The second part of the episode we cover the January shop efficiency numbers, and the P&L report for the shop to see how its doing and what we need to spend more time working on next month!
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Check out Episode 1 below where we give a tour of our shop, Evolution Dynamics, and don't forget to subscribe to our youtube channel!
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But, what should the goal be? You have many options to consider and thig blog post will help you decide what is best for you.
People often fall into the trap of setting their goal as a specific revenue number. While reaching a revenue milestone can be cause for celebration, it should not be a business goal. This is because revenue rarely translates into more money in our pocket.
Time and time again, we see shop owners focusing on their revenue and lose sight of the real number that matters; profit. Getting more revenue is easy. You can reduce the prices for your product to sell more. You can hire another technician to complete more work. Or you can take in really large jobs that you may not be used to doing.
The problem with each one of these solutions is that none of them positively affect your margins or efficiency. They may generate more dollars in revenue, but may cost you even more in wages and lost margins.
Your goal should be to make the business run better and be more profitable. As an owner and manager, it is up to you to guide the business to success. It is also up to you to communicate your goal to your entire team. If you can get everybody on board, you will have an easier time reaching that goal.
Start by thinking about the things that take up a lot of your time that or things you don’t enjoy doing. Then, create a plan of action to address these issues. Below are some good goals that you can consider.
As a business grows, you may find yourself spending less and less time actually working with your hands and more time sitting at your desk. This is inevitable as you hire more people, take on more projects, and your managerial roles increase. But, you don’t necessarily have to spend 100% of your time behind the desk nor should you only be working on projects after-hours.
If you want to get back out in the shop and work with your hands, set a specific goal for the number of hours you would like to bill each week. To achieve this goal, step back and think of what activities take up most of your time.
If you are constantly being bombarded with texts, Facebook messages, and phone calls, consider directing people to email you with all of their questions. You can have your Facebook messenger automatically respond for you and you can change your voicemail to instruct people to send an email. You can also say “Please send me an email with your questions” in a text to get people in the habit of emailing you. Then, schedule specific times each day to check and respond to emails. Before you start working, during or immediately after lunch, and just before you leave for the day are great times to sit and answer emails. Segmenting specific times at the computer will help you focus on the task of answering all the emails.
Does it take you forever to make estimates and invoices for customers? If you are repeating installs with the same parts each time, create specific Tasks and Parts in your accounting system with the name, description, and pricing. That way, when you go to add it again, you don’t have to type in “Labor” or “Part” and then rewrite the description and guess or look up the price. This will save you a lot of time and reduce the time required to make estimates and invoices.
You may also have to relinquish some control in order to get back into the shop and bill hours. This means delegating tasks to another person. To ensure that the tasks are done correctly, you will need to train that person on how you want it done and your expected results. Check out our Roles and Responsibilities blog as a guide to what tasks you can offload.
On this same note as above, you can also set your goal to have the business run without you there. Can you imagine being able to take a vacation?! To separate yourself from the business, you need to put systems in place that allow others to do the tasks normally only you can do.
Things like delegating tasks to technicians, scheduling jobs, communicating progress to customers, creating estimates and invoices, and even tuning cars. All of these tasks (except for the last one) can be done in My Shop Assist and anybody can be trained to do them.
This idea is clearly outlined with a famous management book The E-Myth Revisited. It contains insight into creating and implementing systems which other people can perform. This is where we derived the phrase “work ON your business, not IN your business.” Taking this to heart can allow you to step away from the business and not have it burn to the ground, figuratively.
We talk a lot about service efficiency in these blog posts because it is the single most important factor for the success of a shop. We created a video called Determining your Shop Efficiency that you can watch to figure out where you stand.
If you can increase the service efficiency of the shop from 50% to 60%, you will see a significant bump in your profits. This is because you are completing more work with the same amount of space and manpower. More revenue with same expenses equals more profit!
One way to increase service efficiency is to make sure you are charging properly for your installs. If you are a typical performance installation shop, you repeat many of the installs and become proficient at finishing them quickly. If this is the case, you shouldn’t be charging by time, you should be charging by your skill set.
Another good step is to set the expectations for your employees. You should provide your technicians with specific estimated hours for how long you think it should take them to complete an install. If you tell them is should take no more than 4 hours to swap a turbo out, they will usually do it in less time. But, if you just hand them a turbo without an expectation, they may take 5 hours to do the same job.
If you use My Shop Assist, you can assign each task to the appropriate technician and give it a specific number of estimated hours. That way, they can track their time and you can see if they are performing up to your standards.
You can also consider hiring a part-time entry-level employee to offload a lot of the overhead work from the mechanics. This includes tasks such as cleaning the shop, boxing up parts, and running errands. By doing this, you are freeing up your skilled workers to bill hours on customer projects.
If you are a machine shop and offer specialty machining for a limited number of engines, a lead time goal is an excellent metric! If you find that each project takes 6 weeks to complete, begin to ask yourself why.
You can significantly reduce lead times by investing in a couple cores. This means spending some of your money to purchase new blocks or heads and have them ready to be worked. While this is a large dollar investment up front, it allows you to begin working on the project immediately and not have to wait for the customer’s parts.
You may also consider reducing the number of options you provide. This means not offering every single piston manufacturer with different tolerances. Pick and choose the ones you know are best and only offer those. To take it a step further, you can even keep a few sets of each in stock.
Same goes for hardware for head work. If you can keep the most common springs and valves in stock, it can significantly reduce your lead time to get work finished.
Lastly, organizing the process flow with My Shop Assist can ensure that you are doing exactly what the customer is paying for. This means installing the correct parts to the correct specs every time and ensuring that their specific requests are documented and completed.
One critical aspect to consider is communicating this goal to your whole team. Getting everybody on the same page will help you to achieve the goal. It should be communicated to your employees that a well-running business benefits them all! Don’t be shy in expressing your goal(s) and why it is important that everybody help out.
Your goal It is also not something that is achieved overnight. It may take the entire year to reach the goal! It’s a good idea to track your progress and make sure you are heading toward that goal. If your service efficiency is currently at 40%, write it down in a spreadsheet. Then write down the service efficiency of each month to track the improvements.
It’s also a good idea to write the goal down and display it prominently where you will see it every day. That way, you are constantly reminded to stay on task and reach the goal.
The purpose of this post is to get you thinking on ways to improve your business and not just do more of the same. Having a more organized and efficient shop will result in a better quality of life and more profit. To get to this point, you need to set a goal and think about ways to reach it!
]]>This employee review gives you an opportunity to talk with the employee and quantify how they are doing. If done on a regular basis (say every quarter or end of each month), it will allow you to see trends in improvement or lack of change. You can also compare their performance against other employees at the shop which can come in very handy if you will be giving out raises at the end of the year.
The technician is the easiest employee type to review since they have one main role: complete installs in a timely manner with no mistakes. The purpose of the review is to see if they are accomplishing this goal and making you money.
If they are not performing up to your standards, this review will give you an opportunity to let them know and allow them time to correct the problem. If that employee is consistently underperforming, it will provide you concrete reasoning to let them go.
When conducting the review, you are looking for their Service Efficiency. That is, how many hours are they billing to customers versus how many hours are they being paid. Ideally, each technician should be 100% efficient. In reality, that number will change depending on how your shop operates.
It is imperative to have a system in place to track their time accurately. One of the main features of My Shop Assist is the ability to have technicians track time on each individual task assigned to them. That way, you can quickly and easily see how much work they are completing and how long it is taking. If you are not requiring them to track their time, you don’t have a clear metric with which to evaluate them and you may be losing money without even knowing it.
If you are a restoration or fabrication shop, your jobs are all billed as Time and Material. This means that you are charging the customer exactly how many hours the technician is working on the job. It is critical for the technician to accurately track their time so you are billing correctly.
If you are having your technician fill out a time sheet at the end of the day (or worse, end of the week), there is no way to guarantee the information is accurate. You should try to implement a process where they accurately log each minute they are working on jobs.
In this scenario, you are looking for an efficiency as close to 100% as possible. Meaning that they are always doing something on a customer’s car when they are clocked in.
If your Time and Material technicians are not reaching that 100% efficiency goal, you need to ask yourself why. It could be for many reasons:
Some of the reasons fall on the technician and some fall on you as the owner. Regardless, it is good to know why and work on fixing the issue.
You can also set a realistic benchmark percentage based on everybody’s performance. Keep in mind that it needs to be a goal that must be worked towards. While 100% efficiency may not be realistically attainable, 85% sure is. This means that each tech is billing at least 6.8 hours in each 8-hour day. If they bill more, great! If they bill less, work on finding and fixing the problem.
If your shop specializes in a few platforms and repeats similar installs all the time, you should be charging the customer a flat rate for the majority of the installs. We understand that every car and install is a little different, but it should be a goal to create a Task List of your typical services along with estimated hours and prices. This will greatly improve your ability to review each technician.
Having “Labor” and then a unique description makes it very difficult to evaluate technician performance and adds a lot of unnecessary and repetitive data entry for the person making the invoice. Try to make a list of tasks and set the pricing to cover the majority of the install cases.
If you have a detailed task list and your technicians are tracking their time on each task, you can calculate their efficiency (estimated hours billed over hours at the shop) and their productivity (estimated hours billed over hours logged on tasks). As an example, let’s use Kevin Dubois’ time for October at his shop, Evolution Dynamics:
As you can see, two weeks were above 100% efficient, one was close to 100%, and one was way below. Looking at the average for the month, the efficiency comes in at 88%.
Considering he is a 1-man shop and does all of the overhead activities himself, this number is extremely high. This is because he bills the customers a flat rate no matter how long the task takes. He has perfected the installs and can do them quicker than anybody else while still maintaining a high level of quality. This allows him to charge according to his skills and reputation instead of by how long it takes.
This sort of average value is what you are looking for in a technician. If your goal efficiency is 90%, this technician comes very close and is doing a great job!
Productivity is another metric that can be reviewed. It is the relationship between how long each install takes versus the estimated time. This is how a dealership bills the customer and pays the technician. It helps incentive the tech to work faster but not make mistakes.
Ideally, you want your technicians to have a productivity level above 100%. This means that they are completing tasks faster than your estimated time. If they are not reaching this goal, it could be caused by many reasons:
All of the instances mentioned above can be corrected fairly easily. But, you have to be conducting employee reviews to spot the problems.
We can’t stress enough how important it is to conduct regular reviews of the employees! It provides a formal, non-confrontational, and informative setting to determine what the problems are and how to fix them by providing clear, data-driven metrics. You should prepare all of the data beforehand and then sit down with each person to explain their performance.
After conducting the reviews, you may find there is one stellar technician who completes all the work quickly and right the first time. That person exemplifies the type of employee you want and should be rewarded for the accomplishment.
You may also find that one person is really slacking and not producing work according to your standards. Conducting the review will allow you to explain this to the employee and give them a chance to correct it. If they can’t meet your expectations, you may be better off letting them go and finding somebody better (or not even hiring somebody to take their place).
The goal of the review is to ensure all employees are contributing positively to your business. If you don’t ever conduct a review, you may feel like somebody is dragging you down, but you don’t have any concrete proof to back it up. By deciding on clear metrics to track, you can increase the efficiency of the shop as a whole and put more money into your pocket.
Throughout this post, we have highlighted the need for the technicians to accurately track your time. All of the reports and metrics mentioned above can be calculated using our My Shop Assist software. If you are interested in learning more, please visit our website or email support@MyShopAssist.com with questions.
]]>We have written blog posts that cover Preparing for Your First Employee and detailed the various Employee Types. Now, we are going to cover some ways to determine which of these employee types is actually right for your business. This post is directed mainly at hiring the first employee, but it is also applicable to hiring your 4th or 20th employee.
For this post, we are going to assume the owner is working a 60-hour week and the breakdown in time spent at the shop is as follows:
At face value, most people think hiring a technician will bring in the most money. While this makes sense on paper, it rarely works out that way.
