Show Summary:

This AMA explains how to price labor fairly and profitably. Lucas and Cecil break down why book time often misses real world steps and shop friction. They argue shops should charge for full value, not fear being the highest priced option. The episode covers building confident service advisors through financial literacy and clear scripting. They outline how to defend diagnostic fees by separating testing from code scanning. They warn against routine discounts and show how underpricing destroys reserves and stability. The conversation closes with practical math for labor rates, technician pay, and productivity.

Host(s):

Lucas Underwood, Shop Owner of L&N Performance Auto Repair and Changing the Industry Podcast

Guest(s):

Cecil Bullard, Founder of The Institute

Show Highlights:

[00:01:00] – Book time versus rate changes debate

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Episode Transcript:

Lucas Underwood: Oh, we wanna thank you for being here, everybody. I hope y'all are doing fantastic. I am so excited to be here. My name is Lucas Underwood with Changing the Industry podcast, and Ellen, in performance here in Blowing Rock, North Carolina. I am joined by the one, the only Cecil Bullard, and we're gonna be talking about labor rates today.

Lucas Underwood: Cecil, buddy, how you doing?

Cecil Bullard: I'm doing great. Yeah, I'm doing great. Luke

Lucas Underwood: Cecil, man, I'm telling you what, I'm so excited for this because this morning a question came up about exactly this. It was like to the t some of the stuff that Yeah, absolutely. Some of the stuff we've been talking about, some of the things we were saying, Hey, we need to cover this in today's webinar, a MA.

Lucas Underwood: And so my buddy Dan asked a question, and Dan, for those of you who don't know him, he is probably one of the most solid shop owners you could ever meet. Absolute standup guy. And he threw out a question that stirred up a lot of emotion, right? And there's a lot of perspectives on this and Dan shared his perspective.

Lucas Underwood: I don't think there's anything wrong with Dan's perspective, Cecil, but I wanna talk about it and I wanna break this down because I have a different perspective than Dan does. So is it okay if I read you this post real quick?

Cecil Bullard: Oh please.

Lucas Underwood: Alright, sounds good. Dan says, if we're using the manufacturer, labor guide is the baseline, but then automatically adding 20 to 25%.

Lucas Underwood: To every job because the guide is wrong, aren't we? Basically saying we don't trust the system we claim to follow. If you need 25% more revenue, why not just raise your labor rate, 200 to two 50? Same money, way cleaner, way more transparent. The guide should set time. Your rate should set value. And I'm not saying every job is the same.

Lucas Underwood: Older vehicle, rust belt stuff, diesel trucks, specialty work, those absolutely justify different labor rates or categories. Charge more for harder work all day long. That makes sense. But changing the rate is honest. Changing the time feels like we're gaming the book. If we all say we use a standard, then we should actually use the standard.

Lucas Underwood: Otherwise, it undermines our credibility as an industry. Seems simpler. Just to price your hour correctly and leave the book time alone. Now Cecil, I wanna share my perspective first. As a shop owner, right? I've, I have worked with a number of manufacturers and folks from the manufacturers over the years, and I understand how book hour is calculated and from what I have gathered and I've not seen the process.

Lucas Underwood: I'm not saying this is a hundred percent accurate, but from what I've seen of the process, they take a vehicle that is a new vehicle, they put it into a shop and they lay out the tools required for the job. They lay the part out in front of the technician and he changes that part three times. And after the third time it's changed.

Lucas Underwood: They average that time out between each one. He gets a coffee break, gets to sit down for a few minutes rest, and then go back and do the job again. They average that time out. That doesn't count for pulling the car in. It doesn't count for test driving the car when you get done. It doesn't count for riding up the ticket and putting the documentation in.

Lucas Underwood: And so I believe in my shop, if I'm gonna pay my guys based on some type of production based pay system, that depends on hours. It's only fair to add time for those things because the book doesn't account for that. And so that's what I shared with him. And I also personally believe that those labor rates, we should have variables based on the skill level associated with each one.

Lucas Underwood: So I think he's right about that. See someone, when you hear that post, what do you think? Make

Cecil Bullard: a couple of things. First of all, when Labor, eight times the way that you described it were decided and how they're decided even today, they don't account for all the things that the technician does. I call those things brown bananas.

Cecil Bullard: Okay. I tell the banana story, people have heard it, but my grocery store's gonna buy 5,000 bananas today. Yeah. And this week. And they're gonna sell, they're not gonna sell 5,000. Some of those bananas are gonna get eaten. If you wa, if you've ever been through your grocery store and you see a banana peel up in the milk section in the back, somebody ate a banana as they were walking around.

Cecil Bullard: And they basically ripped the grocery store off for a banana. And then some of the bananas are gonna go, they're gonna get brown. And people don't like brown bananas, so they don't buy 'em, and they end up getting thrown away or used in banana nut bread or whatever. But you have to pay for the brown bananas.

Cecil Bullard: And it's something I don't think we understand in this industry is that it doesn't matter the inefficiencies in my business, the customer has to pay for all inefficiencies, all brown bananas, everything. So number one. It, the book was done a very specific way. And by the way, the manufacturers have always multiplied the book time by 1.5 to two.

Cecil Bullard: Yeah. And we're now getting to about three, right? 1.3. And is that honest or dishonest? Let me cover that. Number one, I'm gonna do what it takes. That's legal, moral, and ethical to put 20% net in the bottom of my business. All right? And some of the things I'm gonna do, I'm not gonna be transparent.

Cecil Bullard: This whole idea of transparency, are you gotta be shitting me, right? I'm sorry, I just said a word. I probably shouldn't, but, okay.

Lucas Underwood: Sorry, Ken's not watching. It'll be fine.

Cecil Bullard: Do you wanna be, do you want to go into a restaurant that has transparency? No, I've worked

Lucas Underwood: on the other side of that.

Cecil Bullard: Okay. And so let's just stop talking about transparency. Like we have to tell the customer everything and be just upfront about everything, number one, I don't want to I don't know. I think I'm a very moral, very I have a real good sense of morality and all of that. Even my company has like a three and a half page statement about all that, just to be clear that we don't make mistakes in that area.

Cecil Bullard: But I'm sorry, I'm not gonna be completely a hundred percent transparent with you. Lucas, I'm sorry. I can't do that, right? Yeah, because I don't iage

Lucas Underwood: want you to there know there's how many sausage is

Cecil Bullard: made that occasionally there's rats in the back or cockroaches or, that I trimmed the green parts of the meat off and only kept the good parts of the meat so that you could have it right.

Cecil Bullard: Whatever. I don't want you to know that. Okay. And number two, why would I ever talk to a client about the time on a job?

Lucas Underwood: Yeah. I,

Cecil Bullard: other than I'm gonna need the car for two, two days.

Lucas Underwood: Yeah.

Lucas Underwood: Now are there some states that mandate it or are there some states that require

Cecil Bullard: it? No, not that I know of at this point.

Cecil Bullard: It doesn't matter. In California and certainly Utah I believe New York Washington State, these are not Utah, but the others are very much for the consumer and less for the business. Utah's more business oriented, less consumer oriented. But in those states, the law basically says that what you have to do is you have to let the customer know what you'll be doing and what the costs will be by before you do the, as they authorize the work.

Cecil Bullard: They have to authorize that. So even in Utah like even my shop, they won't tell me the whole cost. And which drives me nuts. 'cause I think you should be really upfront with your client, look, we're gonna do these three things, and when you come in, the bill's gonna be $2,100. And so now how do we help you go about your day?

Cecil Bullard: Do you need a car? Do you need a loaner car? Do can you, are you all right without one? What can I do for you? Assume close, redirect assume close redirect. And, but I'm never telling a customer about the time. I'm not saying, oh, by the way by the book, this is two hours and we're gonna charge you, $240.

Cecil Bullard: Oh, wait a minute. That's $120 an hour. There's a shop down the street that says they're $95 an hour. There'll, there will always be somebody down the street. And playing games about it all too, which I hate. We've got a prominent guy. He's got his own podcast. He talks about free diagnostic all the time.

