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

Mike Lee
co-founder
Management Success!

Background

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.

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Growing Pains by Mike Lee

Mike Lee
co-founder
Management Success!

A majority of shop owners in the auto repair industry find taking the shop to the next level is their main problem. Their shops have either grown to a certain size in gross monthly sales and have then flattened off, or they can’t seem to take home enough money. It does not matter how big a shop has grown, when it comes to the owner’s checkbook, you should hear him groan.

The Four Stages of Business

The average business goes through four stages of development. These stages reflect the development of the shop owner’s business and management skills. Unfortunately some shops seem to get stuck in one stage of development and are unable to expand beyond it. Other shops are able to grow fairly quickly but can’t seem to make any money.

Stage One

In this stage we have the technician that has opened his first shop. In most cases, he is doing most of the work on the cars and handling the customers as best he can, along with doing all of the paperwork. Basically he is doing everything himself. This is the normal startup procedure.

Some shop owners get stuck in stage one and never really grow out of this condition. They hit a certain level of monthly sales and that is it.

Stage Two

In stage two we have a shop owner who has decided to go primarily into the front office to handle the customers or hire someone to do this for him so he can work on the cars. If he is the service writer he still helps out with fixing the cars in the shop.

Stage Three

In stage three the shop owner has expanded to the point that he has delegated the primary jobs to others. He has a service writer running the front office and other people fixing the cars in the shop. He helps out in the front with the customers in the morning and then will go into the shop to help solve the problems of his technicians. Delegating responsibility successfully gives him an opportunity to do other things to help the business grow.

Stage Four

Here we have a shop that has successfully expanded to high levels of volume. The owner is not required to be there to run the day-to-day operations. Profits are high and relatively stable. He is at a level where 80% of the shop owners in the country would love to be.

We Work Hard, So Why Don’t More of Us Arrive at Stage Four?

There is a rule of management that you will always expand up to the level of confusion that you can handle. When you get confused you go slow and make mistakes. This means that over time a shop owner may develop a big operation, but unless he really understands all the key areas of his business — personnel, marketing, finance, production, quality control, public relations, sales and management — his bottom line will suffer.

But I Don’t Have Any Dough!

Some shops do a million dollars in sales a year and aren’t making any money! If they are making money it isn’t a good return for the amount of business they have or the amount of effort they put into their business. Time and time again I have found shops doing more than $750,000 a year and not making any real profit.

The Real Problem

If you want to narrow all of these conditions down to one broad statement that defines the problem in the auto repair indus­try, it would be that the owners of these shops are very good at FIXING CARS. They can solve any problem with the cars in their shops if given enough time.

But the problem that is beating them up is that they don’t know how to FIX THE BUSINESS. They lack management skills and knowledge. Their lack of management skills is the primary reason they are not making enough money in the business.

Solution

In each of the four stages of a business, the solution is for the owner to quit being a mechanic and start being a businessman. He needs to learn to run his business. Running the business and making a profit is what a businessman is supposed to do. If the owner does this right he can slowly move up stage by stage.

Eventually he will move out of the hectic, overworked stages one and two until he arrives stably at stage three or four and is making DOUGH. That is my wish for you!

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How Do I Get My People to Work as a Team? by Robert Spitz

Bob Spitz
Senior VP Business Dev
Management Success!

Recently this question came up while I was having lunch with a friend of mine who owns a nice shop but is struggling with some production problems.  We were talking about increasing production by improving how employees dealt with each other within the business.  One of the problems he was running into was a lack of communication between the front and the back in his shop.  “I don’t get it, it seems so obvious to me, and yet my guys seem to be on different pages sometimes.”

“Did you ever play any team sports?” I asked.  “What makes a good team good?  Is it simply a matter of recruiting superstars, or is there more too it than that?”  He had played team sports and was still a member of a softball team in a league in his town.  We started to examine what made great teams great and how that could relate to his current situation.

All the good teams he had ever been on had the following attributes in common:

1. They had a common goal.
2. Each person knew his position in the game.
3. Each person understood how his actions and performance affected everyone else.
4. Each person knew all the other players positions.
5. They drilled and practiced all the time.
6. They had a good manager who knew how to motivate.
7. They looked at key statistics in their game.
8. They reviewed good and bad plays.
9. They got along great.

We then took the list and compared these points with his shop.  And I asked him the following questions:

1. “Do you have a goal for the business?  Have you shared this vision with your people?” 