The thinking is this: “If I hire a technician to work 40 hours each week, he will bring in 40 hours of labor. If I pay him $20/hour and charge the customer $100/hour, I’ll make an extra $3,200 each month!” But, there are a lot of assumptions being made in this thought process that don’t always work as intended.
First, you are assuming your new hire is as efficient as you. In reality, your technician will never be as efficient as you. It will also take the new technician several weeks or months to get familiarized with your platform and become proficient at the installs. Something you can complete in 5 hours may take them 6 or 7 hours to finish.
Second, you assume they will never make mistakes. While nobody is perfect, a new employee is more likely to make mistakes than you are. Also, they may not be as meticulous which means more things will slip through the cracks and cause issues later.
Third, you assume you have enough jobs to absorb the additional 40 hours of labor capacity each week for the foreseeable future. While you may be very busy right now and can’t seem to get ahead of the work, it is very difficult to ensure there is enough work to fill a technician’s schedule each week. With the additional capacity of man hours, you have also increased the number of phone calls, estimates, invoice payments, parts orders, etc. All of this leaves you with less time to work on cars.
Fourth, if you have never managed people before, you may have difficulty adapting to the new job requirements. Being a manager isn’t for everybody so don’t feel discouraged if you have difficulty with this position.
Even considering all that was mentioned above, let’s pretend that we add a technician at 40 hours/week and they are 100% efficient and don’t make any mistakes. While the new technician adds 66% (40-man hours on top of your 60 each week) to your total available man hours, he also increases your overhead load by 66%. Below is a graphical representation of what that does to your weekly breakdown:
As you can see, hiring a technician first significantly reduces your available time to work on cars. We see this time and time again at performance shops. They get extremely busy, hire a technician, and then actually get less work done. If you encountered this scenario, this graph explains why!
And things get much worse if you factor in the reality that your technician is not as fast and will make more mistakes than you. The total number of billed hours begins to drop very quickly.
As mentioned in the beginning of this post, the most important thing about an employee is their ability to add money to your pocket. As the owner of a 1-man shop, your time is split between direct labor (working on cars) and overhead labor (paying bills, answering the phone, cleaning, etc.). If you hire somebody to do some of the overhead tasks for you, it will free up time to work on cars.
The easiest and least-risky employee to hire is the Shop Hand. This person needs no prior automotive experience and there aren’t any special skills involved with their activities. Qualified applicants also in abundant supply because enthusiasm is all that is required to do the job.
You have most certainly heard stories about people who got their automotive career started by sweeping the floors and cleaning the bathrooms. That is the person you are looking for with a shop hand. It is somebody who is enthusiastic about the automotive industry and ready to learn.
Hiring a shop hand will increase your service efficiency almost immediately. This is because they can do things like mopping & sweeping the floors, taking out the trash, and cleaning tools or machines. As the sole person at the shop, you are currently doing all these activities while you could be working on cars.
If you have the shop hand come Monday, Wednesday, and Friday for 3 hours each afternoon, that will free up 9 hours each week for you to work on cars. If you pay that employee $10/hour, you could net as much as $810 each week simply because you won’t be doing overhead activities. Here is what your week now looks like using the original data:
While the above example is an ideal situation, the math makes sense in almost any scenario. The Shop Hand offloads the simple tasks that don’t generate any money which frees up time for you to work on cars. The key is to start the employee off slow and ramp up their hours as needed. Finding a high school or trade school student for this job is relatively simple and low risk for you.
An added bonus is that you can potentially train this employee to do basic installs or just disassemble things you need to work on. This process of slowly increasing their job duties allows you to grow the business at a reasonable pace with little risk.
Another position that can offload a lot of the overhead tasks is the Front Desk person. This position is a little harder to fill because it requires a bit of accounting and sales knowledge to be performed well. Luckily, these skills can be taught and are made easier by an organized and proper accounting system.
If you have created a detailed list of services you offer and parts you sell, this employee can make basic estimates. This employee can also enter in all the bills and take payments from customers. If a customer calls to ask about the progress of their build, the front desk person can look up the status on My Shop Assist and answer their question right away. This person can also be in charge of posting to social media and updating the website with new products or services.
All of these activities are relatively simple but can take up a lot of your time if you are a 1-man shop. Below shows how this employee can free up even more time for you to work on cars:
Just like the shop hand employee, the purpose of this employee is to offload a lot of the tasks that keep you from working on cars. If they spend 6 hours each week entering bills, answering basic phone & email questions, and making Facebook posts, that is 6 more hours freed up for you to work on cars and bill time to customers.
This position isn’t really applicable to a small shop, but can be necessary if you have 3 or 4 technicians in the future. The role of this person is to ensure the technicians have all the tools and parts needed to complete an install as quickly as possible.
You can consider hiring this type of employee if you enjoy making estimates for customers, creating content for your website & media outlets, or going to events to showcase your builds. Essentially, you need the Manager to ensure things are going smoothly in the shop while you promote your business.
A Manager can also come in handy if you just want to focus on doing the work and not talking with customers. While it is difficult to separate yourself from customer interactions, doing so will ensure that you bill as many hours as possible while you are at the shop. We see this happen more at machine shops or custom fabrication businesses where the owner is the most skilled technician and doesn’t want to interact with customers.
The crucial thing to remember with all of these positions is that they increase the money going into your pocket. There is a big difference between increasing revenue (not necessary into your pocket) and profit (going directly to your pocket).
That is why we caution you from hiring a technician as your first employee. It is much easier to hire a part time Shop Hand or Front Desk person to offload some of the activities you don’t like to do so that you can spend more time working on cars.
If you are looking to grow your business, keep that in mind with each person that you hire. If you want to prepare your shop to handle the extra workload, please check out our My Shop Assist project management software!
]]>The formal document containing these roles and responsibilities is called the Employee Handbook. The handbook should contain all important information pertaining to that specific employee:
Your state will have specific requirements for many of these items and it is strongly advised to have any documents you create checked by a business lawyer. They can help steer you in the right direction and ensure what you create has a legal standing. And there are plenty of online resources available (such as this Employee Handbook example) to help you with this process.
Once the handbook has been finalized, both you and the employee should sign it. Then, you keep one copy and give another copy to the employee.
Each employee type should have their own set of specific roles and responsibilities. We briefly discussed different employee types and their roles in our Workflow Process blog post which pertained to a job making its way through the shop.
If you are a 1-man shop, you will act as each of the different roles outlined below. But, the instant you hire your first employee, your focus needs to shift to that of a Manager. This means that you will be spending a lot of your time delegating tasks and checking the work of your employee(s).
Below is a list of several employee types and a general list of roles and responsibilities for each. These are merely examples so feel free to change them to suite your specific needs. Some descriptions will overlap slightly depending on the intricacies of the job.
The goal for this employee is to manage the technicians and ensure all the work gets completed on time and in accordance with the customer’s expectations. Often times, the manager is also the lead technician so he/she may be installing parts on vehicles as well. If this is the case, it is still a good idea to clearly outline your role and how it integrates with the business. Below is a typical list of the Manager’s activities:
* My Shop Assist is a great tool to help with these activities.
The technician’s main role is to install parts onto the vehicle. They should be provided with all of the parts needed and any specialty tools required. Efficiency should be their #1 goal (meaning completing work quickly and without mistakes). It is paramount to give the technician a clear list of tasks with explicit estimated hours to ensure they understand what is expected of them. Below is a list of the Technician’s activities:
* My Shop Assist is a great tool to help with these activities.
This person is often the most difficult person to hire. Mainly because they need to be skilled in accounting, customer service, social media, and have an intimate knowledge of the platform(s). Often times, this role is filled by the owner’s spouse, but that may not be an option for every shop.
In our Shop Management Part 2: Creating the List blog post, we explained why it is so important to create a detailed service list (with prices, descriptions, and estimated hours) for your normal services. Doing this makes it much easier for the Front Desk person to create estimates for potential customers. This takes a lot of the “internal knowledge” the owner may have in their head and puts it in a format anybody can reference.
Having a clear list of roles and responsibilities for this position will make it much easier to find and train that employee. Below is a list of the Front Desk Person’s activities:
* My Shop Assist is a great tool to track parts orders and create estimates/invoices.
The purpose of the Shop Hand is to offload simple tasks from the “skilled” employees. This frees up time for the technicians and manager to concentrate on installing parts and managing the shop, respectively. The Shop Hand position is relatively easy to fill because the only real requirements are availability, enthusiasm, and attitude. These qualities are in abundant supply within the automotive community.
Setting a clear list of roles and responsibilities for this person will ensure they don’t waste time around the shop. Many of their activities can be scheduled daily, weekly, or monthly. Clearly explain your expectations for each one of their activities so they know how you would like it done. This means demonstrating how you like the windows cleaned, that you never want fluids left on the ground, and how you clean the bathroom.
This employee type can be perfect for a shop's first hire. You can start this person part-time to offload very simple tasks and help you become more efficient. Below is a list of activities for the Shop Hand:
It will still take a lot of human interaction to properly run a shop. But, providing roles and responsibilities for each employee will outline your expectations of them when they are at work. This helps both with hiring new people to fill the positions and in adding some professionalism to people already employed.
]]>Many small business owners fool themselves into believing they can just hire somebody, put them to work, and expect perfect quality every time. Truth is, it takes a lot of time and effort to manage just one employee.
It is your business and you have built it from the ground up. Your next step is to build a team you can trust and rely on to move your business forward.
As mentioned in our previous blog post, the first step in hiring an employee is preparing yourself and your shop for the extra set of hands. This means having a clear understanding of the workflow steps, a catalog of tasks with estimated times, a way to delegate tasks & track their time, and clear roles & responsibilities laid out. We created our My Shop Assist software to handle the task list and delegating work to the technicians. The other steps are on you to perfect.
Of the 6 steps in the Workflow Process blog post, the new technician will only be responsible for #4: Working the Job. This means that you will be burdened with more customer inquiries, parts orders, bills, invoices, and evaluation of the work to do.
Simply put: you will have more overhead responsibilities of running the business and less time to spend working on cars. Your role at the shop will shift from mechanic to manager.
You will need to set aside a work space for the new technician. If you are like most small shops, you may only have 1 lift that you normally use. That won’t work when there are two people wrenching on cars at the same time.
Ensure that the space is laid out to accommodate another lift, another person, their tools, shelves for parts, and space to work. Don’t force your new technician to work on the ground with jack stands and then expect them to be efficient.
You will need to provide a detailed list of roles, responsibilities, and expectations for your future employee. This means things like; hours of operation, employee conduct (cell phone use, smoking, personal hygiene, etc.), tool requirements, job duties, trial period, pay raise evaluation, and industry experience.
To help you out with this process, below is a general list that we put together.
With this job description in hand, you can begin reaching out to find that person.
Just like with any formal education, graduating proves that the student is able to learn and their grades reflect that ability. It does not mean that they will be able to wire up a MoTeC ECU or rebuild a dogbox transmission.
You need to be looking for motivated and enthusiastic individuals who earned good grades and high attendance records. This is the best indication about them as an employee as you are going to get.
It will be up to you to train and inform them about your specific platform. Do not expect them to know how to do everything and be prepared to show them particular installs several times to ensure proficiency.
It will also be on your shoulders to actively seek out these specific potential technicians. Make a visit to the trade school and speak with the placement department. Tell them exactly what you are looking for and see if they have any applicable candidates. If they do not, ask them where else to try.
We have interviewed the founder of SAMTech on our podcast and recommend them if you run a machine shop. It is an established business with an excellent track record of teaching qualified machinist. But, their students are in high demand, so don’t expect to hire a quality machinist at a bargain hourly rate. Again, talk with them and see if any of their students fit your needs.
Facebook is the farthest-reaching platform you will have to attract possible technicians. But, it is also very broad and open to anybody. This feature has been so widespread that Facebook even added a “Publish a Job Post” option for your page.
Ask them to fill out a simple questionnaire that you create (similar to the one posted above in the Job Description section) and email it back to you. If you do not get a well-thought-out response, you can immediately eliminate that candidate.