Cecil Bullard: Except it ain't free.

Lucas Underwood: Yeah. Yeah.

Cecil Bullard: You want to talk about, excuse me, deceptive. Tell your clients they're getting free diagnostic and then just charge every other client an extra seven or eight or $9 an hour Yeah. To cover that expense

Lucas Underwood: Or charge free, say you're doing free diagnostics. Re do a code scan and start changing parts.

Lucas Underwood: Right?

Cecil Bullard: Yeah. And by the way, that's not what's best for the client.

Lucas Underwood: Yeah,

Cecil Bullard: right.

Lucas Underwood: You're percent right. You're a hundred percent. And that's my thing too, is like my whole drive, everything is about serving the client at a high level. Yeah. And I'm with you. I don't share the time and some of the things that came up, like last night we were talking about another post that came up and there was a post where somebody had just searched on Google, how much time does it call for to replace this?

Lucas Underwood: And it gave them the book time for a specific job. And I think this creates more of a divide. When you start getting just a book or below book, I think it creates more of a di divide between the technician and the shop. It creates more of a divide between the technicians and the industry and they're looking at it, especially if they're paid flat rate or some type of hybrid system, and they're saying, Hey dude, I'm getting taken advantage of here,

Cecil Bullard: but if I have

Lucas Underwood: a, this isn't right.

Cecil Bullard: If I have an hourly rate and it's your hourly rate, it's 36 bucks an hour, $32 an hour, whatever it is, then if I ask you to take the trash out, you take the trash out. 'cause I'm paying you, right? I'm the manager, owner, whatever. Or if I ask you to clean your bay, or if I ask you to, I don't know, help with a car or something, you just do it.

Cecil Bullard: Because you're already paid. If you're in a hybrid system, which is 60% of your pay comes as a, as an hourly rate, and 40% comes. Now when I'm asking you to do extra stuff, it's gonna hurt you financially. It's gonna affect you financially. And so that starts to create that divide. Yeah. So in my shop, when I charged 1.3 on the labor, I gave my tech credit for 1.3 because that's what I realistically felt that the tech should have with the paperwork and with the test drive and the verification.

Cecil Bullard: Yeah, absolutely. And all that kind of stuff. And that helped me have good productivity, helped my techs feel good about themselves, which meant that they actually, Maslow we can't, if we don't feel like we're gonna pay our bills, if we don't feel like, if we feel like we're being cheated, et cetera, we can't think about how do I do that job better?

Cecil Bullard: How you know God Exactly.

Lucas Underwood: A

Cecil Bullard: hundred

Lucas Underwood: percent,

Cecil Bullard: et cetera. The

Lucas Underwood: base needs have to be met.

Cecil Bullard: Yeah.

Lucas Underwood: And I'm a hundred percent with you now. We've got an incoming question. Kirti, I do wanna say this. We talk about in the industry I just give a price for the repair. I don't talk about labor charge or parts or anything like that.

Lucas Underwood: I just talk about repairing the vehicle. Here's the price to repair the vehicle. Cecil Chad's got this question, says, thank you guys for doing this to help us out. I have a service advisor who is well intentioned, but doesn't sell with confidence. I've spent years a few years with formal training and I don't know how to get her to sell with more confidence.

Lucas Underwood: Any suggestions? I'll tell you, Chad, from my perspective. I think it's a lot about them understanding why we're doing what we're doing. So many employees do not understand the financials of the business. And Cecil and I had a talk about my advisor just the other day, or my shop manager, about the importance of her understanding the numbers.

Lucas Underwood: She's got to understand the numbers to see the value in what we do and to have confidence in what she's telling her clients. And so if she can't look at that and understand, hey, we're not making all of that, we're not keeping that money, yes, that's expensive, but if she can't see why it's expensive, that's a problem.

Lucas Underwood: Cecil, what do you think? I,

Cecil Bullard: I also think a good service advisor has a disconnect button.

Cecil Bullard: It's not my car. I didn't, yeah, I didn't buy it. I didn't build it, I didn't drive it. I didn't break it. It's not my, it's not wallet. You can't sell in

Lucas Underwood: their

Cecil Bullard: wallet. It's not my wallet.

Lucas Underwood: Yeah.

Cecil Bullard: And so I have to disconnect myself from how I feel about spending money on my car.

Cecil Bullard: Yeah. I hate, I would hate being the shop that Cecil takes his car to because I know what good customer service is, and I know when it's not. And I also know when someone's jing my chain.

Lucas Underwood: Yeah.

Cecil Bullard: And and I also know when a service advisor's not confident in what they're telling you they're doing.

Cecil Bullard: I listened to phone calls. I just had a meeting with a service advisor a couple days ago, and I listened to two phone calls and I'm about ready to shoot myself. To have to listen to that. There were pauses, there was ums and ahs. There was the tech says blah, blah, blah. There was, very much a lack of confidence.

Cecil Bullard: And you're not gonna sell that way.

Lucas Underwood: No.

Cecil Bullard: You have to disconnect your personal thoughts of what I might do on my car. And by the way, my car, you've seen mine, my car is perfect. It's gonna be taken care of. And it doesn't matter to me what it costs. It's gonna be what it is. Still. I feel so bad

Lucas Underwood: for those Ford service advisors.

Lucas Underwood: Something

Cecil Bullard: Yeah. That have to deal with me.

Lucas Underwood: Yeah. I couldn't imagine

Cecil Bullard: still. And I'm like, Hey you, you told me you were gonna call me at one. It's two 30. I haven't, I'm having a call from you. What the hell? That's it. And oh, I'm sorry, Cecil. But if you can't help them understand the whys and they can't put two and two together.

Lucas Underwood: Yeah.

Cecil Bullard: This is probably also a person that's struggling with their own finances. With making money. They've never made any real money. They can't imagine Yeah. Paying $3,000 to have their car repaired because 3000 would, they wouldn't be able to pay their rent. They'd be kicked outta their apartment or their house, whatever.

Cecil Bullard: Absolutely. And man you have to, I don't know. You, I would say you have to have a disconnect button that you say, it's not my $3,000. It's not my, it's not my concern. I had a client recently say, Hey Cece, you've talked about financing that every shop should probably have some financing.

Cecil Bullard: So I've looked into all the financing. It's 24 to 30%. I said, yeah. Yeah. It's unfortunate that people put themselves in a position where they have to spend 24% to finance the repairs on their car, but it's not my fault. Yeah. I just, need to be able to take care of their car.

Lucas Underwood: I, I had an experience years ago and I had an advisor here that was very much in the same boat.

Lucas Underwood: And I'll never forget, I had an older gentleman that came in and when he came in, I was talking to him and I, the advisor's standing there and he's in his seventies, he's retired. And I said, Hey, can you tell him how it is that you can afford the repairs on your vehicle? And he said son, he said, my dad told me when I was very young, he said, the minute that you can have an IRA and you can start putting money in that IRAI want you to put money in it, I never want you to stop.

Lucas Underwood: And he said, so I started at $60, then I went to a hundred dollars, and then I went to $200 and I maxed it out. And he said, I got to the point, I maxed that out. And he said, I stopped putting money in it when I was 60 some years old. And he said, now I've got six and a half million dollars in the bank. And he said, look, I'm just telling you that, you can live like this as long as you're smart with your money.

Lucas Underwood: The. Folks that are on that front counter, if they've not been smart with their money, it impacts their perspective. They can't see clearly if they're not making enough money they can't see clearly. And the other thing, I'll tell you, I learned this a long time ago. Send your service advisors to another shop and let them buy a service at another shop and see what that experience is like.

Cecil Bullard: Yeah. '

Lucas Underwood: cause you're gonna find out what your value is real quick.

Cecil Bullard: I like to go to a quick lube like a Jiffy Lube once a year, just, and then I take it to the shop and have the oil changed and checked and all that, but I like to go have

Lucas Underwood: plugs, not sideways.

Cecil Bullard: Yeah. I like to go have the experience because it helps me understand the difference of, yeah.

