Video from Batch 2025-06-07 16:44 #100

We are in the process of doing a forensic analysis of a collision operation that's been in business for 25 plus years. They were doing well. According to them, all of a sudden they went from 8% to less than 1.5% in net profit. And my first question was obvious. What period of time? And I said about two years from 8% to 1.5%. And I said, what happened? You know, what happened two years ago? And they were racking their brains trying to figure out what happened. But they did hire a new supervisor at that point. And two years ago, it went from 8% to 6%. You know, they've always hovered between 6% and 8% and didn't pay much attention to it. Then all of a sudden, less than 1.5%. And I thought, OK, let's start with interviewing employees. We'll get these survey questions out and see what's happening with the employees. And the first, you know, the first 10 employee questionnaires came back. They were rating productivity at around 80% and morale at around 70 or 80%, which is pretty low, especially the first surveys back. Because usually the first surveys back are generally the good ones, the ones that are eager to talk to someone like me, eager to talk to management. It's the ones that don't want to talk to me, the ones that send their survey questions at the very last second. Those are the ones we really have to talk to. So and as soon as I heard that, you know, the profit went down that far. I said, you know, we need the bookkeeper and the accountant here to figure out what's going on. So the bookkeeper and accountant joined the meeting. I said, OK, why is this happening? Well, I don't know. Well, how can you not know? I mean, you're you've got your finger on the financial button. Why don't you know? Why aren't you on track of this? Well, we're not doing anything different. And I said, OK, how often are you doing job costing? What do you mean, on every project? And I said, yes, on every project. Well, we usually do it quarterly and sometimes we do it monthly. And I said, well, how is that good? How long does a vehicle stay in the shop? Oh, it could be from three days to two weeks or three weeks. And I said, well, what's the point of doing job costing if the vehicle has already left? Right. And how often are you comparing budgeted to actual? Well, we don't do that. We just do financials either monthly or quarterly. And I thought, gee, what's the point of doing financials if you can't by the time you get the numbers and you can't do anything about the numbers? The numbers are history. Right. And I said, starting tomorrow morning, we're doing job costing daily. How are we supposed to do that? We don't have all the costs for vehicles daily. Yes, but we have budgeted and we can compare it to to the budget. Right. So I was getting a lot of pushback and especially when they were saying, well, we don't have the time to do that. And I said, well, what's the most important part of your job? Yeah. But Leo, you got to understand that, you know, I have to answer emails, you know, I have to answer the phones and people are always asking questions and people want to know what their paycheck is going to be like next week. And and, you know, they want a day off and I'm always dealing with other issues. And I said, why? Why? Leo, that's my job. And I said, wait a minute, I thought you said you were the bookkeeper. Well, I am, but I have other jobs. But what is the most important part of your job? Well, I don't know. I have to answer emails. I have to answer calls. People are always coming into the office, ask questions. And, you know, I'm doing a lot of things. And I say, you're doing a lot of things, but your job, is that what you're saying? Well, no, Leo, I'm always busy. Sometimes I don't get out of here until six o'clock. OK, what are you doing? You're not doing daily job costing. You're not doing cash flow projections. What is it you're doing that's more important than the profitability of this company? What's the most important part of your job? The profitability of this company, correct? And she goes, yeah, I guess, but that's not what the owner asked me to do. And I said, well, it doesn't matter what the owner asked you to do. You should know as the financial one of the financial people in this company, the most important part of your job is to control the financials. I don't care what the owner says. You're the professional. Right. And the accountant is sitting right beside her and he knows he's next. Right. And I quickly switch over to the accountant. I said, OK, what's your function? If she's the bookkeeper, what is your function? What is it you do? Well, I'm the accountant. I prepare everything for taxes. OK, so your goal is to make sure that we pay our taxes on time. Is that your goal? Is that what you're telling me? Your job description is to pay taxes. Really? And I could tell he's getting really hot on the collar and I didn't want another incident where, you know, the bookkeeper and accountant both quit. But I want to send a very clear message. There's nothing, nothing more important for them, the two financial people, than the profitability of the company. And if they don't know what the profitability of the company as of, you know, 30 minutes ago, then why do they still have a job? So and that's the message that I wanted to get across to them. And I said, I don't care what you're doing tomorrow morning, but tomorrow morning, we're going to figure out how many jobs we have. We're going to number them. We're going to create a spreadsheet, you know, a dynamic spreadsheet. And we're going to input all the data that we have for each project. Yeah, but Leo, sometimes we have 40 cars in the shop. And I said, OK, what's the problem? I'm going to help you. We're going to figure out every project that's in the shop now. Forget about last week, but any project that's in the shop today or comes in tomorrow goes on the spreadsheet. We're going to enter the budget on the first column. Then we're going to check hours. The second column is going to be estimated hours. Right. And we're going to track it. What percentage of the project is complete? And we're going to add all the information to the spreadsheet. How is this difficult? OK, but what about the all the other work that I do? I didn't ask you to do any other work. The most important part of this company is making sure that it's profitable, correct? If this company loses money again, how are you going to pay your mortgage next month? Right, because we're bankrupt. If we have another few months like we've had, this company is bankrupt. So what's the point of answering emails and doing all the other crap that you were doing that's more important than the financial health of this company? Am I getting my point across? I said, yeah. OK, great. Thank you for your cooperation. Let's start creating a spreadsheet. Let's figure out how many jobs are in the shop. And I want the two of you to act like you're the owner of this company. This is your company. What decisions do you need to make? What information do you need in order to get the financial information that you need? If you're not getting financial information, then call on the owner, call on me, call on someone to make sure you get the information. OK, are we clear? Yeah. OK. Never mind answering the phones or answering emails. We'll figure it out. We'll put somebody on it to make sure that that's being done. But let's get the financial picture done. So that was the first meeting. As we get more and more employee questionnaires, I'll fill you in and show you step by step how we take a company that's nearly in a losing proposition to back to 8 or 10 percent or 12 percent profitability. Stay tuned and follow along. We'll talk again soon. Take care. Type yes below if you like some help as well. We'll talk soon.