Just like sports teams, any group needs to have an agreed upon goal or objective to perform well.  In sports it is usually to win the division or something even higher like a state championship.  Then that big goal is broken down into smaller goals, then right down to individual players’ goals. I worked with a shop years ago up in Minnesota who had similar problems.  We got his people together and asked them what would they really like to have that would improve their working conditions?  They unanimously announced they wanted a better building. This answer surprised the owner.  He had heard grumbling about the lack of work space but never saw this as an opportunity to unite his people toward a common purpose.  We set about a plan to accomplish this goal and gave it a two-year target.  This was presented to the crew with the sales and production numbers it would take to attain this goal.  Monthly and weekly targets were set with smaller short team bonuses for the crew to earn and within a year they were in a new building! So I asked my friend again, “Do you have a goal for the business and have you broken that goal down into lesser goals with a shorter time interval where everyone involved could experience the joy of winning?”

2. “Does each of your people really understand their job, what’s expected of them and how to measure their own performance?” 

A team only performs as well as the individual players are proficient at their individual jobs. There has to be a way of measuring the production and performance of each position in a shop, a certain statistic to keep track of for that position.

3. “Do your people completely understand how their actions and how their performance affects the performance of the others in the group and the overall performance of the shop?” 

Nobody in a group lives on an island.  Each member has to understand how their actions and performance effects the actions and performance of the other members in the group.

4.  “Do your people completely understand everyone else’s job and what it is they do and how that affects them?”

When individuals in a group do not have a good understanding of the jobs others around them perform it greatly decreases that group’s ability to perform at peak levels. Complete job descriptions for every position in the business must be available and completely understood by each person for their own position. 

5. “Do you take the time to train your people in their positions and drill people on the shop’s procedures?” 

A business that does not invest resources toward training is killing itself.  A shop has got to have a system and schedule for on-going training of each member of the group.  A shop also needs to hold training drills on the various administrative procedures in the shop.

6. “How do you compare with the good managers you have played under in those sports teams? Are you lacking any skills or knowledge to be a competent leader of your people?”

The owner of a business has many hats to wear but the primary ones are planning and the execution of plans.  This is easy to say but takes a very exact skill set to accomplish.  Top professional sports figures all have coaches.  An owner of a business would be wise to hire a competent business coach. 

7. “Like sports, a business must have Key Performance Indicators to gauge its effectiveness and progress toward a stated goal.  What stats or KPI’s are you managing with?” 

Understanding the sales-production-profit pipeline of a business and what the key statistics are to measure the success of an executive’s decisions and actions is vital to the achievement of the goals.

8. “It is a smart operator who videos their people in action and then review their performance with them. This gives management and staff a chance to reinforce positive actions and correct mistakes before incorrect actions become bad habits.” 

All pro sports players use video to enhance performance and it is something that should be done in the workplace.

9. “You had teams you were on where everyone got along great. That was because they were winning teams”. 

Keeping people winning on their jobs is an important part of managing and leadership.  Knowing how to set up bonus plans and quickly handling upsets with employees is all part of knowing how to win the game.

My friend sat back and looked at me and said, “I never looked at my business this way.  There is a lot of room for improvement, but now I have a direction to go in.” 

We hammered out a step-by-step plan to start implementing the changes that needed to be made to create a truly winning team, and I am happy to report the business now operates at a much higher level of sales and production and yes, they are getting along great!

If you would like to improve the performance of your business, give us a call, we would be happy to give you a free business analysis and get you pointed in the right direction.

Wishing you nothing but success!

Management Success!

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Management Success! Partners with the California Autobody Association to Support the Collision Repair Industry

LOS ANGELES, CA – December 2, 2013 – Management Success!, provider of the United States’ leading automotive consulting services for independent auto shops, announced today that it has become a corporate sponsor of the California Auto Body Association (CAA). The CAA is a non-profit trade association that aims to help independent auto body shops thrive.

“Management Success! has been working with the collision industry since 1998, helping to solve the multitude of management problems the modern-day collision center faces. In that time, Management Success! has helped train more collision shop owners and managers than any other independent consulting group in the U.S.,” said Robert Spitz, Senior Vice President of Business Development.

“We believe in the CAA’s mission and want to support them in any way we can,” Spitz affirmed.

The CAA sponsors periodic training, speakers, and presentations from a state level and through regional chapters.  The organization also supports many educational and training programs that its corporate sponsors and other industry groups provide to members. With over 1,000 members statewide, the CAA is well-positioned to deliver a relationship with Management Success! that takes members of both enterprises to the next level of training and management.

The sponsorship came about when members of the CAA who were Management Success! clients suggested the two companies partner to further each other’s goals.

“The CAA and Management Success! will be promoting the many benefits of educating shops owners and personnel to assist in making the shop a successful business,” said David McClune, Executive Director of the CAA.

