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