oil on your oil and filters. If you're buying right.

And you got to be buying filters and oil by bulk, you got to, you can't go to O'Reilly's or advanced and buy it by the box. It doesn't work.

Don't work. You've got to buy.

And we, we buy 350 gallons at a time.

Yeah.

So I mean you've got about.

If you're gonna go down that I just don't. I look at my shop and I think, oh man, where am I gonna have a bulk oil tank? Somewhere with the different grades take up that much.

It's not. And they have these new systems now that are, that are container type systems that are gravity fed and they sit up and they stack beautifully. And I can send you a picture of that. But it's, you know, it's not that big of a commitment to have. And you buy it so much cheaper. And if you use a filter company like Service Champ, which is here at this Bieda convention this week, I mean there's, you know, you're buying filters at $1.75 and you know, air filters at $2.36 or at, you know, at advance and O'Reilly and Autozone, you're going to be paying sometimes double that.

Oh yeah.

So you're saving so much, you're saving so much money, you actually can have margin on those oil changes too.

So sorry. Go ahead, Luke.

So not only have your margin on oil change, but when you're doing your own recon work, your expense won't be as high.

Well, now tell me, help me with this. What should my makeup of techs be? Should I have a whole bunch of Cs to do this kind of stuff and then a couple of B's and A's, or should I try to hire top dollar guys or I get confused with.

Right. So there used to be, there used to be a model for this and you would have like one A, two Bs and a C, something like that. Now the model's at the door because.

You can't find them, right?

You can't find them. There's a shortage of technicians. So what we're finding now is we kind of got to get some. In some cases, we get all Cs and we got to make them Bs, right? And make them A's. We gotta train them up. So now, because there are more open jobs than there are technicians to fill those jobs, like, you got to take what you can get. And as long as they have their character as a person is good and they have good behavioral traits, you can train them up and they're good for your culture. Then you can train them up into where you need them to be. Limit your work to their skill set instead of making them do things that they're not qualified for.

And that's so important is, number one, we should hire. When we're hiring techs or trying to hire techs, culture and morals and character. Because you can train everything else, but you can't train those. And what I have found at hiring lube techs who are just young guys who maybe didn't graduate high school, but they've been tinking around with doing radios and things like this. If you take those guys, you get them in your shop and you get some good program to train them on, man, you can train those guys up. My best. Maybe not my best, but really close to my best tech right now. We hired him and he did oil changes all day long. Now he is one of my best techs. That's amazing.

And now we got more than. More so than ever. We got access to very, very inexpensive training platforms. If you're a Napa car care center or you're a cti, through Advanced Auto Parts, they have training programs for as little as like 25 bucks a month. Technician training program. But the Napa. The Napa Auto Care program is probably the best and most robust. If you sign on with them for technician training and different strategies for running the shop.

And that's another rabbit hole. But just quickly mention every. Every parts store has its own program. And I'm with O'Reilly's just because O'Reilly's is right next door to us. Our Napa is not huge in our area. Worldpac has it as well.

Can you.

And I think autozone has one with Niada. Can you talk through those programs and how they benefit your shop?

So every, like Luke said, every parts store has a program. Some are more Robust than others. Napa's probably the best because their business model is B2B and not B2C. Where advance and Autozone or big boxes in O'Reilly too. And they're, they do a lot straight to consumer stuff. So Napa's, Napa's built out the best and, and advanced CTI program which was part of carquest Technical Institute. When advance bought that, they bought that, that platform too. So you basically just get signed, you get signed on with the parts company. They help you move through. Napa even has technician training. They have assistance with signage and marketing and website and point of sale systems and buying programs for different, you know, bulbs and clamps and all these different avenues for, you know, for building your, your shop business. It helps you do that.

And that's, and it's important because so many car dealers are car dealers, right?

And rebates, don't forget about rebates because these, especially with Advanced Auto parts, rebate, you'll get rebated money back to you, you know, in a form of a check.

Yeah, we get that.

And so they all have it. So that's money straight to you.

And that's bottom line and that's bottom.

Line number, bottom line dollars.

So let me ask you that question. As far as sourcing and parts goes. I mean, do you find that it's advantageous to stick with one source or do you shop multiple? Or like, I know my guy. I mean we ordered from O'Reilly and Napa and Amazon and ebay and LKQ and Rock Auto and I mean we've got them coming in from everywhere we can find them. Am I losing leverage because I'm not spending a lot of money on one guy? Or is it good to just try to find the best part of the cheapest price?

