The Balance Sheet Reality No One Talks About
Now playing — Repair Shop Reckoning
Summary
In this episode of Repair Shop Reckoning, Kevin breaks down the part of the business most shop owners either avoid or don’t fully understand… the balance sheet. You can be busy, profitable, and still not actually getting ahead. This is why. The...
About this episode
In this episode of Repair Shop Reckoning, Kevin breaks down the part of the business most shop owners either avoid or don’t fully understand… the…
Key takeaways
- —Balance sheets reveal who owns what in your business, including assets and liabilities.
- —Short-term debt includes obligations due within a year, while long-term debt is for financing growth over time.
- —Depreciation affects the value of assets but does not change the amount owed on loans.
- —Understanding your balance sheet can prevent negative equity and financial stress.
- —Effective inventory management is crucial to maintaining cash flow and avoiding unnecessary debt.
Frequently asked
- What is the difference between short-term and long-term debt?
- Short-term debt includes obligations that need to be paid within a year, such as credit card bills and vendor payments, while long-term debt is for financing assets like equipment and vehicles over a longer period.
- How does depreciation impact my business finances?
- Depreciation reduces the accounting value of your assets over time, but it does not affect the amount you owe on loans, which can lead to negative equity if not managed properly.
- Why is it important to understand my balance sheet?
- Understanding your balance sheet helps you see the true financial health of your business, including asset ownership and debt levels, which is essential for making informed financial decisions.
▸Full transcript
This is the story of the one. The one who keeps multiple buildings running smoothly day after day. Plumbing that flows, HVAC that hums, cleaning supplies that keep surfaces sparkling. That's why she counts on Grainger. With easy reordering online and 24/7 support, Grainger helps her keep the products she needs on hand. So shelves stay stocked and buildings stay ready. Call 1-800-GRANGER, click grainger.com, or just stop by.
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Call 888-ADD-DISH or Or visit dish.com today. Welcome to Repair Shop Reckoning: From Chaos to Control. Because too many shops today are running on chaos. Phones ringing, technicians frustrated, front counters overwhelmed, owners buried in problems with nobody to call. Kevin Brown has spent over 30 years in the trenches learning how to take that chaos and turn it into control. Shop owner, operator, consultant, leader through industry shifts, insurance games, bad hires, great hires, and lessons learned the hard way.
This isn't theory. This isn't corporate training fluff. This is real shop experience, unfiltered. On this show, Kevin breaks down what actually works— running profitable shops, front counter control, training technicians, negotiating with insurance companies, building systems that make your shop run instead of burn, and the mistakes that quietly bankrupt shop owners every single day. No corporate scripts, no sugarcoating. And yeah, somebody might get offended.
That's okay. Disney's two doors down. But if you want the truth about this industry, buckle up. This is Repair Shop Reckoning: From Chaos to Control. Let's get started. Welcome back. This week we're going to talk about balance sheets. Who here has heard about a balance sheet? You've heard long-term, short-term, stuff like that. Let me just give you some of the Some of the stuff you're going to hear throughout this thing.
Okay. Short term is anything you're going to do under a year. Your credit card bills, your line of credit. You have to pay it off usually once a year to keep in your covenants for your line of credit or renewal. They want you to pay it off, borrow and pay it off, usually to zero. 90% of the banks, the older ones sometimes don't, but they're coming along because they don't want you to leave money on your line of credit forever.
Right. Stuff like that. Anything that you have to pay within a year. We'll just say that. Anything long-term would be your vehicles, stuff you're making payments on long-term, equipment loans, SBA loans. A lot of guys have these EDIL loans. COVID. They're giving these guys money at 3%. Why wouldn't you? Right? You know, you could take a loan and pay $700 a month at 3% for, you know, the rest of your fucking life, I guess.
You know, pay it off or whatever. You know, the P&L tells you what happened. The budget tells you where you want to go. That's why we have them lined up. Then the balance sheet shows you who owns everything. Does the bank own it? Do you own it? Where's your money? Where's your money going? Is it sticking or is it leaving? So we're going to do this with a $100 bill model once again.
So it could be either 10% or $10. Yeah, it doesn't matter. Obviously, your balance sheet is going to look a whole lot different with a lot more numbers on it and stuff like that. But we're just going to do the simple $100 bill model. This is a long ass episode. I had to work on it for quite a while and change it because it gets confusing.
So I'm going to read it and I'm going to go slow. So my suggestion to you, Jason, if you don't understand it, say, "Kevin, can you explain it again?" And I'll explain it again. Yeah, this is kind of a new concept because this one gets confusing to everybody because I'm going to start saying it's a $100 bill, but I'll say it's $130 and they don't understand.
I'm going to break it down that maybe you bought a truck for $100. Okay. You took a loan out for $100. After 3 years, that truck is worth $50. But the loan, you still owe $80 on it because the loan does not give a shit about the depreciation or about how the truck is devaluizing. Yeah. So then all of a sudden now your $100 is worth $130.
So now you're $30,000 or $20,000 or $20 under your hundreds. You know what I'm saying? You're negative. So it gets really confusing. So I, I went over this several times to try to change it so people understand. The balance sheet is very important 'cause it shows your debt load and everything else. Kind of gives you a picture of where everything is and what you own.
'Cause think about it. If you have a truck that you paid $100 for and you put $10 down on it, you own $10 of that truck. Who owns the rest? The bank. The bank owns the rest of that truck. Yep. People don't think about that. Your equipment. Walk out in your shop and say, who owns all this equipment? Who bought it? Well, my hoist was $100,000 or $100.
I put $10 down. The bank owns $90 of it and I own $10 of it. See what I'm saying? So that $100 only goes so far. When you start loaning all your, you're getting your money from the bank and this and that, you can get negative really quick. You buy a bunch of vehicles, they're depreciating. I'm going to talk about 179, Section 179 versus a one-time depreciation write-off in one year or $20 a year on your $100 purchase.
So I'm going to get into all that stuff. So anything that doesn't sit right with you, just question it because, you know, this is confusing. Yep. I, this is the one that I, one episode I was like, ah, this is a lot of information and this kind of ties it all together. Okay. So repeat myself. P&L tells you what happened last year.
Budget we do. Where we're going to go with last year's numbers. We're going to say, okay, this is what happened last year. This is where we ended up. Let's do a budget to maybe up a little bit our net, right? Then the balance sheet shows you what you actually have and who owns it. Simple as that, right? The balance sheet tells you what you actually have and who owns it.
I just— you understood the bank part of it, right? Most people don't think about that. When you said that, I was like, oh, when you said who owns it, I was like, what do you mean by that? And then you were like, use that hoist example. And I love the $100 example because that really ties it home, the 90 versus 10. So, the $100 bill represents everything your business owns, right?
Well, we're going to break it down so you can actually see your business and who owns stuff in your business or your business, right? I mean, because if you really stop and think about it, a shop— this is just me talking— a shop has a bunch of equipment. But if you took all that equipment out of the shop, out of the working everyday working of that shop and you put it in the parking lot and said, I'm going to have a garage sale.
Hmm. What is that equipment worth? 9 times out of 10, nowhere near close to what you paid for it. That's what you guys need to keep in mind when we're talking about a balance sheet. Stuff gets deflated in value. How many of you guys, picture this, that one piece of equipment where you made a little bit of money and you bought that thing.
Say it's a red vise and you put it over on your toolbox and you bolt that red vise down. 20 years later, you look at that in your mind, that vice is still red. But if you took a picture of that vice, that vice would have no paint on it. It'd have war marks all over it, hammer marks and everything else. Okay?
Is that vice exactly what you paid for it, worth what you paid for that day or that? That's where people get a little bit screwed up in business. There's depreciation, there's devaluizing, the value goes down and stuff, right? So, let's just do this. We have $100. Out of your $100, you have $40 in your bank account. Right? The $40 represents your operating cash, your payroll, your quick terms.
You got to pay your vendors. You got to pay all these people, right? That's the money in your bank account. So is that really your money? This is payroll, your bills. It keeps the doors open, right? So anybody who looks at their bank account and says, I got $40 grand in the bank, fucking A, I'm good to go. How many people over the years have you heard say to you, I run my business by what's in my bank account.
Let's stop and think about that. This is not on the piece of paper. This is me just going off script. That's why we have a script. They go and take— they take a bunch of deposits for jobs, to say they take $40. Let's say they take $40 for deposits. And guess what they do? They look at their bank account, go, holy shit, I got $40 in my bank account.
Let's go spend $40 on this. Well, that money, think about that money was already earmarked for the path, the parts or the parts on them jobs you got to deposit on. Yep. So that money was already earmarked. So think about your balance sheet that way out of that $100. So you gotta be careful, right? So you got $40 cash in the bank for your thing.
Then you have your accounts receivable. Your accounts receivable is work you've already done that people still owe you on. You have $10 there, right? It's a simple way you earned it, but you just don't have it yet. Right. So a lot of companies, I always tell these guys, all these guys, I go, you got to have terms of net 30 and your net has to be net 45 to your people because you have to have that buffer.
Because if you're loaning money, you can't get money in. If a lot of these shops, these heavier truck shops will put a lot of money on the street and they're not a bank. Yeah. And then all of a sudden they're sitting there waiting by the mailbox to get paid. Yeah. So there's a couple of things you can do. You pay by the invoice.
Da da da da da. I'm not going to get into that because we don't want to muddy the waters. All right, so then we have inventory. $10 of stuff you've already paid for, these inventory or prepaid expenses, your rent payment for the next month, your insurance payments are prepaid, right? You get accrual accounts where you're collecting stuff out of people's paychecks for their medical insurance and retirement and stuff like that, right?
Sales tax, stuff like that doesn't go on a balance sheet a lot of the time, depending on how it's all set up in QuickBooks and all that. So what about inventory? Think about this, guys. And a guy asked me today, he said, how much do you keep in inventory? I said, as little as possible at the truck shop. Why is that? I said, because that's money I got to pull out of that $100 and buy it with the hopes I'm going to put it on the shelf and sell it.
So what if I'm not really super profitable because my margins aren't right? Yeah, my profit is low. And I go and say, well, fuck, I got $40 grand in my bank account. My bank, my things doing good, I'm going to take $20,000 of that and I'm going to buy a bunch of inventory and set it on the shelf. You just pulled $20,000 of your operating capital that you really didn't have because you had it for payroll and everything else.
You buy all this inventory, set it on the shelf, it doesn't sell right away, and payroll comes around. You're like, fuck, I don't have no payroll money. So inventory is a very dangerous thing if you're not really good at dealing with it, managing your inventory, turning it over fast. I'm not a fan of having huge inventory. And in my situation, the parts houses are pretty close.
They hotshot it to you. Yeah. So why not have them— why have them have the risk to have it on their shelf? And I don't have to worry about it. Filters and stuff like that. No oil. I keep in stock filters, you know, sundries, they call them, like fuses, wire, butt connectors, batteries, battery cables, shit like that. But I remember at one time we'd have $100,000 worth of frickin inventory.
You know, I probably have that out there outside the door. But how can I have a trailer store if you don't have— would I have inventory? Yeah, yeah, yeah. You know what I'm saying? So that's a whole different animal. Right. So, you know, so your equipment, so then you have your assets, your $40 left, right? We had the $10, the $40, then $10 for accounts receivable, $10 for the stuff you already paid for.
Then we have $40, that's your equipment, truck, shop assets, all that stuff, right? So it's simple. What do I have? Where's it at? And what form is it in? We have that extra $10 right there in the accounts receivable. It's our money. We've already done the work, we just have to wait for the money to come in, right? That could cause a cash flow problem, but we know the money's there, so it's gonna hit the balance sheet, right?
We've done the work, we just gotta wait for the money to come in, right? So that's simple, what form is it in? So all this being said, who owns that $100? When you really stop and think about who owns that $100, let's talk about that, right? Okay, step one is what do I have? Step two is who paid for it? And this is where the balance sheet starts to get real.
This is where I have to start following my notes just to make sure I don't go outta line 'cause I don't wanna give anybody bad information and then everybody online say, "He's wrong, he's a big bad guy and he rips off flat rate techs." So, because when you walk through your shop, like I told you earlier at the very beginning of the thing, and you look at your trucks, your lifts, your tools, your machines and all your equipment and say, "I have all this stuff," and that's true, that's all there, it's all yours, right?
It's all yours as long as you can pay for it. Yeah, yeah, yeah. Right? So the next question is, did I pay for it with my own money? Who owns it? Right? For most shop owners, the answer is no. They didn't pay for it. Okay? Some of what's paid was paid for by you. Some was paid for by who? The bank. Okay, so it's not really yours.
Okay? So that's where step 2, this is where we're trying to show you what's going on. So let's forget the math now here. Actually, it says, so forget the math for a second. Think about, A real simple life example. Let's say you buy a truck for $50, and this is where this gets confusing, guys, if you don't know what you're talking about.
So I'm reading it to make sure I don't screw up or transpose numbers because I have a habit of doing that. So I'm going to slow down. All right. So let's say you buy a truck for $50. All right. You take $10 and you put $10 down on that truck as a down payment. And the bank— the bank finances $40 of it.
Right? So now ask the question, who owns the truck? Well, you own part of it because you put $10 down on the truck, right? And you're the one making the payments, right? But the bank also has a claim to it because they financed most of it, right? So the bank who also has a claim to it is because they financed both. I can't— okay, remember we bought a truck for $50.
I paid $10, they paid $40. Okay. So it's about ownership. If you really stop and think about it, if you really want to break the balance sheet down, you want— you always— the balance sheet, you want to kind of watch owner equity grow, right? As you pay everything down, owner equity grows, right? That means you own more of the stuff. And that's where you have to kind of break this all down.
