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This is the Automotive Repair Podcast Network.
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It's your Weekly Blitz with Chris, keeping you in the game.
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Hey, welcome back to another episode of the Weekly Blitz, the podcast where we cut through
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the noise and talk about what it really takes to run a profitable, well-led auto repair shop.
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Before I jump in, I want to give a quick thank you to all of you out there listening,
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our dedicated people. I appreciate every shop owner, manager, and team member who tunes in,
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takes notes, and does the real work. If you've got a topic you'd like to hear about,
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or you'd like to share your story, shoot me an email at chris at autofixsos.com.
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Today, we're going to talk about something that's been sitting heavy on my mind lately,
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and that's being prepared to make emergency changes in your business, or as I like to call it,
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building your parachute plan. This comes up because of what's happening right now with the
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government shutdown. Some of my shop owners back on the East Coast are kind of feeling it.
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Customers tightening their wallets, big fleet accounts delaying maintenance money,
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just not moving around like it was two weeks ago. And it got me to thinking, what would happen if
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this started hitting the rest of us, or what do you do if this is happening to you? It also doesn't
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have to be related to the government shutdown. Maybe you've got a road closure in front of your
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business. Maybe the city, state, or whatever is doing wonky stuff, and it's affecting you.
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There's all kinds of local things going on as well that could be affecting you negatively,
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and maybe you need a parachute plan for that. And so, Chris, why does everybody need a parachute
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plan? In our businesses, we love momentum, and we have momentum. We have cars rolling in,
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phones ringing, invoices printing. That's the hum of life in an auto repair shop.
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Every so often, though, something's going to knock the wind out of us.
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Maybe it's a shutdown. Maybe it's a wildfire, a blizzard, a flood that cuts off traffic for two
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weeks, tornadoes. Maybe a key fleet client goes under, or heck, maybe it's a random road
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construction project like I was talking about earlier, and it kills our front door traffic
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for a month. And if you don't have a plan for what to do when the bottom falls out,
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you're just free-falling with your fingers crossed, hoping that something,
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something, my God, happens. Maybe we'll win the lottery or something.
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You can't put your eggs in that basket. That's where the parachute plan comes in.
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A parachute plan isn't about panic. It's about preparedness. And I want you to think of it
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like this. You don't pack a parachute because you plan to crash. You pack it so that if you
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ever do have to jump, you glide safely to the ground. This is the difference between being
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a reactive business owner and a resilient one. And when we look at this parachute plan, it has
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to have a few key components. Number one, know your numbers. How much cash do you actually have
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on hand? How much do you need on hand? Number two, define your trigger point. When do you pull
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the cord and take action? Number three, before you pull the cord, you need to prioritize your
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people. Who gets a parachute? Who doesn't get a parachute? Number four, communicate and execute
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because chaos hates clarity. As with everything we do, let's talk about the money first. This is
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the altimeter of your business. Right now, today, do you know how much you have in your savings
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account? Hopefully so. Do you know how long that money could sustain you if your car count dropped
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by 30%, 50%, 15%? If you don't know that, then you're flying blind. I want every shop owner to
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set up a parachute fund. This is a savings account specifically for emergencies. It's not your tax
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fund, not your profit account, not even your operating cushion. This is your in case of fire,
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break glass, pull the parachute, oh my God, what are we going to do fund? A good starting point
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is three to six months of fixed expenses. If you don't have it and you think, oh my gosh,
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three to six is too much, start with two weeks, then build it up to a month, then two months.
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That means rent, insurance, salaries, everything it takes to keep the doors open if not a single
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car rolls in. You can figure this out pretty quickly. Hopefully you know what your total
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monthly fixed expenses are. Then you take that and multiply it by one, three, six,
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whatever that number is for months, and that's your parachute goal. Also though, I need you to
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think about, because we're going to talk about the steps of this in our trigger point and what
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happens, what if I keep everybody and all my fixed expenses are the same, how many months can
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I last with that number? Then you need to think about, okay, step two is I let two employees go
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and these expenses are cut. That changes your run rate, if you will, and maybe you can stay open for
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six months on four months worth of savings. I need you to think about that as well.
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Quick math, if it costs 40,000 a month to run your shop, you're going to want somewhere between
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$120,000 and $240,000 sitting ready in that account. If you're, Chris, that's not possible,
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I can't do it, then you have fundamentally things wrong in your business to where you're not
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profiting enough or you're overspending or something, you should be able to get there.
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Now remember, our goal, if you sign up with us as a coaching client, is to net you 25%. That means
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cash in the bank flowing through the business. I know you're like, Chris, that's a ton of money.
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You're right, it is, but so is the cost of closing your doors permanently.
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The other thing I would tell you is if you had to close your doors permanently,
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everybody else in your business is going to find a job. You're going to be the one that can't eat.
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Your family's going to be the one that can't eat. You're the one that's going to suffer.
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They'll all go find jobs. Everything will be fine. The bank's not going to call them to repay the
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loan that you have no cash flow for. You need to make sure that you're taken care of in that fund.
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Again, start small if you have to, build it up month by month, but have that fun because when
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you need it, you're going to be thankful it's there. Banks and everybody want to loan you money
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when you don't need it, but the time you need it, they're not going to give it to you. You're
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going to have to depend on yourself. Step two, we got to set our trigger point. Every pilot knows
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when to eject. In business, you need that same kind of trigger number, the point where you stop
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business as usual and switch into protection mode. That trigger could be a cash balance.