You are in the automotive industry every day at your job. You may know somebody who is looking to start or change careers and may be a good fit at your shop.
Your customer base is a good place to start. If you have tuned a guy’s car several times over the years and never have any mechanical issues with it, he may be a candidate as an employee.
Same goes for your friends. If you were always wrenching with a buddy in your garage and now have your own shop, maybe that friend would be interested in helping out in a more formal setting as an employee.
Never hurts to ask them if they would be interested in a job.
Now, we are not advocating poaching technicians from fellow shops, whether they are in the same industry or not. But, we are saying that it may be OK to hire a technician who was let go from another shop.
Often times, the shop who previously employed that technician was not fully equipped to handle the extra work capacity (see blog post about preparing yourself). This means that technician may be perfectly capable of performing quality work but just needs the right type of management and guidance.
They will already be accustomed to performance work and have a full box of tools. All you need to do is evaluate their compatibility for your situation. So, don’t be afraid to hire a person because they didn’t work out at another shop.
The résumé explains their skills and background, but the interview teaches you what type of person they are. Once you have narrowed down your pool of applicants, you should bring each person in for a formal interview.
If they are available, schedule a specific time for them to arrive such as 11:30. Plan on showing them around the shop and explaining the position. Make sure you talk to the candidate about your expectations of them, and if they believe they are fair, adequate, and achievable. Go over your roles and responsibilities for the position with them one by one so you both know what’s to be expected. There should be no surprises to the candidate or you when they get started. Give them a chance to ask you questions and see if they have any suggestions for you.
Then, treat them to lunch. This is an informal setting where you can further explore their character. Make friendly conversation to better understand if they will be a good fit. During the informal interview, you are trying to determine if you can get along with the person and if they can get along with you. Also, if they didn’t show up on time, they are probably not punctual and will be late for work.
Plan for one of these “shop tour and lunch” interviews each day for however many candidates you have. Then, make your selection of the best applicant and coordinate a start date with them. It is also common courtesy to call or email the other applicants and let them know they didn’t get the position.
Once you have made your selection after the interview process, it will be up to you to fill out all the necessary paperwork to add them to your payroll.
It is advised to draft a document detailing the evaluation period. This document will allow you to let the employee go without any legal ramifications if they didn’t meet your expectations. While we cannot provide you any legal guidance in this matter, a business lawyer will be able to draft up the document for you.
Prepare yourself for the most inefficient month ever. This is because you will be spending most of your time teaching and demonstrating your expectations. Do not just assume the technicians knows how to do everything. Remember, when you hired a technician, your role changed from owner to manager.
On the technician’s first day, help them get setup and show them where all the specialty tools are located. Explain your processes in detail and go over any information about the building they may need to know.
Try to have a couple basic install tasks lined up for them. This includes things like cat-back exhaust install, installing new brake pads, oil change, etc. You just want to provide them with a handful of tasks that will get them accustomed to your shop. Make sure they follow the process you outlined for them.
You will be hand holding them through the entire first day. The goal is to teach them how you like to work and what your expectations are of them. Everything they touch will need a quality check and inspection before it is given back to the customer. Do not simply tell them a list of things to do and then go in the office. That comes later – much later.
Continue to assign tasks to the technician and meticulously watch over their installations with quality control checks. Make sure they clean up the work space after each car is done. Ensure their tools are cleaned before they leave. Take some time to talk with them at the end of each day to ensure they are getting up to speed on your operations. Who knows, they might even have suggestions for you!
You are there to help and watch over the technician. It may feel like babysitting and micromanaging, and that’s because it is! You are using this time to evaluate their future at YOUR business. Make sure they are a good fit and can complete the work in a timely manner.
At the end of the week, go over their performance numbers. In My Shop Assist, you can run the Employee Service Report for Work Completed to see how many hours of labor were billed to customers in that time period. Don’t expect them to be 100% efficient. But, they should be at least 50% efficient. Communicate this with the technician so they understand how your business operates and what you expect out of them. They need to know that they should be at least 80% efficient (or some other number) to justify their employment.
We warned you this would be your most inefficient month ever and this is why: you will be spending a lot of time teaching & helping and not much time generating income.
By the end of the first month, your employee should be accustomed to your schedule and expectations. You have been evaluating their performance each week and slowly weening them off your assistance.
You still need to check all of their work (quality control checks are not ever a bad thing to do) and you will still need to walk them through any installs they have not performed. This ensures they do it properly and as quickly as possible.
Don’t just lay out a pile of parts and say “install these.” You need to discuss the build with them, come up with a plan for which installs to do first, and give guidance about doing each the quickest way possible.
If their efficiency numbers are rising and approaching a reasonable expectation, have been showing up on time, have been cleaning their work space, and their attitude is still enthusiastic, you can formally offer them a full-time position.
If those things aren’t being met to your standards, you can cordially let them know that it isn’t working out. Then you can go back and begin the process all over again! That’s why the application and interview process is so important to get right, spending 30 days training someone that might work out is very expensive.
Hiring your first employee is the single largest percentage increase in labor capacity you will ever do. That is why it is so important to make as few mistakes as possible along the way. We hope that this post will shed some light on the process.
We want you to realize the goal of growing the business isn’t to increase revenue, but increase profits. If another technician does not put more money in your pocket, it was not a good idea to hire them.
It is up to you to ensure that conditions are right before bringing on another employee. Streamline your operations and maximize profits with the resources you currently have. THEN bring on another person to grow the business.
If you would like help improving operations at your shop, please check out our My Shop Assist website for more information about our project management software.
]]>FIFO (First In, First Out) and LIFO (Last In, First Out) are acronyms used to express when your workload enters the shop and when it leaves. In the case of many machine shops (and other service shops), they get sucked into a LIFO workflow. This means that they do not complete the older tasks before completing the newer ones.
Most often it is because a customer nags and pesters you to complete their work quickly. So, you accommodate their request and get their engine machined and out the door first. To do this, you have to postpone working on engines that have been at your shop for longer. While it is OK to do this from time to time, it is not a good practice to do this all of the time.
Your goal as a manager should be to schedule your work so that each product has the same priority. This makes it easier to schedule the work and plan for upcoming hurdles. You do not want to get in the habit of neglecting older work to appease newer work.
If you place all incoming work at the back of the line, you are better able to predict completion dates and give yourself a buffer for unexpected hurdles. You should work towards a goal of promising a completion date for most work and then finishing it before that deadline hits. The term “under promise and over deliver” communicates that idea and is something you should strive towards.
It is perfectly acceptable to tell every customer “Your work will be completed in two weeks (unless we find another issue).” Even if it is a quick job, you set their expectations in line with everybody else’s. If you actually complete the work in 2 days, the customer will be elated! If you complete it in 8 days, they will be excited! And, if it takes you 2 full weeks, you are still meeting your promise date.
Organizing your shop to facilitate FIFO can help you visualize the workflow. This also helps keep the FIFO mentality in place. If an engine needs 5 machining processes, you should be able to track it through each step both visually with the use of racks and electronically with the use of My Shop Assist.
By simply placing the workpiece at the end of the line for each step, you ensure that the priority stays in place. This helps you predict which tools will be needed and give you time to order any extra parts.
This process flow makes it extremely easy to delegate tasks to technicians because they just work the next thing in line. Having a detailed build sheet in My Shop Assist gives them the direction and instructions on what is needed for each engine. They simply grab it from the shelf, look up the build sheet, click the Finish button when it is complete, and place it at the end of the line on the next rack.
They will no longer be asking you what to work on next because all the tasks are in order and available for everybody to see. And if you use the Estimated Hours field in My Shop Assist, you can even track their efficiency for each step. This will help you evaluate their performance or adjust your pricing to better match the work.
It is easy to fall into the LIFO trap, so if you find yourself using some of the following excuses, try to work on eliminating them.
In the age of instant gratification, many customers do not understand the social and professional boundaries of letting you work. They will call, text, email, message, and stop by constantly asking for updates on their particular project. To get them of your back, you work extra hard to satisfy that one customer to get rid of them. But, doing so encourages that customer to continue this unprofessional behavior.
One thing to do is take a look in the mirror and see if you may be the underlying cause for these pesky customers. Make sure that you explain the work in detail and give them a realistic timeline for completion. It is also up to you to express how you expect to be treated and about the value of your time. Then, taking it upon yourself to frequently proactively update the customer about progress using My Shop Assist will help alleviate some of these non-essential communications.
Your last resort may be to just vow to never work with that customer ever again. Many customers are just not worth the hassle and it is ok to “fire” the customer.
Some things are fun, and some things are not fun. But, if you agreed to do the work, you need to complete it before moving on to the next project. Most certainly, there is that one project that you have pushed aside and neglected. It can happen for a multitude of reasons, but the simple fact remains that it is on you to get it done.
The best solution is to discipline your schedule. Set aside a specific period of time to tackle that project and actively work to get it completed. It will feel much better to get it finished and out of your sight. Then, you can use it as a learning exercise to not bring in similar jobs.
Quick money can cause you to make terrible business decisions. While we understand that you have to pay the bills and not all situations are the same, take some time to survey the work you have at the shop. While that $250 head surfacing job that can be done very quickly and sounds extremely enticing, it isn’t the best idea if you have 20 other engines waiting to be worked on already at the shop.
One way to accommodate the quick turnaround jobs is to under schedule your daily workload. If you work 8 hours per day, you may want to schedule 6 hours of work and leave 2 hours available for walk-ins. This way, you are not disrupting the promised dates you have given to existing customers.
We want you to think about your shop as an assembly line. Each task for a job must be completed before moving on to the next and other jobs are not allowed to jump places in line. Disciplining yourself to this mindset will allow for more accurate scheduling and more satisfied customers. Plus, it will free you from constantly answering inquiries about progress from each customer. If the customer trusts that you will deliver on your promise, they will have no reason to bother you.
While we used a machine shop for this blog, the theory applies to any sort of aftermarket shop. Situations will arise which force you to deviate from the optimal work flow, but the goal is to work towards a better flow for the work.
We have put a lot of emphasis on accurately scheduling jobs and proactively updating customers about the progress. Both of these points are key features of our My Shop Assist software. Please contact us today if you would like more information.
]]>Growing your performance shop can be an extremely satisfactory experience! It allows you to take on larger builds, generate more revenue, and have more widespread notoriety within the community. But, with this grown can come more complications, more time commitments, and more headaches. It is critical to know when is the right time to take on additional employees.
Your first employee will be your single biggest percentage jump in man hours. If you are working a 40-hour week (probably wishful thinking), an additional full-time employee will double the available billable hours for the business. The reality is that the first month with a new employee will probably be your most inefficient month ever.
This is because your business model is probably not prepared for the extra capacity. You will need to take time from your normal operations to train the employee, you will have to watch what they do, and they will have to learn to work alongside you.
If you are not prepared, this growth step can backfire. Hiring your first employee may become a very costly and frustrating experiment on how not to expand your business.
Many shop owners feel the right time to hire somebody is when they are too busy to get all the work done. This may be the worst reason to hire an employee.
If you are busy by yourself, you will only be busier when you have to manage another technician. More employees usually lead to more customers, calls, visits, invoices, parts orders, emails, messages, and so on.
As a general rule for a 1-man shop, you shouldn’t consider hiring another technician until you are at least 80% efficient. This means that for every 10 hours you spend at the shop, you bring in 8 hours’ worth of labor revenue. In dollar terms, if you charge $100/hour and work a 10-hour day, are you generating $800 worth of labor income each day? If you answer is “no,” you are not ready for another technician.
As mentioned in the preface, your first month with a new employee will probably be your most inefficient month ever. If you are 40% efficient working by yourself, having to manage another person may bring the shop efficiency down by half (to 20% in this case). So, if you bring on another employee while you are already struggling, it will only make things worse.
