Automobile restoration shop help - from the inside

[duigoose]

Hello everyone, great information here.

Just to qualify myself, I work in a restoration / custom automobile shop.  Among vehicles we are working on now is a 1949 Chevrolet truck, a 1937 Chevrolet and a 1932 Model B, just to somewhat fit in.

My thoughts are concerning our shop.  By 'our' I mean I am the parts manager, there is the owner, the accounts person and 4 shop employees as well.  The boss has scaled up due to volume and potential client volume but we are in a rut money wise and getting things out the door wise.  I know as we operate currently I am given a list of parts they want, I source the parts, order the parts (after boss approval), supposed to inventory the parts and turn the paper trail over to the accounts person.  Past that we have the owner who does great work.  Started doing this stuff at age 15 and has been in business nearly 30 years.  Workload became too great, opened a shop and grew to where he is now.  Then there is a guy strong in body fab and sheet metal, there is a guy adept at the mechanical side of things then there is the 'shop foreman' that can do all of it.  We need to find our bottleneck.  I can expand on all of this but wanted to throw this much out there to see if anyone had any insight or thoughts to share.  We just can't get the flow right.

[1937hd45]

How fast do customers pay?

[duigoose]

That is one pretty big issue.  He does have some slow pay and one that just says he is out of money.  With those he puts to the side.  Yes, he is running out of money.  We just talked about having customers pay for parts up front.  Another big issue is when he moved to this shop, he left a couple workers in the old shop - either was going to try and run two shops or something.  What happened is the workers at the other shop just did subpar work so he is now in the process of fixing what they messed up - basically working for free.  My thinking is you have to get things out to work on new things.  

[37_Roadmaster_C]

Do an audit of project cost verses billed parts and labor. Pay special attention to hours billed. Also, look closely at the shop labor rate verses the labor cost. Remember labor cost includes hourly pay plus any benefits AND all costs added by state and federal labor costs. When I had my business open it was amazing to figure out what an employee ACTUALLY cost.

Edited April 21, 2023 by 37_Roadmaster_C (see edit history)

[joe_padavano]

The shops I'm aware of require cash from the customers up front. Work proceeds using the "go as you pay" method.

[alsancle]

Restoration work is a miserable tough business.   The skilled labor is hard to find, and the number of hours it takes to do good work makes the projects costly beyond what most customers feel comfortable paying.

 

So even a shop with great employees,  a smart boss and lots of experience struggles to some extent.  The most successful shops I know have a small client list of guys that are wealthy enough (some measured in "B"s) that they can spend liberally because they want to.

 

Any shop that relies on more regular folk is going to struggle.    If you are honest with those customers about the costs up front you have no business.  If you fudge it they freak out when the costs explode.

[1937hd45]

The three vehicles you mentioned in the OP are going to cost 3-4 times their market value to restore, do the owners know that going in? 

[duigoose]

Thank everyone for the help so far.  

I will mention to him about the audit, that is a great idea and not sure if he has done that.  I do know my hours have gone from 40 to 35 to 12 hours a week.  Can't push anything out and can't justify me being here.  As far as the clientele, he does have several repeats and most of his business is word of mouth.  He has stopped all advertising and people are still calling and knocking on the door.  I hate to tell them there is about a 2 or 3 month backlog before we can even keep it on the premises much less actually start on it.  To me the flow should be faster.  As far as what the cars are worth, yes I know this business is about a want or desire, not a need and most of the time material cost often outweighs actual value.  To the pay as you go.  I'm pretty sure that is what he does now.  If he takes on a project he takes a decent down payment, goes over wants and expectations and has a darn good estimate for them.  My guess is the ones that do pay on time cannot carry the entire shop and we are fronting parts.  From what I gather they full well know what all this costs and don't balk at those costs.  Its just the slow/no payers, trying to catch up on the ones that have been here for a long time and he is now working for free trying to get them out the door.  No money in working for free.

Morale is suffering which makes for a frustrated employee.  The 'good employees' is another good point.  The workers here are good and can get the job done- I think its a matter of not everyone does things the same way the owner does.  I agree, don't give up your standards, it is his name on things that go out the door. BUT you're going to have to train them if they're not up to your standards.  Either train them or fire them and move on.  Problem is if you fire them there is no telling what you will get to replace them.  Another example from my side.  Me and him both started doing this by gathering catalogs, sitting down, building a car.  I still have my 1969 Camaro, love it and love my job now but I didn't stay in it, he did.  He made it a career and I keep saying it is very difficult to do it that way these days.  I've proven it when he as just as much trouble finding a part as I do.