Cecil Bullard: What a real experience is and what it isn't. I, let me add on this. This particular service advisor if they understand the numbers and I've gone through why the shop needs to make 20% and how that's really not 20% when it's all said and done. 'cause I have to pay taxes and I have to invest in the company in order to make sure everybody gets what they need.

Cecil Bullard: And I have to provide medical and dental and 4 0 1 ks Yeah. And all that kind of stuff today in this. And at the same time, we have all of these techs bitching about not getting paid enough, which I agree with him a hundred percent. And I still have a service advisor that cannot or will not sell with confidence.

Cecil Bullard: I've got a problem. Yeah. I've got a real problem and probably after two years it's not gonna change. Yeah. And maybe there's another, maybe the job of CSI, where it's like making phone calls and doing some marketing and tracking some numbers for me is a great job for that person.

Cecil Bullard: But selling at the service counter, one of the toughest jobs I've had in my entire life

Lucas Underwood: Yeah.

Cecil Bullard: Is not for everybody.

Lucas Underwood: Yeah, you're exactly right. And I'm gonna tell you, I know this is a little bit off topic, but I've done it with technicians and I've done it with service advisors and I've tried and tried to make it work.

Lucas Underwood: And I've got people who really dislike me because

Cecil Bullard: Yeah.

Lucas Underwood: I let it go for too long and it's I wanna be a technician. I'm a good technician. I'm gonna be a technician. No, you're not.

Cecil Bullard: But you also have to think, you have to think about this too. Frankly, I'm not responsible for only one person.

Lucas Underwood: Yeah.

Cecil Bullard: When I own the shop, I'm responsible for everybody that works for me and their families. And if I have one person, that was a

Lucas Underwood: hard one for me.

Cecil Bullard: Yeah, that was a hard, I have one. If I have one person that's screwing it up, whether that's my service advisor or a tech or I don't know, whoever gets up to me to take care of that, because it's not fair to everybody else.

Cecil Bullard: If my service advisor can't sell with confidence and I'm gonna have a lower average repair order, I'm gonna have lower productivity, which means I can't pay my tax as much as I should. Probably can't pay my service advisor as much as I should, and I'm not gonna take home the money that I should. So my family's gonna be affected.

Cecil Bullard: And and it is, it's not right.

Lucas Underwood: What the problem is that we always get attached to those people and we believe. They're also attached to us and feel the same type of loyalty we feel to them. And I think the manager situation I went through last year is a perfect example of that.

Lucas Underwood: I held on too long, we talked about it, we went over it over and over again. You told me from the word go, I don't know if this is the right person then, Aaron told me, I don't know if this is the right person. I think there are a

Cecil Bullard: couple of times where I told you we need to get rid of this person.

Lucas Underwood: Yeah. Period. Oh yeah. And I knew And you knew. I knew. And I was telling you I knew.

Cecil Bullard: Yeah.

Lucas Underwood: But I'm still paying the effects of that right now. I, we just had January and February. So this big ice storm comes through.

Cecil Bullard: Yeah. Terrible.

Lucas Underwood: And 'cause we're up in the mountains, it was like four inches of sleet and then it rained on it, and then it froze.

Lucas Underwood: Solid. They were taking equipment, trying to dig the ice up and you can't get the ice up.

Cecil Bullard: Yeah.

Lucas Underwood: And so it's finally melting now and cars are flooding in the shop, but we went through four weeks where cars could not get here. They couldn't get out.

Cecil Bullard: Yeah.

Lucas Underwood: And so like it completely zonked the shop of all of its money.

Cecil Bullard: So here's another reason to charge what you need to, because not only do I, I need three months worth of operating capital in the bank.

Lucas Underwood: But here's

Cecil Bullard: the thing. If I wanna have a safe, secure business, I need three months worth of operating capital in the bank. And if I don't charge enough, I can't have that.

Lucas Underwood: That's where I'm going with this, is that, that the reason I didn't have it is because I kept somebody that was not the right fit for the shop. Yeah. And it zonked the funds back last year because they kept making bad decisions.

Cecil Bullard: Yeah.

Lucas Underwood: And so at the end of the day. I go and I terminate that person.

Lucas Underwood: And you know what they did? I said, dude, I don't really care. It's fine. Like, why are you upset? Why are you bothered by this? Yeah. It's just a, it's just business. I don't care. Just a job.

Cecil Bullard: Whatever job. Who cares?

Lucas Underwood: And I'm over here dude, I've been over here like suffering and beating myself up for months.

Lucas Underwood: This, and you're telling me you don't care

Cecil Bullard: for

Lucas Underwood: months? Yeah. And so we gotta be careful where we show that loyalty to and,

Cecil Bullard: I think, I think that we need to be loyal. I always say I'm willing to do anything for my employees except their job. I, as long as you're doing your job and I need to define what that is and the results I want, and do that well, yeah.

Cecil Bullard: Then I'm as loyal as anybody could be. I'll take money outta my pocket. To help you out. Yeah. And I know you will, and I know most owners that I know will do that.

Lucas Underwood: Yeah.

Cecil Bullard: But if you're not doing your job, if you're not being loyal to me and to the company. I just had a whole thing about company men and company people.

Cecil Bullard: When you have a manager that you pay a salary to and a decent salary, that person needs to be on the side of the company. And by the way I would say the same thing with the service advisor. If we've set our prices the way we've set them, whether and whether or not we're we raised our labor rate 30%, or we put a 1.3 on our labor, yeah.

Cecil Bullard: Times, whichever, however we did it, and the price is the price, then the person that's a loyal person to the company has no problem telling the customer that's the price.

Lucas Underwood: Yeah.

Cecil Bullard: Otherwise, you're not loyal to the company. You're loyal to whatever your fears, your whatever and what can the client do to you?

Cecil Bullard: That's the other thing. I've never been hurt by any client that I didn't allow them to hurt me. Yeah. So you at the service counter, you can't hurt me. You you can't. And. Do I care? Yeah. I kind of care. I want you to buy, I want you to be happy. I want you to be our client, but if you're not, I'm done.

Cecil Bullard: Yeah. I don't have any more time or energy for that because the 85% of the people that want to bring their car to my shop, I need it for them.

Lucas Underwood: Yeah,

Cecil Bullard: right.

Lucas Underwood: You're exactly right. You're exactly right. And man, I'm telling you, it's just like these service advisors who go in and adjust the numbers, and it's dude I gave you a threshold.

Lucas Underwood: I gave you the numbers. You can't just keep lowering every job.

Cecil Bullard: I'll Yeah, I'll choke you out.

Lucas Underwood: Yeah.

Cecil Bullard: I have to make ano I we have to make a certain, some points here.

Lucas Underwood: Yeah.

Cecil Bullard: All right. Now in 1980, my shop was $70 an hour. Palm Springs, California. Yeah. And I don't know what the average was in 1980, but it was probably close to that.

Cecil Bullard: And I took that $70 an hour and I raised it by 3%. Up to the year 20 25, 20 26. Right now, there would not be a shop in the United States under $264 an hour.

Lucas Underwood: Yeah. If you had done that, just

Cecil Bullard: followed inflation. If you'd just done it 3%, which is just normal inflation.

Lucas Underwood: Yeah.

Cecil Bullard: Forget the fact that in 1980 I didn't have half the regulations, my insurance costs a lot less my, all kinds of things.

Cecil Bullard: Even HR stuff. I never worried about being sued until a few years ago. And now it's like I can't, we had a guy that we let go white guy over 55. By the way, that's a protected class. I'm not supposed to terminate that person. It's, things have changed so dramatically and there's so much liability now that we didn't have in 1980.

Cecil Bullard: I can't even, Ima, at 2 64, it's. Still not enough. And I know what people are gonna say, you're half the people out there are gonna go wait a minute. See? So there's a guy in my neighborhood that is still at $65 an hour.

Lucas Underwood: Yeah. So what,

Cecil Bullard: right? Let him be 65. Let him take all the crap and all the cheap customers, and all the people that, that wanna buy, I don't know, Walmart parts or white labeled crap parts and put 'em on their car and Yeah.