For more information about Management Success’ training and consulting services, please visit www.managementsuccess.com. For more information about the CAA, visit http://www.calautobody.com/.

About Management Success!
Management Success! is an auto industry consulting firm that specializes in elevating the quality of life of shop owners all over the US and Canada. Founded in 1993 and headquartered in Glendale, CA, Management Success! helps shop owners become effective managers in order to increase profits. The Management Success! team believes shop owners deserve to be well-compensated for their hard work. Management Success! fully arms shop owners with every executive ability needed to win.

About CAA
The California Autobody Association (CAA) is a non-profit trade association comprised of over 1000 individual and independent businesses within the automobile collision repair industry. The mission of the California Autobody Association is to enable the auto body industry to survive and prosper by helping its members produce a quality repair for the consumer at a fair price for a fair profit.

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Keeping Employees Happy (The Basics of Employee Management) By Robert Spitz

Robert Spitz
Sr VP of Business Development
Management Success!

Dealing with employees can be one of the toughest challenges for a shop owner. By learning some basic strategies of employee management, an owner can reduce stress level, minimize personnel problems, and better ensure the success of the shop. 

Let’s start by going over some basic concepts. Employees are people you hire to work with you and assist you in achieving your business goals. An owner needs to have well-defined goals and be able to communicate them to employees to get their support. Good employees want to know what you are trying to accomplish, how they fit into the picture, and how they can benefit by helping you succeed.

To find and hire good people, you need to know what good people are looking for - what motivates them to get up in the morning and go to work. Of course people want money, but good people are also looking for a group to be part of, and they want to know that their work is contributing to something of importance. People always want to get compensated well for the work they do - but it is not the only thing they want. Many people also want stability, a well-organized, working environment with high morale and growth potential. Some look for an employer who can communicate clearly and who stays relatively calm even during times of high stress.

Take the time to sit down with your employees (or potential employees) one-on-one; find out what they want in life and what their goals and ambitions are. Make sure they understand what you expect from them, the level of production you demand, what their compensation will be if they achieve this level, and how this will help them get what they want out of life.

Your employee pay plan should reward high levels of production. It can even be tailored for each individual. One technician might work extra hard for a cash bonus while another might prefer paid vacation days for a reward. Just make sure you do not pay high wages or bonuses without also demanding high production. Many pay systems are based on hours on the job. These systems pay people who do not produce much the same wages as those who produce a lot. In companies with these systems, employees learn that if they just show up and look like they are working, they will get paid. It is up to the owner to demand high production and to reward it. Do not reward the underachiever.

Make sure you have a system for tracking and monitoring production, and graph and post these statistics weekly. Your best employees will feel acknowledged and, hopefully, the worst will feel the need to improve. Each employee should be responsible for at least one statistic that measures the main thing he or she is producing on his job. For example, each technician’s billable hours should be calculated weekly and depicted on a sheet of graph paper. Post these graphs so that each employee knows where he or she stands. Employees need to know that their employment and pay is based on their level of production and its value to the company - not on whom they know, their personality, or other arbitrary factors. An employer who does not enforce this kind of accountability from employees is likely to make personnel decisions based on guesswork rather than facts.

An interesting question to ask any employee is, “Where does your pay check come from?” Many will respond, “My boss.” Some are closer to the mark when they say, “The customer.” The truth of the matter is that employees' pay comes from their own hard work and their ability to produce quality products and services that the business can sell to customers for income and support.

The executive of a business must be able to organize the activities of the business and train employees so that they will be able to produce valuable products. Most people want to achieve results they can be proud of and, to a great extent, it is up to the owner to make sure they can be proud of their products. It is an owner’s responsibility to make sure that all employees who come on board are given a clearly delineated job and adequately trained so that they understand how to do their job. They also need to be shown what their job means to the rest of the crew, and they need to know about the overall product the company produces. Unless every employee is aware of how his or her job relates to the final product of the company, you will never really have an efficient team working together to achieve your goals.

Mandatory weekly meetings with your crew will strengthen the concept of a team - that you are not just a bunch of individuals running around frantically trying to get something done - and will give you a chance, as a team, to review how the shop did during the previous week. It is vital to stay positive in these meetings, to accentuate and focus on the production and improvements that were made in the previous week, and to set targets for the upcoming week. Stay upbeat, and do not let the meeting drag on. If a particular employee did something above and beyond the norm, acknowledge him or her in front of the group. If there are any corrections or improvements you want to see, go over those, too. However, never single someone out for correction in front of the group. If you are unhappy with someone, always address this with him or her privately.