It's good. It's good. I think you need a first call. You need a guy that you like, know and trust as your first call. So the, usually the closest shop, the closest store to your shop should be your first call because they're close, they're fast, and you should have a good relationship with them because you're their neighbor. So you need a first call to do your basic stuff and get as much as you need.

Brake pads, rotors, things like that.

And then, and then you can go back and say, okay, sort, because it, from that first call forward, there's, there's no reason to stay loyal with anybody else. So you get what you can get where you can get it. Parts are everywhere. If you're having good Luck with one place, you know, for one particular item, then stick with them on that and then just move around like you're doing. I think that's totally, totally fine. Because you want to maximize on a retail customer, maximize your margin, number one, and then on your, you know, reconditioning side, minimize your expense. That makes sense.

And that's not as time sensitive. I know with my recon, if it takes two or three weeks to get a part, you know, it's not good. Not two or three weeks, two or three days, not good. But with a retail customer, you just can't have that. Right? I mean, it's got to be there within.

I think there's a fine line between price savings and getting that car ready. Because you can't have a lift tied up because that's costing you money, right?

Yeah, absolutely. Because you, you know, it's opportunity cost. Because if you think of that shop, you know, labor is, you know, it's finite.

You've only got so much.

You only got so much. And see, once it. Once it goes bad and expires, it's gone forever. You don't ever get it back. So it's kind of like milk. It's kind of like milk at the grocery store. Like, you know, you sell some of it and some of it you don't sell, and it goes bad and it goes in the dumpster.

You're spilling it all over the place, man. I'll tell you what, it's all over the place. So let me ask you that. Let's go down that road if we can. What about labor and your pay? What would you recommend is the best pay plan? I've gone at my place, we've done hourly, we've done hourly plus flat. Now we've gone to just a straight flat rate. Labor pay is that. What do you find works the best?

Think the best is. Well, this model is kind of changing too. But right now the best thing to do would be a flat rate that. That has a little bit of a bump when you hit certain milestones. Like if you get to 30 labor hours, maybe you get a little bump. 35 labor hours, you get a little bump. 40 labor hours, you get a little bump. So it gives them incentive to push to the next tier to try to increase that, to increase that productivity. And then when they really get up, they can really start making some money.

So let's talk about that. And everybody, everybody listening is, hopefully knows about productivity and efficiency and things like that. Proficiency as well. Should every tech be 100% proficient? Or are we looking for 125? What do you see as most techs doing and what is the goal?

I think that, well, there's probably, I mean there's best case scenario goals and models for this. But for me personally, my opinion is like, if you got a guy on the floor, let's, let's bill an hour for him for being on the floor.

I agree 100%.

And if you got five guys, you're gonna have one guy that's gonna do 125 and one guy that's gonna do 75. But at the end of the day, let's get, let's add it all up and get, you know, 100% of the hours that were open.

So, so, so help me, help me understand that in my terms. So if I got a tech who's, let's say kind of unofficially clocking 80 hours in a pay period, he should be a one to one, like a flat to clocked hours. Is that what you mean by 100%.

Or really, really good tech will be more than that?

Yeah, right. And that's what I tell my techs. I say, look, we want you to be at 90 hours or whatever, a pay period. You should be able to flag more than what you're physically here. That's the goal.

Yeah, so most can, but you know, technicians are just people. Right. So some people, it's just like salesmen. Some people are going to come in and sell 30 cars and some people are going to sell eight.

Right.

So technicians are the same.

Right.

So but what we're trying to do as a group is get together and be selling enough hours to cover the hours that you're open.

And that's. And it's hard to do.

It's hard to do.

Really.

Okay, just like a salesman, you're gonna have, you gonna have the eight car guys and you gonna have a 30 car guys. And it's no different with technician because some are faster and some are, you know, slower. And so it's, it's just, it's just part of the game.

The big issue I run into is that, is that sometimes the techs and I understand their situation, they want to be paid for everything, even if there's not a Mitchell rate for it because they're doing these odds and ends and these side deals or they're putting a GPS in or they're got some bolt that rusted over. And so they're always asking for more. But rarely, I think, do you get back on the.

That's a great question, Jeff. And I want you to talk about that, Matt, because I have that same issue. You'll take a car back that a customer just bought. You just need them to do something real quick. How do we address that in our shops?