Cecil Bullard: And let 'em be that. So what should we be? I believe it or not, I have a shop right now, it's about $320 an hour and I'm really happy about that. But my, our average shop in the United States for the Institute probably right now is Pushin in the one eighties, one nineties.

Lucas Underwood: Yeah.

Cecil Bullard: Now the last,

Lucas Underwood: and we just raised mine again.

Lucas Underwood: We just came up a little bit more. Yeah.

Cecil Bullard: And the last survey that was done, I think it, it was either tech metric or it was parts the parts guys.

Lucas Underwood: Yeah, parts

Cecil Bullard: two. The average was like 1 26. In the United States. So how do you pay a tech a, a master tech who's gotta buy tools and who, who's gonna bust their knuckles and work their butt off?

Cecil Bullard: How do you pay them 30 bucks an hour?

Cecil Bullard: And have a happy master tech and charge 126 and still make the profit that you need.

Lucas Underwood: Yeah.

Cecil Bullard: And by the way, 26,

Lucas Underwood: I tell people all the time that there has to be money, right? Yeah. I have these meetings with these techs and I'm like, Hey. And I do the same thing with my guys.

Lucas Underwood: Hey,

Cecil Bullard: yeah,

Lucas Underwood: I get that you wanna make more money, but we have to have production. There has to be production there.

Cecil Bullard: Yeah. We've

Lucas Underwood: got another question coming in.

Cecil Bullard: Yeah. Production's a thing that kills us in our,

Lucas Underwood: yeah. Ab it is in our profitability. It absolutely is. Yeah. Oh, very cool. I know this bunch right here.

Lucas Underwood: Good afternoon guys. If most other shops in our areas charge little to no diagnostic fees, we charge higher than our labor rate. How can we help clients understand the value of testing? Oh, buddy. I just tell 'em like, Hey, go over there. They can do the testing and they can fix it, and when they don't fix it, you can bring it to me and I'll get it right for you.

Lucas Underwood: Especially on the diesels. I have no problem with that. Cecil, the way I've always done this is I have always been very transparent about it. I know you don't necessarily like the word transparent, but I've always explained to them this is the most advanced part of our job, and in this town we're known for doing the most advanced testing.

Lucas Underwood: Of anybody up here. We have lots of very high-end equipment that allows us to do this. Have lots of subscriptions, lots of OE tools, and we have the equipment that the manufacturer has to work on your vehicle here in shop. And so we have very highly trained staff. Now, what I'm gonna explain to you is that a lot of these shops aren't actually doing what you think they are.

Lucas Underwood: They'll say that they're doing diagnostics, but really what they're doing is a code scan. And a code scan is simply that code's like a zip code. You put that on an envelope, drop it in the mailbox. It might get it to the right town, but it's not gonna get it to your door. It just gives us an area that the problem exists in.

Lucas Underwood: And so a lot of shops take that and they use that to try and sell additional parts. We don't do that here and that's why I charge you more for testing so I can be upfront and clear with you. And that way we don't go broke trying to figure out what's wrong with your car. We actually get to the bottom of what's wrong with your car.

Lucas Underwood: And so I think a transparent conversation that sense is what's worked best for us. What about you, Cecil? What do you think?

Cecil Bullard: They're moving my camera around.

Lucas Underwood: I know, right? I'm

Cecil Bullard: busy

Lucas Underwood: now.

Cecil Bullard: So the I have a script that I have used for years and years, lucas, the least expensive way to fix a vehicle and take care of a vehicle is to have a technician that knows and understands that vehicle.

Cecil Bullard: Do a proper diagnostic.

Lucas Underwood: Yeah.

Cecil Bullard: So that we know what's wrong and we can make intelligent decisions about that service or repair, and so that we don't put parts and do things on the car that aren't necessary.

Lucas Underwood: Yep.

Cecil Bullard: It will save the average customer thousands and thousands of dollars over the life of their vehicle if they have a proper diagnostic done.

Cecil Bullard: And I've had people go what if it is the, thermostat. If it is the thermostat as your cousin told you, then at the very least we will know. Not only that we verified that was the problem, but we'll also know if that was caused by something else. And we'll know that when we fix the thermostat that the car will be in, the vehicle will be in great shape.

Lucas Underwood: Do you know how to shut 'em down? You know how to stop 'em dead in their tracks? No. You say, Hey, listen, I've got this. I've got this thing that I do in this situation. We can do it together if you'd like. And they say, what? And I say, Hey, call 'em up. Put 'em on speaker phone and let's ask them if it doesn't fix the car

Cecil Bullard: now.

Lucas Underwood: Are they going to pay you back for the repair or make the proper repair if it doesn't fix it? Because I am.

Cecil Bullard: Yeah.

Lucas Underwood: And they say, huh? I said, yeah, just give 'em a call and ask Hey, if that's not the correct diagnosis, are they gonna give you your money back for the parts? Are they gonna pay for the labor?

Cecil Bullard: I would love it if it doesn't fix the

Lucas Underwood: car.

Cecil Bullard: If the, from the pet boys in the auto zones. If the if, it was like, oh, so I'm gonna buy this part. I'm gonna take it to a shop, or I'm gonna tell the shop that you coded my car and you told me. And if that, if I take it to the shop and they do this work and it doesn't fix it, are you gonna pay my bill?

Cecil Bullard: Right.

Lucas Underwood: Yeah, exactly. You gonna,

Cecil Bullard: the,

Lucas Underwood: oh they, you wanna see that, you wanna see 'em scramble a little bit and I've got shops around me who brag about how cheap they are and they brag about all this stuff. And one of the things that I've dealt with over all these years, being in the industry and doing the podcast and talking to all these people is this extreme fear.

Lucas Underwood: Being more expensive than somebody else. And I tell 'em that it's like they couldn't imagine, oh my gosh, I charge more than someone else. And I ask 'em, I'm like, Hey, let's just be really transparent about this. Did you buy the cheapest TV in Walmart? Because they still sell a 14 inch black and white tv.

Lucas Underwood: And they said, no, I wouldn't want that. Okay. Did you buy the cheapest car? No. Did you buy the cheapest pair shoes? The could the you

Cecil Bullard: had, yeah.

Lucas Underwood: Yeah.

Lucas Underwood: Exactly. No, we don't. We don't. That's not how we make decisions. It's not just about price. It's about value. And I think what shops miss is that they don't see their own value.

Lucas Underwood: They don't dig into their own value and understand it. They've never been to another shop to experience it because they've been working on their own stuff.

Cecil Bullard: This is and there's also this false expectation with your technicians that, the book time is two hours and I'm gonna charge two hours.

Cecil Bullard: 'cause the book time must be the law. That's what the other shop's gonna do. They're gonna look at the book time. And so I'm comparing myself, like I wanna be comparative to them price wise and then we expect our technicians to get it done in 1.5 so that we can actually make a living. Or if we're gonna take time off of a job, we take it off in the tech doesn't get the time or the credit for the time, even though it should be the time.

Cecil Bullard: There's no wonder that we're having such a conversation with the techs that is not a good conversation.

Lucas Underwood: Yeah,

Cecil Bullard: because we're, we want to be the cheapest guy in town who wants to be the cheapest guy in town. As you were talking, I'm thinking to myself, the shops that, that I've had. I probably work with 3000 shops if I do the math.

Cecil Bullard: In my career I've owned five total. I've ran another six or seven, but I've actually worked with, as a coach and a consultant about 3000. And do you know that the shops that are the most consistent, the shops that are the most profitable, the shops that have the highest customer satisfaction ratings Yep.

Cecil Bullard: Are also the most expensive shops for sure. They're not the cheapest shops. And so how do you put that together in your brain and say, I still want to be the cheapest guy in town.

Lucas Underwood: Yeah.

Lucas Underwood: It doesn't listen my parents I think you've been here, have you been to the shop before? Have you ever been

Cecil Bullard: here?

Cecil Bullard: I have never been to the shop, no.