That’s why we stress getting your efficiency up very high before hiring your first employee. Factoring in all of the people who work at the shop, a service efficiency of 40-50% is a good benchmark. If you are higher than that, chances are the shop is doing well and rather profitable. Any lower than that and you are probably struggling to pay the bills and keep the doors open. If you are curious on how to determine this efficiency number, check out this video.
Notice how this does not factor in income from parts sales. We do this on purpose because the core competency of an installation shop is the installation labor. Parts pricing and margins are pretty much set and you don’t have much ability to change them. For labor income, it is totally in your hands and your efficiency is the perfect measure of your ability to get quality work out quickly.
So, what can you do to prepare yourself and the business for another employee?
You accounting system is the life blood of your business. While most people dread opening up their QuickBooks (or other accounting system), it must be well organized and maintained. This means having an excellent list of Tasks and Parts to reference. Our rule of thumb is “If you will ever repeat the install again, make a task for it with a price and description.” We even wrote a separate blog post outlining why this practice is so important.
You should also stay on top of imputing bills and parts orders into your QuickBooks. If you take the time to add in the part information immediately (name, description, part number, price, cost, vendor), it is very easy to create a purchase order or a bill when you need the parts again. Otherwise, you will have to research the info each and every time you install it on a customer’s car. So, pick one morning, evening, or day on the weekend to input all of your bills.
Obviously, we are going to recommend that you use our My Shop Assist software to manage the projects (cars) at the shop. Doing so allows you to schedule each job, track parts orders, log your time, and communicate the progress to customers.
We developed the system to take place of whiteboards for parts orders, online calendars for scheduling, printed invoices for time sheets, and texting for progress updates. Having all of the information stored in My Shop Assist means that you don't have different bits of data scattered in different areas.
My Shop Assist includes all of the reports necessary to determine if you are at that magical 80% efficiency mark before you hire your first employee.
It is very lucrative to spend some time to reorganize and optimize your shop’s layout. Often times, tools and equipment are just thrown into a space without consideration of their most efficient placement. While lifts can’t be moved easily, there are several steps you can take to improve the layout and flow of your shop.
Racks! Racks everywhere! Hardware stores sell inexpensive and sturdy racks that you can scatter all over the shop to hold parts, organize supplies, and use as work benches. Each lift should have a rack in front or near it to lay out all the parts being removed or installed on a car. You can string up LED lights underneath to illuminate the work space.
When you disassemble a car, divided bolt organizers are an excellent way to keep track of which bolts go where. You can pick them up at your local hardware store for under $15 each and then you can mark the bolts’ location on the lid. No more guessing which 10mm bolt you need for the water pump compared to the one needed for the intake manifold. This will greatly decrease the amount of time required to reassemble pretty much anything!
The simplest way to increase your efficiency is to raise the install price. Here is how it works:
Let’s say your benchmark hourly rate is $100. If it takes you 5 hours to do a clutch install, you should charge at least $500. This will give you a service efficiency of 100%. But, you need to factor in your skillset, knowledge, and the tools needed to do the job quickly. So, you increase your price to $600 for the same service. Your efficiency is now 120% simply by raising the price.
We want shops to charge according to their skillset and knowledge. If you have been around for years and built up a reputation for quality work, you should not be the cheapest option out there. So, don’t be afraid to raise your prices to get paid for your skills.
When you hire an employee, your role changes from owner/operator to manager. This is a big shift that many people do not expect. You are now responsible to keep them busy throughout the day and must ensure that they do the work properly. So, you need to prepare yourself mentally for the shift.
This means that you will be spending a greater percentage of your time building estimates/invoices, talking with customers, and ordering parts versus actually working on cars. For some people, they may not like the change. And that’s perfectly OK! There is nothing wrong with having an extremely efficient 1-man shop if that works best for you.
If you are comfortable in the management role, you will find that the business will grow. Your daily goal is to ensure that the employee is as efficient as possible. So, you must schedule enough work each day, ensure they have all the parts needed for the job, and know how to do the installations properly. When the work is complete, you must check over each task to ensure it is done to your standards. With any extra time left over, you can also be working on cars and generating revenue.
The main point of this blog post is to have you concentrate on efficiency, not revenue, as the driving factor for adding employees. If you chase revenue, you may actually take home less money.
Just remember to focus on working on your business, not in your business. This mindset will allow you to build a profitable and enjoyable business!
]]>Most shops just set their hourly rate by choosing a number out of thin air. We want you to use data to determine what it should actually be.
This video demonstrates how you can calculate the effective hourly rate at your shop. Using your overhead expenses and how many hours you actually billed customers, you can determine if you are charging enough to cover your expenses.
It also explains some reasons why you should increase your prices to ensure that you are making money.
You can download a PDF version of this video by clicking this link.
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A digital borescope is a great tool you can use to quickly and clearly diagnose engine problems for your customers. At $350, the Vividia AbleScope VA-800 USB Borescope is an excellent buy and a useful tool for any performance shop.
It's a great idea to document any damage you encounter while working on a customer's car. My Shop Assist allows you to upload photos to a task (such as Diagnose Engine Failure") so you and the customer can reference them at anytime.
This tool is great for quickly determining the origin of the engine failure. No more guessing on what broke and allows you to quickly generate an estimate to fix the issue for the customer.
You can purchase this product from Oasis Scientific by following this link.
]]>High car count typically means excessive storage fees, long lead times, and headaches resulting from trying to remember every last detail about the cars. You are probably saying “Yes” to too many projects and also not charging enough for your services. You may be bringing in projects before they are actually ready to be worked on and accepting projects that exceed your skill set. Plus, you probably hate pushing dead cars in and out of the shop that you may not be working on for quite some time.
Luckily, all of these issues can be addressed! If you find yourself being a master at providing space for dust to settle, read below for some ways to correct the problem.
If every person who calls the shop for a quote agrees to have you work on their car, you are probably not charging enough. You can actually adjust your hourly rate to influence the backlog of vehicles. Most shop owners are very scared to turn away work (which is a perfectly legitimate concern) but you need to make sure that everything you do returns a profit.
Another benefit of raising your prices is that it weeds out the tire kickers and those who can’t actually afford your services. These are usually the people who ask the most questions and take up the most of your time. If you can price yourself out of the bottom 20% of the market, you will probably save yourself 80% of the headaches.
We built a specific feature in My Shop Assist to help keep track of which parts are Need to Order, Ordered, and Received. The main purpose of this feature is to ensure that work doesn’t begin until all the parts are at the shop.
As mentioned in our Workflow Steps blog post, you should get a deposit for all the parts and order them immediately. Once they arrive, you can schedule the car to be dropped off for work. It’s much easier to store a shelf full of parts versus a car AND a shelf full of parts.
You can also think about stocking the most common parts that are needed for jobs at the last minute. Things like T-Bolt Clamps, silicone hoses, fuel pumps, and common gaskets & bolts can all be stored very easily and made available if needed. There is nothing worse than having to halt a $15,000 build from completion because it needed an additional silicone hose.
Consider only scheduling cars Monday through Thursday. Then, you can leave Friday to catch up if needed, clean the shop, or prepare for that weekend’s race. It’s inevitable that some projects will go over their scheduled time. If you have a full schedule already planned out, you will never be able to get ahead.
You can also leave this open day for the quick in-and-out appointments like oil changes or track inspections. That way, you can better plan to have a lift open if needed to gets those cars finished quickly.
Every customer who drops their car off at your shop needs to sign the waiver that contains fees for storage. If you didn’t have them sign the form because they are your buddy or you were in a hurry, you may be left with no legal recourse to get rid of the car. So, no matter who the customer is, have them sign the form.
And you should always assume that they didn’t read it. Take some time to explain to each customer your policies about storage fees and late/non-payment.
We all have these. You know, that super awesome race car build that you will get done…eventually. As car enthusiasts, we love to acquire vehicle shells with lofty goals of one day turning them into race cars. But, if it hasn’t been running in the last month and you aren’t planning to race it within the next month, you will never finish it. So, swallow your pride, tuck your tail between your legs, and sell it.
This applies to your technicians as well. They probably got smoking deals on cars but now they just sit at the shop. These cars just take up space and provide no value to you as a company. Plus, it looks rather bad if you give a shop tour to a customer and they see 2 or 3 (or 10) dead cars in the back of the shop.
This specific issue often arises from the worry that not enough work will come in the future. So, you agree to do work that you are not familiar with or is above your skill set.
A good case in point would be an Evo shop agreeing to work on a DSM. If that customer comes flashing a bunch of cash, a half-assembled engine, and a box full of parts & bolts, you may say “How much different can it be?” Well, it’s very different. You are now stuck working around a vehicle that you are not familiar with and may not actually be able to assemble properly. Chances are, you will not be able to finish the project by yourself so you either have to bring somebody else in or return the car unfinished.
It’s best to just avoid this scenario all together. It’s in your best interest and the best interest of the customer to send them somewhere else.
Scope creep occurs when the customer’s final vision of the project is not materialized before the work begins. They just pile on more and more work as you progress through the build. This makes it very difficult for you to schedule and work on other customer’s cars.
Oddly enough, a big cause of scope creep is your initial build taking longer than expected. While they wait for weeks to have their engine installed, the customer scours the internet and finds a “smoking deal” on a used turbo kit (which probably won't fit or will need modification/parts). So, they buy it and drop it off to be installed. But, their injectors aren’t big enough, so you order those as well. Then they purchase a bigger fuel pump. Oh, and they want you to store and then install some new wheels they bought on Craigslist. Sound familiar?
It is best to not let the customer keep piling on work to their build. Even though it may cost them less to install a bunch of parts at once, it costs you more because you now have to squeeze in the work somewhere. If you can just get the car completed to the original plan, you can provide the customer a quote for the future upgrades and have them schedule another appointment.
There will always be that one project that you just dread working on. It’s either because it’s not a good money maker, you don’t particularly like the customer, or you got in over your head. You need to get rid of these projects no matter how much you hate it.
This can mean finishing the work yourself, bringing in a knowledgeable person to finish the work, or communicating with the customer that you are unable to finish the work and have them get the car.
Having them get the car may be your best option. It is most certainly the quickest way to alleviate yourself from the stress of finishing it. This may come about because of scope creep, you may not be able to handle that type of workload, or you may have downsized and no longer have the capability or space to finish the job.
No matter what caused the scenario, both you and the customer will be happier if the car goes somewhere else to be completed.
Offsite storage can be a great way to clear up some space from your shop. It can be the local storage place down the street or you may rent a bay next to your shop. The idea with offsite storage is to relocate the dormant projects out of sight and out of the way.
Charging for this service covers your expenses and discourages people from abandoning cars. If the customer needs a new engine and you know it will take a couple months, you can build in a monthly storage fee into the build price. Once you take the engine out, you spend 30 minutes relocating the car and you don’t have to worry about it until the engine is ready to go back in.
Or, you can try to sell the customer on one of your short blocks that is already assembled at the shop. This option is more expensive for the engine (because it’s already done) but it will save you and the customer a lot of time and avoid the need for car storage altogether! Either way, the car spends very little time sitting idle at your shop.
This offsite storage also deters your employees (and yourself) from keeping cars at the shop. If a monthly charge must be paid to keep the car, it may incentivize the owner to just sell it.
You should consider trying to generate revenue from every square foot of your shop. If you are storing personal, employee, or customer cars for free, that space isn’t making you money.
Your goal as a manager is to treat the shop like a business, not a hobby. Increasing throughput and reducing the time a car spends at your shop is a surefire way to increase your profits. You may have to make some hard decisions up front, but it will pay off in the long run to get rid of toxic projects.
If you want information on how to better manage the cars at the shop and delegate tasks to the technicians, please check out our My Shop Assist software.
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In this video, we show you how to determine the Service Efficiency at your shop. The goal with this metric is to help you focus on profitability versus revenue.
Many of the struggles shops face come from their obsession with revenue. Often times, we hear people say "There is so much work! I need to hire somebody to help me get the work complete!"
But, this often leads to more headaches and even LESS revenue. If you don't have systems in place to manage your employees and ensure they are billing plenty of hours, you will find adding more people only makes the problem worse.