So who owns the truck? Well, you own part of it because you put money down on it and you're making the payments. And the bank also owns some of it because they have a claim to it because they financed it and they put most of the money down, right? So it's not really about the math, it's about the ownership. Once again, I'm repeating myself 'cause this is a confusing part.
It's about understanding that everything in your shop is either paid for by you or still being paid for by somebody else, is money, the bank, right? You're paying the payments, but they already paid for it. So you're paying them back. That's why balance sheets matter so much. You kind of see where you're at, where your business health is. Because a lot of the shop owners look at what they have and they, they don't stop and think that who actually owns it.
Now I could say in my shop, I can go in there right now. I've been in the business for a long time. I'm not a new shop owner. I pretty much own everything except for the two pieces of equipment because I hadn't taken a bank loan out in a while and I just took a bank loan out. I own all the tire equipment or bank, I'm pretty much almost paid off on it, but I own all the other hoists and stuff.
I paid cash for it. I think a couple of the trucks have financing 'cause I did Section 179 for taxes. I think that's pretty much all I owe. Um, you can make your balance sheet look bad if you buy a bunch of cars for all your kids and all that stuff, and you're making payments. You know what I mean? Cause that ends up going to long-term, long-term debt, you know?
So short-term debt, it's a simple model to say, we say $30 of short-term debt. Short-term debt is stuff that is due soon. Usually, like I said, at the very beginning, it's your, you got to pay your vendors, uh, parts vendors you have not paid yet, your credit cards, your lines of credit that you have to pay off, stuff like that. Your Edison, you write that short-term debt, it goes in, you, you owe it, right?
This stuff that affects you, that affects your cash right now. The short-term stuff. Think about that $40. Remember I said that the guy that has $40,000 or $40 in his bank account, he's like, look at all the money I have. I run my business on my bank account. Wait a second there, buddy. Go look at your balance sheet. You owe Visa, you owe O'Reilly's, you owe fricking Auto Value, all these people.
So you start taking them bills out of that. $40, all of a sudden you fricking have $3 left in there. That's your short-term, that's your cash in the bank. So you kind of got to protect it, right? Um, a lot of guys nowadays will use their credit cards to pay for everything. And then at the end of the month, pay it on your credit card.
I'm not a big fan of that because it just seems to me if you guys spread it out, you kind of, something ever happens, you can kind of say, okay, X and Y, it doesn't put you in a big trick bag. If something happens, you owe Visa $60,000. It's a lot easier to pay O'Reilly's. You owe them $10,000. If something was to happen, I'm not advocating, but you say, hey, I'm going to pay you $2,000.
I'm going to pay you— you could kind of spread it around. Yeah. You know, it kind of gives you a little bit of, you know, so that's the stuff that affects your cash flow right now that hits your checking account. This is what affects you, whether payroll feels tight, makes it feel tight. Remember that $40, we got to be careful, right? So that $40 that's in your bank account, you got to remember that's used for short-term money.
That's all the stuff. Now people are saying, well, that's going to happen within a year, but a year or under short-term. I mean, the Edison bill is going to be due next week or next month, right? It's a short-term debt. Yeah. Right. So that's what affects your stress level every day. Think about it. So you go and buy inventory because you think that you want to do X, Y, and Z, and you think it's a great idea to have all these chambers.
Cause you know, Bob from the auto parts stopped by and said, 30, 30 chambers are on sale instead of $50 or $40. You'll give me $4,000 worth. Because I have all this money in my bank account. You buy it all. The auto parts store bill comes a couple of weeks later. Maybe you had a little bit of money in your bank account because you know your numbers really well, but something happened and the bill popped up.
Now all of a sudden you owe all this. That's— you're not getting that back. It's not like you're buying them chambers, putting them on a truck, and the truck gets picked up and you get paid right away. Yeah, they go sit on the shelf. They could be sitting there for a couple of months. Yeah. So that's kind of like you kind of got to be careful with inventory.
Yeah. You know, I was kind of shocked how some of these shops that we go to have so much inventory. I remember going to Tim's and like all the batteries. Yeah. And I've said, how many of them batteries do you sell? Well, guys said you got a deal. I go, fuck, you still have a half a pallet. That's what I was— when you were talking about the deal, like he had the big pallet worth of batteries that had been sitting there.
Yeah. So, you know, this is what causes stress. You know, this is pressure. You know, you got it. You got to keep the money coming in, right? You can't have it going out faster than it's coming in. So you kind of got to kind of work this whole thing. Like you could do things where you could pay your bills twice a month.
A lot of guys have gone to the 1st and the 15th. I've noticed because I talk about them, because if they try to pay it every week, the cash flow is not happening a lot. And let me tell you something, nobody takes into consideration because I'm going to tell you what's happening. The corporations are buying everything now. They're trying to push payment terms out to 60 days.
Okay. 60 days is impossible for businesses our size, guys. Yeah. So my suggestion is you don't even let people frickin' get house accounts with you. You're not a bank. You're a repair shop. You're a little guy. In a little world and you get the big corporations that they can put you out of business because they get into you for $60,000, $80,000, which happens pretty quickly.
And all of a sudden you don't have no money and you go out of business and you have no leverage. They can just say, fuck you. Yeah, yeah. Talk to our legal team. Yeah. You know, so you got to be really careful. Long-term debt. This is where we say the $130,000 is long-term debt. The money is borrowed to build a business over time.
This includes things like your equipment loans, your business or your trucks, your, your SBA loans. Like I talked about the Small Business Association, the, uh, IDL loans that everybody did that you're making payments on them. This is stuff that helped you build a shop. You didn't pay cash for, for everything all at once. You finance growth, you finance the equipment, you finance a truck, you finance the expansion.
Cause a lot of guys don't just say, okay, I'm going to expand. I'm just going to go ahead and jump $300,000. They get a bank loan, they put a roof on, whatever. Yeah. You know, they all do it, right? So long-term debt is not necessarily bad if it's managed right. You can't go out and buy 15 trucks and not be able to make the payment at $1,500 apiece when you don't know how much money you even make.
And this is where you go to the P&L, the deep dive on the P&L, the, you know, the balance or the budget. Now the balance sheet, you know, you kind of got to say, okay, you know, I have to figure all this out. I can't make more payments than I actually have coming in because it's got to come from somewhere. Right? So long-term debt is how shops grow.
There's no doubt about it. A lot of guys took that money that they got, that loan from the SBA, that $150,000, $200,000, they grew, no doubt about it. And it's cheap money. It was at 3%. You can't get 3% money. So hell yes, take that and grow your shop. That might've put the guy the next level. Maybe he needed doors on his shop.
Maybe he needed a new truck, whatever. So he took that $150,000 loan. And he did a shop, blah, blah, blah, blah, blah. But now he's got a payment on that loan, but it's managed, right? If he didn't take more than he could afford, he's going to be okay because he managed it smart, right? To take 3% money when the door company maybe wanted to finance him for 7%.
And then you look at the commercial loan on a pickup truck, they wanted 9% and you got all this money for 3%. You were smart about it. So your payment's $731 on $150,000 at 3% versus, you know, pickup truck, that's going to be $1,800. And then the equipment, the door loan is going to be another, say, $2,000. Right. Look at how much money you managed to save by doing it that way.
That's, that's sensible. Yeah. Right. That's managing your debt. You didn't have the money in your, in your bank account. So you just did that. Makes sense. Right. We have a savings account. We put 10% of our income in every week. Our gross, we take 10% of it, we put it in our bank savings account, and if I need it, I can take it back, right?
But if I pretend it's not there, it builds up. Then I look, oh shit, we got money. Oh, I want to buy a new tire machine. Not a problem. I know I've made it 2 months down the road with that money in the savings account. We're good, right? Yep. So that's on the balance sheet, obviously, right? It's owner equity or whatever you say, how much we own of the business, because that's our money.
So I say, okay, I'm gonna go buy a tire machine. I put it in there. It doesn't become a debt, it becomes an asset. Okay, ta-da, right? But you have to make money to be able to do that. You know, I've backed in and out of my savings account now for probably the last 4 years. COVID, we were so busy. We didn't raise our prices, we didn't gouge anybody, but we did enough work.
We did more work than usual. We got to save a lot of money even after giving everybody raises. Yeah, that's awesome. You know what I mean? At first I didn't know what was going to happen because we always thought it was gloom and doom. So I'm like, hey, you guys might— we might need to take a pay cut if it slows down.
But what ended up happening, everybody closed around us. I'm like, you guys want to close? They're like, fuck no. So we stayed working. We didn't raise our prices, but we just had a lot of work. And all of a sudden we're doing brake jobs and we're doing this and we're doing that. And we did very well. We paid all the guys more money.
We never worked any overtime still, but we put money in our savings account and that gave us a leg up. Being careful with everything, you know what I'm saying? Yep. So let's talk about depreciation, because a lot of people get confused on depreciation on pickup trucks or everything like that. You know, we're going to talk about Section 179, like I talked about at the very beginning.
So let's say we buy a truck for $100, right? So instead of counting the whole $100 at once, accounting spreads the costs out over time. So for the first 5 years of this truck's life, we take $20 off that $100 every year. There's a couple of schools of thought. Number one, the IRS doesn't want you to get fricking huge fricking tax savings right away, but they look at it and say, you're going to use a little bit of this truck for the next 5 years.
So we can depreciate over 5 years. That's depreciation. Now there's other things that we could talk about, Section 179, but you know, for the tax plan, the IRS usually does not want you to take the full tax benefit the first year, because you're going to be using it for several years, like I said. So the simple way of thinking about it, it's an asset you're going to use over time.
So instead of taking the whole $100 up front, you spread it out. What that means each year is you deduct a little bit. So your taxable income goes down just a little bit and you pay a little bit less taxes each year. Okay? Less in taxes each year. Yes, depreciation helps you on your taxes, no doubt about it., but it helps you over time.
Not all at once. Yeah. Cause think about it. You put $100,000 or $100 out, but you're getting it $20 at a time for 5 years back. Yeah. Can't outcrook the crooks. Yeah. Yeah. Yeah. You know, they have this all shit nailed down. Guys are way smarter than me. Yeah. Have it all nailed down. Right. Um, so you do not get all the tax savings on the front.
Now, one important thing to say here, no cash is leaving your bank account when depreciation happens. You're not taking that $20 out of your bank account. It's already in your schedules, right? Your depreciation schedule. This is really important because a lot of people hear expense, they think cash left the business again. It didn't. Remember, it was in your, your depreciation schedule. So you already spent the cash, but you're just getting— you bought a truck, right?
You got a truck for the cash. So the depreciation is an accounting adjustment. It lowers the value of the asset on paper and it gives you some tax benefit over time. So simple one-liner is depreciation is spreading the cost out over time and lowering the value on paper. Yep. Right. Yep. Now there's this thing called Section 179, which is a bunch of rules that you could do a 100% write-off the first year instead of spreading it out over several years.
I'm not going to get into the Section 179 depreciation. It has a lot to do with gross vehicle weight, how many seats, seats, if it has a cargo bed, a lot of different things. Look it up, Section 179. If you need a tax deduction. Now remember, if you buy a $100,000 truck, you're not getting $100,000 off your taxes. Yeah, it's— you're going to be able to deduct your tax rate, you know.
So there's rules around the limits and stuff like that. But once again, Section 179, normal depreciation spread out. Section 179, you can speed it up and take it all the first year you buy it. That's what we did on Cybertruck. We Section 179'd it this year or last year. Okay. Why this matters on the balance sheets. Now let's bring it back. Let's say over time you bought $200 worth of stuff.
Maybe you financed a lot of it and you still owe $160, right? $160. Because those trucks and tools have gotten older, the accounting value on paper now only shows $100. Now remember, started out at $160, right? Now I'm going to say this before I go any further. The financing does not give a shit about the depreciation. So you might owe $300 on that truck still.
So you have $140 lost already. See what I'm saying? I did that like, that's about $300 out of the $300. Yeah. But you know what I'm saying? So this is how you end up with the business. You have $100 of the assets, but $160 in debt is tied to what you bought over time. Do you know what I'm saying? Because it goes down faster than the note.
Yep. And that's how you end up going negative on stuff. You know why these numbers can feel backward if you don't understand depreciation? This is a line that makes it all click. Your equipment loses value, but the loan does not care. This was very eye-opening when I was sitting there researching balance sheets, because I'm going to tell you guys, like, balance sheets is not something I'm strong on, as you could tell..
But this is the next part of the puzzle. So I'll put myself out there. I'll fricking talk about— I obviously know how to read mine. Yeah, but it's like, okay, you start looking at it going, well, look at my balance sheet. This is fucked. Then you have to sit there and keep looking at it. You're like, okay, but mine is by design.
I have vehicles and stuff like that, you know what I mean? If you look at Motor City, their balance sheet's beautiful. You look at the other shops, well, I have vehicles on and stuff like that. You know what I mean? So the equipment loses value, but your loan does not care. I can't say that enough. You know what I mean? You still owe this money and the vehicle is getting used up.
Yeah. So, you know, that's exactly what happens. The asset value goes down on paper. The debt is still there. This is how the business ends up upside down. Think about it. I'm upside down because of some of the cars, my wife's Yukon. Think about that. You paid $90,000 for a 2023 Yukon, just say. Well, GM 6.2s started blowing up all over the place.
Guess what happened to the value of them vehicles? They fucking got cut in half. So say the thing's worth $50,000, I paid $90,000 for it. Do you think the loan just said, oh, let's adjust the loan down by $40,000? No. Nope. You end up negative. You still pay that money, yeah. You still have to pay it. So the thing depreciates faster, or not depreciates, it loses value.