Lucas Underwood: Okay. So I've been closed. Where the shop, right? Where the shop's at? We used to have these rental cabins and there were nine of them. And then for years, right? I was young when we put 'em in. I was 15, 16 years old, maybe 17 years old when we put these cabins in. And for years my parents ran them for 99 a night.

Lucas Underwood: Now, these were log cabins, actual log cabins, and they had a one bedroom. They had like a living room and a bathroom, and then they had a full kitchen, right? Really nice little cabins. And they were set up at an angle, and yeah, they were close to each other. But motel rooms up here were going for 2 65 a night.

Cecil Bullard: And so why were your cabins like 300 a night? Creates

Lucas Underwood: value

Cecil Bullard: too.

Lucas Underwood: And so the occupancy rate stayed in the twenties, thirties and forties. Now, my parents they loved people, right? Like they loved giving back. They loved taking care of people. The majority of what they did was to be good to people.

Lucas Underwood: And that was their reward. It wasn't the profit. And so I respect what they did. I'm not saying anything bad, but we raised the rates. Occupancy went up. Yep. And so we were asking people questions. We were saying, Hey, you said you've been up here for all these years. Why haven't you stayed here before?

Lucas Underwood: And they said, we thought something was wrong with them. Too cheap. They were way too cheap.

Cecil Bullard: Yeah.

Lucas Underwood: I've had a couple people come out and say, Hey you told me to raise my rates and it put me out of business. Let me tell you something. If you don't bring the value, if you are not providing a good service, if you're not fixing the car, if you're not calling them back, if you're not taking care of them, yeah.

Lucas Underwood: You probably don't wanna raise your rates that high because I would, you're selling exactly what you're worth. So be careful. If you're not bringing value,

Cecil Bullard: I would almost guarantee you, I don't know I might put money on it, that any shop today could raise their rates by. $15, 20 bucks an hour,

Lucas Underwood: nobody even

Cecil Bullard: know.

Cecil Bullard: And nobody would even know. Not one customer. The only people that would be nervous about it is whoever's talking to your clients.

Lucas Underwood: Yeah.

Cecil Bullard: And you know why? Because over the last 25 years, I've seen shop after shop go up sometimes much more than I thought. I had a shop go like 56 bucks. I was at a diesel thing thoroughbred diesel show,

Lucas Underwood: strive to th or strive to.

Cecil Bullard: And one of our clients, yeah. And one of our clients was there. Yeah. And I said do I have any clients in the audience? Because I don't always know every client we have now. 'cause I don't work with everybody. And guy stood up young young young guy, and I said what was your lab rate when you came to the institute and how long have you, and he said, been with the institute about a year from the last diesel show.

Cecil Bullard: And he said, my liberate was, I think $93, $92 an hour. And I said, okay. And what is your lib rate today? He said, we're $197 an hour. He'd gone up a hundred bucks in a year. Now, by the way, the next question was, how many clients did you lose? He said probably a couple, but he said, but the people we lost were the people that we could never make any money off of.

Cecil Bullard: They always give us trouble, never happy,

Lucas Underwood: no matter what

Cecil Bullard: you did. They were the ones we didn't want. Yeah.

Lucas Underwood: Yep.

Cecil Bullard: And you're like, you think about that, let's say they had three technicians and they were 70% productive. That's 21 hours, that's okay. Let's say 18 hours a day times a hundred dollars, right?

Cecil Bullard: Yep. Times X many days. And that's profit coming in and, okay, so maybe I'm not greedy about money, but wouldn't it be nice to give my people a 20% raise? Yeah. And make sure I had three months worth operating capital in the bank. And so the weather wouldn't affect me

Lucas Underwood: Here. Here's the thing is it's just like this.

Lucas Underwood: I, I told a good friend of mine, Tobin and Tobin and I have been friends for years, and I told Tobin a while back when we met, I said, you have got to get these rates up. $65 an hour is not gonna cut it. I promise. I see your rent, I see your financials. I know what you're doing. I've been there like, you've gotta get the rate up.

Lucas Underwood: And he looked at me, we were at Outback in blowing rock, North Carolina, and he said, Lucas, if I raise my rates, everybody's gonna leave. And I said, Tobin, it ain't gonna matter 'cause you're gonna be outta business anyway. If you don't, I said, you're either gonna go outta business because you didn't raise your rates, or you're gonna go outta business because you lost your clients, or you're gonna find out this is gonna work.

Cecil Bullard: Yeah.

Lucas Underwood: And so today, we talked to him the other day and he said, man, he said, if you hadn't told me that, he said, I'd been outta business. And I said, look, if somebody hadn't told me that I'd be outta business. Right?

Cecil Bullard: Yeah.

Lucas Underwood: It's, I can't. And that's what this group, and that's what the institute, and that's what this podcast is all about, is hey, there's a lot of people out here that don't know this, and they're walking in fear because they don't know any better.

Lucas Underwood: And so we're about bringing the knowledge.

Cecil Bullard: Do you know how many shops? I would tell you that more than half the shops that we have worked with. So more than more than 1500 shops. If they had not raised their rates, if they had not fixed their parts margins, put a matrix in place. If they had not, worked on their systems and processes, they wouldn't be here today.

Cecil Bullard: 1500 shops, right? Yeah. Would not be here today because they, I can't tell you how many guys I beat 'em and they come up and they gimme a hug or they, shake my hand and they're like, cec. Oh my God, you saved my life. You saved my company. Yeah, you saved my family, blah, blah, blah.

Cecil Bullard: And it's very rewarding to have that and to do that. But man, what about the other? Two, the ones we've not reached yet, two shops out there, which we just can't seem to reach.

Lucas Underwood: Yep. All

Cecil Bullard: we got. Our next question, do you think we need to do? Okay, go ahead, get the next question.

Lucas Underwood: All right. What is your opinion on veteran military or senior citizen discounts?

Lucas Underwood: Now look, I'm gonna tell you something. Now that I'm in the shop, or not in the shop as much, it doesn't happen as much. But when I was in the shop, you know what I did? I grabbed that, their wallet, and I took the money outta that wallet and I walked around the front counter and I pulled that cash outta my wallet and I laid down and paid what I wanted to give them for a discount right there on the front counter.

Lucas Underwood: And you wanna talk about making an impact, sir, I appreciate your service and what you did for our country. You provided me the opportunity to be here and do what I do. Thank you. Now, not only does it make an impact with them, but it makes an impact with you because I have seen so many shops discount themselves to poverty.

Lucas Underwood: Literal poverty.

Cecil Bullard: Yeah. I had I had a shop, a new shop probably two months ago, come on that I'm coaching and they made about $1,200 in that month. They discounted over 12,000. Okay. And you're going what was your discount? We have a AAA discount. We have a senior discount. We have a military veteran discount.

Cecil Bullard: And so literally, and we have crap rates. And by the way, so we weren't making anything anyway. And so if you want to, corporates, corporations, big corporations understand this.

Lucas Underwood: Yeah.

Cecil Bullard: Small business does not. When you walk into Walmart and there's a discount item and you're gonna save 20 bucks on that thing, they're getting in your wallet somewhere to make up for that 20 bucks.

Cecil Bullard: You, period.

Lucas Underwood: You're exactly right.

Cecil Bullard: Period. Because if they don't make the profit they need to then their stockholders sell the stock, the stocks worth nothing, and the company goes bankrupt and we don't Yeah,

Lucas Underwood: they got that product on a discount they got. Yeah. There was somewhere they still made their margins.

Lucas Underwood: Right.

Cecil Bullard: So if you routinely want to give away 10% to say veterans or old people, and by the way, I'm now in that, I get that, those discounts.

Lucas Underwood: See, so you know that 20 years ago you got into that category, right?

Cecil Bullard: Yeah. Yeah. Shut up. So anyway yeah, scissor used to do it at 55 and I used to like, there was a scissor.

Cecil Bullard: Here it is gone. I wonder why. But I used to like Sizzler and they would be, look at my hair and I've been white for I don't know, 30 years now. Yeah. They would look at my hair and they'd go, oh, we're gonna give you the senior discount. I was probably 42 at the time. If you're gonna discount 10%, you have to raise your rates by more than 10% because you're talking about parts and labor that I'm discounting.