In the video above, we show you how to calculate your shop's efficiency and what you can do to improve it.
If you would like to view this presentation as a PDF, you can download it via this link.
]]>Below are 6 steps that should occur with every build. It is critical that each step be optimized to ensure the vehicle passes through the shop as quickly as possible. This means setting clear expectations and goals for the person responsible for each step. Think about which person is responsible for each step and make sure they have the knowledge and tools to perform them quickly and accurately.
Technology has vastly expanded the number of channels for your customs to reach you. At first, it is up to the customer to decide which channel they will use. They may prefer calling you on the phone, emailing, texting, PMs on a forum, DM on Instagram, Facebook messages or posts, and even in-person visits. All of these methods feed into the sales funnel and it can be quite overwhelming trying to sort through all of the noise of these various channels.
We suggest trying to persuade your customers towards using one channel in an effort to reduce your workload. Usually, the best method is emailing since it is well organized, searchable, and available on any device. Once the initial communication is established and the customer is pushed to this one channel, you can begin making an estimate.
The first thing you need to begin writing the estimate is to determine exactly what the customer wants. If they just need a driveline fluid change, that can be answered in one response. But, if they want a full race car build, you need to know the customer’s goals, timeline, and budget. You can even begin with a questionnaire that they can fill out.
Even for something as simple as a clutch installation, you may need some of this information. If you don’t ask what the customer wants to use the car for, you may end up installing a part that doesn’t suit their needs.
For larger estimates, you can also consider an in-person visit. This will allow you to truly gauge the interest/seriousness of the customer and give you an opportunity to show them some of the things you are currently working on. It will also eliminate some of the price shoppers who are just looking for a quote filled with parts that they can order somewhere else.
Once you have a clear picture of what the customer wants, you can begin creating the estimate. For specialty shops, these can be quite easy to do. If you do the same thing often or offer a limited number of products & packages, the prices don’t change much from customer to customer. At the opposite end of the spectrum are restoration shops who can strip a car to the bare frame and rebuild the entire car one part at a time with thousands of hours going into the car.
In our previous blog post, we detailed why it is so important to have a detailed list of tasks and parts you offer. This will significantly reduce the amount of time it takes to create an estimate for a customer.
If you repeat installations often, it can take mere seconds to create the estimate by using the Groups function in My Shop Assist. Since we perform a lot of clutch installations, I can select Evo 8/9 5speed Clutch Install and it contains all of the parts and labor needed to complete the job. Takes me less than 1 minute to create the estimate.
On new cars, estimating is even easier because the cars are usually stock and you know exactly what you are getting into. But, if the car is older, there is a good chance it has been modified before and may complicate your estimating process. If this is the case, it may be a good idea to have a physical look at the car before making a solid estimate.
Once the customer gives you the green light, what do you do next? First thing you do is transfer the Estimate into a Job/Invoice.
If you are using My Shop Assist, all you need to do is click the Make Job button, put the job on the calendar, and assign the work to the appropriate technician(s). Since you know how much time each task will take, you can schedule the car for the appropriate amount of time on your calendar. At the same time, you can mark parts as Need to Order if you don’t have them in stock.
You should never buy parts for a customer’s car with your own money. So, you need to take a deposit for parts. In My Shop Assist, we break down the invoice by Tasks and Parts so you know exactly how much money is needed as a deposit.
You also want to try and not work on a car until all of the parts have arrived. This means that you may advise the customer to drop the car off in the future so that you don’t have to worry about storing it while you wait for parts. The goal of any job is to get the car in and out as quick as possible and complete the work to the customer’s satisfaction. Having the car for the shortest period of time will help with this.
Once the parts have arrived, you can bring the car in and begin working on it.
Now that you have the car, it’s time to get to work! All of the parts should be available near the car and all of the tasks should be expressed to the technician. My Shop Assist shows each task that needs to be performed as well as how long it should take. Before the work begins, take the time to discuss the job with the technician and make sure you are both on the same page.
As the technician progresses through the job, they should be tracking their time and marking tasks as complete. It is also a good idea to take pictures of anything unexpected that arises. And you can also take pictures of the completed work. Customers love shiny new parts!
If they need any additional parts for the job, the technician needs to get approval by the manager to install the part. This ensures that nothing gets installed on the car without it being added to the bill. As a manager, you can set a dollar amount that triggers this approval. You can tell your technicians that they don’t need to alert the manager for small bolts, zip ties, or rubber hose. But they do need to ask about AN fittings, fuel pumps, oil, etc.
If the job takes several days (or weeks), be sure to communicate progress to the customer. The goal is to be proactive with updates instead of reactive. Tell them how it is progressing and they will have more confidence in your work.
When the technician is done with the car, there are still a few items that need to be taken care of before asking the customer to come pick it up.
First, make sure all of the work was completed correctly. Make sure wheels are torqued properly, ensure all fluids have been filled, check intercooler pipes for tightness, etc. There is nothing worse than having an intercooler pipe pop off as the customer pulls out of the parking lot.
Second, make sure the invoice is up to date. Add in any parts that were added during the build and update tasks with any extra time that was needed.
Now that the car has been checked and the invoice updated, you can contact the customer and have them come pick up the car. Since you have been updating them with progress, there should be no surprises about the final price or how the car performs.
At this time, it’s also a good idea to put on your salesman hat for a second. Communicate to the customer what they can do next to make more power or any maintenance items that are coming up. This will further solidify them as a returning customer!
Now that the customer has paid the bill and taken the car, you should see if you made any money on the job. Take a look at the recorded hours for the job and compare that to the estimated hours.
If it took the technician more time than you thought, ask them why this happened. Maybe the car was rusty and the bolts were difficult to get out. Maybe the technician wasn’t proficient with the install and it took longer than expected. Maybe the technician spent the whole time texting his girlfriend.
Also think about any last-minute parts that were needed for the job. Do you find yourself needing these parts often on other builds? If so, maybe you should consider keeping a few of them in inventory so you won’t have to wait next time.
Lastly, are there any tools or logistical tricks that you can use to help speed up the install next time? Things like bolt bins, specialty tools, and dedicated work stations can all reduce the time spent on the install. This means you can complete more work in the same amount of time.
If you don’t think about these points often, you may not be operating at your full efficiency potential. We want people to look at their business from a very data-driver perspective. This will give you concrete evidence to make rational decisions to improve your situation.
If you work these 6 steps into your workflow process and assign each step to a specific person, you will be better suited to ensure a happy customer and a profitable business.
We have added a Flow Chart below that details the process.
]]>I want to break down how you can use time tracking to analyze employee performance and I will be showing the times from my shop as an example. To start, the tech has to be clocking in and out every day. Without this information, you will not be able to determine their efficiency. If you’re paying them hourly, this is the number you use for their payroll hours.
Here is a look at my times for the past two weeks:
From Jun 24th to July 7th I worked 85.1 hours. Looking at the times, I try to hover around 8-9 hours a day. I have a family, so occasionally I come in late or leave early like Tuesday the 27th. I took off entirely for the 4th of July, and to make up for missing a day, I stayed a little longer on the 6th and 7th.
Every shop treats punctuality differently. I make sure I’m on time for appointments but I’m more concerned with getting work done than being at work by a certain time.
Below is the Time Clock report for the month of June. I clocked 209 hours which averages out to 47 hours per week.
And if I push that report to the first half of 2017, you can see I have logged 1117 hours at the shop. This averages out to almost 43 hours per week. This shows me that I can run the shop with sane hours and still be successful!
Now let’s use this data to see how efficient we truly are. In addition to tracking the number of hours I am at the shop, I also track the time I spend working on every individual task. MSA builds out several reports for this. The first report is called the Employee Service Report.
Below you can see my report for the past two weeks.
Looking at the report, the first thing to note is that there are two options along the top. One is called Tasks Completed and the other is Work Performed. I charge a flat rate on most tasks which means I base the price off the estimated time (or book time in dealership lingo). Typically, we see custom fabrication and restoration shops using the Work Performed report because they are more concerned with the actual hours a tech worked on a particular task in a time range.
Digging into the details of the report, I first look at the totals to make sure the numbers make sense. Over the two calendar weeks, I was at the shop for 85 hours and I completed 92.25 hours of billable work. I know this based off the estimated hours column total at the bottom. Again, because I bill like a dealership would, it’s possible for me to bill more hours then I actually work.
There are several examples of this within this report. The clutch job is estimate to take 9 hours. It took me 6 hours actual in one instance, and 6.8 on another. I charge the customer for 9 hours even if it takes me 12 hours.
Here you can see that clutch job which is estimated at 9 hours but only took me. The text is colored green to indicate it was done faster than estimated.
Sometimes, it takes me longer than estimated. A great example of this is the “Exhaust – Hotside Install” shown above. I charge based on 3.5 hours estimated, but it actually took me 8.5 hours. Needless to say, I lost my butt on that one.
This is the example of a task which takes longer than estimated. The estimate was 3.5 hours and it actually took me 8.28. The text is colored red to indicate it was an overage.
Now that we have the billable hours for the two-week period and the actual hours I was at the shop, I can determine my efficiency: 92.25hr / 85.1hr = 108% efficient. Any tech that can achieve these types of numbers will make you very profitable. And it’s the job of the shop manager/owner to ensure your techs have all the tools and resources to regularly achieve these types of numbers.
Looking at the second part of the Employee Service Report is the actual time I spent on tasks. That number shows 72.6 hours. This number is usually shy of what I actually work because I spent time doing non-billable work such as cleaning, running parts, phone calls, and customer interactions. I don’t stop a timer to take a phone call because I try to keep them short. And I’ve focused on scheduling so that I don’t have customers hanging out at the shop all day.
If I were just a technician, I would be focusing on getting that 72 hours closer to the 85 that I was actually at the shop. Likewise, a manager should be working to make the actual task hours closer to the actual time at the shop for all the techs. If a tech’s estimated hours completed in a time frame is less than the actual time at the shop, the manager needs to look into whether the problem is the estimated times or the actual tech’s skill level.
How do we know if the problem lies with the tech or the estimates on a job? The answer isn’t always cut and dry, but we can certainly use data make the analysis easier. First, it takes months of correctly logging time on everything you do before you can start pulling useful information. In the reports page, there is another report called the Task Report, shown below.
The Task Report gives us insight into individual tasks. These won’t be specific to a single employee, but rather anyone at the shop who works on cars. The goal is to have the average be below the estimated. If its higher, you are not charging enough for the task.
The second thing to consider is the sample size. In the report above, I only pulled data for the past month so many of the tasks have only been performed once. It’s better to run this report over a longer period of time (assuming you have been tracking that time).
If I run the report over the past two years, there is a lot more data available to make decisions. For example, in the case below, I have done 42 clutch installs for 5 speed transmissions on Evo 8/9 vehicles. I estimate 8 hours and I’ve averaged 4.12 over all of those.
If I want to verify the data is correct, I can click on the performed number for the task and see each individual job times. This is shown below.
Looking at the results, there were several instances two years ago that I didn’t record my time (shame on me). It skews the results slightly with the actual average excluding those 0 hours jobs coming to 5 hours. But, I’m still far below the estimated time so I know I’m making excellent profit on these jobs.
I’ve now looked at a couple reports to see that the estimated times are where they need to be. As long as the estimate is higher than my average, I know I’m charging the appropriate number of hours. The only thing remaining is to know if your hourly rate is enough to cover your expenses and make a profit. We put together this equation for determining minimum hourly rate:
Total overhead expenses last year a. ____________
Total payroll expenses last year b. ____________
Other expenses (loans, credit cards, etc) c. ____________
Total billed hours in a year d. ____________
Additional Profit e. ____________
Hourly Rate = (a + b + c)/d + e HR= __________
For me, I can run around 100-105$ an hour and be fine. You can change the amount of work you have by increasing/decreasing your prices. As you increase your prices, you don’t need to work as hard and can maintain a higher level of quality, attention to detail, and better customer service. Fewer customers will be able to afford the work, but the customers who can will keep you busy. If nothing is coming in the doors, simply lower your prices. Using the pricing to control your work load is a nice way to not burn yourself out.