Faster than you fricking the loan. So loan doesn't care. There's no connection. It's not like, you know, my accountant calls you, whoever, GMAC or GM Finance, who are the fucking ally, and goes, hey, just so you know, UConn, Kevin, worth 50. And you think the finance companies let me adjust his loan? Let me adjust it. No, no. And that's what's going on.
And that's, that's a real problem. So what exactly happens is the value goes down on paper, the debt is still there and the business ends up upside down on it. That's just all there is to it, you know? So what's left for you now that we have the simple truth? If you have $100 in assets minus $160 in liabilities, you're negative $60.
Wow. And you really stop to think about it. Now you start to realize where your money's going. So, I mean, if you're making money and you can control everything, your long-term debt's going to go down eventually, right? Your balance sheet might go up and down, but they say usually somewhere in the middle of the vehicle loan, it hits the vehicle value. Have you heard that before?
Yep. Halfway through the note of a loan, it's a 5-year note, you know, 2 and a half years, you usually hit somewhere in that value. Now, I don't know if that's necessarily true nowadays because vehicles are depreciating so fast. And some guys like you own a Tesla, you're fucked to the depreciation. Calculations with the depreciation on my Cybertruck and my Yukon are exactly the same.
Wow. Yeah. Cause GM is the 6-2s, you know, so, you know, this is what negative equity means. That's exactly how I told you to get negative equity. That makes sense. Yeah, absolutely. Okay. Yep. So you can have the cash in the bank. You can be profitable. You could be busy. You could have a full shot and not actually own your business on paper.
You could be taking it all in, everything perfect, and it's going right back out in payments to somebody else. Now, a lot of guys do that by design. A lot of guys will take a building like Grant Cardone. I've heard him say before, what a lot of these guys do is they'll buy an apartment complex, they'll pull all the equity out of it, 100%, they'll go buy another building.
So they're 100% your bank owns that building 100%. They're just pulling the cash flow off it. So I'd imagine their balance sheets look really shitty if they're pulling, pulling, pulling, pulling, pulling, right? Because they don't own anything. Yeah. So what ends up happening when everything starts to dry up? Say COVID happens, they start laying people off like crazy, and all of a sudden, like, okay, all these properties are up for foreclosure.
You've seen it before. Yeah. Yeah. And I'm not a financial wizard when it comes to how all that stuff works, but it's common sense. If you're 100%, you don't own anything. Like I always tell people, like 100% of houses that are paid for never get foreclosed on. And you know, one, people are— most people are one paycheck away of losing everything they own.
They don't have an emergency fund in their bank. And most businesses are the same way, small business, because these guys don't know their numbers. Yeah. You know what I mean? And I don't really necessarily like this whole balance sheet podcast, but it's kind of something we need to talk about. I need to read through it so I don't fuck it up. I mean, I'm going to say this again because you can see how confusing it gets.
Oh, for sure. And this is something like the balance sheet aspect isn't something that I've drawn a dividend, you know, like the P&L and the budgeting and that it all makes it. But balance sheet is a whole other thing. Yeah, it's a whole other animal. A lot of people don't talk about it. Now, if you go to sell your company to private equity, they're going to ask for a couple of things.
But the number of couple of things they always ask for, P&L for last year and your balance sheet. Yeah, they want to see what you're doing on the front end. But where's it going on the back end? Oh shit, this guy's in debt up to his ears. That money's not staying. Well, we know that's not the case with my business because what I pull out of it.
We do the ad backs and stuff. We know exactly what I take, right? So the money's there. Yeah. I didn't go negative at the end of the year. My company— I didn't say, okay, Garrett Auto and Truck Service did X amount of sales and I took $100,000 salary out of it as a business owner. Oh, look, he's $100,000 net underwater. That's not how it worked, right?
Yeah. I was still above the line, so I still wasn't going negative. You know what I'm saying? Because a lot of guys— this is where a lot of guys pull every fucking inch out of their business they can, and their balance sheet's horrible because they're taking all the money. They don't need anything in the company. So, you know, I'm making money, but I still feel broke.
I've got to work a lot and nothing's changing. We talked about that, right? I've got the cash, but I still feel— I don't have the cash. I still feel pressure. Everything's right on the front end. I'm billing everything right. That's all good. My budget's perfect. Why is my bank account empty? The balance sheet will tell you why your bank account's empty. Your long-term, your short-term, everything.
Long-term is the real killer. Think about it. Short-term, you can say, okay, looks like my credit card bill is $20,000 this month. That's going to be a tough one, but we're going to make that work, right? Next month we need to follow the budget or pay attention, whatever, right? So we can, we can manage that short one, right? But the long-term one is over a year.
So what if you have all these vehicles for 5 years? That means you're locked into 5 years. Yeah. Yup. So you gotta be really careful at how, okay, how much long-term debt do I have? You know, a lot of times the answer is sitting right in front of you. The balance sheet is weak. There's too much debt, just like I just said, right?
There's not enough equity. Owner equity is what everything, all the math is done. And that's actually what you own. Yep. Right? Yep. If you have a $100 bill and the bank owns $50 and you own $50, $50 is yours, right? But what ends up happening if everything's 100% financed, like I just said, that these guys do with these things. So the bank owns 100% of everything and it starts depreciating, losing value.
All of a sudden there's a minus. So the first year the bank owns 100% of everything. You paid $100 for it, but that next year it goes down $20. All of a sudden you're negative $20 right away on your P&L sheet because remember, the loan is not connected to the value. Yeah, the loan doesn't go away. It stays on the long term.
This, this shit is like voodoo. If anybody that's listening to this podcast doesn't think to themselves, I'm a little confused, you're a fucking genius. You should come over here and do a podcast. You're going to teach it. I literally have to sit down with some of this shit. I'm telling you, I write the notes out, as you could tell, I kind of go 4 or 5 pages ahead, but I want to make sure I don't misspeak because I'm giving people, in my opinion, life or death information on their business.
Then, you know, the funny thing is, uh, the bookkeeper that I interviewed, she went and looked at my podcast before I even called her. And she said, oh my God, I watched your fucking podcast. I fucking love you. She's like, nobody breaks shit down like that for small business. She's like, you could help some of my other clients. She's like, people don't understand the importance of this stuff.
I go, well, you're a nerd, you like numbers. She's like, damn right. But at the end of the day, if the numbers don't work, the numbers don't work. And a lot of these guys don't even know if the numbers work. Yeah. How could you think about a shop owner? You hear this always over and over again. Hey boss, can I have a raise?
I can't afford it. He's probably not fucking lying. No, he doesn't even know what he has. Yeah, his bank account's like one fricking check away from, you know, being in negative. He doesn't fucking know what he has. Imagine, and we see this all the time with our clients, they don't even have QuickBooks. They look at their bank accounts. What's in their bank account?
Hopefully some money. I've had a couple of them say, well, I try to write these checks and I hope to God they don't fucking bounce. Yeah. Yep. I've seen a lot of these guys. We haven't even got to the bank or to the, uh, a lot of these balance sheets on these guys. I know I got them in the green because they're paying off debt and they're paying their bills and paying off debt.
Right. So inadvertently without QuickBooks, they're paying their imaginary balance sheet off. They don't even have, because if you owe all these people money, right? I owe Napa $100. I owe Autobay, O'Reilly's. I do this and I go through the month. And I'm billing my jobs, I'm bringing money in, but I'm paying my loan payments. Then I'm starting to pay my debt off and starting to go away.
What's happened to the balance sheet, guys? The short-term liabilities, and then he's paying these loans off early. The long-term and the short-term are getting better. Guess what's happened to the owner equity? It's getting better. Inadvertently, even though we don't have a balance sheet, we don't even have QuickBooks yet, I can kind of know, hey, these are all the fricking loans you have out, right?
Yep. I said, okay, if you start paying these up, you're paying all your bills? Yes. You're paying your payroll? Yes. You're paying your taxes? Yes. You paid all your— everything's up to date? Yes. You have extra money in your bank account, right? Yes. What do your bills look for next month? Well, I haven't got them all yet. Well, call the auto parts and ask them.
Well, X, Y, and Z. Okay, well, they're due in 30 days. Right now you have 30 days. How's your workload? Well, I have a ton of work in the shop. So you're going to probably bill $50,000, $60,000? Oh, easy, in the next 30 days, right? We'll just say Boom, pay them loans off. They're gone forever. Don't take no more loans. Keep paying shit off, right?
And the one guy's just about all his shit paid off. He's got one big one. He said within 6 months he should probably be paid off with this big one. Within a year, he thinks he should have everything paid off and start paying off his property. Wow. Talk about freedom. Yep. Just by frickin changing the way he does his billing and runs his shop.
No more work. No more advertising, nothing. Just moving the needles where he needed to be. And guess how many people have complained? Zero. That's happened to 3 different shops. We raised the prices and nobody said a word to the customer, but the customer was scared to raise their prices. He thought he'd lose it. I said, what the fuck does it matter? You say you're 30 days out, you're backed up 30 days and you're scared to raise your prices.
What if you raise your prices 20%? We'll just say it happened. People leave and you do the work for 20% more. The other people don't even matter. Absolutely. You know what I mean? So we talked about there's too much debt, there's not enough equity, there's too much money being pulled out of the companies. The other one, these freaking business owners, I'll take $20,000, I'll put this on a Chloe Receivables and stuff like that.
Now, if you know what you're doing, you have a good account, you should— could strategically pull money out of your account for different Things. I'm not going to get into what I do or how I do it. Cause it's nobody's fucking business. But I, if you have a good accountant and you want to sign it, sign an NDA, there's different things you can do with your tax liabilities personally and corporate business loans to the officers and stuff like that.
But that's a whole nother podcast that we could bring Maria on for. Oh, that'd be amazing. Yeah. You know what I mean? So, or there's too much leverage sitting in your business. Your leverage. You ever hear that term? He's leveraged to death. That means the bank owns everything you fucking have. That's not freedom, boys. No, no, no. You got to make enough money.
And know what I always call it? Outrunning the bear. I was standing at Garrett Auto and Truck today, and that was yesterday, I wasn't there today. And I was looking at the glass block window by the coffee maker. There's 3 glass block windows. I was sitting there thinking about them glass block windows. I'm probably the only guy who knows this story because everybody else is dead.
We had to have a meeting about spending $1,900 to get them glass block put in. Wow. It was a big deal. We had to have a meeting. Like, it was like an hour and a half meeting. Like, where are we going to get $1,900? It needs to be done. There's a water leak leaking in. We can get this guy to do it for $1,900, blah, blah, blah.
The reason I remember the $1,900, it was so— I was thinking to myself, this is fucking ridiculous. We're working fucking 60 hours a week, Saturdays and everything. This fucking guy that owns the place Can't fucking talk about $1,900 like it's the end of the fucking world. I will tell you, this is going to sound arrogant. If something came up for $1,900, I'm like, fucking do it.
I don't even think about it. But times have changed and I make sure I'm profitable and I have money in the savings account and I can do these types of things where I have money on my charge card available however I want to pay for it strategically. You know, one thing is you guys need to take into consideration if you run your business on your credit card right now, 'cause you're just trying to survive.
Don't put— figure out when your statement closes. If your statement closes the first day of the month, don't fucking put $25,000 on it the last day of the month. So when the date next day, the statement closes and all of a sudden it's due in 30 days. If you float it, you can wait till that new statement starts, order the parts, they'll go through that statement and then you have a grace period.
So you can extend that out. That's tricks of the trade. A lot of guys do shit like that. Figuring it out. That's awesome. Just think of doing stuff like that, you know what I mean? So you can get a lot more days. You can use their money for a while, you know? And, you know, my suggestion is people is don't put more on your credit card than you can't pay off.
But if something happens, you put something on your credit card and you can't pay it off, I'm not a big fan of paying the credit card company interest, but sometimes you have to do it to keep your head above water. It's just the way it fucking is. There's financial guys say you're fucking crazy. You do it. Let's face it, we're small business.
Things have changing in our area where a lot of the parts aren't available. So we go online and we can have them the next day. So we use a credit card. It's just the way it is, you know? So that's why the P&L alone is just not enough. The P&L tells you how you performed last year. Ta-da! The budget says this is where we want to go.
We want to aim. This is our plan, right? And here comes the balance sheet. Who owns what? What do I get to keep? You know, I'm not going to get into the real balance sheet, but I hope everybody understands exactly what I was trying to do here. So if you're talking to your managers, advisor, your people in the shop, you can make this really simple.
Not that a lot of you guys are going to even talk about P&L sheets, budgets, or anything to anybody, because a lot of you guys don't. But there's a couple of my clients that want to talk to their guys about what's going on in the front. Yeah, they just don't have QuickBooks set up yet to talk about the back. And quite frankly, guys, you can let your higher-ups know exactly what's going on, but nobody needs to know what's really going on in your business.
Yeah. Okay. Long as they need to know they're getting their paycheck and you're treating them well and you're paying their vacation time and everything else like that. Yeah. You know, you got to be careful about what you show them. Unfortunately, because they don't understand. You know, we had a job here today that we closed out that was a piece of shit from the insurance company.
And we had a meeting about the hourly rates and everything like that, what we actually made on the job. And guess what happened? All my guys knew because they listened to the P&L sheet and everything. Yeah. So I don't have to explain it to my guys. I'm like, you guys, I tell them, you guys all need to listen to my fucking podcast.