In my opinion he needs to spend less physical time fixing mistakes and more training fixing those mistakes and moving on.  It is extremely hard to find workers, good workers, much less workers that can come off the street and perform at your level and quality.  Can't be done, not for the salary available.  I will let everyone mull over my responses while I go find something for my headache.  

[alsancle]

My advice it so limit the scope of the work to mechanical and MINOR cosmetics.    Cars have to run but they don't have to look perfect.  I will never paint another car, it makes zero sense.

 

There is more work out there than shops that can do it.    FOCUS ON MECHANICAL WORK.   The jobs and scope will be smaller,  less likely to be a sinkhole with an irate customer.

[duigoose]

I see what you're saying on the mechanical but that will never happen.  He grew up as a painter and would rather be in a paint booth than anywhere.  Not extremely strong in the mechanical here.  I cant get up and down anymore and one other guy wont cut it.  Good thought but he would never go for it. 

 

[Xander Wildeisen]

Some of what you are saying does not make much sense. If you have cars that need work done, and the customer has the funds. No reason that work can not be done with skilled workers. If owners do not have the funds to continue the work, load their cars on a trailer. drop them off at the owners house, until there are funds to continue. Not sure what parts you are stocking? I have always ordered what is needed, stocking parts with out a online store selling those parts is going to be a looser. I would pay close attention to others desire to cause the business harm from the inside. Very easy to see a result from a days labor on straight forward cars as you have listed. Taking a chunk of money up front is a very good way to start to go backwards if money problems are facing the business. States like Idaho target businesses, cause them harm, hit you with a big glass of Kool aid. Give you the  BS "free will" option. And then you will climb to great heights, for awhile. Quality workers, good turn around time and quality customers. The bottom feeding stuff will sink you.    

 

[63RedBrier]

Hi, Duigoose!  With all due respect to you and our fellow posters, but does your boss/friend know that you are asking for guidance on a public forum?  I don't think I would be too keen on the idea if I were him...  A private consultation with a financial planner who specializes in small businesses may be a better idea.  All the best!  Greg

[duigoose]

I appreciate the concern but in the end if we gain insight and find some ideas I'm not too worried.  No names and nothing bad, general discussion.  I see what you're saying though.

[60FlatTop]

Some insight would be gained if you look at your historic weekly billable hours and material sales. What would the total be if you cashed out every Friday? Plot it on a graph.

 

My business is not automotive. Since the plague hit and I got old we haven't done much. I subcontract for "big" companies, apparently with less capital than I. My accounts receivable averages about 60 days. I have been stretched out to 150 days while continuing to have cash flowing out of my pocket. Knowing what you are pulling from your Basis is very important.

 

With a little foresight I would have started a Savings and Loan with my money instead of running one by default.

[John_S_in_Penna]

5 hours ago, joe_padavano said:

The shops I'm aware of require cash from the customers up front. Work proceeds using the "go as you pay" method.

I know of one shop that wants payment in advance;

while other shops do not.  Myself, I would avoid the

advance payment shops, but courteously pay promptly

the shopkeepers that are waiting for money.

 

There are many stories of customers who paid large

amounts in advance, but then the shop didn't follow through,

and the money was lost.

 

Mr. Duigoose, I know of at least one restoration-shop owner

who frequents this forum.  His advice might be especially

helpful, and I hope he finds this thread.

[pkhammer]

   I know a restoration shop owner very well. I know that the customers that pay promptly, their cars get the attention (as they should) and move through the shop very rapidly. The problem is the clients that don't have such deep pockets. They (customers) go into the process with stars in their eyes wanting to see Dad's old car restored to new, but after six months of bills rolling in and seeing the car in a million pieces after tens of thousands of $$$ spent they see no end in sight and decide it's not worth it. Then they quit paying and the car goes into storage since there's no money to work on it and then storage bills start rolling in. It's a lose-lose situation. Unfortunately, having a professional restoration shop do a body-off-frame restoration is for folks that are at least relatively wealthy.

