‘Behind every successful man is a surprised Mother in Law’
With this hailstorm comes a greater appreciation for my wife.
Over time, and as the kids have grown older and need less attention, she has taken on a larger role in our business.
She has done so mostly out of a desire to help, but I must tell you too, it was also to keep me from imploding.
Bending over dollars to pick up dimes
At one time, I did it all. Bookkeeping, taxes, shipping, all the menial stuff that is part of business. I loved it too.
One day, someone told me I was trading low value work for high value time. Boy, I was mad at him. This stuff has to be done. It would cost me 20 or more an hour to hire someone competent enough, much less be trusted.
Like I’ve always said, dent work is 100 an hour or more. So my advisor was right, keeping the accounts (or the time spent doing so) was costing money.
I had to give it up. But I loved it. It felt like I was doing something in my business. Sure, I knew making calls on new clients would be more profitable. I knew there was a car to get done. But I wanted to do the books and so I did. It soon became a de facto excuse for not doing what truly needed to be done.
Incidentally, when you sense this happening to you it usually means the thing being put off really needs to be done. Now.
Not everyone loves the accounting part of business. I might not either, were it not for a gift my mother gave me when I opened a body shop in the late eighties. She came in one day with a simple accounting book which categorized everything and had to be reconciled like a checkbook each month.
Once I started keeping track, I was hooked.
Whoever sold these books was genius. On the inside cover was a quote from a U.S. Supreme Court justice about paying taxes.
“To avoid is legal, to evade is illegal.”
This short quote was like permission to succeed for me. Never one to cheat on taxes, I wanted to be above board and honest in all things.
Yet the government has made provision for a business to legally avoid taxes on purchases. I was excited.
Before, as a tax paying employee, I bought tools with after tax dollars, now I could write it off. Not just tools, but computers and all other sorts of cool stuff.
So keeping track of spending is not just to know how the business is doing, it is also to avoid paying taxes on money you shouldn’t have to.
I liked being different.
Perhaps you are one who cannot stand the accounting aspect of business. Yes you can delegate it, and you should, but please, for your own sake, at least learn how to do it. Its much harder for an accountant to steal or be neglectful for a business owner who knows what is what.
I tell you all this because the path into your own business is never a straight line. For me it started as a way to legally pay less taxes, to do a little better with money.
In the US, rising healthcare costs has long been an issue. Most pay for medical costs with after tax dollars. We formed a certain type of corporation in 1995 which has allowed us to write off all healthcare costs legally. (please consult your tax advisor).
Doing better means being better informed and getting better advice.
In case you are wondering, we use Quickbooks software in our business. It was fairly easy to learn and the amount of reports it can spit out more than fills my obsessive compulsive need to know how we’re doing.
We also use it for invoicing the shops we work for.
Paid Today or Paid Later?
I’ll digress a moment and share a question I received from a fellow in the window washing business.
Different from what we do, right?
Wrong. All businesses are the same. Let me prove it.
My window washer friend cleaned windows for a chain of restaurants and had most of their locations, but not all, as clients.
Each location paid him when he was done right out of the cashier’s till.
Like every good entrepreneur, he wanted to grow the business and get all the locations. So he schlepped down to the main office where they said, “no, each location makes their own decision on who to use.”
Soon after, he got a letter stating he would now need to invoice each location and the main office would pay him once each month.
His question to me was, “Do I drop them all and go get different accounts or do I go ahead and invoice them?”
Huh? Drop the accounts?
A ‘bird in hand beats two in the bush’ and you should (almost) never drop accounts which give you money each week.
This question is one you will face too, if you haven’t already.
Let me put it another way.
“Do I stay self employed, or do I adapt and grow a real business?”
It is all too easy to get addicted to cash work.
Who doesn’t like instant gratification?
I remember another fellow who did paint touch up who did a lot of work but was always broke. He worked at many of the same dealers I did, but at the end of the day I left with purchase orders and he stayed behind trying to get a check. Or, he would drive all the way back next day to get paid for what he did day before.
(Incidentally, if you are driving around town each month paying bills you are costing yourself a ton of money. )
The window washer asked me at the end of our conversation, “Why can’t they (the corporate office) just do things the way I want them to?”