I'm fucking— and they do. They like listen to it, which is awesome. Yeah. And you know what? They're like, God, you know, A lot of that shit gets confusing. Like, I know that's why I read off a script a lot of the times, but a lot of times I'm 5 pages ahead of the script. So it's not like I have to read some of this stuff.
There's no doubt about it because it gets confusing. Yeah, you would have to be Einstein to frickin' recite all these pages. But I think people should have an understanding what a balance sheet does now. Who owns what? Owner equity. The bank account or the loan amount does not care what the frickin' vehicle is worth. That loan is going to stay. You're paying that bitch off.
If you took a loan for $100,000, you're paying $100,000 back unless you trade it in and start over. So that's a long-term debt. You're not calling the bank, but it broke down. Yeah. And yeah. Right. You know, so, you know, most shop owners never really look at the balance sheet. If you really stop and think about it, you just said it yourself.
How many times have you really taught balance sheets or talked about balance sheets? Yeah. Not at all. This is like when you said balance sheets, I'm like, okay, I'm excited to kind of go into this. And I, you know, I don't have a company vehicle and some of this stuff, but like even going into the depreciation, like, Figuring that out is interesting.
Yeah. And you know, a lot of the guys, a lot of these guys, these shop owners never really look at the sales. They maybe look at the sales, but they don't look at the profits. They really don't know what they're looking at. Yeah. One good thing is there's a lot of guys on, um, uh, social media that are pretty good. I know that one guy that actually knows his numbers pretty good and he's recited them over, that's N Wright Auto.
So you could tag him. He, he, when he sits there and talks, he's obviously a tool freak. He's got more fucking tools than I cannot believe how much He does tools and stuff like that, like reviews and stuff. That guy's got so many fricking tools. He owns a shop and everything. But when I listen to him talk, there's a guy that knows his numbers.
He doesn't sit there and bullshit. You know, I put myself on a limb talking about some of this stuff. Let's face facts here. I do because I'm not in— I don't have an accounting degree. Yeah, I'm a guy that's self-taught. So am I going to misspeak? Absolutely. Crucify me. But it's worth exactly what you paid for it. Nothing. So get the value you can out of it.
And if you understand it, great. If not, sorry. Call an accountant, have them explain it to you. You know what I mean? But that guy knows his numbers. When you start listening to the percentages and stuff like that. Yeah. You know, then you get the haters. John B, see, that guy always hates on everybody. Even Enright said to me the other day, he's like, yo, keep talking.
John B will be on here. Yeah. You know, you know. But if you don't understand your balance sheet, You don't fully understand your business. So once again, learn to read all this stuff and get with somebody who can show you. And I'd be willing to bet you a lot of the business coaches can't look at a balance sheet because everybody wants to talk about the P&L sheet.
Yeah, that's what happened in the past. Yeah. Yeah. You know, that's something you can't lie about when you're trying to sell your business. They're going to want the P&L sheet for last year and the tax return. Tax return, you can put depreciation back in and all that stuff. You're really good with the P&L sheet, shows you what happened last year. Long as the books aren't cooked, you can do bank statements, tie it all together, blah, blah, blah, blah, blah.
You know, just because it's, you know, just because it's in your shop don't mean you own it, boys. Think about that. You got a big old fat loan on that Mercedes. And what do I always say? Well, guys call me and go, I do this amount of numbers in sales. I always say to myself, what is your net and what do you keep?
A lot of these guys can't answer. They think the main number is the number that matters. Yes, it matters to a certain extent, but would you rather do $1 million and get 1% profit or $500,000 at 30% profit? Do you know what I'm saying? There's a mathematical difference there, guys. Yep. You know, 1% to me would be going out of business or 2% to me would be going out of business.
2% to GM is a fuck ton of money. Yep. Right. It's all scale. The scale. Yep. You know what I mean? So, you know, P&L tells you what happened. The budget, once again, we're trying to figure out where we're going next year. This is our plan. This is where we're going to try to hit. The balance sheet tells you what you actually have, what you actually own, what everybody else owns.
You know, I always tell, I always tell, uh, you know, me and Jim always talk about stuff and I'm like, you know, anybody could have payments. They'll give anybody a fucking car. Would you not agree that you can go to the Mercedes dealer right now and get a fucking loan for a fucking 5-star or a G-Wagon or whatever? If you have the income to show, They'll give you a G-Wagon.
Congratulations. You can own it for a month or two till you don't make the fucking payments. Then Bernice, the fucking South Beach Tony, will come and get that bitch. But you know what I mean? That's where businesses get in trouble. You gotta be careful not to leverage yourself too much. And there's finance companies out there that call you. They fucking call my phone nonstop and text me.
We have funds. We have funds. We'll loan you funds. We'll loan you Oh my God, they're desperate to give away their money. Yeah, right up to the point where they get you leveraged and then they fucking take your shit, you know. So sometimes these mechanics don't understand that, you know, the boss man might be leveraged to the point where he can't freaking buy that scan tool you need.
So you guys got to make do with what you got. Maybe it's not his fault, maybe it is his fault, you know. It's a little bit easier when you look at a guy and go, yeah, um, I really can't afford a scan tool, and you're driving an old shitty pickup and you're like, I can't afford a scan tool to enable you to do your job, but look at my new F-350 Platinum Edition.
And by the way, we're taking it across the street to get a lift kit on. It's going to be $5,000. Oh, fucking rims, $7,500. Look at this bitch. But I can't afford that scan tool. So sometimes priorities are fucked up as business owners. Yeah, but what if they knew how to look at all these numbers and go, man, that balance sheet's fucked up.
I'm underwater on X, Y, and Z. I got to literally get rid of this vehicle or this vehicle or pay this loan off before I start taking more debt on in the company. Long-term debt. And let me tell you something, short-term debt can fucking kill you too. If you look at you, you start going out and you're buying stuff on your credit cards and stuff.
You start spending that money faster than it's coming in. You go on vacation with the old family Rooney and you spend $15,000 in Europe. You put it on the company nut, right? And you're not making that much money because you don't know. Yep. So then you're playing games. So we— and no, we're good. Um, so in closing, guys, think about it. If you freaking— if you're leveraged to the hilt, You're not owning, you don't own anything.
The bank owns everything in your shop. So the minute you can't make them payments, that's where the problems come in. So try to keep, try to keep the long-term debt down to a dull roar if you can. You know, like I'm saying, I think I would probably say the biggest ones for shops would be scan tools. They're expensive. And a lot of guys just can't rip a $5,000 check.
Like I will take a $5,000 check out of the, I'll write a check out of the savings account or whatever if I don't have it readily available in my checking account to buy a scan tool. Or tell the Snap-on guy, hey, listen, I'll go ahead and do this, but I want you to put it on a truck account with no frickin'— with no interest.
Don't put it on Snap-on credit, but I'll pay you X amount of dollars a month. A lot of them guys will do it if they know you're a good shop owner. Yeah, yeah, yeah. So all of a sudden you're getting hit. He's selling it, but you're getting it, you know, interest-free. You know, there's ways around not getting killed. Just don't go out there and go, I don't really give a shit.
I need it right now. It doesn't matter if it's 18%. Okay, well, a lot of guys will, that's a write-off. Oh my God, stop, stop. So I have to tell you a story before we close about credit card fees. Because a lady came this week to pick up her motorhome and she was giving Lincoln a hard time. It was Monday. And Phil wasn't there.
And she says, you guys charge credit card fees, you should have it posted. And Lincoln didn't— never read the things. He's nervous. He's fucking only been doing this for 5 months. I was in the back. He didn't come and get me. It says it right on the counter, 3%, blah, blah, blah. And also is in our terms of service they agreed to.
Well, they backed the motorhome into the dirt. Berm at the shop, so plug the trailer hitch with dirt. So the phone rings, it's the lady, and she's like, I'm pretty upset right now, my motorhome door was unlocked. And I wrote a policy on that, guys, just so you know, because it was unlocked. And there's dirt in my trailer hitch and there's a scratch on my bumper.
I said, let me come over. Are you coming over right now? Absolutely, I'll come over right now. So I drive over there, I'm like, absolutely. I can't even tell you how many times this dirt gets plugged in the trailer hitch. It's not a big deal. I cleaned it out. She's like, I want to talk to you about the credit card fees. I said, okay.
She's like, I'm an accountant. I said, oh, cool. I said, you'll understand what I'm about to tell you. She's like, excuse me? She's like, that's a write-off. I said, absolutely, at your tax rate. She's like, what? I go, let me just give you an example. I said, if I have a $10,000 credit card bill, fee bill, And I said, and it's a write-off, would you agree?
So if I do $100,000 in sales and I get $10,000 off tax write-off and credit card fees, right? So it's now $90,000. Would you agree with that? Absolutely. I said, at my tax rate, I take the tax. What do you mean by that? I said, at $10,000 at a 30% tax rate, I would get $3,000 off my tax bill. I would still give the credit card $7,000.
Would you agree with that? She's like, Got mad. I said, how about this? How about I pay— you guys pay the 3% credit card fee, I take the $10,000, so my taxable income goes from $10,000 or $100,000 to $90,000. Guess what? I get to save the $3,000 in taxes. She's like, I'm not going to argue with you. I said, okay. This is hilarious.
You got an accountant and I charge you credit card fees because yeah, guess what? I get to keep that $3,000. I get to write off and I get to keep it and I don't pay 7%. So if you're not charging credit card fees, guys, cause you're scared of your customers getting mad at you, then just tell them to fricking bring cash or write a check.
And if they say, well, I can't, I don't have the money to write a check or a thing. Think about this, guys. I'm going to say this to people. That I always tell the— I always tell my guys this. I said, these people right there, they have plenty of money. They pull up in a Mercedes, they might be making a payment, they have plenty of money, but they're always on vacation.
They just have none they want to give you to fix their car. And that goes back to the thing with the guy that said on one of our posts, which I agree with 100%, they have no problem paying 28% interest to fucking Visa, but they will crush a small business guy for 3%. 3%. The local guy that's trying to make a living, trying to recoup so he could actually stay in business, they're trying to fuck him outta the 3%, but they'll pay Visa, Uncle Visa.
Without a question. Without a question. Yep. All right guys, thanks for watching. Hope you enjoyed it. All right, that's gonna do it for this episode of Repair Shop Reckoning. If this helped you, please make sure to subscribe so you don't miss what's coming next. We drop real conversations, real systems, and real solutions every week. We'll see you back here next time on Repair Shop Reckoning.