   This shop owner doesn't do estimates because quite frankly, until ANY car is stripped down it is impossible to predict just what all it will need. I obviously don't have great answers for how to solve this dilemma, but when I hear the horror stories, it makes me glad I'm not in the restoration business. I think if I were running a shop I'd ask for what I THINK the project is going to cost up front, then send the client a itemized list of material and labor costs every month and photos of progress. At the end of the project if under budget any left over money would be returned to the customer. If it goes over budget then the client would be billed for what I thought it would take to finish it and the process would continue. Working like that, I probably would have no work!! 🙄 There MUST be faith and trust and accountability on the part of the shop and the customer or the project won't end well.

[Steve_Mack_CT]

You are working for a guy with a passion for painting and not running a business.  You have to have some business and people skills in addition to your technical skills to run a successful shop IMHO.

 

The question you need to be asking yourself is if your boss is as passionate about his staff as you (admirably) seem to be about his shop.

[gungeey]

DUI... Your hours have been cut to 12 hrs a week and you're expending valuable time and energy trying to save someone elses business. Cut your losses and go get a job. Let the owner figure it out.

[duigoose]

I do agree.  Loyality and not able to let go are two of my flaws sometimes.

[1937hd45]

1 hour ago, John_S_in_Penna said:

  Myself, I would avoid the

advance payment shops, but courteously pay promptly

the shopkeepers that are waiting for money.

 

 

So if you planned a total kitchen renovation the "kitchen remodeler guy" pays for the cabinets and counter tops and new flooring and appliances, and hopes you pay him? Really?

[erichill]

I do not own a shop, but I do own my own small business going on 31 years.  Part of my business is service (landscaping).  As someone else mentioned your boss need to do a couple things. One is figure out his actual over head,a nd what he need to be bringing per man hour to cover all the overhead plus profit. No profit and you don;t stay in business. He can hire consultants to help with figuring this all out. If you are using a program like Quickbooks and entering things properly this will go a  long way in helping determine overhead.  

In addition follow each project closely with man hours and net profit from each project. You will quickly find out what jobs actually make you money and which jobs you lose money on. It will become apparent and may be surprising once you start doing this.

Finally since has more work that can do, start cherry picking the projects you take on and focus on the most profitable ones. And raise rates.

Good luck, running a successful profitable business isn't easy. 

[3macboys]

22 minutes ago, duigoose said:

I do agree.  Loyality and not able to let go are two of my flaws sometimes.

My take is that there is a friendship involved as well and you don't want to see the owner fail.

 

Reading through all this and pondering it all I'll chime in.  Take what I say with a grain of salt as though I have some business experience and supervisory experience it is not in the restoration world.  That being said I used to work in a world of specialists overlapping with generalist in both a large and a small to medium size work place.   Are the various employees able to assist in areas that are not their primary focus?  The problem with a specialist is that unless there is enough work to keep them busy with that one area they are almost useless in other areas as either they don't have the knowledge/skills or they lack the interest to do it well.  Does the shop take on only total restorations or do they take in the small jobs?  Long term projects are great but clearly they are not paying the bills, maybe there needs to be a discussion of how many full scale projects the shop has at a time and free up space for small tasks that are in and out in a few days - from my own experience one of my cars had been restored once and then later needed the floor pan replaced - I supplied the brand new pan and shop did the install.  There's lots of small maintenance work out there.  If a long term project is stalled the shop owner has to be upfront with the customer and come to an agreement with the customer, either pay or send the car back and sell off what ever parts have not been paid for.  Just like time, space is money.  Take a page from restaurants, they base the business on how many times you can turn over a table in a day, the floor space in the shop is the same, how many hours can you bill per day for the square footage - a car not being worked on is an opportunity cost, put something there that is paying the bills.  Just as the boss didn't get to where he is all at once getting back above water is going to take some time but a little sole searching and a few changes may yield results.  Remember Einstein - Insanity -Doing the same thing over and over again and expecting different results.  

[1937McBuick]

7 hours ago, alsancle said:

 

Any shop that relies on more regular folk is going to struggle.    If you are honest with those customers about the costs up front you have no business.  If you fudge it they freak out when the costs explode.

Ouch,  sounds like a no win situation.

 

So I guess low end cars below a certain value can't be restored to a high standard.   Unless of course the owners want to do most of the work themselves and rely on out sourcing jobs outside their capabilities.

 

Restoring a car is like a black hole or trying to fill a bottomless pit.

 

But none of those comments will help find solutions to the problems you're trying to address.

 

Sometimes I think the industry is broken or as good as dead.   Seems it will end up being a rich man's game.

[1937hd45]

13 minutes ago, 1937McBuick said:

Ouch,  sounds like a no win situation.