In this blog post, we have looked at how to check a technician’s efficiency and to tell if they are being productive or not. We can evaluate the data to know if a task is profitable. And, we know how to adjust pricing to make sure there is money in our pocket at the end of the day! This is why we stress the importance of tracking your time. Performing these checks every so often will ensure that your business will run strong for many years to come.
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I have been talking a lot about charging the right price for tasks. Take some time to think about how you originally determined those numbers. Was it a guess? A gut feeling? Some number you pulled out of a hat? All of these reasons are bad.
If you don’t know how many of your worked hours are translating to dollars (i.e. billable hours), I would recommend beginning to measure that metric first. Tracking you and your employees’ hours will allow you to see where you sit.
I define shop efficiency as the total number of billed hours over the total number of worked hours. Take a guess at how efficient your shop is as a whole. And remember, your front desk person bills zero hours even though they may work 40 hours/week.
Now, let’s use some data to actually determine the efficiency. Assume there are 3 people working 40 hours/week which is approximately 6000 hours/year. If the shop generated $300,000 in labor revenue last year and you charge $100/hour, this translates into 3000 billed hours. This equates to a 50% efficiency (6000/3000). This number can definitely be improved but it actually isn’t too bad for a small performance shop.
Here is the formula if you would like to determine it for your shop:
Total Labor Revenue last year a. ____________
Hourly Rate b. ____________
Total Billed Hours in a year = a/b c. ____________
Employee 1 hours per week d. ____________
Employee 2 hours per week e. ____________
Employee 3 hours per week… f. ____________
Total Hours worked in a year =
(d + e + f) * 52 weeks g. ____________
Service Efficiency = c/g SE= __________
You will notice that we do not include Parts Sales in this equation. We do this on purpose. Parts margins are shrinking every year and it is becoming increasingly difficult for install shops to complete with online-only parts retailers. So, we want people to focus on making their core strength, installs, be the most important metric at the shop.
Here is some food for thought: If you employ a person who only sells parts and pay them $35,000 per year, they need to sell $175,000 worth of parts just to make their salary if your margin is 20%. If that margin is reduced to 15%, that person needs to sell $233,000 worth of parts each year. And this doesn’t even account for additional employee benefits or taxes! If you have that type of employee, did they meet that goal?
More than likely, you looked at your overall shop efficiency and it is well below 100%. If it is 50%, you are doing OK but you can still improve it a lot. If it’s less than 30%, you are probably struggling. To improve this we need to know where we are messing up. Tracking time on jobs is the single best way of doing this and why we created My Shop Assist. Thankfully, you made a task list to work from in Part 2!
The price for a task should be directly tied to how long it takes and the tools required to perform it. If you do custom work and bill hourly, you shouldn’t guess at how much time you spent. If you are doing flat rate work (i.e. the price is fixed) but if you don’t know the average time to perform the task, again, you are guessing.
Here is an example of how I learned the hard way to track time:
This example drives home the fact that you need to be tracking the time on every task. The more employees you have, the more critical it becomes. In My Shop Assist, each technician can track their own time on a task and you can compare their performance. This allows you to make decisions on who performs the task the quickest (and makes you the most money).
You may have to guess on the task price the first time you do it. If you measure your time and determine you underestimated it, you can adjust the price to compensate. If you didn’t measure your time, you may never know if you are actually making money on the install. And again, if you have technicians performing these underestimated tasks over and over again because they aren’t tracking their time, you are missing thousands of dollars in labor revenue each year.
This is why chasing higher revenue is not the answer. Hiring more technicians to perform tasks that you undercharge for will increase your revenue but decrease your profit. Sound familiar?
Action item #2: Track everyone's time at your shop. Utilize the list from action item #1 to break down where the time is going.
I personally have used My Shop Assist to cut out work that isn't profitable (mounting tires), raise prices on bigger ticket items (engine installs, head gaskets), and adjust prices both up and down based off of average times it takes to do.
This My Shop Assist report shows the last 27 clutch installs I've done on Evo 8/9 5-speed cars only. The average time is 5.3 hours.
This wouldn't be possible without putting forth the effort to religiously track time on every task I do. The hard work pays off as I now work less hours and make more money doing it.
In this blog, we covered the basic concept of setting up a task list, tracking time on jobs, and applying it to pricing. This concept works for any type of service job (install, fabrication, powder coater, machinist, etc.). Take a look at your own books and determine the efficiency of your shop. Do this once a month and pay close attention to where the time goes.
Use that measurement to implement improvements and watch your profits improve as the efficiency improves! If you don’t have a tool to track time or any way to break down the tasks you perform, consider using My Shop Assist. Good growth can’t happen without a stable system in place.
Revenue may be the flashy number that everybody talks about, but increasing efficiency makes you more profitable. There is always room for improvement so contact us today to see how we can help out.
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For years now, I have been working to improve my own shop, Evolution Dynamics, to be profitable, fun, and not require insane hours. Sadly, I learned from the school of hard knocks (i.e. made every mistake imaginable costing time and lots of money) on how to best run my business. It shouldn’t have to be this way.
To get started, I want people to look at running a business as a machine that can be finely tuned. We are all car people and most of us come from a racing background. As a competitor, we look for every edge we can get to go a little faster. The fastest people know and understand their car better than anyone else. They understand it because they are measuring it. They are taking time to know the theory and apply it to their car.
I challenge shop owners to take this same approach to how they run their business. I want you to measure things that matter and look for ways to improve how your shop runs. Like an engine, if you have a good control system for it, you can fine tune it to be more efficient and more powerful. In a service industry like this, efficiency is the name of the game. Your time is the resource and money is the output
Time = Money. Duh!
There is only so much time in the day. That means you can only make so much money before you run out of time. Sadly, we all know it isn’t as easy as putting in long hours and collecting a bunch of money at the end of the week. What goes on inside the business “machine” is what defines how successful you will be. To start, let’s define what type of work we will be doing. Sounds simple, but many miss this basic activity.
For myself, I run a full service performance shop for Mitsubishi Evo’s. You could be a freelance tuner, general maintenance shop, machine shop for engines, or even something like a powder & ceramic coating shop. Anything that you exchange your time for money should be defined up front and don’t deviate from this unless you are absolutely certain you need to.
We need to break down the work we do into definable steps. Here is a chart containing a small sample of tasks I perform at my shop:
This will give you a specific breakdown of all the tasks you perform and the parts needed to complete them. Taking the initial time to do this sort of operational improvement will save you hundreds of hours over the course of a year. Having a well thought out task list means that you can quickly, easily, and repeatedly make estimates/invoices for customers.
Time and again, I see invoices from shops with items such as “Labor” and “Part” followed by a description and a price. When I ask to see a similar invoice for a different customer, the price is inevitably different. Not only does it take more time to write out the description every time, you are obviously making less money on one of the invoices. Sometime on both!
Having a front desk employee only exacerbates this problem. Generally speaking, they aren’t going to be as intimately knowledgeable about the pricing structure as you are. Give yourself and your team the tools to quickly and efficiently do the job.
Action Item #1, create a task list for your shop. Write down all of the services you normally perform and include descriptions and prices if you have them. Here is a link to the Task List I created for Evolution Dynamics. Feel free to modify the details and use it at your shop.
This concept is the core of our My Shop Assist Software, and many of the important metrics we will use to improve the shop are built off of the task list as we will see in subsequent sections of this blog.
This is a page of my task list already in MSA
Continue to Part 3 Here
]]>For many performance shops, flying by the seat of your pants is a way of life. Running a business is more about passion and drive then a well thought-out plan. We (myself included) built cars, tuned them, and made a name for ourselves by racing and having fun doing what we enjoy. We worked out of our garages and never thought about doing it full-time.
That passion is what drove us to start helping friends. Then friends of friends. Eventually, the word of mouth spread to the point where we would spend every free minute helping others modify their car. At this point, a dedicated few will give the operation a name and make a business out of it. With no formal training at running a business, we do what we think works and assume that the saying "Hard work pays off" is true and that these long days will lead to success.
For a tiny fraction of us, it is true and the hard work pays off. However, that success seems to be more a stroke of luck and good timing. I've seen countless people putting in crazy hours with aspirations of making it big but get nowhere.
However strange it may feel, the realization that hard work and determination doesn't automatically mean success is really freeing. It allows you to take a different perspective on how to approach your business. Instead of spending 80-100 hours per week at the shop with no relief in sight, we can apply business tactics to increase your chance of success.
This is another saying that is often brought up by success businesspeople, and it holds true in the aftermarket performance world as well. If you are struggling to stay afloat working 70 hours per week, bumping it up to 80 hours isn’t going to solve your problem. You may take in more revenue, but you also incur additional expenses and the quality of work may suffer.
Everybody is working hard in this industry so the only way to get ahead is to work smarter than them. Having talked to hundreds of performance shop owners over the past few years, I have seen many people think about this on the surface. But fail to implement any significant changes in the way they think about or actually run their business. They have pushed hard for years doing the same thing over and over, and just assume that 12 hour days is how you make it. I have to admit that I used to fall into that category of people. You can listen to my podcast interview with Reid to find out how bad it used to be.
Many performance shop owners focus on the Gross Revenue to gauge their success. I have found that it is very easy to increase revenue; just hire more technicians. But more revenue does not equate to more profit.
The point of this blog is to help people think of their business as a system with processes that can be measured, improved, refined, and controlled. Take a look at your shop right now. Do you know the following metrics or can you find them quickly?
Focusing on revenue instead of the metrics mentioned above will lead you to be more stressed and reduce your chances of success.
Success is never guaranteed, but here are some reasons why so many performance shops struggle:
In our first video tool review, we look at the Qwikline Thread Chaser. This tool was designed to slip over the end of a damaged bolt, stud, or axle, and reverse off to clean the threads. We Show a sample of what the tool is capable of doing with a heavily damaged axle threads. a normal die was unable to thread onto the damaged axle, and couldnt clean the threads. The Qwikline tool can be used with an impact as well making very quick work of the heavily damaged axle. We found that the tool easily cleaned the threads on our heavily damaged axle making the axle useable again! We were using the M22x1.5 thread size chaser which is part number TC1122 which requires their socket part number: ID111.
we purchased the TC1122 from a webpage called american producers for $321
The socket part number ID111 from the same site was an additional $64.05
For further information you can check out Qwiklines webpage here:
http://www.qwikline.com/products/qwikline-thread-chaser/
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Anyone in the automotive performance world has to work with machine shops at some point or another. They have been around as long as people have been building engines. Interestingly, with so many performance shops doing tuning, performance upgrades, and engine building, the assumption would be that quality performance oriented machine shops would be equally as prevalent. In my experience, this has been far from reality. But the question I ask is, why? There are some excellent memes on social media related to performance shops that go like the following:
With such a demand for quality work, the next option would be a fast turnaround or cheap price. My customers haven’t been afraid to spend extra to have it done quickly, but I’ve had a difficult time finding a machine shop around me that could deliver work in a timely manner regardless of price. I’m not alone in this thinking (at least in my general region). So again, why is it hard to find a machine shop that can deliver quality work in a timely manner? If we as performance shops are willing to shell out the cash needed to meet those two requirements, it should be easy.
I have spoken at length about this with a friend who owns a Job Shop machine shop which wouldn’t touch any engine related items (they did fabrication, water jet, CNC, etc..). The owner of the business is a car guy at heart and moved away from the automotive machine for a simple reason:
Years ago there was a big push by dealerships and general service shops to get the cheapest work possible. Machine shops in turn fought for the business by undercutting their competitors. Price of boring a block fell rapidly to 20$/hole or less. A savvy business person would realize that with having to buy a 50k+ machine and having to spend an hour to do the work, the machine would never pay for itself. And this price war put the quality machines out of reach for someone wanting to do automotive machining. Additionally, the barriers of entry for the business are very high from a financial perspective. Having to spend 250k+ just to get started for ultimately no return on the investment just doesn’t make sense. Over time, this has severely limited the number of machine shops capable to do the work that the performance world has needed.