Therein lies the danger. We often want to force our customers to do business the way which suits us. Yet, a customer comes to us fill their needs, not ours.
Some of the many reasons why a large or even small company prefers invoicing:
- One check a month vs. many.
- Less risk of cash theft.
- Not paying out money until they absolutely have to. (see the November 2006 edition of this newsletter at https://www.pdrsecrets.com/members)
- Most important, the IRS requires it. Any person or company who receives more than 600 dollars from them in a year must be reported as a subcontractor. Hard to track with cash pulled from the drawer.
As a vendor, you will reach a point where you will decide what type of business you want to run.
For us it has been a mix of invoices (money later) and cash tickets (money now).
We have some who prefer an invoice be given and we leave with a purchase order. This p.o. is like a tracking number for this job. Like a check which you can cash later. At the end of the month, we send a statement with a list of invoices done for the month and the total amount owed. Most pay us within ten days and some have paid quicker.
I have rarely had ones go longer, but usually a call to the accounts payable clerk gets it handled.
Generally, since these checks come once per month, we use this money to pay overhead and the cash tickets are profit.
The hardest part is getting started, since you are delaying payment 30 days out. The nice thing is the cushion it gives later on. You know what’s coming so you can rest easy or you know you’d better go make something happen.
You are in effect giving credit to the company, trusting them to pay you for work completed last month. It is a risk on your part and I know of a couple of times where vendors were burned. It can and does happen.
So be smart and adapt. Being at risk for a few thousand is a lot different than tens of thousands. In a hailstorm where body shops will have big statements, I ask them to pay me more often, like weekly.
This lowers my exposure and gets the techs paid faster, which they like.
Once again, Quickbooks does all this for you. You enter the invoice and it will churn out a statement for you. This is my system, but you can adopt your own.
If you want, hand write a statement with invoice numbers and p.o. numbers, you can create your own system. Unpaid tickets in this basket, paid ones in here.
Point is, a system guarantees it gets done each month as it must.
Which brings me back to my partner in business.
A System for dealing with Tim
Many wives complain about husbands who throw clothes on the floor. Karen is wise and refuses to allow this.
But she does have to pick up after me in business, so to speak.
Usually, it goes something like this. An estimate with a filed supplement needs to be found and is not where it should be. After thumbing through a stack of hundreds, she adapts the filing system with a new folder for pending supplements.
No more frustration, the system comes to the rescue once again.
You really begin to like this when you realize the time saved is cumulative. This event will be repeated, but with a different result and in less time. The time saving is invisible, but it stacks.
Also, the beauty of a system is someone else can be plugged in with a short training period.
Here’s Proof
I have often touted McDonald’s restaurants for their incredible implementation of systems in their business.
Many mornings during this hail storm found me in the drive thru or inside getting breakfast.
No, the food is not great, but it is persistently good. And fast? You betcha.
Yet, this franchise has one of the highest employee turnover rates in the nation. Granted, there is not much skill in fast food. But because they have a system, they can have an employee up and running in 90 minutes. From “welcome aboard” to on the job in an hour and a half!
And its all done with a system of pictures. So language or aptitude are no longer barriers to putting someone to work.
The longevity of this restaurant can only be due to implementing and improving on the systems which are used to run them.
You may or not like the food, but when people find themselves in an unfamiliar town, they choose what they know. And they can with reasonable expectation find what they expect at McDonald’s. People are drawn to the familiar. Yes, no one ‘recommends’ the food to their friends, but they vote with their wallet.
I should however tell you a lot is involved in maintaining the consistency between restaurants.
A recent customer had just sold his location and told me how it works.
First, if you want to buy one, good luck. They really look to sell to someone on the inside. Meaning, a person who has much experience at working as a manager for several years.
Why? They already know whether this manager sticks to the system or not.
You see, each location is “graded” by corporation inspectors who come through – sometimes announced and sometimes not.
They bring a score sheet with them and based on the review, the owner either gets a pat on the back or a warning: “Clean up and stick to the system or lose your franchise”. It is this scoring system which convinced my customer to sell his location.
“It is a tremendous amount of pressure,” he offered.
