Tuesday, February 4, 2014

The Adventures of MACH TWO – The Mild Mannered Automotive Shop Owner By Mike Lee

Mike Lee
Management Success!

This is a story about a guy who is in the automotive business.  His nickname is MACH TWO.  He has red hair.  The reason for his nickname is that he works hard in his shop all day and always seems to be going MACH TWO with his hair on fire.  But, I am getting ahead of myself.  Let me start at the beginning.

A number of years ago, MACH TWO was a technician at somebody else's shop.  He had been working as a mechanic for about seven years and was considered to be a pretty sharp technician.  He was a good guy who worked hard and seemed to get along with everyone.

MACH TWO had always dreamed of opening his own shop.  Over the years he had build a pretty good reputation during the day at the shop that he worked for and had developed a small clientele of people who he was doing work for out his garage at night and on the weekends.  He had put away quite a bit of money, so when the time was right he decided to open his own business.

Chapter One:
The Beginning

In this first chapter of the continuing adventures of MACH TWO, the mild mannered technician, he has decided to open his own shop.  He has found a nice two-bay shop that he can rent cheaply enough to start his new business. 

The first nine months pass by quickly and MACH TWO is doing well.  Of course, there are many things that he has to deal with that he had never thought about before, like all of that government red tape.

I Am From the Government – Give Me Your Money

It all started with the phone call from the City which indicated that he was not allowed to run a business without a business license.  So MACH TWO went down to the City offices and was asked to fill out all kinds of paperwork that he did not understand.  Although, he was beginning to understand, after paying for his business license, that this being in business was going to cost him some money.

Of course, he needed someone to help him with his paperwork, he knew that.  So he hired a friend as a part-time bookkeeper to help him keep up with the paperwork.  He quickly found out that there sure was a lot of paperwork involved with running a business.  At the garage, he handled everything out of his pocket, not a problem.

And there was that little matter of not having a resale number.  MACH TWO was surprised to see how excited the people from the state sales tax office got when they found out that he had not been charging sales tax on his work.  Luckily, he had enough cash in the bank to handle their bill.  Gee, those city government people just don't seem to have a sense of humor.

But, they seemed calm compared to those guys from the IRS.  When they found out that he hadn't been paying employee taxes, things were a little tense for a while.  Something about going to jail, taking his house and a bunch of other unpleasant stuff.  After all of this, he decided that this was definitely not a fun group to have to handle.  All of these government people seemed to have graduated from the MORTICIAN SCHOOL OF COMEDY.  They were a group that was absolutely too serious.

Many would have been discouraged by now, but not our mild mannered MACH TWO.  All of his money that he had put away was gone, but his business was thriving and he decided that if he could just be left alone to work on the customers' cars, he would be able to make all of his money back rather quickly.

However, just as things start to look up, he has a meeting with his friend, part-time bookkeeper a week before the April 15th tax deadline.  At this meeting, the bookkeeper informs him that he has done real well in his first year in business and he is going to owe the government about $9,000 in taxes.  Which, of course, is just about $8,900 more than he has in his savings account.

Now MACH TWO is really in confusion.  His accountant is telling him that according to what he had worked up from the paperwork that MACH TWO gave him in a PARTS BOX at the year-end, it shows that he has been very profitable and owes the government $9,000 in taxes.

Now MACH TWO is really confused.  His bookkeeper is telling him that he has had a very profitable year and yet he owes the government $9,000 in taxes that he does not have.
MACH TWO having operated his finances for years on the BIG POCKET THEORY of finance, is totally beside himself.  (For those of you who are wondering about the BIG POCKET THEORY, it is a theory which states that if a shop owner has lots of money in his pocket, he has made money and if he has no money in his pocket, he ain't made any money.)

So, finally the mild mannered MACH TWO begins to lose his patience and demands that his NOW ex-friend and SOON TO BE ex-bookkeeper, explain how it could be that he owes $9,000 in taxes when he has no money in his checkbook.

The accountant takes the financial statements and shows MACH TWO the figures which indicate that he has made lots of profit and explains that the government wants its share.  At this point, MACH TWO goes ballistic.  MACH TWO has his own idea of what the figures should be and they do not match at all the figures that the soon to be ex-accountant has worked out.

After much discussion, about the only thing that MACH TWO understands is that somehow he, supposedly, owes the government $9,000 in taxes that he doesn't have.  The bookkeeper says that he might be able to borrow the money from the bank, because his shop is doing so well.

MACH TWO goes home in total confusion.  He had worked so hard to develop a respectable business.  His business was already doing between $10,000 and $15,000 a month in less than a year.  He has 1 – 2 mechanics helping him.

Even with his one or two mechanics helping him he was still working more hours than he has ever done in his life and felt as though he were going backwards.

Before going into the automotive repair business, MACH TWO had put quite a bit of money away in savings and now it was all gone.  Worse yet was the fact that the government wanted $9,000 in taxes that he did not have.

MACH TWO Solution:  MACH TWO decides that this whole government game is horse feathers.  He is not going to give the government money that he doesn't have, so he decides to get a computer and have the wife do the books and he going to run his business on the industry famous NRU method of accounting.  (NRU stands for NEVER RUNG UP.)

Real Solutions:

1.  MACH TWO needs to get a good accountant.  One that doesn't work for the IRS.
2.  MACH TWO needs to learn to quit fixing cars and start learning how to run his business.

In the next chapter of The Adventures of MACH TWO, MACH TWO runs into employee problems.