 

So I guess low end cars below a certain value can't be restored to a high standard.   Unless of course the owners want to do most of the work themselves and rely on out sourcing jobs outside their capabilities.

 

Restoring a car is like a black hole or trying to fill a bottomless pit.

 

But none of those comments will help find solutions to the problems you're trying to address.

 

Sometimes I think the industry is broken or as good as dead.   Seems it will end up being a rich man's game.

 

Over 40 years ago the owner of a shop was having a hard time with some cheap run of the mill car, out of his wheelhouse. "I took this job in to remind myself why I don't work on them". A quote I've remembered, fits all things not just cars. 

[duigoose]

I'll say this, every single post has been thought provoking and very very helpful.  I searched for a while here and there and decided to pick this forum / group to post in.  I made the right choice.

Also, I have not been working here long at all and didnt know anyone here before getting the job.

[John_S_in_Penna]

2 hours ago, 1937hd45 said:

So if you planned a total kitchen renovation the "kitchen remodeler guy" pays for the cabinets and counter tops and new flooring and appliances, and hopes you pay him? Really?

Definitely--similar to the automotive practice I described.

Standard contract forms from the American Institute of 

Architects state that no payment shall be made unless

material is on the jobsite or installed.  That gives you

protection, Bob, so use those forms on your next renovation!

 

Edited January 21, 2023 by John_S_in_Penna (see edit history)

[1937McBuick]

2 hours ago, 1937hd45 said:

 

Over 40 years ago the owner of a shop was having a hard time with some cheap run of the mill car, out of his wheelhouse. "I took this job in to remind myself why I don't work on them". A quote I've remembered, fits all things not just cars. 

If that was the case 40 years ago,  the passage of time to the present would have likely only magnified that sentiment.  I seriously doubt the value of run of the mill cars could have kept up to,  or even gained on the inflationary costs of parts and labor of having a car professionally restored.

 

I know my project will be under water in a big way by the time it's finished.    I made the choice,  but I was given a quote and made my decision based on that.  Everyone can or should expect cost over runs but what is reasonable?   I intend to see this through to the finish line.  Blank checks are big checks.   There has to be a close relationship between the customer's expectations and the shop's accountability for each to get a measure of value from the job being done.

 

I wasn't trying to be confrontational when I quoted ansancle's post but what he said rings so true.   It was too good not to acknowledge.

Edited January 21, 2023 by 1937McBuick (see edit history)

[Bhigdog]

44 minutes ago, John_S_in_Penna said:

Definitely--similar to the automotive practice I described.

Standard contract forms from the American Institute of 

Architects state that no payment shall be made unless

material is on the jobsite or installed.  That gives you

protection, Bob, so use those forms on your next renovation!

 

Yup, that's pretty much the way it works or should work. I've had several buildings erected. The contract states the number of draws against the agreed price. First draw is not until ground is broken and the major portion of the materials are on site. Second draw is after a specified degree of construction. Third draw is nearing completion. Final draw is after completion and sign off.

The local newspapers are full of stories about gullible folks being swindled by making large up front payments.............Bob

[Bryan G]

Our family business was a body shop; it was the "old-fashioned" type that would work on anything, from rust to late model wrecks, Coke machines, yard furniture, tractors. And we did a lot of restoration stuff, because we liked it. The trouble was, we didn't have a good head for business. We treated folks right, took care of the employees, but didn't know how to take care of ourselves. We didn't charge nearly enough for some jobs. In later years there was enough of a backlog of restoration work that I kept a full-time guy on just for that; it seemed like a good idea at the time but turned out to be a money loser. At one point we did a Packard...I'm not talking about a $4 million custom, but a late 30s six cylinder sedan. I sat back and watched as the tech spent nearly an entire week...40 hours...on one door. If I'd charged the customer what I was supposed to, we'd have never finished the car...his budget would have quickly been exhausted. Instead, it was my wallet that got emptied! I don't envy folks trying to make a living at it these days. (I no longer have to.) 

 

Based on my experience, for it to work, you need to be paid weekly for whatever the tech performed that past week. You need to make a profit on every billable hour. Parts, if not paid up front (and I can certainly understand a customer balking at that), well, they should at least be paid as they arrive. Add them to the weekly bill. The real challenge is finding enough customers with bottomless checking accounts so that you don't have to push half-finished projects off to the side. (And when you do, that becomes floor space that isn't making you money, unless you charge storage.) A tough contract might spell out that, if a car sits waiting for a payment for more than x number of days, storage charges start accruing. 

