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The Bonehead Cycle
The Transition from Technician to Shop Owner: American Dream or Nightmare?
By George Witt. I call it the “bonehead cycle” of the Independent Repair Shop. Workers in the average Independent Auto Repair Shop are sick of being treated like dirt, working in poorly lit and ill-equipped conditions on junk cars that “just need to be fixed so they can get by.” The boss constantly complains that the workers are making more than he is and they ain’t making much. Tired of working for a “bonehead”, the technician takes a bold step and opens his/her own shop, setting labor rates below the market in a bid to get a lot of new business.
Time goes by, the new business holds on and the parking lot is full, so the new owner hires some technicians to get the work out the door. But this isn’t good work and it doesn’t pay well. The new shop owner finds the hired help is making more than they are. The money for the much-needed new equipment isn’t there and the workers believe the owner is a “bonehead”. So the technician strikes out on their own and opens their own shop…..
In this way the “bonehead cycle” continues for another round. This all-too-true story is a sad reflection on our industry. It perpetuates the poor wages, working conditions and image that we all disdain. So, how do we break this cycle? By understanding the differences in being a technician and being a shop owner/businessman.
This article will explore how to make the transition a little easier. I started my own shop 6 years ago in a one bay shop (15 feet by 30 feet) on a dead end dirt road in a storage building. Today I have a 10 bay shop that’s clean, well lit and well equipped. My story can be your story.
Start with a large bag of donuts, some crayons and a few large pieces of sack—hey, I never said planning had to be real formal, you know. It just has to be intelligent. Now, eat a donut and start listing the types of work that you do best. The biggest mistake the new shop owner makes is trying to do every type of work for every type of customer. They’re desperately afraid to let a potential customer walk out the door with their wallet in tow. They need the money and they’ll do the job—often at a loss, figuring they’ll “make it up next time”. The real problem here is “next time” doesn’t come very often.
Now, back to the crayons and the sack—we need to figure out what we do best and build a business around it. This is the business plan. A business plan written on pieces of sack with a crayon is better than no business plan at all.
The main reason businesses fail is they’re under capitalized (not enough money) and they’re not well planned. The typical new business owner uses every bit of cash they have to get the doors open and when the profits aren’t there, the expenses eat them alive.
The easiest way to have cash is to not spend cash. Equipment takes money, so let’s figure out what equipment we really need. This really sounds far-out, but listing what you do best is the most sensible approach you can take. Build your business by doing what you’ve always done best-whatever that is.
In my case, what I’ve always done best is preventive maintenance. It always made sense to me that if an upper radiator hose had a life span of 3 years, why not just replace it before it blows? If changing the transmission fluid on a schedule kept the transmission from blowing up, why not service the transmission on a regular basis?
The rent on my first shop was only $165 a month. The sum total of all my expenses was only $22 a day!! It’s kind of hard to not make a profit when the phone only had to ring once all day long. Besides, I’d discovered that a great many people out there didn’t want car trouble and were looking for a shop who was honest and made sense.
About the author:
George started out as a mechanic in a gas station over 30 years ago. He now owns and manages his own repair shop, George Witt Service, Inc. which specializes in Honda, Acura, Toyota and Lexus cars. He holds the following ASE Certifications: Master Auto Technician, Advanced Engine Driveability and Service Consultant. He’s earned the Degree of Accredited Automotive Manager from the Automotive Management Institute (AMI). He wrote a book entitled “Shop Marketing” that’s had over 15,000 copies distributed by ALLDATA
Check out some of George’s training videos at www.auto-video.com
LBT-109($50.00) list is $100.00 Save 50% The Manager Everyone Wants
Using real-world techniques, George will enable you to gain excellent people skills that will directly increase your profit margins and make life as a shop owner more rewarding. 1-1/4 hours viewing time, 2 manuals. Essential forms to customize.
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I have the same dream, and I agree preventive maintenance is the way to go. I liked how you stated that the best to have cash, is not to spend any.
I would like to have at least a mid range scanner to maybe install an 02 sensor or whell speed sensor, but that is about as far as I would take the diagnostics in my shop.
Although I am still working towrad that goal, I feel that with in the next two to three years I should be able to do so. Preventive maintenance and some light OBDII Diagnostic work is my plan. Anyways thanks for listeneing.
Steven R.
Steven,
Thank you for your comment. George definitely knows how to build a profitable shop. I agree that not every shop has to take on every kind of diagnostics to be successful. Keep working towards that goal and I wish you great success. I have forwarded your comment to George for him to comment back.
Thanks,
Julie
This is an interesting dilemma. Although it is important to prevent cars from breaking, we also must provide some means to assist our customers when they do break.
This can take several forms. If there’s a shop nearby that does do diagnostic work well, you might be able to take the car to them for testing when needed. They do the diagnostic work, you sell the repairs and perform them for your customer.
This also highlights the importance of keeping our focus tight on what we do work on. Due to the high complexity of today’s cars, it’s unwise to “specialize in foreign and domestic” cars. Like, what’s left?
You need to take a combination of the make or makes that you love to work on and the number of those available in your market area. If you love Volvos, but there are none registered in your county, this probably ain’t the smartest business plan.
Ideally, there will be a few makes (preferably those whose technology is similar) that you can highlight in your operation. This will make training and tooling easier to accomplish. Get tooled up for those makes and learn how to fix them.
Next, when looking at what a tool will cost to buy, we must also look at the cost to NOT HAVE IT. In the above case, you’re now dependent on another shop for diagnostics. If it works great, fine. If it doesn’t, then the cost gets higher to not have the tool.
Also, record the number of times you need to use it. Multiply that times what you could charge for it and you now have the actual cost per month to not have the tool. If you get 3 requests a week for “check engine light” work and you could charge $90 for testing, you’re out $270 a week. This amounts to 156 requests a year, which is $14,040 a year!!
Clearly, you need to borrow some dough to get that tool and some training. The “cost to not have it” is too high. Many times you can get great complex testing tools used at great deals. Quite a few guys buy them and give up learning how to use them, so they sell them at a loss. There are some great deals out there.
In addition, factory service information can make fixing things a lot easier and narrowing your focus means you’ll be using that factory system more often.
A lot more of this type of information is in my “Advanced Pricing Strategies” DVD and book.
We do a fair amount of diagnostic work for other shops at my shop. If you only need this a few times a month, it becomes less of an issue.
Thanks for replying.
George
Thank you Mr. Witt for replying back> I acn do diagnostics, as a small shop owner, i dont know how much time i will have to do it. Starting out it is just going to be me.
My factory training is with Honda. Luckily they are very popular so finding the market should be easier.
I have also owned 3 Suzukis an Esteem a Forenza and a SX4. I want my shop to do Asian Imports, and with a subscription to Identifix and a Snap-on Solus( perhaps) I may be good to go.