Cecil Bullard: Yeah. I'm not just discounting the labor. So I can't raise my labor rate 10% and go, okay, that's good for a 10% discount. 'cause the parts, I'm actually discounting the parts also. Yeah. So I probably have to go up around 20% on my labor rate in order to make up for the parts and the, or at least probably.

Cecil Bullard: 18% on my labor rate and to make up for the parts if I'm gonna give 10% discounts away.

Lucas Underwood: Yeah. And you absolutely have to put stock in that discount. You can't just drop that money and say I just took it off the repair order need. I

Cecil Bullard: just took it off my

Lucas Underwood: wallet. You need way to track it.

Cecil Bullard: Right?

Lucas Underwood: Yeah.

Cecil Bullard: I just took it outta my wallet.

Cecil Bullard: And that's the killer too, is it's,

Lucas Underwood: yeah.

Cecil Bullard: You're better off. I'm, I might've been the one that told you this, but go down to the bank and get some 20 fresh, crisp $20 bills and when you're ready to discount, whoop out a couple twenties, hand it over to the customer, say, I wanna help you today. 'Cause you're old or because you're a veteran, or because it's just one of those days.

Cecil Bullard: And watch those $20 bills disappear. And then tell me how often you're gonna do that.

Lucas Underwood: My buddy John that runs a diesel shop down in Morganton, North Carolina, he and I were talking a while back and I said, I was explaining this process to him and he said, but Lucas, if I do that, I won't have any money.

Lucas Underwood: And I said, that's my point because you don't have any money now, but you're giving it away. Yeah. So how do you feel okay about this

Cecil Bullard: now? So I

Lucas Underwood: won't be able to pay my bills

Cecil Bullard: in our shop. We, when we added features, we added price. So when we gave loaner cars out, we went up four bucks an hour. When we watched every car, we went up $4 an hour.

Cecil Bullard: We calculated our costs, we doubled what that was gonna be. We raised our labor rates. Yeah. And in that shop we we made a profit. And when we made a profit, we said to ourselves, we want give back. So we set aside a budget, $30,000 a year goes to and we went down to one of the local churches that Pat talked to the pastor, and we said, we know you have people in your community that need help.

Cecil Bullard: We are willing to help. We'll either you pay for the parts and we'll do the labor up to $30,000 a year or, yeah. We'll pay for both up to 30,000 until the money's gone. Yeah. And the pastor wanted to pay for the parts and we took care of the labor, but we kept track of it. And when we were done with 30 grand, we were done.

Cecil Bullard: 'cause that's what we set aside based on the profit that we were making. The thing about it is people want to give and give. We all do. I think we're all, I think in general, humanity wants to give, they want to take care of people, they want to feel good about their relationships.

Cecil Bullard: And the problem is you can't give what you don't have. Yeah. So if I don't have any empathy, sympathy, because I'm just worn out, and then I can't give, if I don't have any time because I'm working 90 hours a week, I can't, not only can I not give to my people at church, but I can't give to my own family.

Cecil Bullard: Right?

Lucas Underwood: Yep.

Cecil Bullard: And if there's no money, I can't give to my clients, I can't give to my family, I can't give to anybody.

Lucas Underwood: It can be addictive. It can be a crutch. Yeah. And so I see so many people use it as a crutch. They get a, they get afraid and they begin, like they start discounting to make that client happy.

Lucas Underwood: The client gets used to saying, Hey, can I get a discount? Next thing you know, you've built a pattern and it's really hard to break that pattern. I just don't believe in doing discounts. Yeah. Yeah. So my advice would be, would just pay for repair, filing?

Cecil Bullard: No, no discounts. Just, and I never discounted and I don't discount today.

Cecil Bullard: Don't get me wrong. We do some stuff here at the institute, but it's not me. It's the younger people who are like, oh, we're gonna do this Ferd and we're gonna give a timeframe. Thanks St. Stu.

Lucas Underwood: Man. How many times have I told you about that stew guy? You gotta

Cecil Bullard: watch. Shoot 'em both, both him and Kent at the same time.

Lucas Underwood: Now look I am doing a little bit of discounts, but I'm also working really hard to try and get the car count up for this shot. And

Cecil Bullard: if a calculated discounts too. Yeah. If they're calculated, if I know that I'm making the money somewhere else, yeah. If I know that I'm gonna have a certain average of ator and I can make that up, then I'm ha I'm okay with that.

Lucas Underwood: But hey, this

Cecil Bullard: next question, once you start the pattern, it's the pattern.

Lucas Underwood: It, yeah. It's hard to break that pattern, buddy. Yeah. It's hard to break that pattern. The next question is, what are some marketing strategies for slower times? We're already doing Google Ads website, et cetera. Now listen, I can tell you about slow times.

Lucas Underwood: This shop that typically sees nine to 12 cars a day for the three or four weeks after this storm saw like one car a week. Yeah. And like we've got a 8 73 Bobcat that we push the parking lot with sometimes. Cecil I backed it out of the shop the other day and I got out of the bobcat and I was getting ready to go in and grab myself a drink and all this stuff, and I start to step off the machine and it felt like it moved funny.

Lucas Underwood: So I put my hand on the machine and I could take this 13,000 pound machine and push it around the parking lot with my hands with no ice force at all on it. Said, I think I'm gonna get back in the machine before it slides off and it's something, right? Yeah. It was so slick. And we shouldn't have wanted our clients to be out the mistake that we made, I'm gonna tell you something about this because this is important to the slow day strategy.

Lucas Underwood: The mistake we made is that right before the holidays, the staff didn't want to disappoint any clients. And so what they did was, is they began to back us down as far as reserves go. Yeah. They were trying to get everything finished to make everybody happy, so they didn't have their car sitting here over a holiday, and it killed our reserves.

Lucas Underwood: And so then when it did slow down. We didn't have any reserve stuff to work on and it impacted we continually load the lot up and keep things here. And even if it means some people and like we're listening to them, we're talking to them. There's a great scene in the show, the Bear on fx, and in it, it's a lady and she's organizing the kitchen and it's this really fine dining restaurant.

Lucas Underwood: And she said, this table likes to eat slow and they're in no hurry. This table will fuss if it's slow. We need to hurry this, rush this slow this, take this to this table, do this with this table. If you don't have someone managing your workflow in a way that they can understand what's coming in and going out and the customer expectations and then using those expectations to the shop's advantage, you're missing out because that's where true revenue and auto repair comes from.

Lucas Underwood: And so I'm gonna tell you right now i's one thing you can do when you get slow and you need cars right now. And that's called pick up the phone and start calling 'em.

Cecil Bullard: Yep.

Lucas Underwood: Plain and simple. Yep. That's the one thing that will work.

Cecil Bullard: Let me talk about two or three strategies here. Number one, when you're busy, don't stop marketing.

Cecil Bullard: Yes. Don't slow it down. Nothing. Keep, okay, keep my budget's tight. See? So

Lucas Underwood: I gotta cut all my marketing out.

Cecil Bullard: Yeah. Number two, are you booking the customer's next appointment? You wanna create consistency in your business. Book the next appointment. And you know what, some people are gonna say no, some people aren't gonna show up.

Cecil Bullard: But what if you could get three or four cards booked out every day for the next six months that would actually show up? What would that do for your consistency of car count?

Lucas Underwood: It's back to the Tobin thing, right? I asked him, yeah. Hey would you rather just go outta business?

Lucas Underwood: Would you rather not be able to pay your bills than ask them or would you rather be afraid of asking them? Would you? Yeah.

Cecil Bullard: And by the way, don't ask 'em, just tell 'em they have an appointment. It you're the person that's supposed to be taking care of their car. Tell them how they're gonna take care of their car.

Cecil Bullard: It's a strategy, right? And then do you have a referral program? Are you asking for referrals? Are you doing, is this a part of your everyday life? Does every customer that walks in your door get asked for a referral? Yeah. There, there's just these little things and then there's the 20 calls process, what you're talking about.