Well, we need to pay them, but we don't need to be paying for. Like, if you're going to put a GPS in the car, you need to establish a rate up front for what they should get paid to do that GPS in that car and make sure everybody knows what that is.

It's an hour. It's an hour.

It's an hour. Like, some of them are going to take you five minutes, and some of them are going to take you two hours. But it's an hour because sometimes you're going to be the bug and sometimes you're going to be the windshield, Right?

The standard becomes five minutes for an hour of pay, and then if it ever goes to two hours, then they're going to ask for that extra hour. Oh, we couldn't find a ground on this one. Or we couldn't find a power wire. I need to get. I need an hour bump on this.

But that's the reason you've got to have a. You've got to go to your tech, say, this is what it is. I'm not paying you die more. It's what it is.

Right. You got to have that trust, and you got to develop that trust with them, too, and establish, like, you know, make sure your culture. Right. And establish, like, a set of fundamentals or a set of, like, behaviors that you want your organization to follow. And then. And then make it clear to them that, hey, you know, like I said, sometimes you're going to be the bug, and sometimes you're going to be the windshield. But you're going to. At the end of the day, you're still doing better than what you would have done.

Yeah.

So sometimes it's going to. Now, if you get a car that comes in. If you get a car that comes in and it's rusted and it's bad, and you're putting. If you're fabricating brake lines and then you're, like, cutting bolts off and like, how do you.

How do you address that? Is it. Is it the time they need on the car?

Yeah, you need to give them a little bump for that. And like, when a torch fires up, get a little torch time. I mean, stuff like that. Because that's service.

Riders got to be aware of that. Right, Right.

Yeah, exactly. And it's because, you know, those are outlier Situations that are beyond the scope of what a Mitchell or ALL data guide will provide you a time for.

So on that, on that note, how do we address that with our customer? Because we've already, we've already estimated to the customer, hey, this job is going to take 1.5 hours. Well, we're not talking hours or customer. We're talking. It's going to take this much in labor and this much in parts. But then all of a sudden we realize that we got something that's tough. How do we address, how do we address that with our, with our customer? And when do we address that with our customer?

So up front, before is better. Like when you're discussing.

Okay, yes.

So like when you're, before you even call them with that estimate on that repair, you can be like, hey, look, you know, it's really rusty. I think what we do is with our system, since we have a digital inspection system and we're sending out pictures of the, of the problems with the car, you know, we're having that discussion and saying, you know, you see how these bolts are rust, you know, you know, this is how much it's gonna be to fix it. Cause if you call people back after the fact and say, hey, it's gonna be more like, people get upset about that.

Right?

You would get upset about that. Like if a roofer come out and give you an estimate on putting your roof in, he starts and he's like, yeah, man, it's gonna be five grand more. You're like, no, no, no, no.

Right, so. And your shingles are already off.

And your shingles are off and you're screwed. Right. Same thing with auto repair. But at the same time, like, I think on the front end, we can knock some of this out on the front end. And then if an outlier situation comes along during the repair, that needs to be addressed. You know, let's say that we're, we're doing, hypothetically we're doing a timing belt and water pump on a Honda. We pull it off and then we see that maybe the cam seals are leaking or something like that. You know, a well documented explanation in a picture. And just telling people the truth will go a long way because people know that, like, it's hard to estimate, so you can't see. Yeah, an estimate is an estimate. Sure. And remember that too.

And that leads me down another path. Let's talk about service advisors real quick. And for me, I almost think of a service advisor at this point as another salesperson in my office that's really what they are now, they're advising service. But how important is it to have great service writers and service writers who are trained to sell properly? Because this comes into selling property.

Yeah. Because if they can sell, you know, they can really, really make you some money. Right. And I think they should be part of the sales team. They should be part of the sales training. Because look what you guys, you guys spend a tremendous amount of money on sales training as dealers like a tremendous amount of money. And so they need to be part of the sales training process and treated like salesmen and compensated in some way to reward them for being salesmen.

And how do we do that? Because how is a service writer paid compared to. They're not flat. I mean, they've got to make some money too, right? Right.

Well, what you like to see is that sales cost be about 7% of your sales. So figuring out a variable compensation based on that 7% number.

So they come in. So let's just say that I have a hypothetical. A customer comes in for an oil change, and my service advisor did a walk around. They sell them wiper blades, they sell them tires alignment, and they sell them a transmission flush and a coolant flush. Do I give them a commission per item? They sell like that.

No, not per item.

Okay.