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215 - Ask Me Anything: Car Count vs. Profit - Why More Cars Doesn't Always Mean More Profit
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[00:18:00] – Every shop must find the workload that supports its model. [00:20:00] – Clean financial data helps owners make sound business decisions. [00:22:00] – Fix weak margins before spending money to attract more clients. [00:28:00] – A thoughtful response can protect workflow without rejecting the customer. [00:42:00] – Adding technicians without strong processes can create greater chaos. [00:49:00] – Clear goals and accountability help employees understand how to succeed. In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry? Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode. 👉 Unlock the full experience - watch the full webinar on YouTube: https://youtu.be/7M70n_DfTDg Don’t miss exclusive insights, expert takeaways, and real talk you won’t hear anywhere else. Hit Subscribe, drop a comment, and share it with someone who needs to hear this! Links & Resources: Want to learn more? Click Here Want a complimentary business health report? Click Here See The Institute's events list: Click Here Want access to our online classes? Click Here ________________________________________ Episode Transcript Disclaimer This transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com. Episode Transcript: Ask Me Anything Car Count vs. Profit - Why More Cars Doesn't Always Mean More Profit Lucas Underwood: What is up, everybody? Hey, y'all. It's Lucas Underwood from the Changing the Industry podcast and L&M Performance here in Blowing Rock, North Carolina. I am joined today by the one, the only, Mr. Cecil Bullard. We're gonna be talking about car count versus profit. Cecil, how are you today, buddy? Cecil Bullard: I'm doing fantastic as usual, Lucas. Lucas Underwood: Very good. Very good. So Cecil, one of the, one of the things I'll never forget, I taught a class at a industry event one time, and I had been in another class where the person was talking about do whatever it takes to get them in the door, and they'd been in a shop, and they were in their own shop, and the, the advisor had turned down a car at 4:00 in the afternoon that came in for a coupon oil change and wanted to wait. And so she chased the person back out into the parking lot and said, "No, no, no, no, no, we'll get you in. We'll make it work. I'm gonna pull a technician off something else. I'm gonna put them on this," and fired an advisor over it. And I've, I'd been in that class, and I'm talking about that in this training, and that person was sitting in the back of the class and I didn't see Cecil Bullard: him. Yeah. Lucas Underwood: And, and the thing that I said about it was this, is I said, "Listen, one of the most impactful things that I've ever experienced was being on the other side of an experience like that as an advisor, as a technician, what it feels like to feel that kind of pressure and why we shouldn't do that to our people And so I know there's been a massive movement, movement in the industry that's pushing people to say yes to every car that comes in the door. Doesn't matter what it is, just more cars, more cars, more cars, more cars. And I have had a very, very different experience than that. I am someone who has experienced a higher ARO with less stress and less pressure on our people, a better experience for the client, and I have found that that works best for me. And I'm not saying it works best for every organization, but I wanted to dig in with you and talk a little bit about this. Are you a say yes to every car man, or are you a balanced car count and balanced ARO man? Help me understand. Cecil Bullard: I think there's a, I think there's both, frankly. Um- Okay ... it, it has to make common sense, and I think you're really talking about two different things. So first of all- Yeah ... you know, before you fire someone for not doing what you want, does the person really understand what you want, right? Yeah. I mean, is that, is that well defined? Did the guy know that no matter what, I have to bring that car in? Uh, you know, so at 4:00, your service advisor made a decision. He'd made promises to other customers that they would have their cars. Yeah. And instead, now you're jumping in the middle of that and you're saying, "Well, I'm gonna fire this guy because he turned down a, a discount oil change or whatever." Yeah. Maybe a dis- and it- maybe a dis- you know, the guys, the discount oil change guys would say, "Well, yeah, but we do discount oil changes 'cause it leads to other sales." Lucas Underwood: Right. Cecil Bullard: But so that's one thing, you know? I- I- is the person who works at your counter... Um, I, I was in, uh, North Carolina. You saw me last week. I was on the road- Yeah ... for four da- after one of my meetings, and this happens a lot, one of the kids came up, young guy, uh, looked like he was about 14, but he was probably in his 20s, and he's like, "I'm a third generation. My dad runs the shop, but, but you know, my dad, he's getting in the middle of everything. It's really hard." And, and, uh, I, I always say you work for someone, they write you a check- You have to make a decision about what you're willing to put up with or not put up with, right? For sure. As an, as an employee, right? Lucas Underwood: Yep. Cecil Bullard: And so when you decide that I, I wanna work here and I wanna take the check, i- in a way you also decide I'm gonna follow the rules of the company, whatever those are. Yeah. Whether Cecil agrees with them or Lucas agrees with them or, or whatever. None of that really matters. What matters is that the person that's writing you a check is, is basically saying, "This is how I wanna do it," right? Lucas Underwood: Right. Cecil Bullard: And, you know, behind the scenes, we can have all the arguments we want. We can sit down and go, "I don't think that's correct." Um, a- a- but until the owner changes their mind about how we do this, then you gotta do- That's how business Lucas Underwood: runs ... Cecil Bullard: you gotta do how, what the owner wants. And so if that employee got terminated legitimately because- Yeah he knew better, then I'm, I'm fine with that. I, I, I think we have a craziness in our industry. I think we've all lost our minds because You know, you, you look at car count, car count. I mean, that's everybody's... That's like the mantra, right? More cars, more cars. I'll make money if I have more cars. Yeah. Well, that's, that's not necessarily true. It's never been true, frankly. Lucas Underwood: Right. Cecil Bullard: Right. You know, we have these shops. I mean, I can't tell you how many times, you know, having done seminars in the industry for well over 20 years and, and, and worked with automotive- thousands of automotive shops, we have these shops that come in, they're doing $2 million a year worth of business and losing money. Lucas Underwood: Yeah. Cecil Bullard: And, and so... And we also have shops, frankly, that are doing, you know, uh, 700,000 and losing money, and, and I'm pretty sure there's shops out there doing 10 million and losing money. Yeah. Uh, there's a balance and there's a way to run your business that is successful, right? Yep. Lucas Underwood: Absolutely. 100%. So- And, and look, h- I, I'm gonna, I'm gonna take a play directly from the Cecil Bullard playbook, okay? Hey- I'm gonna pull the play straight out of the playbook because you said something that I think we need to address right here and right now, okay? We Cecil Bullard: lost our minds in our industry? Lucas Underwood: Well, I mean, you would've had to have had one to have lost it, okay? You have to have something to lose it. So, I, the industry in that sense, we're in trouble. But, you know, th- this brings up something that's completely off-topic and, and I'm just gonna ask you what you think about it. There's all these technicians who are really upset right now, right? They're, they're very disgruntled, and it's primarily in the dealership space, right? You know I make these videos and they come out- Yeah every single Tuesday, Thursday, Saturday and Sunday. Yeah. And these videos come out, and all these dealership guys get so upset and so mad because they think that I'm talking about the dealership space. And I keep saying to them, like, you set the terms for what you're willing to accept in that, that job, in that role as an employee, and if you don't like the job, for God's sakes, leave. Cecil Bullard: Yeah, there's- And if Lucas Underwood: everybody leaves- Cecil Bullard: There's so many... There, I mean, you know, I, I think if you got a thousand shop owners in a room and you said, "How many of you need a good technician in your shop?" You know, 999 hands would go up, right? Yeah. Um, the, the... And, and yet we have these techs that are so miserable in their lives, in their sh- in the shop that they're at, and the, bec- the owner doesn't pay me, doesn't appreciate me, doesn't whatever, or she doesn't- Yeah or whatever. Okay, Lucas Underwood: cool. Why Cecil Bullard: are you there? Go somewhere else. Right. I mean, holy, holy crap. Um, yeah. I'm with you, man. I mean- I am like, uh... And I was t- I talk about the level of incompetence you're willing to accept. I, I do that- Yeah ... with owners because, you know, nobody's gonna be Cecil, right? Yeah. And by the way, in Cecil's head, in my brain, I think I do it right all the time. Right. Yeah. I mean, there's a piece of me that knows that's not true, right? But we're all a little- Sure ... insane in some ways, and we think that, you know, we, we know how to do things, and we think that our way is the right way. And, and, but as an owner, I'm gonna work twice as hard as pretty much anybody else, you know? Yeah. If it... I, I was talking to one of our, um, our marketing people. I, I used to print our workbooks, and I used to write our workbooks, and I used to edit our workbooks. Yeah. And, excuse me. I don't, I don't do that now, but I was, I was talking to her and I said, "You know, I used to be here at 2:00 in the morning-" Lucas Underwood: Yeah Cecil Bullard: printing workbooks because I had a class the next day that I needed the workbooks for- Uh ... and putting them together. 100%. And now I'm really glad I don't have to do that. Lucas Underwood: But- We, you know, we got a, we got a review the other day b- at the family business, and it said, "The owner was in there serving food." And I wanted to reply and say, "Yeah, because, like, I gotta do whatever I gotta do." 'Cause Cecil Bullard: everybody quit, and, and I'm in trouble, and I c- I'm the only one. Otherwise, I wouldn't be there. Lucas Underwood: Right. I've gotta do what I gotta do, right? Yeah. Like, this is how we're gonna survive. And, and I, uh... What is it that old Dutch always says? Like, "I'm paying for the blessings of tomorrow with the sacrifices of today." Of today. Whatever it takes. But Cecil Bullard: we a- you know, a- and so you, you create the level of incompetence. And I would say from an owner's point or a manager's point, you say, "Okay, in that position, I'm willing to accept 3% warranty," right? Yeah. So I've got a tech, I'm willing to accept 35 hours a week as a, okay, that's, like, you, you, you hit 35, you're, you're still in my good graces. You- Lucas Underwood: Right ... Cecil Bullard: you only have 3% warranty, you're still in my good graces. But, but also employees have to do the same thing. I mean, you have to decide, what am I willing to put up with? Am I willing to put up with- Yeah ... crappy pay? Well, if you do, and you take the check, and you keep taking the check- Lucas Underwood: Ain't Cecil Bullard: nothing gonna change then shut up. Right? Right. I mean, stop bitching about it. And we're, we're a, an interesting industry. Like you said, maybe we never had a mind, but- Lucas Underwood: Yeah ... Cecil Bullard: you know, we, we, we constantly eat our tails, you know? Yeah. We constantly bitch and bitch and bitch, and, and we don't W- I don't even think we fully understand. So, you know, I'm pretty sure if, um, if, uh, uh, Aaron Stokes was still alive and, and we had Aaron on this, Aaron would be saying, "Yeah, you say yes, and you say yes because of this, this, and this," right? Yeah. Because that was w- that's one of their philosophies, was that yes philosophy. And on the same time, I would be saying Yeah, but sometimes you gotta say no. Yeah. Because you've already made promises to other customers because you're pulling a guy off of a $5,000 job that he could finish up- Lucas Underwood: For a $29 Cecil Bullard: oil change ... and you're gonna have him do a, an oil change where you're gonna lose $35. Lucas Underwood: Yeah. Cecil Bullard: And then he's gotta come back to the $5,000 job, and he's gotta get his head back in the game. So now you've increased the odds of, of mistakes happening, comebacks, et cetera. And so I think there's a point where you say to the customer, "Look, you know, we, we would love to do that oil change for you, absolutely. Only I can't do it tonight, right now, because my techs are all tied up on other jobs, and we've made promises to customers." Absolutely. "And I'm pretty sure if you were one of those customers who I made a promise to, you would not want me pulling the tech off of your car to do someone else's- To, to do that ... service or whatever it is, right?" I, I think- And it's not even about a $29 oil change. If it was a $300 oil change, I still wouldn't pull my guy off of a $5,000 job- Yeah at 4:00 to do that oil change. Lucas Underwood: I, I think it's easy, right? Like, so, so my vision of leadership is, is my job is to create a awesome environment for my internal customers, my employees. Right. And, and currently I'm not in the shop that much, so it is my managers' job to create an amazing experience for them, and then they in turn create an amazing experience. The desired outcome is a safely and properly repaired automobile for our consumer that is safe and reliable for them and their families. Or that, that's what we're trying to accomplish, and we have the guardrails which say, "Here is the, the metrics of profitability that we expect, and so you guys stay within these guardrails. Here's where you're going. This is the roadmap. This is what we want." You saw the roadmap. Well- I've, I've got it on the whiteboard, right? Cecil Bullard: Yeah. And so- And you're also not, you're not setting yourself up for success here, right? I'm, I'm bringing a, a $29 oil change. So I'm working with, uh, big old tire guys, uh, not, not the big company, but a guy who owns three locations. Yeah. And we're doing free tire rotations and free brake inspections. Yeah. We're doing hundreds of them. You know what we're selling? Probably Lucas Underwood: nothing. Nothing, Cecil Bullard: right? Lucas Underwood: Right. Cecil Bullard: Because we're so busy doing the tire rotations and brake inspections, we forget to look at the car. We don't have time to get to the Lucas Underwood: actual work Cecil Bullard: that they could approve. We, we forget to estimate the work and, and we don't have time to have a conversation with the customer. Yeah. And so I'm, I'm literally going... I said, "Why, why do you guys do free brake, uh, you know, inspections, free tire rotations?" Yeah. He said, "So we can look at the car." Well, you forgot that- Does it matter if you're not getting the end of it? somewhere along the... Yeah. So now I'm gonna bring this, this oil change in, and we'll get to that question in just a second, but I, I just have to make the point. I'm gonna bring this guy in at 4:00. It's a waiter, you know? Yeah. Uh, we're gonna service the car, and if I have a good technician do a good inspection, we're 35, 45, 50 minutes in. So now we're pushing 5:00 Then we will find stuff on this car that needs to be talked about. Customer may not buy it, but it needs to be talked about. The whole reason I'm doing the cheap oil change is to get the guy in so I can look at the car and try to sell him the things that he really needs, right? Lucas Underwood: Yeah. Cecil Bullard: Except now it's close to 5:00. Is that customer gonna sit for another 15, 20 minutes while- Lucas Underwood: Yeah ... Cecil Bullard: my service advisor estimates the work, and then is he gonna sit for another 15 or 20 minutes with my service advisor after that to discuss what he needs- In- ... so that