Cecil Bullard: Get on people that, that didn't show up for their appointment. Get on the phone. People that had work that didn't do that work get on the phone. I call it 20 calls. 'cause in my shop we were slow. We, my service advisors made 20 phone calls. Were three appointments. When they made three appointments, they have to make no more phone calls.

Cecil Bullard: All done.

Lucas Underwood: Here's the thing is I I will use chat GPT here and there for fun stuff and I don't like, I don't want my brain to turn to mush, so I still try to use my brain, still try to be on

Cecil Bullard: top of it.

Lucas Underwood: Yeah. But I was dropping things in chat GBTA while back, not at this recent slowdown, but the one before it where it just lightened up a little bit.

Lucas Underwood: And so I was putting some data into chat GPT because I have found that it sees patterns that I miss.

Cecil Bullard: Yeah.

Lucas Underwood: And it's obvious patterns. And it's very much like hiring the institute to coach you in your business because you see things and your coaches see things from a different perspective.

Lucas Underwood: And so it, it's easier for you to catch something because you're not just used to it. That's not just the way it's been. Yeah. And so I put our customer data into chat, GPT, and it brought up this really interesting fact and it said, I. If you acquired or if you reignited, or I can't remember the word it used basically shook up

Cecil Bullard: 10% or

Lucas Underwood: whatever.

Lucas Underwood: It's the client base from six to 18 months. Yeah. The ones that have not been here in six to 18 months, if you shook up 5% of them, you would have two months of work.

Cecil Bullard: Yeah.

Lucas Underwood: And I'm like, huh, I hadn't thought about it like that. So customer, guess what? We're gonna make some telephone calls.

Cecil Bullard: Customer retention management

Lucas Underwood: yeah,

Cecil Bullard: booking appointments, 20 calls, phone calls. There, there are multiple strategies to ramp up as fast as I can ramp up. But

Cecil Bullard: Yeah, don't stop your marketing ever.

Lucas Underwood: Now, something else, and I'm sure that you know this, but something else that I have learned, me, I use shop wear and I have got the analytics and shop wear laid out really well.

Lucas Underwood: I and Cecil, I take my hours per RO and I take my revenue and I've got a little bit of an algorithm that I've built in Excel and I use that and I say, okay, if I can take three jobs a day, three and a half hours per ro, how many jobs do I have? If this is the number, my average repair order's about 1100 bucks, what's my car count be, need to be, exactly what does my car count need to be and where am I?

Lucas Underwood: How many days of work do I have on what's sitting in the shop right now? And how many do I have coming in

Cecil Bullard: on

Lucas Underwood: appointments, knowing that some of those may not show, knowing that some of those may not turn into those bigger tickets

Cecil Bullard: we're

Lucas Underwood: using.

Cecil Bullard: But if you're keeping track of the data, you can actually anticipate a

Cecil Bullard: 12% loss or whatever.

Lucas Underwood: Exactly. Whatever

Cecil Bullard: that loss is.

Lucas Underwood: Exactly. And see that's what we do is we're tracking the averages and so we're paying attention to that. Yeah. Now, my algorithm, the way I've got it built out is, Hey, listen, if I get to sub seven days of work, you're getting on the telephone and you're making telephone calls.

Cecil Bullard: Yeah.

Lucas Underwood: If I get,

Cecil Bullard: yeah. It's a red light.

Lucas Underwood: Exactly. If I get to, 14 days, we're backing out a little bit, trying to give ourselves some breathing room, but I'm bouncing the shop based on the data that's available. Yeah. So many people try to run their shops based off of what's in here and up here they base it on emotion.

Lucas Underwood: Yeah. You

Cecil Bullard: stop, there's facts, there's information. Yeah. You have to stop. That's that. Somebody asked me the other day, said, Cecil. If you only had, if it was one thing, what's the one thing that you gotta tell people? Run your shop like a business. Understand the numbers. Yeah. And what they're telling you.

Cecil Bullard: You do that and you'll make so much. Oh, I'm much money. You'll have so much more consistency, et cetera. The problem you have in the industry is we have a lot of great guys. They're wonderful techs, et cetera. Men and women. They're just not great business people.

Lucas Underwood: Yep.

Lucas Underwood: Go ahead.

Cecil Bullard: When I started a business I wasn't a great business person, but I got news for you, man.

Cecil Bullard: I learned, I got mentors, I hired people, I did whatever it took to get good at this business. I want to be the best at this business of anybody. And I continue to learn today because to me, that's everything's

Lucas Underwood: Cecil. I'm not afraid to tell the story of what happened with the family business. Like it was not ran like a business.

Lucas Underwood: The business was turned over to another family member and because it wasn't ran like a business, the accountant really wasn't watching it. The bookkeeper was stealing money. The person who was running the business was stealing money. The person who was working in the business was stealing money. We're talking about $3 million.

Cecil Bullard: Yeah. Millions.

Lucas Underwood: We're talking about millions of dollars

Cecil Bullard: I have seen and all of this shop that the same really millions of dollars over time going away.

Lucas Underwood: And all of this happened when my father was taking care of my terminally ill mother and had no bandwidth to take care of

Cecil Bullard: attention was away.

Lucas Underwood: Yeah. And here's the thing about it is if systems had been in place and it had been ran like a business before that this wouldn't have happened,

Cecil Bullard: flags would've came up and people would've attention would've been drawn.

Lucas Underwood: And to all the shop owners in this room listening and to all the folks who come back and listen later.

Lucas Underwood: My dad didn't think that my mom was gonna get cancer. My dad didn't think that he was gonna be away from the business. My dad didn't think those people would steal from him because they were some of his closest allies.

Cecil Bullard: Yeah.

Lucas Underwood: Yet they did

Cecil Bullard: well. And I don't think you, I don't think you can live your life going, oh my God, my wife might get cancer.

Cecil Bullard: Of

Lucas Underwood: course you

Cecil Bullard: can. Or man, everybody around me is gonna steal from me if I'm not paying attention. But I think you, you live your life. I understand the business. I understand this exactly as well as it can be. Understood. Exactly. So if my wife gets cancer or if someone starts hundred percent from me, that I'm very aware of that and I can take care of that very quickly.

Lucas Underwood: And that is exactly what I'm trying to say, seasonal to the T, is that if it had been ran like a business all along. Then it wouldn't have been a scramble to try and figure it out. He didn't have the bandwidth to run it at a, as a business when that happened. He didn't have the bandwidth to babysit

it

Cecil Bullard: and fix and he didn't set it up that way because he didn't know how to set it up that way.

Cecil Bullard: Or he probably would have the thing now. Absolutely.

Lucas Underwood: A hundred percent.

Cecil Bullard: There. There are so many resources. The Yeah we're announcing a new learning thing. Auto Academy. It's gonna be fantastic. Yeah. But even our YouTube, your YouTube, there's so many resources. If you really want to know the numbers, I've done multiple things about the numbers of the business.

Cecil Bullard: Yeah. And I know you have two and we've done it together and Yes. They're just out there. Just take some time to dig up that stuff. Yeah. And pay attention. Exactly.

Lucas Underwood: And look,

Cecil Bullard: it can be the difference between retiring with. $3,500 a month from your social security and nothing else, or retiring with six and a half million dollars in the bank and $3,500 a month from your social security.

Cecil Bullard: Yeah.

Lucas Underwood: Yeah, you're exactly right. You're exactly right. And here's the thing and I think this is where so many shop owners miss it. Cecil, I loved pulling out an oscilloscope and using my deductive reasoning skills. To work on a car. It was my favorite thing. Yep. Yeah,

Cecil Bullard: it's fantastic.

Lucas Underwood: And to see that problem be solved and to make it through it and it work and the customer's happy and the car runs like it's supposed to, I fell in love with that process.

Cecil Bullard: Yep.

Lucas Underwood: And it took me years to fall in love with the same process of learning what screw to adjust and what number and what KPI to check and how to do it to make the business do that too.