Help each of your employees see the priorities of the business correctly: first, to make sure the customer wins because without customers there is no purpose for the shop; and second, to make sure the shop is winning (viable) because without the shop, there is no purpose (or paycheck) for the employees. Finally, the employees have to win because if they can’t win, they won’t stay. Review these priorities at your team meetings and make sure everyone understands them.

Managing employees is a primary responsibility of an owner. Your success at it will be a reflection of your attitude toward the business. You set the tempo and the pace for your crew. If your standards are high and you demonstrate your commitment to meeting these standards, employees will follow. If you show genuine care for your people, they will respond.

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Management Success! Debuts Shop Management Innovations at Fall Convention

Management Success!
2013 Fall Convention

LOS ANGELES, CA – October 4th, 2013 – Premier auto industry consulting firm Management Success! introduced several new, more efficient tools for shop organization and flow at its Fall Convention—the company’s largest convention ever at nearly 200 people. The convention took place at the Glendale Hilton from September 20th to September 22nd. Attendees included auto shops from all over the country and Canada as well as representatives from DemandForce, the leader in small business emarketing solutions, and 10 Missions Media, which publishes Fender Bender and Ratchet & Wrench.

The theme of the Fall Convention was Cutting-Edge Solutions for Today’s Shop, and the company’s dynamic partnership announcements certainly fit the bill. Management Success’ statistics system now auto populates with statistics from the NAPATracs interface to save shop owners time and to eliminate human error. While this partnership was originally announced at the Spring Convention in Destin, FL, the stats system is now in place and available for all Management Success! clients.

“A business cannot make correct management decisions without accurate and timely data. These new interfaces will provide our clients with this kind of information,” said Robert Spitz, Vice President of Production at Management Success!

Management Success! also announced its new partnership with DemandForce, with more details to emerge at the next convention.

The theme of innovative solutions extended to the two new courses offered at the convention—The Art of Diagnosing Your Shop, taught by Senior Consultant Wency Severi, and Hiring in the New Age, taught by Consultant Ari Cohen. The Art of Diagnosing Your Shop showed clients how to determine the real problem and find real solutions, while Hiring in the New Age explained how to employ online techniques to recruit a new generation of employees.

Though the convention played stage to Management Success’ new developments, it was also a time to recognize the hard work put in by clients who had gone above and beyond.

During the Awards Dinner on Friday, September 20th, Dino Di Giulio of Body Best of Sonoma became the third person ever in Management Success’ 20-year history to receive the Master Elite of Shop Management Award. Coming to the stage to accept his award, Di Giulio gave a rousing speech about his journey, which was met with a standing ovation.

“Twice a year Management Success! awards shops that have done the necessary training and have demonstrated competence at the various levels of shop management. They have passed through a rigorous battery of performance benchmarks and shop inspections,” Spitz affirmed. “The Master Elite of Shop Management is the highest honor an owner of an auto repair facility can achieve. We are all very proud of Dino,” Spitz added.

Other highlights of the night included the Master of Shop Management Award, given to Brian Small of Doc’s Auto Clinic; Competent Shop Owner was awarded to Joe & Lori Fenski of Fenski Automotive Center; the Effective Shop Management Award, given to Amanda Pederson of B & D Industrial Service and Curtis & Tracy D’Addario of D’Addario’s Auto Service Inc.; and the new Sustaining the Masters of Shop Management Award, given to David Saline & Lynnetta Rogers of 2nd-to-None Service and PJ & Jackie Robert of Roberts Automotive.

Saturday night took a turn for the jubilant, with a roaring ‘20s-themed dinner. Clients went undercover as zoot suit-clad mobsters and flashy flappers, competing for fun costume prizes, playing table games, and dancing into the night to ‘20s and ‘80s tunes.

The sparkle and glamour of the event alluded to the ritzy location of the next convention—Las Vegas. The Spring 2014 convention will be called Stable, Profitable, and Loving It! and will take place over the course of five days. Clients can expect a convention filled with hard work and a brand of fun only Las Vegas can offer.

About Management Success!
Management Success! is an auto industry training and consulting firm that specializes in elevating the quality of life of shop owners all over the US and Canada. Founded in 1993 and headquartered in Glendale, CA, Management Success! helps shop owners become effective managers in order to increase profits. The Management Success! team believes shop owners deserve to be well-compensated for their hard work. Management Success! fully arms shop owners with every executive ability needed to win.

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Please contact Management Success’ Marketing Department at Morgan.Scott@managementsuccess.com or (818) 500-9631 for more information regarding Management Success! conventions and training programs.

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