he can make a good decision? Lucas Underwood: In this instance, the, the, their theory was is like just, just find one thing wrong with the car that will make them leave it, and then do an inspection and provide the inspection later. I didn't feel like that was very kosher. Cecil Bullard: It's not my, it's not the way that I would- Lucas Underwood: No, I didn't feel like Cecil Bullard: it ... I would approach it. And it's certainly, it's certainly not the way that I would teach. I don't wanna have three phone calls with you, right? Yeah. Or three meetings. I don't wanna find one thing and say, "Oh my God, your, y- you know, your oil leak is coming out of the, the whatever timing cover so badly, we've gotta do your timing cover, and it's gonna cost X, Y, Z." And you go, "Okay, you know, I've seen the leaks. Do it." Yeah. And then you leave And then I go, "Oh, and now we've had time to check the car over, so here's another $5,000 worth of crap." Right. I don't wanna have that. I wanna have one conversation. I don't wanna have three or two, right? Right. I may have two because when we get in the middle of stuff, uh- Yeah we may find something- My vein's gonna have to- ... that are related that, that we can't see at that point in time with a basic inspection. But I certainly don't wanna have three conversations. And- Lucas Underwood: Yeah ... Cecil Bullard: and I think you're, um... Everything is i- with a client is about how does that client feel about us, right? Lucas Underwood: Yeah. Cecil Bullard: And that experience with us. And, and so by telling him yes, I made him feel good, okay? So yeah. Tell him, any, anytime you tell someone, "No, I, I really can't do that," if that's all you say, you're in trouble, right? Lucas Underwood: Yeah. Cecil Bullard: Or no. Uh, nobody wants to hear no, right? Yeah. "Oh, my gosh, I would love to do that for you right now, but unfortunately there's just not enough time, and if we did it right now, we wouldn't do you a justice. We wouldn't be able to-" Yeah "... inspect the car. We wouldn't be able to tell you about what's going on with the car. You would not have the information you need to make intelligent decisions, and my whole job is making sure that you have the information you need to make the right decisions about Lucas Underwood: your car." Is advising you, being your advocate. Cecil Bullard: That, that's what I do, right? Yeah. And so this, this yes mentality and this car count thing of just driving as many cars through. We... I watch... I'm a numbers guy. You, y- everyone in the industry kinda knows, you know? Cecil understands the numbers or thinks he does. And- Yeah and I watch shops drive car count, and as they drive car count, I watch sales go down. I watch- Yep ... average repair- Yes ... orders go down. I watch mistakes go up. Employee satisfaction Lucas Underwood: go down. Cecil Bullard: Yeah. The whole nine yards. Employees are, are running around- Yep ... like chickens with their head cut off. Yep. There's a lot more inefficiencies that, that happen in the business. Yeah. And so if you, if you run a shop and you really pay attention, you'll learn where your sweet spots are, right? Yeah. Where does the shop make m- the most money? Where does the shop create the most happy clients? Where does the shop create the best average repair order? You know? Yeah. Those things that matter to me. And then where does the shop create the most profit? Because y- I, I have to, I have to be profitable here i, in the short term, and frankly, in the long term. Yeah. Otherwise, I, I have to go work f- For somebody else, and I'm not employable Lucas Underwood: Right. I, I'm the same way, and I, I think it's important, right? O- one of the things that I'm bad for doing is painting with a broad brush. Yeah. If you own, own a tire store, right? And, and you can turn hundreds of tires a day, that, that's a different model than what we're discussing. We're not talking about a high volume just tire store or something like that. That's a very different model. But even then, these same practices work in that tire store the same way they work in, in a mechanical shop. Cecil Bullard: And- Most of, most of the tire guys that I know are- Mm-hmm ... probably doing 50% tires, 50% um- Mechanical ... at least. Yeah. I mean, I know there's some that are 70% tires, 30% service, but I don't know of- Yeah ... any tires, uh, other than maybe discount tires, that are only doing tires. Just tires. Yeah And not getting into any of the service at all. Um- Lucas Underwood: Well, you know, I, I thought, I was, I've talked with Mark Ponz a lot. Brilliant, brilliant businessman, right? And, and one of the things that I always learned from Mark was, was, "Hey, watch the way we do tire business," and then we kinda shift gears in the mechanical business. You have to. It runs a little bit differently, right? Cecil Bullard: It's a different business, right. Lucas Underwood: And so you've got your tire team that's out here just nailing the tires out, and that's what they do every single day. And, and I've, I've, because of ASEA, I've had some amazing opportunities to work with some of the best tire men in the entire country. Cecil Bullard: Yeah. Lucas Underwood: And, and I always, I was the guy saying like, "You can't make it with tires." How do you make it? And then I meet Mark Ponz and I'm like, "Whoof. He did more than make it with tires." Cecil Bullard: Holy smokes, you can make a lot of money with tires. Yes. But- Lucas Underwood: Yes ... Cecil Bullard: it's a different margin, it's a different business. Lucas Underwood: Yeah. And it, it's ran differently. Cecil Bullard: Yeah. Lucas Underwood: And so, you know, I found my sweet spot to be three cars a day per tech, somewhere between $900 and $1,100 on my ARO. That, that's my sweet spot. That's where we run. That's where things work. We get too much higher than that, we start getting into very complex jobs. And, and listen, I talk to a lot of shop owners, "I got a $3,000 ARO. That's too high." And they're like, "What are you talking about that's too high?" Well, Cecil Bullard: if, if you're a diesel shop, it's not. For sure. If you're a European shop, you're pushing the edge. But- For Lucas Underwood: sure ... Cecil Bullard: but if you're a general repair shop, it's, it's too high, right? Lucas Underwood: Exactly. It means you're Cecil Bullard: doing engines and transmissions all day. It also means you're doing a lot of heavy duty work. Engine repair. And if you're doing a lot of heavy duty work, the margins and the matrixes that- You currently would have in place normally that would be taught to you will never work for your business- Yeah to make the profit you need. Lucas Underwood: Exactly. Right. You're 100% right. You're 100% right. And, and I think that's why, you know, it's like when I talk to folks about coaching with the Institute, I'm always saying, "Listen, there is no cookie cutter model that fits every shop." Like, this is a- I think there, Cecil Bullard: I think there is, frankly. I mean, if you say, "I'm a tire store," there's a model that works best. Yeah. If you say, "I'm a- I don't Lucas Underwood: disagree ... Cecil Bullard: I'm a discount store-" I don't disagree with that ... there's, there's a model that works best. Yeah. But, you know, I was... A- and again, I, I have never run a discount store, so I've never done- Yeah ... a cheap oil change or anything cheap. Or frankly- Right ... I'm, I never, when I was running shops, I never was a discounter. So- Yeah ... I don't understand that model. And I know some guys, however, that run really discount. Yeah. I've known some guys in my life. And, and their model works for them, only their techs are usually, uh, pretty transient because- Yeah they're just- Discount model, that's it ... they're not paying them enough, and they're running too many cars through, and that's, their service advisors can be somewhat transient in that business, and their customers can be somewhat transient in that business. Yeah. So the other part of that is if I'm running a discount model, I have to keep really hounding- Yeah marketing. Tha- those are the guys that are also saying you need to send out 10,000 to 40,000 mailers every month so you can bring- Yeah ... these oil changes in, so you can do enough business to- Here- ... you know, to be profitable. Lucas Underwood: Here, here's my thing, though, okay? When, when we look at the numbers, right? When we look at the financials, because I talk to Eric Jordan all the time at Geisen. Cecil Bullard: Yeah, yeah. Lucas Underwood: And I'm like, "Dude, I... You know where I was at, I didn't have clean numbers." I, I ran through a, a spell where we didn't have good bookkeeping and, and our numbers were a mess. Cecil Bullard: Yeah. Lucas Underwood: And it's impossible to run a business without good clean numbers, right? And so what I'm saying, though, Cecil, is that without good clean numbers, without good clean data, there is no model that's gonna work. And I think that when they have good numbers, that GP number that you have to hit every single month to pay the bill- Cecil Bullard: Yeah ... Lucas Underwood: what, what the shop down the street's charging- They don't, they don't- ... is irrelevant to you. Cecil Bullard: Yeah. They also- Lucas Underwood: What you have to make is what you have to make. Cecil Bullard: If you don't have clean numbers, you make mistakes. Yeah. And you make bad decisions. So, you know, imagine- I've made bad Lucas Underwood: decisions with clean numbers, Cecil. Cecil Bullard: Yeah. Right, yeah. But, but, you know, imagine that we brought a new car in or a, you know- Yeah ... a four-year-old whatever, and we didn't have a scanner, and we couldn't get the data- Yeah ... out of the car, and so now what are we doing? Now, now it's the, you know, well, I, I, based on my experience, I think, or- Lucas Underwood: Yeah ... Cecil Bullard: you know, my tech is saying, "Let's- Yeah ... place re- let's rep- replace these six parts. Maybe that's gonna solve the problem." Yeah. I, I don't wanna be that company. I wanna be the company that says, "I know exactly what's going on with your, with your business, and- Yeah these are the three or the five things that we can do that will really improve your business and- Yeah ... put more money in your bottom line, create more happy, happier employees, happier- uh, clients, et cetera. For sure. Um, we do have a question. Let's- Yeah. Kyle ... let's get to the question. 2020, Kyle. I know that this is supposed to be ask me questions, so, and I've al- I have kinda read the question, but I'll let you read it. I read it myself, so. Yeah. " Lucas Underwood: I'm a mobile programming and testing company netting 8% currently." Now, Kyle is a, a fairly new company, very proud of him, doing awesome things. "My GP's 55% per RO, but my car count is only about 10 per week, so two a day. Should my next step be more investment into marketing or jump into coaching to maximize what I currently have?" Cecil, what do you think? Cecil Bullard: Well, I would, I, I, I would lean on the coaching side, and here's why. Lucas Underwood: Yeah. Y- Cecil Bullard: you're supposed to be making net 20, and your gross profit is off by, uh, what is that? 12, 14 points. Yeah. I mean, I need 62 to 64% GP. Lucas Underwood: Yep. Cecil Bullard: And I need to know where that's missing. For sure. And what I have to do to get that. So you can bring more cars in at this point, and you'll st- and, and if you maintain a, a net eight, you're just gonna... If you wanna make tw- you know, the 200 K you told- A higher Lucas Underwood: net eight. Cecil Bullard: I wanna make, I don't know, I wanna make $200,000. At 8%, $200,000 is an awful lot of cars to work on, an awful, awful lot of places to make mistakes, and a lo- awful lot of liability. Yeah. At 20%, you know, $200,000 is a lot less cars, it's a lot less liability, and a lot less places to make mistakes. I- So for me, I, I'm, I might do both. It, it would depend on, you know... I mean, 8%, if you're doing, you know, 10,000 a month, okay, I'm making 8%, that's, in my opinion, that ain't enough to survive. You know, if you're doing 100,000, you might do both. You might, you know, get coaching, improve your margins, figure out where your business is going wrong, and then while you're doing that, you might improve car count and put a few more, you know, butts in seats so that I can make 20% on more people instead of 8%. Lucas Underwood: So here, here's my perspective, okay? So, so thing number one for me here Is that you're exactly right, and my reasoning's a little bit different. I would want to fix my net and I would want to fix my gross profit- Gross Cecil Bullard: profit ... Lucas Underwood: first before I started stacking more clients in the door, because now I'm gonna have more attrition because I'm changing my model midstream as opposed to narrowing down and polishing my model right now and getting my model right before I start presenting it to more people, right? Well, then- So, so I can set the expectation early. Cecil Bullard: Yeah. And if you, if you do that, you'll have happier clients that will continue- Yeah ... to use you and come back. And- Lucas Underwood: I Cecil Bullard: agree ... this is a mo- mobile programming guy, so his client is probably not, uh, like the end user. This m- he may be working with more shops. I mean, there's- Yep definitely more information I'd need in order to- For sure ... evaluate him. And, and he is- These are the five Lucas Underwood: things ... he's working with a lot of shops. Right. Cecil Bullard: Yeah. And, Lucas Underwood: and I think he's doing some mobile diag too. Cecil Bullard: Yeah. Lucas Underwood: But so here- But you're- ... here's the next question to that though, right? Okay. Because I think there's a lot of mobile diag guys out there, there's a lot of mobile techs out there, and, and that does lead us to that next question is, hey- Like I, I'm not... If I do a DVI, how am I gonna upsell something? Because I'm really just coming out to do the diag and program the vehicle. Cecil Bullard: Well, in, if I'm working with other shops, I'm not doing a DVI. We're, we, we are just there to fill a, a place. That's why- Yeah ... I never liked, like, uh, being the alignment guy for the 10 shops around me. Um- Yeah ... because when the car comes in, I see things that- Lucas Underwood: Wasted Cecil Bullard: opportunities ... that the customer should be talking. We, w- we need, I, I feel like- Yeah ... oh, my God, why aren't they telling the customer that, you know, your upper control arm bushings are falling out of the car, and- Lucas Underwood: Yeah ... Cecil Bullard: you c- I can't even align it, right? It, I, uh, uh, but it, I have different roles in, in different places. And, and if I am coming out to do programming and I'm the, I'm at the end user, the, you know, the client who owns the car, and I do a DVI, I might have an opportunity to sell additional stuff. But do I have the tools with me? You know, do I have the parts there? You know, do I have the equipment? Can I do it wherever I'm at, or do I have a place where I can take it and do it? I mean, there's a lot of additional questions and information, you know, depending on the model that you wanna build, right? I- And- Lucas Underwood: Yeah. I- ... Cecil Bullard: I don't think you should run three different models. I think you need to find the model that's gonna work the best for you, and that's the model that you wanna run, and you wanna run it as, a- as, as well as it can be run. Right? Lucas Underwood: I, I don't know anything about the mobile business, and I'm not gonna pretend to. But I, I think if it were me, right, what I would be doing is I'd be working with professional shops, and I'd say, "Hey, what I'll do, you guys get the cars you need programmed lined up. You get everything you need. In other words, do you have multiple cars that are gonna need programming? Do you have things? Try and get those all scheduled on a day for me. I'll come out, and I'll get the repairs made if you need me to do repairs. Whatever. I'll get diags done. But get me a day's worth of work," right? Cecil Bullard: Yeah, yeah, yeah, because I can't be moving around. I'm losing- Exactly ... my time, and time has to be billable no matter what. So either I gotta- Exactly ... charge... If, if I'm, if I'm working with five shops in a day- And I'm traveling around