It is interesting to note that of all the machine shops I have used over the years, most have been in business for decades. You don’t see a lot of young entrepreneurial ventures in the performance automotive machining world. They are definitely out there though, and most have figured out how to treat the business more like a manufacturing operation then a walk-in machine shop by focusing on a core niche market with their own specifications and parts, thereby talking the customization out of it.
This lead me to the Performance Racing Industry (PRI) tradeshow in 2015. As an exhibitor, I can walk through the hall before the show actually opens and talk to other people setting up booths to see products I would like to learn more about. I walked by a shop setting up a booth with a Billet 2JZ block on display called Mazworx. Mark was the owner and briefly told us about his operation. We spoke some more during the show and he was able to attend our condensed Essentials of Operating a Shop seminar. After a few months of brief communication, Mark decided to pull the trigger and have us improve his work flow by implementing My Shop Assist (MSA) with our consulting package.
I got the privilege to setup Mark’s shop the week following our full Essentials of Operating a Shop class in Orlando, FL. Having never been to Mazworx before, I didn’t know what to expect. From our phone conversations he had mentioned some systems were in place already and they were using QuickBooks desktop for their accounting.
Day 1:
Day 1 at Mazworx – Shop tour and initial impressions
Walking into Mazworx, I was prepared to wade through mountains of randomly placed engine blocks and cylinder heads. I was expecting to have to call dozens of customers to find out specifics of what they wanted done and what work they had delivered to Mazworx. My years of dealing with that type of machine shop has jaded me to the point that I expect disorganization. Mark’s operation really is a step ahead of the performance machine shops I was accustomed to!
Mark had a decent sized team with 10+ people working at the shop. He also had clearly defined roles for everyone at the shop. His ultimate goal is to make the shop run itself and enable him to step out without the whole operation grinding to a halt. The crew consisted of two front office guys answering phone calls and handling the billing. His wife is an industrial engineer and the VP, dealt with operations, and was the one tracking profitability on all the jobs they performed. His father worked in the parts room and handled the shipping and receiving. He had two guys doing teardowns and cleaning operations. Two guys worked the fabrication area. One guy for running the CNC machines (a task Mark also helped with). Last he had several guys doing engine assembly and running the manual machines. While I was there, Mark was looking to hire a shop foreman or someone to essentially replace him at putting out fires and answering questions. This is a very hard role to fill, and one that Manuel, his primary front office guy, was doing.
We began the day by Mark giving me a tour of the facility. The shop was well laid out with offices for himself, his wife, and the two sales people. Much of what they deal with is internet sales and long distance customers sending them work. They had a clean break room connected to the front office areas and well maintained bathrooms. There wasn’t a waiting room but this type of business isn’t one for people to wait for work to be completed. However, he had some nice display cases with trophies from drag racing as well as many of the products they manufacture.
Walking into the shop, there were several rooms for specific operations. Again, not something I see very often. They had a parts room with actual bin locations tied to QB inventory along with a shipping and receiving area.
They had a rack in the room setup for orders that weren’t complete and waiting for parts on order. There was a window opened to the main shop area where techs could talk to the parts guy. It was one step away from working exactly like a dealership. Next to the parts room window was a PC for their time clock system and Excel sheets to manage all the jobs at the shop.
From there, the second partitioned area was for the short block assembly. It was a climate controlled clean room with about a half dozen stations for assembling motors. The room was laid out nicely with a staging area for stuff coming in and a rack for various torque plates, ring compressors, and other tools in tool chests.
Outside the engine room was the primary area for the bulk of the work. They had a lift and two shop race cars, CNC machines, engine and cylinder head machines, and a staging area for incoming and outgoing jobs. The last section of the shop, was roughly equal in size to the main area but was focused on fabrication/manufacturing, storing materials, bead blasting machine, and vat cleaning washers.
The Layout of the shop was well thought out with only slight inefficiencies with some back and forth work to include a cleaning step in between every machining step. This may sound inefficient, but through years of experience, Mark has figured out its better to have a clean engine then damage something from FOD (foreign object debris).
After the initial tour, Mark spent some time showing me how they handle the jobs. This included printing out the steps involved from their QuickBooks jobs. Mazworx had a nicely setup QuickBooks database with memorized transactions for common engine builds. When they took an order in, they would add it to an excel sheet, add it into QuickBooks, and had a third system which handled their time working on tasks. Even though this was essentially triple entry, compared to what I have been used to seeing, this was a pleasant surprise! The goal of my visit was to replace the time clock system and excel sheets with My Shop Assist.
We would implement MSA to tie in with QuickBooks so they can use it to track job progress and times for any and all tasks. They could then run reports on specific tasks (such as sleeving an EJ block or assembling a 2JZ) to see the number of times performed, an average time to complete, and what they estimate the job to take. These powerful metrics are what a successful business needs to ensure they are pricing jobs appropriately. It is ok for a shop to undercharge on a job from time to time. But if you always undercharge for that job, you’re doing something wrong.
With a goal of what we needed to accomplish in mind, I took the parts, labor, and customer lists he had in QuickBooks and imported them into MSA. This first day was largely getting the system information entered and all the employees added with their appropriate roles. I then took the active jobs Mark had printed for me from the QuickBooks invoices and added the jobs into MSA. Additionally, Mark printed off their packages for specific engine assemblies as well as cylinder head builds from the memorized transactions in QuickBooks. Those proved to be very useful as I created the same transactions as groups in MSA. Many of the open invoices had 5-10 steps and a slew of parts to go with it which could now be created with 3-4 clicks of the mouse.
Day 2 – Implementing My Shop Assist
Most of my second day was spent entering this data so the team could begin using the system with everything ready to go. I also made a point to walk around the shop and give each tech a demo of how they would log in, clock in and out, how they would know what to do, and how to track time on those tasks. Mark’s goal was to have everyone start using MSA in parallel to their existing system for the rest of the week and then transition over once the pay period ended.
Day 3 – Finishing up
On day three, the techs began using MSA to track their time. I made sure everyone was getting up to speed by answering questions and making corrections as needed. What made the system so easy to use for everyone was the fact that they were already used to entering this data, just through three different systems at once. Luckily, Mark didn’t have pushback from his employees on using a new system. This is a very common problem we see with shop owners wanting to implement a new way of running their shops.
Mark has an excellent team behind him and he fully understood where the inefficiencies are at his shop. We addressed a big one with MSA’s customer login portal. This portal allows customers of Mazworx to log in online and view the status of their job(s). If you have run any type of shop, you understand how the endless phone calls you get from impatient customers can really drag you down. These calls take time and add little value. The customer login portal can augment your customer service by giving customers a quick and easy way of viewing jobs which reduces the number of phone calls you get.
Real world benefits
A perfect example of this interaction with the customer is through my own shop working with Mazworx. Mark has the ability to line hone cam caps on smaller cylinder heads. I have literally thrown thousands of dollars’ worth of cylinder heads away in the past because I couldn’t find anyone local to do it for me. Immediately after getting back from the visit with them I shipped a head out to them to be fixed for this. Shortly after shipping it I got an email from them with the job information.
Since my shop uses MSA, the job immediately showed up in my outsourced work window. This feature gives me a quick glance at all the jobs I have at other shops that use MSA. Some other examples are the numerous jobs I have at Sheperd Transmission and also Eddie, a local machinist I use in the Dallas area.
MSA gives Mazworx some simple metrics to show them that the system is working as well. They have a customer login graph that shows how many times customers have logged in to view their respective jobs. The higher this number would correlate to a reduction in phone calls asking for status updates. The best way to get your customers to use this feature is to email them once the job comes in, just like Mazworx did for me. The email contains the link at the bottom which directs them to the login. My interaction with Mazworx consisted of one phone call to verify they could do the work, where to ship the box, and what to include with the head. From there, I got the email and over the course of a few days, they completed the work I requested. All of this I could see via my outsourced work tab in MSA. A day after it was completed, Manuel called me to say what I asked for was ready, but recommended I do an additional step before they ship it back. I agreed to do the work, and was able to see they updated the job with the new task. This interaction between two shops could not have been any smoother! I fully expect Mazworx to become the benchmark as they refine the way they use MSA at their shop.
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This is met with an angry reply of, “Don’t backchat me, I know boats!” and as if to make his point, the know-all immediately steps off the dock and goes straight through the waiting dinghy below and into the water, vindicating the cautious professional and making himself look the fool in front of his clients. Ouch.
I bought my first decent performance car, a 1995 Nissan Skyline R33, back in 2002. Although it was mostly stock except for the usual bolt-on parts, it went like a rocket compared to my previous car and I loved it. It made about 320hp (roughly four times as much as the car it replaced), and unlike today where you’ll spot a dozen of them on a five-minute drive around my neighborhood, back then it was still fairly unusual to see one of them on the road.
It was also rare to find a workshop owner who had seen one. This proved to be a real problem, and a learning experience too, when it came to choosing a performance shop to work on and maintain my car. I must have visited five or six shops and asked them each the same question before I found one with the guts to answer it honestly. The question was simple:
“Have you ever worked on one of these before?”
Now in the very early 2000s in my hometown of some 250,000 people there were, to the best of my knowledge, a total of three cars of this type. In fact before I even met the two other guys who owned one, we used to wave whenever we saw each other. A sort of mutual acknowledgment that we were driving something almost nobody recognized. It was a shared love for the type of car as well as a mutual understanding of the difficulties associated with owning it.
There were a huge number of workshops I could have chosen to ask my simple question to, so to narrow the list down somewhat I focused only on the shops who specialized in and had runs on the board when it came to performance work. I picked a couple and went for a drive to see them, sound them out, and ask them my innocuous little question.
The responses were all variations on a theme. “Yeah, I’ve worked on plenty of them before, no problem,” and “Built a bunch of them in my time,” and other similar responses along those lines. The problem I had with these answers should be obvious. They hadn’t worked on plenty of them and likely had never seen one before. These shop owners, all performance car mechanics with years of experience in their field were just telling me what they thought I wanted to hear.
It wasn’t until I met the fella who ran what would become the only workshop I’d trust to work on my car, that I got something that sounded like the truth. I asked him if he’d worked on my type of car before and he replied, “No, never. But common sense says it shouldn’t be too different to other cars with a similar engine and driveline that I have worked on. I’ll have a look at it and if there’s anything unusual or tricky I’ll let you know.”
He hadn’t fed me a line or tried to convince me that he’d built a hundred of them or that he knew them back to front. Instead, his practical, common sense answer gave me all the confidence I needed to entrust my car to him and his workshop. He was the cautious professional serving up truth in the face of so many know-alls hoping to bullshit their way into the job, and it was the beginning of a great relationship.
Just a couple of years later his workshop had become the place to take your Nissan Skyline, and then more broadly your late-model import car, if you wanted someone who actually knew what they were doing to work on it. The shop’s reputation was second to none and the quality of work was top-notch. It was nothing to see four or five imports in there at once on any given day.
The moral of the story is simple. Any short-term gains to be made by feeding a potential customer a line to get a one-off job are easily outweighed by just being honest. By giving it to me straight my mechanic was effectively playing the long game and in so doing earned my business as well as that of dozens if not hundreds of other performance car owners.
When you give a customer the confidence to spend money with you and back it up with the quality of work they expect, you’re enabling them to advocate for you and your business and that can only end well for everyone. Reputations are earned. But more importantly, whether they’re good or bad, they’re almost always deserved.
-Adrian Hodgson
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Evolution Dynamics is a relatively small shop just outside of Dallas, TX specializing in the Mitsubishi Evo platform. It has anywhere from 20-30 cars at the shop and between 15-20 engines being built at any given time. Handling 15-20 engine builds can be a daunting task if you only have 1 person building the engines. Keeping the parts straight, knowing what each customer wants, and various components going to different machine shops adds to the difficulty of getting every engine exactly right. To top it off, building race engines isn't just putting parts together using manufacturer supplied specs. Race engines can exhibit undesired behavior when built to unsuitable specs. So having detailed records of each and every engine built can help a builder dial in clearances and fine tune the build process. If an engine fails, being able to quickly look back and see every detail about the engine can save countless hours and dollars by not repeating the same mistake again.