It wouldn’t be my first choice for a business, but I still like to eat there when I need a quick meal.
Clearly, the numbers tell the story and they are very successful.
What about you and I? We are companies of one or a few.
Yet, it is still my belief that our success and sanity depends on implementing systems in our businesses.
A system for getting business. For keeping customers and getting referrals. For tear down of the interior of the car. How the car is worked. How the car is delivered. How the techs get paid, and finally, how you get paid.
This sounds like a great deal of work and it sometimes is, but once a system is built and implemented, it keeps working and you can count on it.
A System for Getting Business
Most times when people grab a yellow pages, they are ready to call now and they go down the list. Some though, are looking for information. If they are, my ad points them to an 800 number with a free recording or a website for them to visit.
Each of these are a system in themselves and is one more bit of persuasion I use to tip the scales in my favor.
My business proves you can have a terrible location and still survive with the right kind of marketing system.
Each customer who calls or visits the website is followed up on using an automated system as well.
Once they become customers and give me a money, another system kicks in for showing gratitude.
A Tear Down System
While working a hail storm at a shop in Colorado last year, I worked next to a body man who employed helpers. He had two guys who would do the grunt work of tear down while he did the skilled welding and plastic filler work.
Some of his cars would be torn down for weeks at a time. Tough to remember what goes where. Top of this, which one tore it down? Is he even around on the day it needs put back together?
To eliminate time wasted on guess work, the body man implemented the zip seal plastic bag system. Each group of fasteners goes into a bag marked with where they came from.
This year, my youngest sons age 13 and 16 became R & I or remove and install guys during the storm. This freed up the skilled guys from time spent dropping headliners and allowed them to push more dents. Of course they made more money and so did I.
Things moved along fine until the wrong bolt was used in the wrong hole and Tim spent precious time drilling and re-tapping.
This frustration led to our implementing the baggie system for tear down and it has all but stopped the mistakes.
Repair System
In the last newsletter I spoke about the importance of a system for using to walk around the cars. This year I adapted this a bit and now often start a hail car on the sides instead of the tops. So much of a car requires glue pulling these days and a lot of time is spent on the sides and rails. On most cars this makes the upper panels the ‘dessert’ I like to save for last. Put it back together and you’re done.
Before, I have made the mistake of doggedly staying with a dent until it is done. Too many times it gets in my head and I walk away and go look for something else to do. Often it is some meaningless distraction or something way down my list in priority to the job in front of me.
Now, if a dent is giving me grief, I go to another. Yes, it means moving my light twice and all that, but my attitude stays intact.
When I was learning to paint cars, my instructor told me, “If you’re not feeling well or in a bad mood, you might as well go home. Painting is a skill which demands a clear and level head. You will make more mistakes in the booth when you’re mind is not right.”
Paintless dent repair is the same and perhaps it is even more critical as the first few pushes are so important.
So the system which I’ve implemented for this is the “Come back to it later system”.
I almost always find this dent much easier once the frustration is gone.
Pre-Delivery System
The final quality inspection has also become a part of our system for delivering cars.
I picked this up from watching the owner of one of my body shops.
He’s the last guy to look at and inspect a car and he does this outside. I often see him with a touch up brush hitting the spots burned by the buffer or touching up the adjacent panels.
We had some boo boos get by this year and it was all because I failed to do a final inspect.
For example, a sunroof when it’s wires are unhooked will likely need resetting. Sometimes this is accomplished by running it back all the way. Another car required the switch to be held down a certain way. So even if we don’t take down a sunroof, it has to be checked for proper operation before delivery.
Also, before a headliner goes back up, the hoses need to be inspected. These are for draining the rain which is certain to get in the sunroof pan. If these are pinched or not hooked up the car gets wet inside. This is bad.
Having clean hands is essential to keeping the headliner clean, but still some prints will get on it. A final look and some 90% isopropyl alcohol will safely remove these.
Keep turning your rag to a clean spot so you don’t spread the dirt around.
System for Paying Techs
If you have a storm, likely you will need help. If you get someone skilled they are going to get most of the ticket.
For this reason, I don’t let their money sit in my bank for very long. Karen gets a check, spits out a report from Quickbooks and can see who gets what money from it.