I have to shop Lucas Underwood: to shop, I spend as much Cecil Bullard: time and gas money Lucas Underwood: moving Cecil Bullard: Am I charging enough? Yeah, do, am I charging enough to cover the vehicle, the, the expenses- Yeah ... the, the gas, the rent, the, uh, excuse me, the utilities, the payment, whatever, uh- Yeah you know, or... Utilities, holy smokes. You know, I bet I'm, I'm thinking one thing, and it c- what comes out of my mouth is something else sometimes. Um- Lucas Underwood: We're used to it, Stace, so it's fine. Cecil Bullard: Yeah, it's all right. Guy's losing his mind. Um- You Lucas Underwood: never had one ... Cecil Bullard: and never had one in the first place. Um, but am I charging enough? And- Yeah ... and by the way, if I'm going to one shop and I'm gonna be there all day, that cost, uh, can be less for that shop than if I'm going to five shops. If I'm going to five shops- Yeah ... I have to cover all the traveling time and all the expenses that go with it. I've gotta charge more, otherwise I only make 8% or I only make 3% or whatever. I don't make my 20%, and I need my 20%. Lucas Underwood: I, I, I think, you know, to summarize basically where we've gone with this is, is like, the, the base numbers, the 55 and the 8%, are not fixed by increasing car count. Mm-hmm. So we fix those numbers first. Cecil Bullard: Yep. Lucas Underwood: And then, like, we, we get some of that dialed in, and we get the model dialed in, we get the efficiency dialed in, and then we work on marketing to bring more in if we need it at that point. But that's, I, I, that's how I would take it. Yeah. Cecil Bullard: So imagine you were, say, building houses, and you weren't charging enough, plus you maybe weren't building the house in a correct manner. All right? Yeah. So, and I, I build more houses, I create more liability- Lucas Underwood: Yeah ... Cecil Bullard: that la- later I may have to go back and fix, repair, whatever. Um, I think you always wanna fix the model first. And, and there- Sure ... is a point, you know, hey, I'm a guy. I, I wanna start a business. I don't know what I don't know. Uh, I'm gonna get in there, and I'm gonna work my butt off and, and all of that, but there's a point in that where you have to say to yourself, "I want this to run well- Yeah and I want this, you know, I want... And so I need to know what it really takes to run it well, because I don't wanna work, you know, 12 hours a day, uh, in order to make the money I need to take care of my family or to- Yeah ... you know, take..." So yeah, I, I mean- A- and that, back to the... Okay, so I hope we answered that well enough, Kyle- Yeah, I think so and thank you so much. Thank you so much for that, that question. Um, and, uh, you know, back to this yes mentality, I told you I'm, I'm of both worlds, so I don't wanna tell a customer no, no matter what. Yeah. I, I really don't. But sometimes I have to say, "Yes, but..." Right? Lucas Underwood: Right. " Cecil Bullard: Yeah, we'd absolutely love to take care of that for you. However," right, "this is the situation." Uh, I always try to, um, to create some, uh, empathy, uh- Yeah ... around what's, what's going on in my world. Yeah. And, and by the way, if I get a guy that comes in who's really pissed off because at 4:00 I can't stop everything and change his oil- This is Lucas Underwood: somebody I want in my shop. Cecil Bullard: Yeah, and is that the guy I wanna work with? Yeah. And the answer is no. N- for me, the answer is- Lucas Underwood: Yeah ... Cecil Bullard: uh, uh, unequivocally no. Lucas Underwood: So, so many of these shop owners, okay, and, and I'm gonna be really blunt here, and I'm not talking about the Institute. You blunt? Wait a minute. Yeah, I know, right? I'm not talking about the Institute when I say what I'm gonna say, okay? Cecil Bullard: Okay. Lucas Underwood: But so many of these shop owners, they go to a class somewhere, and somebody gives them these ideas of what to do. Now, listen, I, I've been this guy. I've been disconnected from the front counter. I've been disconnected from the base, and I go to a class, and this person recommends... And, and I'm gonna tell you, why do you think coaches have got such a bad name? There's, there is a coach that, that if you go on TikTok and search his name, it's technicians cussing him. Like, every TikTok video is people just cussing this guy out, right? And it, it's, it's that they have become so disconnected from what it's like to do the job. Now listen- I think what happens is, is that owner has been struggling for a long time. I've told you about this in my personal life before, that I spent so many years fighting and just climbing and trying to get things right and dealing with the stress and the upset client and all the things, that the minute somebody was willing to walk in that front door and take that pressure off of me, I'm like, "Here you go. It's yours. Take it. Do whatever you want with it. I don't care." Right? Cecil Bullard: Like- Well, would you... I mean, if you're gonna listen to someone- Yeah ... give you advice, right? Lucas Underwood: Yeah. Cecil Bullard: Um, uh, you know, uh, am I going to do some research on that person or that company- Lucas Underwood: Absolutely ... Cecil Bullard: and, and find out- Lucas Underwood: Absolutely ... Cecil Bullard: you know, you know, what their clients are, are saying and, and, you know, where did that person get his education? You know- For sure ... what, what's the, where's the- Lucas Underwood: What's Cecil Bullard: their experience? Uh, as they said in What Are the Bona Fides, right? You know- Yeah ... um, uh, in, in whatever movie- Right ... I can't remember the title to, but, um, i- or are, are you just, uh... At one of our events, and again, I'm gonna be brutal but not name their name. Lucas Underwood: Right. Cecil Bullard: You know, last year, um, chose speakers based on the title of their thing. Lucas Underwood: Yeah. Cecil Bullard: And, and they got a- Never Lucas Underwood: actually inspected the class or anything. Cecil Bullard: They got a lot of complaints. Uh, uh- Yeah ... and I heard a lot of feedback from people saying, "Wow, I, you know, in 20 minutes I walked out of that class." Yeah. And, and so do you wanna ha- I, I'm not saying we don't wanna have new people in the industry, 'cause we do. We wanna bring new people in, but do you wanna have people that, that have no bona fides, no, no qualifications? Just, they're just basically- Well- The, the thing I hate about the internet is they're able to say, "I'm the expert on this," and all of a sudden- Exactly everybody believes they're the expert on this- 100%. Lucas Underwood: 100% ... Cecil Bullard: even though they don't have the experience. They don't- Well- ... have the, the basic knowledge to really- E- ... be the expert. Lucas Underwood: Here's my beef though, right, is like they, they can come in and say whatever they want and, and it's, it's like a lot of what's being taught in the industry right now has consequences that, that we're not paying for yet. And I believe there were a lot of things taught over the past however many years that we're paying for the consequences right now, right? Like, there's a lot of things that we're paying for that were done years ago, and this is just how the industry works, and now we're paying the price for it. We don't have any techs, and all of these problems and all this stuff's coming up, right? And so when I... I guess what I was saying about, like, they're teaching these things, but they've never been on that side of the counter. And so it's like the shop owner comes back and says, "Hey guys, we're gonna start doing this." Well, let me ask you, Mr. Shop Owner, how many years has it been since you've sat on that front counter? How many years has it been since you were the one getting the butt chewing because you did something that was shady or was... Right? Like, have you disconnected yourself from the, the experience? Have you disconnected yourself from the consumer, the advisor, the technician? So I'm gonna- Because many of the guys we teach- Cecil Bullard: Yeah Lucas Underwood: were technicians, they were advisors. And- Cecil Bullard: Yeah, but I'm gonna, I'm gonna, I'm gonna kick you in the teeth here. Lucas Underwood: Okay. I like it. Do it. Cecil Bullard: Just because you sat on the front c- on the front counter- Lucas Underwood: Mm-hmm ... Cecil Bullard: doesn't mean that you learned anything. Lucas Underwood: Of course. Cecil Bullard: So, so I think, um, like having a technician who becomes a service advisor, I would rather have a service advisor who was never a technician. Yeah, I- And I know a lot of shop owners are gonna go, "Man, you're crazy, Cecil." But there's bad habits that you learn as a tech- Yes, absolutely ... that are great habits when you're a tech, but when you're a salesperson, service advisor- They're terrible ... they're not good habits, right? Lucas Underwood: Yeah. Cecil Bullard: And, and so that's one thing. One thing is, okay, so you did it for 20 years. So what, right? And, and I know, you know, that's some of my bona fides. I used... You know, I- Yeah ... I did this. This is... I've, I've, I've run business, been successful, et cetera. I, I believe I've learned a lot of things that, that maybe many shop owners don't really know and understand. Here's, here's the other part of this. There are things that need to be taught to a tech that a service advisor should not be taught. Yeah. There are things that a service advisor needs to know that a tech shouldn't know, and, and there are things that a manager needs to know that are different than a service advisor, and there are things that an owner needs to know that are a, a lot different, and not all of those will, you will learn by being on the counter or by running the business, right? For Lucas Underwood: sure. Cecil Bullard: And, and listen- We... I've got guys that has, have been doing this for 30 years. I see them all the time. They come up and they're like, "Yes, I've been, I've had a shop for 30 years" and, and their business is worth $150,000 all in. And they, and they have no money. Right? A- and but they've been working at this for 30 years. Lucas Underwood: We've always done it this way. Yeah. But, but here's my point, though, is, is where I'm going with this is a little bit different. Where I'm going with this is it's been so long since you've sat on that front counter, and your policies and procedures are causing problems for the front counter that you don't even see. Cecil Bullard: I, I cannot use my policies and procedures when I was running a shop 15 years ago for a shop today. Yeah. Exactly. Lucas Underwood: Um- Cecil Bullard: Exactly ... and, and we don't teach that, you know? Lucas Underwood: Yeah. Cecil Bullard: It might be a good place for you to start, because you can see what a policy and procedure should, should look like. Lucas Underwood: Yeah. Cecil Bullard: But to take my policy, even my sche- the way I scheduled- Lucas Underwood: Yeah, Cecil Bullard: completely different um, uh, today, I think it's a bit different, right? I, i- it has to be modified. But- And that, another thing you want your coach to be is somewhat flexible on certain things, because- Yeah ... if they're not, they're gonna teach you what they learned 25 years ago, right? And- Well, Lucas Underwood: I, I mean, I guess my point in that, though, is let, let's, let's go back to the example given, okay? Of, hey, we're gonna have this situation where we bring this car in, and they've got a coupon, so we just wanna get the car in to convert it into a car that we can turn into a higher ARO, right? Now, I've got an advisor who's at the end of the day. Yeah. They're trying to make all of their telephone calls, they're trying to update all of their clients, they're trying to get everything cleaned up. Cecil Bullard: Once finished the 15 tickets that are going on- Exactly ... they get the money in the bank, et cetera. Lucas Underwood: Trying to make sure- Right ... the shop looks good, trying to get everybody wound down. They're, they're in the end of the day. They're phasing it out. They're getting ready to bookend the day. Plan tomorrow, right? Cecil Bullard: Right. Lucas Underwood: And now I've got a technician who's in the middle of a job, he's got an hour left, and I'm going back and I'm saying, "Hey, I need you to stop what you're doing. I need you to inspect this car. I need you to do an oil change right now. I need you to pull this thing in right now." And plus you're asking the advisor to go to that client, write an estimate for something simple, something that needs to be dealt with right now. It's a big deal to get the car to stay, and now I'm arranging a ride for this person, right? So the- Now you wanna talk about disgruntled, think about how that disrupts every single person in the shop's day. I've disrupted a porter, I've disrupted an advisor, I've disrupted a client, I've disrupted a technician. Cecil Bullard: I've disrupted my profits. Yes. I've disrupted my, my workflow. Lucas Underwood: Absolutely. Cecil Bullard: You know, one of the biggest, one of the biggest expenses in the automotive industry, the biggest cost and, and where we're losing the most money is that we do not have good workflow. Yeah. So the productivity issue, and we have a... Because of that we have a lot of techs complaining 'cause they can't get paid. If they're on flat rate and we don't have productivity, and it is the fault of the business because of our flow, um, then they got a, they got a legitimate complaint, right? Lucas Underwood: Yeah. Cecil Bullard: And, and what we're doing, I have a class called Stack the Deck, and what we're doing is stacking the deck against us. Yeah. We're not stacking it in our favor, Lucas Underwood: right? Right. Cecil Bullard: And so we're doing... By, by bringing that car in at the, at the last minute, we're doing everyone a disservice. Everybody. Lucas Underwood: Yeah. Cecil Bullard: The, the client, the car, the service advisor, the tech that's gonna have to be pulled off, and, and we're creating kind of hatt- havoc and, and bad attitudes. Lucas Underwood: Chaos. Yeah. Cecil Bullard: And, and if we create, you know, bad attitude and havoc in our, and chaos in our business, then what are our results gonna be? Lucas Underwood: Yeah. Cecil Bullard: Okay? Exactly. And you can beat guys only so long. You know, you, you can- Yeah ... be a forceful manager and, and use the whip or the, you know, the, the prod or whatever only so long when guys say, "Uh, no more of this." It is not a long-term strategy for running a good business that's gonna last long-term and be profitable long-term. It's just not a good strategy. Lucas Underwood: Yeah. Yeah. I think you're exactly right, and, and I think that that's where it comes back to me that, that if I build a workflow That is prioritizing profit over the car count, right? Because I, I don't believe in the, the high car count numbers. I- now let me tell you something. I, I had an epiphany a few years back because I was in three bays. You've seen the shop. Cecil Bullard: Mm-hmm. Lucas Underwood: I was in three bays, and it didn't take a lot- With Cecil Bullard: no ceiling. I mean, nine feet- Yeah ... or eight and a half feet or whatever. Yep. Yeah. Lucas Underwood: It didn't take that much to fill that shop, and it didn't take that much to pay that shop's bills. Cecil Bullard: Yeah. Lucas Underwood: And then you've seen the new shop, and I, I, I'm, I don't even have to tell you, it takes a lot to pay its bills, right? Cecil Bullard: Yes, sir. Lucas Underwood: And so I have a whole new appreciation for people who try and drive car count. Like I get it. I get it. Cecil Bullard: I had a... In the, in the class, I had a, a guy come up and he's like, "Hey, I'm just, I'm just me, and, uh, what should I do now?" And I'm like, "Well, first of all, I, I don't know enough information." Yeah. "But second of all, when it's just you in one bay, you're gonna have the least expense, but you're gonna make the most money." It's gonna be hard because, you know, you gotta be the service advisor. You gotta, you know, when you've gotta answer the phone- Yeah ... you have Lucas Underwood: to stop what you're doing- Maybe you can stack Cecil Bullard: that bank account full like that ... blah, blah, blah. But you, you can. Yeah. I also have to... Kent made a comment that, um, it requires you to hold