Unless you're trying to do a spiff or something. But then they get used to spiffs, and that's not really the right way to do it. The right way is to set it up on the front end so that they get compensated based on their total sales for the week.

So they got a base salary.

Base salary.

Then they have a little extra.

And if they get numbers and then it bumps. And then it bumps. If you hold your GP and then it bumps.

If you have like.

Like you ought to give them a bump for Google five star guru reviews.

I agree.

You know, hit them with the $5, you know, something. Give them something, reward them for that behavior.

Yeah.

Maybe I should ask this question in the beginning, and I think I know Luke's answer. And your service shop is its own business. You guys don't run your. I mean, obviously, Matt, you don't. We know that. But as a dealer, me as an independent dealer, do I need to set my service shop even though it's attached to the back of my sales floor? Does it need to be its own set of books, its own set of llc, its own setup so that I can really track it like it's its own business?

No, because if you go to the Honda store down the street, like they don't separate it out, do they?

Now you have your own financials for each set of your, of your business because you need to know your financials for that set of your business, right?

Yeah, but I mean, but not a separate business. You don't have to have a separate, you know, I just set it up and I use QuickBooks because I don't sell a lot of cars, So I use QuickBooks. So I have it separated in classes.

Okay.

So I got my dealership, then my towing service and then my repair shop in a class. So I can see a snapshot of how we're doing.

But it doesn't have a separate set of books. You're not talking. When you look at your gross profit for the month, you're tying everything in. Car sales might have a line item, but service has a line item. Now, Luke, you keep your separate. Right, Your shop has its own. I mean you have its own credit card, its own bank account, its own.

And I did that for a couple reasons. One, because percentage of ownership is different than a percentage of ownership. So there's other reasons I do that. And probably in the long run, once I own everything 100%, I'll probably bring it back together. Yeah.

Plus you have some, you know, you're doing some in house finance and there's some issues related to that. So I completely understand that. But as a normal, normal day to day, I think you just run it in together. Your point of sale system can be different and it can give you a snapshot, a guide of how you're doing in your repair shop. And you can use that information on a daily and weekly basis to run it and then set your business up in classes on QuickBooks. And then I know dealer track does it completely different when they account for that money. But you know, I think there, I think you should try to keep it together because you've built your brand, right. So you've worked really hard to build your brand and the brand is worth something and it's powerful and sure.

And I don't, and I don't necessarily recommend if you are splitting it, you should still operate. We operate as goblet motors. Even if I servicide.

Yeah. But for the book standpoint. Now is there any. And maybe Luke, you could speak to this more. My big one of my headaches or hurdles I got to get over is when I bring a car in for service. And of course 99% of them are current customers. Cause I'm buy here, pay here. It's always. Well, can you side note that. Can you just tuck that on the back of my loan? You know, like you should see.

Some.

Of you watching on YouTube. Matt's like, what are you talking about, man? So, yes, it depends. You know, we have to do that as buy here, pay your stores a lot, and it's not something you like to do, but if I got a good customer who pays their bills, we do some financing there. I know, Matt, you probably use synchrony or something like that, right?

You can use synchrony or something like that. But why not ask them for them? Why don't I ask them?

No, you can't ask me for the money. And I do ask for the money, and always, you don't ever get anything you don't ask for.

Right, man? Yeah. Because if they go down the street to pet boys, they don't charge them.

They gonna charge.

Yeah.

They go, you know, you're not rolling out of there with your car until someone's paid for it.

Yes. So it's not like you, You.

You.

The reason that they do that is because you let them do it.

That's right. It's expectations.

So if they get the expectation, if the expectation set, that you gonna put this in your own. But if you put that at the end of your loan, are your loans paying out all the way? Well, are you getting paid? I mean, what we do is we.

Tie it into a monthly payment. So if a customer comes in and let's say if they're really good customer, I'll finance tires for them, but they'll pay me every month. That would, you know, for the next five months. Okay, but let's say the car broke down because it needs a water pump. And I know if I don't fix that water pump, they're not gonna pay. We fix the water pump, right? And then we tie that side note in, and they pay over the next several months to get it paid for. So I think.

Yeah, because you're trying to get them to pay because you don't want the car back.

I get the car back. It's a night.

I mean, you got to do what you got to do there.

And I think that each dealer should.

Look at that, but try to get your money if you can. Right.

Always ask. And we ask for a down payment on that repair.

