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March 22, 2010 02:00 AM

SHOP FORUM: How does a small shop afford good help?

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    A service shop owner in West Melbourne, Fla., writes:

    “I have a few extremely qualified techs that want to work for me. The problem is that I do not think I can afford to pay them what they make now. I have always dreamed of paying on a shop-profit type of system but have quickly found out that most techs want their flat rate pay.

    “How does a small shop afford good help? How do you pay your techs: hourly, salary, or flat rate? I know with a tech as good as myself working full time on cars that our shop will only get more customers and continue to grow. I have come to the point where I can´t do it all, but I also can´t pay top wages.”

    Tom Ham replies:

    “One method that is working well in some shops is paying an hourly wage that is about half of the going rate plus some version of flat rate that is about half of the going flat rate. Maybe see if you can find a reasonably decent tech who can handle 90 percent or more of what comes in, with you helping him learn the other 10 percent.

    “Also, maybe try new hires for a week or so to see if they are a good fit and don't be afraid to try several until you find a decent one.”

    A service shop owner in Denver answers:

    “Tom´s suggestion of hiring for a week at a time has worked well for me. Even though I have a large shop, I have done that with great success. And I do that for every position. As far as pay, give him 75 percent of what the employee needs and if it doesn´t work out, charge that cost to sublet labor.

    “One idea is hire that exceptional tech that can do it all. Be upfront about your money issues and ask him to be flexible. Hire him for a one-month trial and pay him what he needs within some guidelines. What have you got to lose? Keep communicating on his progress.

    “As far as pay, the format we use is you should be making somewhere close to 70 percent gross profit on his pay. Some auto consultants use an 80 percent margin loaded. But make it simple. An easy way to calculate is if your shop rate is $100 per flat rate hour, he could get $30 and you make $70.”

    Another service shop owner in Ventura, Calif., writes:

    “The way I did it was to pay flat rate. That is the only way I have found to control cost and motivate techs to work. I always worked flat rate as a tech and loved it. You can stairstep the pay rate so it increases as hours produced increases. But you also have to maintain very tight quality control and hold the tech accountable for comebacks. There has to be a consequence for poor quality work.”

    Another service shop owner in Hollywood, Fla., replies:

    “Tom changed my life. If you set up the pay like Tom has for me, you will not go wrong. You are in Florida, and (the state's Division of Consumer Services) will give you a list of every tech in your county for free. Fix the pay and mail out a job ad to every tech.

    “We have set up the pay, and great techs are still working for me. The ones that could not produce are gone. Now I do the work of six techs with four techs. All the techs average over 40 hours and make more than they used to. I now make 100 percent more profit than last year, and the techs make about 20 percent more. Everyone is much happier.”

    A service shop owner in Beulaville, N.C., answers:

    “Just because you´re a good tech doesn´t automatically mean you will grow. Customer service is a must. The best move I ever made was getting my head out from under the hood, locking my tool box and running my business by the numbers. A lot of small shop owners think they can´t do it, but I live in a town of about 1,000 people, have one 'A tech,' one 'C tech,' and a service advisor. Work on the business, not in it.”

    Another service shop owner in Inverness, Fla., writes:

    “When I first got into business, I inherited a 'C tech' from the previous owner. He was OK for what I paid him but that was it, OK. As I got busy, I had a retired guy, whom I worked with at another business when I first moved here.

    “Anyways, he would work the pants off of a tech half his age. What was great is he didn´t want a lot of money. He really wanted to help. He had been in business himself at one time and had a lot of knowledge to share. If he came to work and we didn´t have much, he would say, 'I´ll go home, no need for me to spend your money.'

    “If you could find someone that really is looking for something to do instead of making a living, it might benefit both of you. The other thing with some of the older techs is the work ethic is better.”

    The preceding question and responses are posted on the Automotive Management Network Web site, which is operated by Deb and Tom Ham, owners of Hams Professional Auto Service Inc. in Grand Rapids, Mich. The comments have been edited for clarity and brevity.

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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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