 

As has also been learned, you really have to stay on top of the employees. I've seen some "top" techs doing some shady things because they thought they could get away with it. And who knows what they did get away with. 

 

These are the types of lessons I wish I could have lived by when I was running the show.

[1937McBuick]

I think there would have to be some sort of a balance found,  if a business only reserves their services for customers who can afford "anything"....   they will have in effect limited their client base.    I think the auto restoration business is already a SMALL niche market.   Simply raising prices without looking anywhere else to make the shop profitable will have the same effect as only doing projects for elite rich customers only.

 

Duigoose,   there were some good suggestions and experienced insights provided in this topic from people involved in the trade.    I am self employed in an large industry that the "cookie cutter" mentality of how to run our businesses probably isn't appropriate.   Each of our businesses in my vocation are distinct enough that one size does not fit all,  way too many variables on the variable and fixed expenses, capital cost, leases, overhead, etc, to say only one way is the right way.   Everyone is on their own road to success and profitability,  some are more easily travelled than others.

[John Bloom]

Duigoose, thanks for bringing this topic up.  One of the more interesting things I've read on here in a while.  You truly seem to want to "figure this out and make things better".  That is a good start.  A certain percentage of employees are just going through the motions.  They are employees and think like employees (they have no capital on the line).  You think like an owner.  To be successful, that is half the battle.  My thoughts:

 

Go talk to owners of successful Restoration shops.  After you do that, go talk to another one......keep repeating that.

 

There is little value talking to other restoration shops that are dysfunctional and financially a mess.  True, they can tell you about all their mistakes and what not to do, but what you really need is for someone to tell you what to do.  Reading this thread gives you the impression that it is almost impossible to find a successful shop.  They are out there. (I have a friend who is running one, growing annually and just built a brand new beautiful large facility to handle their business)  You need to seek them out and see if the owner can become your mentor.  They may tell you some things not to do, but they will surely tell you things TO do.  If my son wanted to be a plumber, I wouldn't say "go talk to old Joe, he was a plumber for 20 miserable years before it broke him and then he went and got a better job".  I'd find someone who has a successful plumbing business and try to get him to form a mentor relationship with that guy.  

 

Another thought.  When I was young (30), I was practicing full time, moonlighting at night, and using my moonlighting funds to do what is currently called "flipping houses" (we didn't call it that, but that is what is was back in 1995).  Those were dark days from a healthy time management perspective, but we do things like this when we are young.  I had a partner and we were doing this together.  After a while, it became obvious that we should concentrate on one type of house.  In our home town they had something called a National Home.  These were small, simple, built on a slab homes built in the 1950's-1960's.  typically three bedrooms, one bath, around 900 square feet.  We would only buy those houses, and we bought distressed ones.  By about the 5th one, we had it down to a science.  We would close at the bank on a Friday morning, have a rolloff in the driveway by noon Friday, and head over to the house and get to work.  Usually by midnight, it was gutted, no carpet/flooring, all the kitchen and baths gutted and some quick prep for painting.  I'd show up Saturday morning with a respirator and an airless sprayer and paint the whole interior of the home while my partner was at Home depot buying the same "off the shelf", cabinets, countertops, and appliances.  We used the same color scheme of paint on every house.  On Sunday we'd put the kitchen and bathroom together with all new stuff and I'd head home on a Sunday night with a flooring guy set up to arrive Monday morning.  In a three day weekend we did this.  It was profitable, the quality of work was average at best, we kept it simple, we did the same thing over and over.  Decisions were easy after completing basically the same/similar job over and over.  Things become very streamlined and efficient.  

 

I tell that story because I think one strategy could be for you to not take on every car with every problem.  You say you currently have a 49 Chevy truck, a 37 Chevy and a 32 Model B.  Is that the first time for each car that your shop has restored one of those models?  Sourcing parts, the mechanical aspects (differences) of a wide variety of platforms, etc.. make each restoration a new adventure.  Some shops specialize in certain Make/models of cars.  Is that a possiblility for your shop to slowly evolve towards that goal?  To immediately go in that direction might mean financial disaster, but pick a model that you do well, have good sourcing for parts, and can show some good examples of work completed and market for that make and model and try to increase the number frequency of doing that car.  Anything that increases speed through the shop and streamlines your efforts will help.  Maybe over time you could get to having 50% of your work focused on a specific car that you do well and develop a reputation as the "go to shop" for that car.