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That's usually what I recommend. Maybe when your savings dips below 50,000 or you've got
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less than one month of expenses in the bank, that's when you pull the parachute. Here's the
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catch. You can't wait until you feel the panic. Define the number now while you're calm, rational,
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and not in crisis mode. When you hit that number, it's not a debate. It's action time.
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You're obviously going to freeze non-essential spending, delay projects, pause hiring,
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protect your cash runway. That's your level one response. If things continue to decline,
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you need to move into level two. Protect the core of your business. Talk with your team.
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Adjust hours if you need to. Focus your marketing dollars on the customers who already know and
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trust you. Notice I didn't say cut, cut marketing dollars because that's never an answer.
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If the emergency drags on, then you've got level three. This is survival mode. Cut every
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non-essential expense. Protect the profit centers that pay your bills. Yes, it's time to let people
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go. Some of you may have that in step two. That takes us to the next part. Who gets a parachute?
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This part's uncomfortable, but it's real. Every owner has to know who are the key employees I
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can't live without. You know the answer to this. I've had you do this before. I've had you close
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your eyes and say, hey, if you had to repurchase this business now knowing everything you know
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about your employees, who would you keep? Who would you not keep? Same thing. You're putting
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them in the scenario and making it work like this. All right. You know, who are the people
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who keep the machine running no matter what? Your top service advisor, lead tech, maybe the
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bookkeeper who quietly keeps your world organized. Those folks get a parachute. Then you've got
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others who are valuable but not essential. If things get tight, they may have to go. And I
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don't say that lightly. It's one of the hardest things about being a business owner, but guess
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what? Put your big boy pants on. It's time to be a business owner. You're the one that gets to make
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those decisions. Ignoring that reality doesn't make it go away. You can soften it. The best
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thing you can do is cross-train your team and document your systems. That way, if you do lose
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someone, the shot can still function. Don't wait for the chaos to start figuring out who does what.
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Map it out now. Have it in your brain. Have it written down. Have this plan in your red envelope,
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yellow envelope. That way, if something happens to you, your loved ones knows what the plan is
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and what you're wanting. I want to step aside for just a second. This is kind of bummerville,
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but all the time I talk about how marketing isn't something you do when business is slow.
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It's something you do all the time to build a strong, steady pipeline of customers. And that's
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exactly where my friends at Shop Marketing Pros come in. They specialize in helping independent
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auto repair shops just like ours, tell our story, attract the right customers, and grow our car
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count with proven marketing strategies that actually work. From websites to SEO, social media,
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Google ads, and even brand storytelling, they get it because they've lived it. They're shop people
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just like us. So if you're ready to take your marketing to the next level, check out
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shopmarketingpros.com and tell them Coach Chris sent you. Also on that note, I can personally
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tell you that they can provide results. Whether you've been in business for 40 years or starting
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one from scratch today, I've got one 40 and I've got one that's not even four months yet,
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and they are doing wonderful things for us. I could not recommend them more.
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That takes us back into the episode. The next step is communication and calm.
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When the turbulence hits, your team looks to you for calm. If they see you freaking out,
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they're going to panic. If they see you steady and honest, they're going to rally behind you.
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Be transparent and tell them what's going on, what the plan is, and what steps you're taking.
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But you don't have to share every financial detail, but help them understand the why behind
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the decisions. Also, you want to stop the rumor mill before it gets started. You never know what
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they're saying to each other, what they've heard in town, or anything else. Make sure you control
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the narrative, but be truthful. I want you to remember chaos hates clarity. The clearer you are,
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the faster you can stabilize. Next, we've got to review and refuel. Your parachute plan isn't
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something you write once and forget. You've got to review it quarterly because your business
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changes, your team changes, your costs change. You need to update your savings goal, adjust your
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trigger number, and make sure your system still makes sense. The plan isn't about expecting the
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worst, it's about being ready for it. Because if the past few years have taught us anything,
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from pandemics to shutdowns to park shortages, it's that the unexpected can hit fast, okay?
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And here's the bottom line. You don't pack a parachute because you're planning to jump.
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You pack it because you're smart enough to know that if you do have to jump,
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you're going to want it ready. Take the time this week, sit down with your leadership team.
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If that's just you, then it's just you. Identify your cash trigger point, build your parachute fund,
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review your team and your systems, and then I want you to sleep well at night knowing, hey,
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you're ready to glide and not crash. Remember, folks, success is built in the calm, but it's
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proven in the chaos. I want you to keep your parachute packed, and we'll see you next week.
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Thanks for listening. Let me know if you have a special topic or would like to be on the show.
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Email me at chris.autofixsos.com. One more time, I want to thank our sponsor,
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Shop Marketing Pros. They help shops just like yours tell your story and grow your business.
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You can explore many other outstanding podcasts dedicated to our thriving automotive repair
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industry at the new automotiverepairpodcastnetwork.com. While you're there, download our
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free mobile app available for both Apple and Google devices for easy access to all our shows
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in one convenient place. This network is featuring Karm Capriato, Remarkable Results Radio, Hunt
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Demarest, Business by the Numbers, Matt Fanslow, Diagnosing the Aftermarket A to Z, Kim and Brian
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Walker, Auto Repair Marketing Podcast, and my friends at Shop Marketing Pros, Craig O'Neill
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with Speak Up, Effective Communication, and yours truly with the Weekly Blitz. Remember,
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rise and grind and keep your mindset positive, everybody. Have a great day.
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You've been listening to the Weekly Blitz with Chris Cotton on the Automotive Repair Podcast
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Network. Download our exclusive podcast app at automotiverepairpodcastnetwork.com because
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the best conversations in the industry start here. Want expert advice on running your shop?
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Well, Chris is listening. Check the show notes for his email and send him your topics.