the stick. Somebody has to hold the stick. Yeah. And my answer is, "It doesn't require me to hold the stick. It requires the stick to be held- Yeah ... and held by somebody that, that knows what, what they're holding and knows what they need to do, right?" Yeah. Flying a plane, I don't wanna put my, you know, uh, 13-year-old grandson flying a plane. He's no experience. I put the stick in his hand, we're probably in trouble. You know, I want, I want a pilot, I want Dutch at the- Lucas Underwood: Exactly ... Cecil Bullard: you know, behind the wheel, right? Lucas Underwood: Well, you know, it's funny you say that because I was getting ready to bring him up. I, I was talking to him years ago. I was really frustrated about the way the shop was going, and he said, "Son, let me tell you something" He said, "When I worked for the airline," he said, "it does not matter who flies that plane or who does what on that plane." He said, "Because I was the left seat captain, that was my job." He said, "I could let anybody I wanted fly the plane. For God's sakes, I could let a passenger fly it." Cecil Bullard: Yeah, but he- "But I Lucas Underwood: could give them- Cecil Bullard: But he's responsible ultimately for what happens on that plane ... Lucas Underwood: I could give them all the authority in the world- Yeah to fly the plane, but ultimately it was still my responsibility." Good luck. And I said, "What does that have to do with me?" He said, "You're letting a bunch of bimbos fly your plane." Yeah. Cecil Bullard: People who don't know. Lucas Underwood: Like- Cecil Bullard: That's like, that's like- You know? It's like- ... going to coaching and, and going to classes- Yeah with people who, who have a nice internet presence who don't really have the, the experience or the knowledge to really help you out. Lucas Underwood: Yeah, 100%. Cecil Bullard: You know? And, and, and- I, I see these, some of these new coaches come on and they say things and I'm like, "Well, that sounds really pretty, but-" Lucas Underwood: Yeah ... Cecil Bullard: you know, it i- i- it's not meaningful or impactful. It just sounds pretty. Lucas Underwood: Right. Okay, we've got a question here. Um, Steve from Wasp Automotive: "My question is how do you decide when adding capacity, another tech, actually helps profit versus creating more chaos?" Been there, done that. It's all in the numbers. It's all in your financials. Ha- I, what do you say, Cecil? What Cecil Bullard: do you- I think, um, I think you look at your business and you say to yourself, uh, you know, like, "I've got three techs. I have one service advisor. I'm probably... My flow is now starting to get affected because one service advisor, three techs." Lucas Underwood: That's Cecil Bullard: for sure. Uh, and 11, 12 cars a day, maybe 15 if you're running a lower ARO model, and that service advisor can't talk to all those people, answer all those phones, deal with everything that's happening and make that happen. So you say to yourself- Yeah ... "Okay, um, I'm gonna add a fourth, uh, uh, tech," before you really have your service advisor stuff really set up. So, you know, I'm, if I'm adding a fourth tech, I'm, I'm certainly probably at that point adding a second service advisor. And if you're, if you're willing, if you have your systems and processes down and your shop is efficient, the, if you have a, a decent ARO, if you, if you know your inspection process and your sales process is good, then let's add a tech. But if you're, if you're adding a tech because you feel like we're, we're stacked too deep and I can't get the work out, then y- y- Yeah ... it's not the tech you need, it's the process you need. Lucas Underwood: So- Right? ... w- what I do in my shop, okay, let me give you a rundown of how I do my daily planning, my weekly planning. Yeah. Is I'm monitoring how much work we have in the shop at any given time. So I know how many hours and I know how many dollars I have in the shop, and I'm saying, "Okay, I know what my typical sales per build hour are, and does that line up with the financial model we've put in place for the shop?" And so if I'm consistently at that number, I can take my hours and I can say, my technicians should be able to turn eight hours a day. There's gonna be days they're a little bit less, there's gonna be days they're a little bit more, but if I have X number of hours and it gives me a runway, because I view this like my runway, right? Like, how far can I go? And I run this shop somewhere between five and seven days out, is, is typically where it falls, right? Yeah. I wanna have between new appointments coming in, right, because I know my average hours per repair order, new appointments coming in versus the work that I have here right now. How much work would that give me, right? And a lot of guys come back and say, "How could you judge what a new appointment's gonna be?" Because it's my average hours per repair order. That's what we always run. It doesn't go up and down hours. It goes up and down five, 10, 15 minutes. It goes up, down .1, .2. It's not a huge swing. Cecil Bullard: Yeah. Lucas Underwood: And so now I'm looking at the shop and I'm saying, "Okay- If that is the case and I have this much work and I'm billing this much, is the work getting done? No, it's not. Okay, well now I have an efficiency problem in the shop. Cecil Bullard: Maybe. Maybe- Okay, the work... Go ahead. Maybe it's an efficiency problem in the shop. Maybe it's a, I have too many clients and I need another tech, right? So- Lucas Underwood: Well, I guess, I guess what I'm saying though is if, if I'm in that situation, right? So if I've got that number and my number is, is each tech should be able to do eight hours a day, and I am not moving that number through the shop, and I go and I look and I find out, hey, I got four hours per day per tech, that's an efficiency problem. And by the way, that's a- Adding another tech Cecil Bullard: will not fix that problem don't hire another tech. Yeah, because now you're gonna have- Unless you- Now you're gonna have five guys doing three hours- Doing four hours a day ... or whatever. So yeah. And, and all the marketing, all the money you've spent on that and everything else- Yep ... is just gonna go by the Lucas Underwood: wayside. 100%. So- But I'm gonna maximize what I have, I guess is my point. I'm, I'm, I, it, it's ran by the numbers. There's a formula. I Cecil Bullard: think, I think if you're smart, you're always maximizing what you have. And so- Yeah ... um, you know, you're, the question that I ask every day is, is why not, right? W- why- Yeah ... aren't we? Why, why, why isn't the institute growing faster? Why are we not, uh, signing up more people? Why are we, you know, whatever, whatever it is. Because the answer to that question is the answer I need to, in order to really move my head- Yeah ... right? Lucas Underwood: Yeah. Cecil Bullard: Sure. And, and so if you're, if you're saying, you know, I've got, um, six hours of productivity out of my s- out of my techs- And now I'm gonna hire another tech because I have too many cars. Well, m- maybe your price isn't high enough to, you know- Yeah ... maybe your price needs to be a little higher. Uh, so th- that's a way that you might manage car count. So we're booked three weeks out. Well, booked three weeks out is, is not okay, and what, what often happens is I, I have customers come in today, and they were scheduled for whatever, and then we found $4,000 worth of stuff they need, and they wanna buy it- Get bumped I said, "I can't, I can't do it today." Lucas Underwood: Yeah. Cecil Bullard: So they get bumped a week and a half out, two weeks out. And then the other problem is if I'm, if I'm scheduling that way, and, and I have new people that are, that I'm... They don't know who I am. Yeah. So they're calling for a first time. I need to get those people in either today or tomorrow. Yeah. I cannot- If you wanna retain that ... schedule those people. Yeah. Otherwise, that money I spent is wasted money. Yeah. And, and so, you know, there, again, there's these balancing and tipping points in your business that if you really understand the business and you're watching the numbers as, as Ken says, you know, if you know where you're going and you're, you know, you got s- your hand on the stick, and you got the data that you need- Yeah then all of a sudden, I'm making better decisions, and so I know what to do when I need to do it. And then- For sure. Lucas Underwood: Absolutely ... I Cecil Bullard: think, I think everybody should have mentors or coaches. Uh, y- you know, mentors, uh, uh, many of... Some of those are paid because you, that's what you hired them for. Yeah. And they might be your coach, and some of those are not. I mean, you know, I'll, I'll call you occasionally for something and say, "Hey, Lucas, what do you think about this?" Because- For sure ... frankly, I look at you in s- some areas as that guy where I can call you and get some good information. Right. Um, and, a- a- I just think we have so many people in our industry that they just don't know enough about the business and how- Yeah the business runs to make the best decisions, and so they keep running into the wall. Lucas Underwood: They were really good at fixing cars, and they were really good at maybe selling service. Cecil Bullard: Yeah. Lucas Underwood: But they weren't good at running the business that fixes cars and sells service. Cecil Bullard: Well, Lucas Underwood: how many- There's a d- there's a difference. Cecil Bullard: Yeah. And then, you know, how, how about how do I manage these people? I mean, I can't tell you how many times I've heard, "Well, my guys won't do good inspections," or, "They won't take-" "... 20 pictures of the car," or whatever. Ah. And, and, and I'm, I'm like, part of me is, is flabbergasted, right? Yeah. Part of me is like, how, how do you have people that won't do what you need them to do, and you keep writing them a check every, every week- Yeah right, or every two weeks? And, and then part of me is, is angry, like- Lucas Underwood: Yeah ... Cecil Bullard: are you, are you really that dumb that you, you can't figure this out, and, and manage people, and make sure that you're getting, you know, what you need out of your staff? And, and so I, the... I'm always two people in my head, you know? I'm just always. But they keep doing the same thing over and over. Yeah. And they keep thinking they're gonna get different results. Lucas Underwood: You know- Cecil Bullard: It's insanity ... Lucas Underwood: here, here's what stands out to me, because you know I've been working at the other end dealing with- Mm-hmm ... with much younger employees, right? Cecil Bullard: Yep. Lucas Underwood: And I had one a while back come up to me and said, "I really appreciate you holding me accountable." And I said, "What are you talking about?" And they said, "Nobody has ever said to me, 'Why didn't you accomplish this thing?'" And they just acted like I was gonna be upset or was gonna be mad if somebody came and said, "What about?" And they said, "The problem was is I never knew if I was winning or losing. And so I need somebody to tell me I'm doing good or I'm not doing good- Yeah so I understand where I need to go, but that's not happening anywhere else I've been." And see- Cecil Bullard: Well, it doesn't... In most places it does not happen, my friend. Lucas Underwood: Yeah. Cecil Bullard: And so- Lucas Underwood: Exactly ... Cecil Bullard: you know, we, we don't have goals. I'll, I'll go into a shop and say, "Well, what are your goals for your techs? How do they win," right? "Well, uh, they do a lot of work and they don't have any comebacks." Well, first of all, not having any comebacks is ridiculous because you can't work on cars without having a comeback. Lucas Underwood: You figure that Cecil Bullard: one out, buddy. Second of all, what's a lot? What's a lot of work, right? I mean- Yeah ... a lot of work is, is 10 hours a day. I mean- Yeah ... uh, people need... If you hold people accountable, if they understand, if you're fair, meaning- Yeah ... they know what their target is, they know what they have to do, and then you hold them accountable, they're very happy. They're happier than they can ever be. Yeah. It's the people that don't have any direction, that don't know if they're winning, you know, every two years, every three years they move to another shop hoping that they can find that thing that they don't have, and the thing that they don't have is goals, targets, accountability, and winning. I mean, those are the things you absolutely have to have to be a happy human being, right? Lucas Underwood: Yeah. Cecil Bullard: If not, it wears at you and it wears at you until what you do is you go online and you just bitch, right? Lucas Underwood: Yeah. Cecil Bullard: And, and so we got a lot of online complaining going on. Lucas Underwood: Yep. Cecil Bullard: Um- Lucas Underwood: The, the quickest way to a depressing life is unmet expectations. Yeah. And the only human being capable of setting your expectations is you. Is Cecil Bullard: that right? Well, and that's the other thing I think we all... You know, I, I always say, um, managers need to manage, meaning- Lucas Underwood: Yeah ... Cecil Bullard: you know, you... When I was a tech, I kept track of every hour I billed, okay? Now, the reason I was keeping track of every hour I billed was not because I d- I thought my company was gonna not pay me for it. The reason I kept track of every hour was because every day was a competition against yesterday. Lucas Underwood: Yeah. Cecil Bullard: So if I did seven hours yesterday, today I wanna do eight. And, you know, I, I, I'm competing against myself. In, in a way, part of my life has been managing myself because if somebody else- Yeah ... doesn't create the expectations for me, I create the expectations. Lucas Underwood: Amen. Cecil Bullard: Because I need the- The dopamine or whatever that comes from being successful. Lucas Underwood: Amen, Cecil Bullard: buddy. Uh, if not, at the end of the day, you watch me. I'm sitting watching TV doing this because- That's it ... I wasn't successful today, right? I di- I didn't- Yeah ... make anything happen. Lucas Underwood: Kent says, "Complaining can make the problem feel bigger it is to the point it feels insurmountable." Um, I- Cecil Bullard: Yeah, it happens all, all, all the time in this, in this industry ... Lucas Underwood: somebody told me one time that human beings can be in love with their problems. They can make their problems their identity, and so I think that Cecil Bullard: that's- Well, think, think about this. As a technician, I'm a problem solver. Lucas Underwood: Yeah. Cecil Bullard: Right? And problems are brought to me all day long, but all of a sudden- Yeah I become a salesperson or I become a manager, sol- creating problems so that I have problems to solve, right? Lucas Underwood: Amen. Cecil Bullard: And, you know, don't get me wrong, you'll... A- as a salesperson you'll have plenty of problems to solve. As a manager you'll have ple- plenty of problems to solve, but we have a lot of people in, in the industry that are creating their own nightmares- Lucas Underwood: Yes Cecil Bullard: and then they're living in them, and then they're complaining about them. Yeah. And, and, and my mind is like, "Okay, fix it." Lucas Underwood: Right? Exactly. Exactly. Cecil Bullard: It might not be easy. It might not be quick, but fix it. Stop doing what you're doing today. Start learning how to do something just a little bit different and, and because you keep going the same way, you keep getting the same thing. Lucas Underwood: That's exactly right. If you continue to do the same thing and expect different results, that is the definition- Is Cecil Bullard: insanity ... of Lucas Underwood: insanity. Cecil Bullard: Yes, sir. Lucas Underwood: Cecil, thank you for being here today. Cecil Bullard: Yes, sir. Well, thank you. I love these things. And- Yes, sir ... uh, thank you for those of you that participated and, uh, and asked questions, and we'll be back again soon I'm sure. Lucas Underwood: That's it. Well, I guess another month and we'll be back Cecil Bullard: here. Another month, and we'll make your head Lucas Underwood: hurt one more time. Another AMA. Yeah. Waiting to hear y'all's questions. Cecil, see you next time, buddy. Cecil Bullard: Love you, brother. Lucas Underwood: Love you, brother.