PEER TO PEER Does More Labor = More Money?
THE PROBLEM: “We are a pretty busy shop,
but we’re getting to the point where we have too much work. The problem is, right now we can’t afford to bring on more staff. We raised our labor rates, even though we’re still lower in comparison to most of our com- petitors. What do other retailers use to find the right balance? Is there an equation of labor rates versus pay rates that I should start with, or something else?”
POSSIBLE SOLUTIONS: Go the OT Way: “Try allowing your installers to work longer hours after work. I’ve found on many occasions that working after 6
p.m., when the shop is closed, is a much more productive time. There are no phones ringing and clients walking in and out of the doors. Just don’t keep them too late or they won’t be productive the next day.”
— Jeff Smith, Cars of Atlanta, Atlanta, Ga. Check Yourself: “I think the first thing to do is take a look at your process to see if you are being as efficient as you can be in
terms of getting jobs done on time. Fixing some operational things in that department may ease the pressure a bit. Also, consider talking to some of the better business consultants in the industry before making any financial labor commitments, like Del Ellis or Marcel Newell. I believe they would have some thoughts for you on the matter.” — Jon Kowanetz, Handcrafted Car Audio, Mesa, Ariz.
Take a “Chance Advance”: “You have to ask yourself: Is the extra body going to pay for itself? If the answer is ‘Yes,’ then by all means bring on the extra body. If it’s ‘Maybe,’ there is a good enough chance that you will avoid letting customers walk by having the extra body to get a job done now. Have him help where he can and pull him to do on-the-spot/quick-lane-style work. You may not think you can afford him, but if you’re that booked, can you afford to turn away dollars that are already inside your store?” — Joe O’Byrne, Brentwood Car Audio, Brentwood, Calif.
Even the Scale: “Forty percent of labor is a common commission rate for installers. If you are at least as good as your com-
petitors, I would suggest making your rates competitive to theirs. If you are significantly lower, consider a gradual price increase over a reasonable period of time. One last thing: If you cannot afford another tech in a busy shop, you may need some outside consultation to help streamline your business. A busy shop should always be able to pay another tech as the tech should be able to pay his way based on work he will complete.”
— Mark Miller, WSS Westminster Speed & Sound, Westminster, Md. Have a Little Faith: “Labor rates vary from as little as 25 to 50 percent; the norm is closer to 30 to 40 percent. Sometimes hiring
new staff is something the owner must do on blind faith. It’s a calculated risk in the hopes of expanding your current business or market share. To make it easier, offer your existing guys bonuses and/or overtime pay for putting in additional hours in the interim. Two people putting in an extra 10 hours a week means you can easily afford a part-time employee, but likely another full-timer.” — Joe Cassity, Tunes-N-Tint/Alarms, ETC., Lakeland, Fla.
70 Mobile Electronics August 2012
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