Lucas Underwood: You can fall in love with the management of your business the same way you fell in love with working on the car or doing the diagnostics or whatever it is. Just because you don't know right now, doesn't mean you can't learn and you can't figure it out. You're not,

Cecil Bullard: you're not stuck loving only one thing in your life.

Cecil Bullard: Yeah. At least hopefully because, you. For me it was a very hard change to go from being a tech to being a service advisor. And there was some depression involved because I wasn't fixing cars and fixing cars was like crack cocaine. It was just like, yeah,

Lucas Underwood: me too.

Cecil Bullard: I had to learn that selling was now my crack cocaine and getting people's confidence in controlling the conversation and learning how to be really good at that.

Cecil Bullard: And then I went to become, oh, I'm now I'm gonna manage a business or I'm gonna own a business. It's a whole nother, it's different skill sets, but you can be just as in love with that, as you can be in love with anything else.

Lucas Underwood: You're exactly right. And here's the thing is I think for me, like I had built my importance of fixing that car, right?

Lucas Underwood: How many shop owners have you seen that you have a really hard time getting them to let go of the back of shop process or the front counter process? They need to be in control of it. And they will self-sabotage. To make sure they remain in control of it and they don't even realize they're doing it.

Lucas Underwood: And they're like, happens all this doesn't work. People can't figure this out.

Cecil Bullard: Yeah.

Lucas Underwood: And the thing is like they, they get their self worth and their value from doing that. And I am learning, okay? And Michael Smith has been a big help with this, but I am learning

Cecil Bullard: guy.

Lucas Underwood: He is, I'm learning like, Hey, Lucas your vision's been shortsighted and if you want to have meaning and value and you wanna feel like you have purpose in life, teach the other people that work for you.

Lucas Underwood: How to do the things that you did, so then you can move on to bigger and better things and impact more people.

Cecil Bullard: And you can, as I said, you can't give somebody something you don't have. So if you have a business that's limited by you, then you only have so much to give. If you have a business that runs like a business where you can grow it and you can bring people in and train people and stuff, now you can affect a lot more lives.

Cecil Bullard: Absolutely. And the other thing is, at the end of the day, there's gonna be a day for all of us, like it or not, where we're like, okay, either I'm getting so old that I can't do what I used to do and so I can't fix cars. And the legacy that you're gonna leave, the legacy that you're gonna leave is what the knowledge that you give and the help that you give to other people to be successful, that's what's gonna be there.

Cecil Bullard: You can't,

Lucas Underwood: yeah.

Cecil Bullard: Yeah. So to me, like for the institute, how many people can I help? How much?

Lucas Underwood: Yes.

Cecil Bullard: When I had the brain tumor last year or the, yeah, last year. It, you don't know what's gonna happen and what are you thinking about and have I done enough here? Have I changed enough lives, et cetera.

Cecil Bullard: Sure. And it was really nice. I got a lot of people that were very supportive. I got a lot of people that said, Hey, Cecil, I just wanted you to know, you've just, you've really changed my life and a lot of the people's lives and my company. And I still like today I am like, okay, how many more lives can we change right before the game's up?

Cecil Bullard: How many lives can we change? And it's not, for me, it's not about the money, it's about helping as many people understand the machine so that they can really make the machine run well.

Lucas Underwood: You're absolutely right. And I'm just gonna be completely honest with you. I don't think I've ever told you this, when all that was going on I sent Kent an email and I said, I am really worried about this.

Lucas Underwood: I'm really concerned. I really need Cecil to pull through with this. And he said, I really appreciate that. And I said, good, because it was his turn to buy dinner.

Cecil Bullard: There you go. That's right. I'm saying like, come on, Nancy. He's, he owes me a steak and a good glass of whiskey. Are you kidding? Oh no. I feel like he's

Lucas Underwood: trying to skip out on the bill.

Lucas Underwood: What is going

Cecil Bullard: on

Lucas Underwood: here?

Cecil Bullard: No. Yeah that's wonderful. Hey, one, one more thing. Yeah. Before I know we're at the end.

Lucas Underwood: Yeah.

Cecil Bullard: There, there is some math around setting your labor rate. So there's a couple of things. Number one, if it's me and I, now, I don't say everybody should.

Cecil Bullard: I, now it's if it's me or this is what I would do if somebody around me was 200 bucks an hour, I'm gonna be two 20. I'm always gonna be the most expensive guy in town. And so I'm not calling around to find the cheapest guy and try to be close to him or below him. Yeah. I'm actually calling around to find the most expensive guy and I wanna be a little more expensive than him because I have, I really feel like I have that value.

Cecil Bullard: So if the labor rates in your area are, if the dealership's two 50 and you're working on those cars. Why would you be less than two 50? Yeah. Okay. I'm

Lucas Underwood: sorry. But dealerships are less skilled than independent shops. Did I say that out loud?

Cecil Bullard: I know that. And by the way, the consumer believes that to be true too for the last five years.

Cecil Bullard: Yeah,

Lucas Underwood: exactly.

Cecil Bullard: So the other thing about that is I can afford to pay up to 40% of my effective labor rate. So whatever your posted rate is, that doesn't mean anything. What do you really get per hour? And that is a calculation of labor dollars brought in a time period times labor hours that were billed, right?

Cecil Bullard: Yeah. And so you may say I'm see something $180 an hour, but my effective labor rate's only 140. Alright? Yeah. And so I can't base my, what I pay my tech on 180. I have to base my tech on what I pay at 140. Because that's what I'm getting paid and can pay. And

Lucas Underwood: you have to take into account production.

Lucas Underwood: You can't

Cecil Bullard: just, yeah. And I, yeah. And and that's why when we build these performance enhanced pay plans, they pay more when they're productive and less when they're not productive. So that we hold margin throughout, right? Yeah. Yeah. And but I can afford to pay up to 40% loaded, meaning FICA few to workers' comp, all the expenses that I would expense.

Cecil Bullard: So if I'm $150 an hour, I can pay $60 an hour to my best tech in that shop. And then I gotta back that off about $12. So I really have about 48 that I can pay. And if I wanna build it I'm probably gonna take 30 to 32 or 35, give them a base based on the clock, and then I'm gonna build 14 or 15 into a bonus structure.

Cecil Bullard: And by the way, at that point, I can actually pay more because when they get above 40 hours. And if I'm using a 1.3 matrix, I should have some people that can do more than 40 hours a week. And if I do that and I get above that, any money that comes in, I have higher margins. So I can actually afford to pay more than, yep, that $60, I could probably go to 64 loaded or 65 loaded.

Cecil Bullard: If they are productive and if they're not productive, if they're 70% like the rest of the industry, I can't even afford to pay 60 now. I've got to be down in the forties.

Lucas Underwood: Yeah, exactly.

Cecil Bullard: A hundred percent. So I just wanted that kind of to be out there. And I know we have a labor rate calculator. And I don't have an example of it here.

Cecil Bullard: I'm not, I didn't I got here and I was like, oh, did they? But I'm more happy we had a webinar.

Lucas Underwood: Oh,

Cecil Bullard: Yeah. Some days, I more than happy to whoever wants that if they hit Raleigh, who, what are they gonna, where are they gonna go?

Lucas Underwood: I think they can email it to info at the institute.com.

Cecil Bullard: [email protected]. We are sure. The institute

Lucas Underwood: dot

Cecil Bullard: com's on the Yeah, we are the institute.com info.

Lucas Underwood: Yep.

Cecil Bullard: And we'll make sure, and it'll be on the screen here. Yeah.

Lucas Underwood: Got it.

Cecil Bullard: I think we're at that time, buddy, as much

Lucas Underwood: as, yeah, we were at that time six minutes ago, but I was just gonna let you talk as long as you wanted to talk.

Lucas Underwood: Cecil folks.

Cecil Bullard: There you go.

Lucas Underwood: Thank you so much for being here, and thank you for being part of what's changing the industry. We all believe in making the industry a better place for not just shop owners, but technicians, service advisors, and the consumer. So thank you for being part of what's changing it.

Lucas Underwood: Thank you to the institute for putting this on, and we look forward to seeing you guys real soon.