Handling the Process
When a customer drops a car off or places an order for an engine, you begin by entering the job into My Shop Assist. Evolution Dynamics has streamlined the engine building process with My Shop Assist by building out groups and setting them as default tasks as seen below.
Taking Pictures, Making Notes, and Tracking Time
To get the assembly process started, the builder lays out the parts for the build. Parts are thoroughly inspected for defects then washed in a soap bath to remove any contaminates.
As the block is flipped back over, ring gaps are measured and filed to meet the specs refined for the use the engine is expected to see. What works best for a 900hp car may not be ideal for a daily driver at 400hp. Knowing the difference helps build an engine the customer will enjoy (and not have to constantly worry about oil levels, crank case pressure, and if they need to tear it down to "refresh" it every year).
Evolution Dynamics has noticed the biggest difference in the road racing cars. Ring gaps were made smaller and smaller to reduce crank case pressure and blow by into catch cans. Running a 40 minute session with an engine normally built for 900hp meant several quarts of oil filling into the catch can. This was unacceptable. Through several revisions, the specs were adjusted to meet the needs of sustained periods of time at full throttle.
Final Steps
By tracking hours to do a complete assembly, Evolution Dynamics has adjusted their assembly pricing to reflect the care taken in the build process. My Shop Assist has increased the profit of the job by easily tracking that time. "Without knowing the total time, I was simply charging less than the other guy doing it," Kevin said. "Now that I know how long it takes me through countless revisions to my process, and knowing the specs that work the best, we are not afraid to charge more for a better product."
Unless you have been living under a rock for the past couple years, you have probably heard of English Racing. They are a premier destination shop in Camas, WA which is about 15 minutes outside of Portland, Oregon. English Racing has been a go-to shop for Evo, DSM, and Honda tuning for many years. More recently, they have been taking in Subaru work as well as building several of the fastest GTRs on the planet.
English Racing's race rig at TX2K15
The shop is owned and run by Lucas English who, like most shop owners, wears many different hats. Lucas divides his time among managing the shop, answering phone calls, tuning cars, and writing invoices.
Lucas at his desk working on invoices
In the front office, he is supported by Myles who handles a bulk of the phone calls, emails, and customer service/scheduling.
Myles spends a great deal of his time answering the phone
The shop itself is spread out over a couple buildings including one for their AWD Dynojet, a smaller two lift building primarily for GTR work, and the main building with the waiting room, office, engine assembly room, parts storage, and the primary work areas with 5 lifts. There is a large, recently paved parking lot where they keep the customer cars in for work. The parking lot has a slew of every type of car they work on ranging from simple tunes to ground up builds. English has a team of techs who divide the work up based off specialty.
The back side of their main building
The Situation
We have known Lucas for several years because we both come from the Evo world so we were intimately aware of the struggles associated with running this type of shop. The most obvious issue is the sheer number of cars they had to work on.
Their parking lot had a lot of cars in for work
It is quite the daunting task trying to track all the work that needs to be done and all the parts needed for each car. Without a good system to do this, shops will spend too much time on overhead activities. This includes tracking down parts, trying to remember the work done, answering phone calls from customers wondering what is going on with their car, pushing cars around, and even directing technicians. This cuts into the profitability of the shop. The guys at English did have several systems in place to try and help their process. The most useful was their use of Google calendars to track appointments. They were also using the multi-user QuickBooks for accounting. And Lucas had created his own Excel worksheet for tracking the status of all the cars in the parking lot/ But this was a very labor intensive process in itself.
I spent day 2 entering jobs from google calendar to MSA
The Plan
After talking with Lucas a couple times about My Shop Assist, we decided it would be of huge benefit to him for us to simply fly up there and help implement a complete shop management system. Lucas fully understood that his time is extremely valuable and he simply didn't have any to spare to try and learn a new system on his own.
We at My Shop Assist realize that this is a pretty common struggle for shops who are aware they need to improve things but can't devote the resources to do so. We addressed this issue in December, 2014 by offering a consulting service where we would visit the shop in person and do the heavy lifting for them. This includes importing all of the customers, tasks, parts, and users, then adding all of their current projects, and finally training all of the staff.
We agreed a good time to visit would be right after he returned from the California Shift S3ctor half mile event. This would give him two good weeks of use on his own before they head down to Texas for the Texas Invitational. This trip to the TI event would give him a chance to meet us in person again where we can go over how its working out for him. We can address any questions he may have and keep him going in the right direction towards better efficiency and higher profitability.
Getting Started
On the first day of the visit, I was introduced to several of the guys on Lucas' crew. Lucas gave me a tour of the shop and explained several of their current processes. Lucas said that over the past 6 months they have been pushing hard to clean up the shop but that it was still a work in progress. Years of hard work with not enough time devoted to cleaning and organization can takes its toll on the shops efficiency. It also makes the shop look less appealing to higher end clientele. The first big change was his parts room. English Racing stocks a large amount of competition clutches which were neatly organized on the shelves and labeled for each application.
Their move to organize the shop was obvious in the new parts room
This same thing applied to Wiseco Pistons, GSC, ARP, ACL, and even a bunch of Magnus Intake manifolds for Evo's. English Racing buys direct from the manufacturer on many of these products and also helps with some R&D. This is excellent for maximizing profit margin and establishes himself as a resource the manufacturers can use to test their products in practice. Having a good amount of product on the shelf also means they can turns cars around faster because they wont have to wait for parts to be shipped to them.
Myles likes their parts room
Another area of the shop was reserved for parts to be used on scheduled cars. Lucas was using the shelves to tag parts with the customers name and made it clear to the team those parts were not to be used for anything else That way, cars can come in and leave the same day because everything is there for it.
The last change I will point out was the use of rolling racks to store parts for customer cars. When you tear down a car for a motor build, there are a lot of parts that need to go somewhere until the new engine is ready to go. The use of these rolling racks minimizes the footprint on the shop floor these parts take up. It also keeps things off the floor which adds to the professional look we strive to achieve.
The rolling racks behind the lift contain the parts from disassembled cars
A bulk of the remaining work Lucas’ team had left to do was cleaning up used and old parts throughout the shop. It's often difficult to throw good old parts away because you know at some point another car will need it. The downside is that those parts will be in your way until that time comes (which could be years). We advise shops to take a good hard look at their pile of used parts and determine if they really need to hold on to them. Most of the time, if a customer needed a part to fix a car, just make them purchase a new one. Lucas and I looked through several of his shelves and he started coming to the conclusion that keeping many of the used parts is just a waste of space.
Moving Forward
My work with Lucas began after our tour. The first part to setting them up with My Shop Assist was to integrate their customer list from QuickBooks into MSA. This gives them a good start to adding jobs and makes each job a little easier to create from here on out. Next, I went in and reviewed their parts and services within QuickBooks. They had a very extensive list of OEM parts used on the various cars they work on but much of the aftermarket parts were missing. The services were grouped under just a few distinct line items. On my flight to English Racing, I anticipated needing to make a good service list for them to work from. I built a good base of tasks organized by type of task and broken down to specific areas and even specific vehicles when appropriate. Since we at My Shop Assist have been in the aftermarket automotive industry for many years, we have a pretty good idea about what the task list should look like. And this list would be a great start for them to build off of as time goes by.
Throughout the first day, Lucas was working hard to get invoices printed for me for the cars already at their shop (and it took essentially his entire day). I needed these invoices so that I could enter the jobs into MSA for his techs to begin working from. This process was very time consuming for him because the QuickBooks database he originally had didn't have many of the parts or services they commonly use. He would manually have to enter it every time a car needed it. When you’re doing that 5 or 6 times a day, I would estimate between 3-4 man hours a day would be saved with a more complete service and parts list available to pull from in MSA and then export as complete invoices back into QuickBooks. This simple process improvement of streamlining invoice creation and having more data to pull from could potentially free up 80/hrs a month of Lucas and Myles time (at $100/hr that’s $8000 dollars a month more potential earning time without having to hire another person or work longer days). In the coming weeks, we are going to be working closely with English to continue to enter more data with them and to better fit the spreadsheets created for them to the pricing structure they use there.
By the end of the first day, I had MSA connected to their QuickBooks via the web connector and was able to transfer jobs from MSA into Quickbooks as invoices. This is a critical component that shops who implement other “General” project management programs overlook. I also had entered in all of English Racing's technicians into the system and even had several of the invoices entered as jobs into MSA. One of the techs began tracking his time late in the day with MSA This is a key component to what Lucas was wanting to fix from his previous system of hand written time cards. I gave myself some homework for the night to begin creating groups within MSA and to further customize the labor list to their needs..
System Implementation
Day two began with showing several more technicians how to use the system and explaining the purpose of what its being used for. It took several hours to explain it, answer questions, and demonstrate the functionality to them. By this point, Myles was proficient at adding jobs and had begun using MSA in place of their Google calendar for new appointments. He also successfully took an email thread with a customer for a staged power package they offer, entered it into MSA, and emailed the work order to the customer with a request for a signature to authorize the work. The customer digitally signed the request within a few hours and Myles was able to follow up with a deposit placed and parts marked to be ordered. Because the work order was created in MSA, Myles already had the work allocated to the specific technicians (which automatically appears on those techs to-do lists when they log in), had the job listed on the calendar, and will be able to export it to QuickBooks as an invoice once the job is completed. The biggest struggle with explaining MSA to shops is how the dots are connected through the work flow in a shop. Over the next few months, as Lucas and his team are more comfortable with using it, things will become increasingly apparent about how seamless MSA makes running the shop.
By the end of the second day, many of the cars at their shop had been entered into the system and we were ready to start the third day training the rest of the technicians about using MSA
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By the second day, the techs were tracking hours on the cars they were working on.
I spend the night building out specific groups that Lucas can use for engine builds and short block assemblies. This will reduce the time to quote and invoice a full engine build. Additionally, fewer things will fall through the cracks. Lucas and I went over several motor build invoices and found he was grossly underestimating the “misc fluids, seals, cleaning supplies” charge he was using. And there were even discrepancies on certain parts pricing from one invoice to another. These are the small things that cut into the bottom line without even realizing it. By building out specific groups of parts and services, every engine build going forward will have identical pricing without missing the small (but significant) supplies he was overlooking. These supplies are no longer grouped into “misc supplies” and are called out as individual line items which makes his invoicing more professional to the customers.
I spent the third day training the remaining technicians and making sure all questions were answered. I also entered his dyno waiver legalese into MSA and showed them how to take signatures for the waiver
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Aaron at his home away from home on the dyno. Now able to upload the dyno sheets and get waivers signed with MSA.
Lucas also wanted to start using the Time clock within MSA because it was difficult to edit times using their paper time clock system which required manually totaling out each employees times every week. The MSA time clock report generates this report automatically and it is easier to make corrections.
Conclusion
Overall, the visit was extremely productive! It took Lucas away from the task at hand many times throughout the day, but I did most of the heavy lifting to get them moving forward with the new system. By the time I left, everyone was actively using the system and the active jobs screen was growing rapidly as new cars were being entered into the system. I plan to follow up with Lucas and his team several times through the next few weeks to make sure all their questions are addressed and they continue to smoothly transition to using MSA. I want to thank the team at English Racing for inviting us to come help them, and for the opportunity to see their operation!
This service is available to anyone interested. If you think your shop would benefit from a visit like this, please Contact us.
Purchase Price | 12000 |
Additional Equipment (RO filter, sink, and trays) | 1000 |
Loan Period (years) | 2 |
Interest Rate | 5 |
Monthly Payment | 570 |
Additional Charges (cleaning fluid/month) | 150 |
Charge per Service | 150 |
Minimum Services to make Payment | 4.8 |