 

And again I'll say, seek out successful shop owners/managers and get to be friends with them and listen to how they do it.  They can provide some good wisdom and give some guidance.  Good luck.

[alsancle]

1 hour ago, John Bloom said:

Duigoose, thanks for bringing this topic up.  One of the more interesting things I've read on here in a while.  You truly seem to want to "figure this out and make things better".  That is a good start.  A certain percentage of employees are just going through the motions.  They are employees and think like employees (they have no capital on the line).  You think like an owner.  To be successful, that is half the battle.  My thoughts:

 

Go talk to owners of successful Restoration shops.  After you do that, go talk to another one......keep repeating that.

 

There is little value talking to other restoration shops that are dysfunctional and financially a mess.  True, they can tell you about all their mistakes and what not to do, but what you really need is for someone to tell you what to do.  Reading this thread gives you the impression that it is almost impossible to find a successful shop.  They are out there. (I have a friend who is running one, growing annually and just built a brand new beautiful large facility to handle their business)  You need to seek them out and see if the owner can become your mentor.  They may tell you some things not to do, but they will surely tell you things TO do.  If my son wanted to be a plumber, I wouldn't say "go talk to old Joe, he was a plumber for 20 miserable years before it broke him and then he went and got a better job".  I'd find someone who has a successful plumbing business and try to get him to form a mentor relationship with that guy.  

 

Another thought.  When I was young (30), I was practicing full time, moonlighting at night, and using my moonlighting funds to do what is currently called "flipping houses" (we didn't call it that, but that is what is was back in 1995).  Those were dark days from a healthy time management perspective, but we do things like this when we are young.  I had a partner and we were doing this together.  After a while, it became obvious that we should concentrate on one type of house.  In our home town they had something called a National Home.  These were small, simple, built on a slab homes built in the 1950's-1960's.  typically three bedrooms, one bath, around 900 square feet.  We would only buy those houses, and we bought distressed ones.  By about the 5th one, we had it down to a science.  We would close at the bank on a Friday morning, have a rolloff in the driveway by noon Friday, and head over to the house and get to work.  Usually by midnight, it was gutted, no carpet/flooring, all the kitchen and baths gutted and some quick prep for painting.  I'd show up Saturday morning with a respirator and an airless sprayer and paint the whole interior of the home while my partner was at Home depot buying the same "off the shelf", cabinets, countertops, and appliances.  We used the same color scheme of paint on every house.  On Sunday we'd put the kitchen and bathroom together with all new stuff and I'd head home on a Sunday night with a flooring guy set up to arrive Monday morning.  In a three day weekend we did this.  It was profitable, the quality of work was average at best, we kept it simple, we did the same thing over and over.  Decisions were easy after completing basically the same/similar job over and over.  Things become very streamlined and efficient.  

 

I tell that story because I think one strategy could be for you to not take on every car with every problem.  You say you currently have a 49 Chevy truck, a 37 Chevy and a 32 Model B.  Is that the first time for each car that your shop has restored one of those models?  Sourcing parts, the mechanical aspects (differences) of a wide variety of platforms, etc.. make each restoration a new adventure.  Some shops specialize in certain Make/models of cars.  Is that a possiblility for your shop to slowly evolve towards that goal?  To immediately go in that direction might mean financial disaster, but pick a model that you do well, have good sourcing for parts, and can show some good examples of work completed and market for that make and model and try to increase the number frequency of doing that car.  Anything that increases speed through the shop and streamlines your efforts will help.  Maybe over time you could get to having 50% of your work focused on a specific car that you do well and develop a reputation as the "go to shop" for that car.

 

And again I'll say, seek out successful shop owners/managers and get to be friends with them and listen to how they do it.  They can provide some good wisdom and give some guidance.  Good luck.

 

John, you point is valid.  By repeating the same process with the same car you can make it all so much more efficient.  Shops that specialize in one kind of car are smart that way, assuming there are enough of them.  Three is a shop in Michigan that tries to just do Duesenberg.  They are very good at it.  There are 3 or 4 great shops in the US that only do RR or prewar RR.  They are efficient as much as possible because they know what they are doing.   If you give your RR to the Ford shop you are going to have to pay them to learn the car.   Sometimes it takes lots of cars to really learn a model.

 

As a shop if you are willing to accept any car,  any customer and any type of work you are doomed.