She marks the cars that were paid, puts the date and check number on the report and makes a copy for the tech.
This is a lot of work, but the techs appreciate getting paid quick and often and I feel better, too. When I see the balance, I want to know its my money and I don’t owe it to any techs.
This system is perhaps the most important one to implement since the reputation you have as a guy who makes good on a techs’ pay is a big deal. The stories of those who didn’t pay from many years ago still linger to this very day.
Whatever you do, pay your techs what they are owed.
A system for getting paid.
Most newer cars have a loan on them and the bank wants to be named on the insurance policy so they get paid first in the event of an accident.
With hail damage, insurance companies just as a practice will put the owner’s name on the check along with the banks’. This keeps the owner from cashing the check and never fixing the car which is worth less money until it is repaired.
How can you get paid in this situation? If they have the check, ask the owner to call the bank which holds the note on the vehicle.
The bank will either 1) inspect the car after repair or 2) ask to see an invoice from your shop showing repairs completed and the job has been paid.
Whatever you do, do not allow the car to leave your possession until you have some form of payment. If you have the car, you will get paid. If you don’t have the car, you are in a risky position of ever getting paid.
If the customer would like, I take credit cards. However some jobs are quite large, bigger than some credit limits.
Most of the time we take a personal check and hold it until the person gets the bank to sign the check for them. Once the insurance check has cleared, they call and we run their personal check through the bank.
To date I have not been burned with this method, though it is not without risk.
What if I don’t get paid?
By taking a check and holding it, I am choosing to be protected by the local District Attorney. Their office collects on bad checks and if you are an upright citizen you do not want them on your case.
It is very important that you not allow the customer to post date the check. It must be dated for the date it was written or the DA will not help you.
This arrangement works I think because it is reciprocal. You are trusting the car owner to make good on the check by getting the insurance check to clear. They are trusting you not to deposit it until it is good.
Remember the three levels of risk when delivering a car.
First and best, the car stays in your possession until you have cash in hand. If a person refuses to pay in the U.S., you can file a lien on the car and it becomes yours in 90 days. You will get paid, one way or the other.
Second best is the method mentioned above where I hold the check for them. Now you are somewhat protected by the DA.
Third and worst is to let the car leave “while I run to the bank, and get you a cashier’s check.” I’ve seen guys do this and get burned. You cannot afford to lose thousands on one dishonest customer.
So having a system for getting paid, you will already determine up front which path you will choose. From there its up to you, your techs and yes, even your customers to follow this system.
You can decide for yourself whether systems work or not. I see them in every successful business and I see people use them who are very effective and get a lot done.
If you still work at a regular job, take a look around at the systems in place. Consider every procedure, every mandate from above and how it fits into what system. Bet you see it different now.
If you want to read more about it, check out “The E-Myth Revisited” by Michael Gerber.
Finally, a parting thought about being in business and running one.
When I wrote my first invoice, it was to a used car department in 1989. Like my touch up friend mentioned earlier, I would do a job and get a check. The accounts payable lady liked me and didn’t mind – at first. When I started getting more and more jobs from them, she asked me to send a statement instead. Kindly, she educated me on how it worked. I did not like it at first, but soon I appreciated the time saved and the chance to get even more cars done.
Using invoices puts you in as a partner with the company. You are adapting to their system and this (usually) is appreciated. You are extending them a little credit, but you are also casting a vote of confidence in their ability to pay.
One large dealer where I work at the body shop had a meeting where the check signer wanted to suddenly mandate to all the departments using one or two vendors so they could sign fewer checks. In other words, they wanted fewer partners.
Let’s say you need your house painted. You can grab the yellow pages and pick a company or you can grab the next guy you see holding a sign saying, “Will work for Food.” Which one would you be more comfortable with? Which to you is a better partner in the goal of getting your house painted?
The more systems you implement in your business, the more permanent you appear, the better quality customer you get and, I can almost guarantee – you’ll make more money.
If you are as fortunate as I to have a wife to clean up behind you, hug her and take her and her Mom to dinner.
One more thing: tell her she has my sympathy.
Till next time,
Tim Olson