Because I don't think. Because JD by rider, they make them pay, Right. I would assume, you know, I think that's what their system and what they make. You know, if you finance a car at, you know, Hendrick Motors, even if it's A subprime deal like you, you go pay.

Always ask a couple more questions for you, Matt. We wrap this up, it's just, Geez Louise, man. This is definitely something I need, but.

We'Re gonna have to have you back at some point.

Sure.

Oh, my gosh. Is there a. Is there a standard flat rate? Because I guess that would be my question. And maybe it's all completely dependent on market and you got to do your research. But I look at this and it's like, well, some guys like, yeah, well, my flat rate, My hours of my flat rate don't matter because I'm getting such a high flat rate or vice versa. You guys are got me so slim on what my flat rate is that I got to bill out 90 to 100 hours pay period, or I'm not making my ends meet back home.

Yeah.

Where do you find that number?

I think that flat rate is probably market specific. I think you have to find out what your competition is paying and you have to be competitive with that. So I think that.

And then do you add things if they have certifications or if they have their own scan tools or if they have, you know, experience in these things?

So the way my. So the way my flat rate is, is again, it. It has bumps. Once you hit certain milestones of hours turn, you get a bump. Your flat rate pay, that's retroactive back to the first hour. Now, the only way that you get a raise in my company is if you get ASC certified. So as you move down the path of ASE certification, you get a little bit more. And so if you're ASE master tech, you get the top tier and top level of pay.

And what is that?

Just for instance, at your store?

Top level.

If you're a master tech, you know, if you do. If you do 60 hours and you're at top level, you know you're going to be making 33. Between 33 and $35 an hour. Flat rate turn per flat rate turn.

Yeah, that's good.

33 to $30 per flat rate. If you got 60 hours in a pay period in a week.

And you have all your ASCs.

And you have all your ASCs.

Cause you remember that's how you move down the path of getting raised in that way.

And where do you start a tech at your loot techs, what are they. Where are they getting?

They have a hourly pay to start, right? And it moves down from that. And then when you have, when you show that you can consistently turn over 30 hours and you move To a tier that's a flat rate tier from the hourly tier and then from there it's just certifications or what you want.

And what is that baseline, once they move past the 30 hour week. What's that baseline flat rate?

I think it's 17, $17, something like that, Roughly. I don't have it in front of.

Me, but it's a. I think I'm overpaying.

You may be, you may not, because your market may require you to pay.

One thing I found about technicians is the grass is always greener on the other side.

You know, salespeople too, buddy.

Yeah, that's true.

Technicians by nature are not. They do, they're. They're technical minded by nature. So they don't. They do one thing really, really well, right? Like they fix things or they build things, but other things like social interaction and you know, some of the other things that they struggle with. That's why you can't ever hardly make good technician a service rider, right? Because they can't work outside the scope of what they're good at because they're really engineer minded, right. They don't have the social skills and stuff to do the, to have the personalities to be able to get out here and sell and do things. So you're right, it used to be like that. So that's why now more than ever we got to work on our culture, got to work on our engagement to retain these people. Because there ain't a whole lot of technicians left out there. So if you have them, you better try to keep them. I'm not saying coddle them, but you have to take care of them.

Yeah. And that's why I always joked around their toolboxes got wheels on the bottom. You know, I was about to make that comment.

Well, you know, think about technicians with toolboxes with wheels on it. Like we set that up as, as, as repair garage. We set that system up of being nomads. Because you know, what other career do you do where you have to furnish your own tools and to go to work for somebody nowhere, right? Like you, when you go to work, if you work for the power company, they give you a bucket truck and your tools and you go fix power lines, right? Like you don't bring your own stuff.

They give you climbing gear and everything.

You don't bring your own stuff. So they had to bring their own stuff. Well, you set it up so they got to bring their own stuff. When it's time to roll out, they roll it all out.

The party words I want to give you guys are and we talked about it in the beginning culture and it's so hard to find text and everyone gets in a scarcity mentality and I've had it for the last last two months with a specific tech that I just we didn't let him go because we were so scared we couldn't replace him but he ended up souring the culture so badly that we ended up having to cut the strings and let him go and he got worse outside of here thank goodness he wasn't here but the same day we had a guy walk in off the street a buddy of ours from my general manager and great guy just awesome find so don't be scared to get rid of the bad apples if you think you're going to be short you might be short but what you can't do is have your whole culture suffer because you're just hanging on to someone too long.

That's a great way to end there. Jeff.

Sa.