[kar3516]

I’ve run a relatively large “small business” for 30 years selling used industrial stationary gas compression equipment.  (1) I can tell you we make 80% of our profits from 20% of our deals.  (2) There are a number of things we used to do for customers that we no longer do because we discovered they were consuming money rather than making money.  (3). A very wise customer once told us we weren’t charging enough for a particular job we had quoted; the next time we added 30%.  My two cents is to take time to identify the different processes and services you provide and the different types of customers you work for.  Assess the relative profitability and rank them.  Then eliminate (with an absolute disregard for emotion) the low or zero profitability processes and customers.  What we eliminated was attempting to resell labor where the customer wanted us to quote lump sum amounts with us not knowing how many hours we might actually require.  Since a restoration shop is essentially a bunch of open ended projects of unknown duration and hours I’m betting the solution is to raise rates significantly thereby eliminating the less profitable customers (because they will go elsewhere) and to manage cash flow with ironclad requirements.  Also my dad worked as a manager in a large multinational corporation and was promoted many times.  He always said he couldn’t be promoted until he trained someone below him to do his job.  The owner has to improve the skills of the employees to the highest potential level they are capable of.  

[kar3516]

And one more thing:  since a restoration shop is essentially a reseller of labor and parts (just like a law firm or accounting firm), it is imperative that you bill out every single hour of labor that you pay your employees and yourself for.  That means detailed time sheets from every employee at the end of every day detaining what they worked on so you can bill it to the job.  And if you don’t plan to bill the parts guy’s time or the receptionist’s time then you have to add that to the shop labor labor rate as a burden percentage.  All parts must be marked up and not insignificantly and the customer should know this up front.  All insurance, utilities and all consumed shop supplies (e.g. carb cleaner, shop towels, etc) has to be added into the labor rate as a burden percentage.  That’s why a decent shop charges at least $100/hr or more if they want to make money.

[1937McBuick]

kar3516,

 

So if three employees each clocked 6 one hundred dollar hours in a day against the job....  $1800 for that day plus taxes.    "Buy the time" that car is finished it would be in the Mariana Trench in the Pacific Ocean.

 

🤑🤔.

 

275 of those kinds of days is nearly half a million dollars.   That's only about a year's worth of work.

 

I guess that's why I said the industry is broken or essentially dead.   Except for a select few.

 

I guess it's really nobody's fault costs out paced finished value.   The difference is the price of emotion.

 

 

 

 

Edited January 21, 2023 by 1937McBuick (see edit history)

[kar3516]

6 minutes ago, 1937McBuick said:

kar3516,

 

So if three employees each clocked 6 one hundred dollar hours in a day against the job....  $1800 for that day plus taxes.    "Buy the time" that car is finished it would be in the Mariana Trench in the Pacific Ocean.

 

🤑🤔.

 

275 of those kinds of days is nearly half a million dollars.   That's only about a year's worth of work.

 

I guess that's why I said the industry is broken or essentially dead.   Except for a select few.

 

I guess it's really nobody's fault costs out paced finished value.   The difference is the price of emotion.

 

 

 

 

Exactly.  I’ll bet the only restoration shops that make money are the big money shops with blank check customers and the guys who run a restoration shop supported by selling cars or parts or other services as a parallel business

Edited January 21, 2023 by kar3516 (see edit history)

[jerry k]

All the employees are, evidently, highly skilled ( think well paid ) specialists.  Car restoration involves a lot of grunt work requiring minimal skills.  As long as you are using skilled labor for the grunt work the numbers $$$ will not work.

[kar3516]

I also would guess that many small businesses operate at near net zero profit except that the owner is paid the highest salary and is comfortable with that.  The business makes it possible for the owner to draw that high salary.  So everything else is a wash…

[pkhammer]

I visited a shop last year that specializes in Model A Ford restorations. I was dumbfounded when I asked the owner what the average Model A (total) restoration costs. His reply was "well into six figures". This obviously included total chassis and driveline refurbishment, bodywork, paint, upholstery and some upgrades as well such as overdrive units. So who spends six figures on a Model A? Apparently enough to keep this man's shop (with about a half dozen employees) plenty busy. Costs are what they are. If a total restoration takes 1000 man hours (that might be light), even at $75/hour that is $75,000.00 before parts. There are also plenty of people who still think they should be able to get a quality paint job for $5,000.

[28 Chrysler]

Time sheets for each car and the car owner should be looking for or have the parts that are not off the shelf items.