Episode 36 – Are You A Man With A Business or A Business Man?

Rob Munro: Well, Chuck, we're back at her for another month again, more podcasts. And it's funny, know, was, I spent a lot of couch time in February on the couch. mean, I was watching a lot of Olympics.

There was a lot of things going on and I don't know if you saw that kind of a funny story. So we talk about quality control all the time in the shops and parts quality and that kind of stuff, but You win the gold medal, it falls off your neck, bounces off your toe and rolls down the street.

I mean, they, even they have quality control issues at that kind of level. So I don't know, I did kind of struck me a chord. I'm like, as much as we fight quality control in our conversations every day, it's like, what was going on?

How come these medals are falling off everybody's neck? But yeah, you can relate. You spend a lot of time with quality control.

Chuck: Yeah, absolutely. You know, and thing is, I guess, where you kind of separate things out. Okay. No one's going to get hurt by the metal apart. ⁓ that can the ⁓ with a lot of products that we in our industry built. So, you know, it's embarrassing. Now, I guess that's kind of like a, you know, the race engine. always, that old analogy, they would say, well, If it's a little loose, only I know if it's a little tight, everybody knows and but...

Rob Munro: Exactly. That's exactly right. Yeah. No, that's. So it's like I say, it just kind of struck a chord with me, but kind of on my funny bone only because I'm like we, how much we fight quality control every day, ⁓ with our, know, with everything that we do. And then you get to that kind of high level, you know, and that kind of high, high level athletics. And even they're having some issues. ⁓

Chuck: That's a fact. You know what's important to do any in any part of manufacturing just how we run our daily life and so forth even our home lives and auditing, you know, okay, you set a standard and you audit to see that you maintain that standard and one of the ones that we probably all hate because I'm bad about this is our or our patrolman that patrol the highways.

So we have a standard speed limits 55 miles an hour or 65 or whatever the case may be. But the auditor is going to be the cop that's out there making sure that you're running the posted speed limit. So, you know, we like to complain about other industries and whatnot.

Not, you know, cops seem to be, you know, not so favorite people, but hey, we a community set a set a speed limit or a rule or we elected people to do that and then they're just auditors. So, you know, if you think of it like that, mean, quality is all around us and the way to ensure that we quality, that we have repeatable and reproducible processes to audit.

So, I guess we'll get off that subject now. I can get in the weeds. ⁓

Rob Munro: No exactly and we do have a couple things coming up here also ⁓ future events we've got ⁓ Jasper regional is on April 17th so that's kind of our first kick at the cap for our regionals for this year. I that one hits close to home for you, you live in that area and you spent a lot of time at Jasper so tell us a little bit about what we can expect for that one.

Chuck: Yeah, true, true. Again, I worked there for 20 years and I've got a great relationship with Chip with a lot of folks that are still there. Just had the conversation yesterday, someone was asking about ⁓ there and where is it?

And I'm like, well, it's in Jasper, Indiana. He's like, ⁓ so Jasper named after the name of the city it's in. Like, yeah, they actually have a couple other businesses. That's too uncommon to be named after your, city that you're...

But yeah, Jasper Engines and Transmissions is Jasper, Indiana, the headquarters anyway. They have multiple locations throughout the US. But it's going to be a two-day deal. We're going to have ⁓ tour that's available to a ⁓ number on Friday.

Just of ⁓ management. you know, our first guys to register, you know, to get those slots. ⁓ And then we're going to have ⁓ tech sessions and we've got a pretty good lineup set up. And I think that everybody, you know, is going to be able to ⁓ away with something that they can take back.

one the presentations is actually going to be the, the AFM delete stuff with HP tuners involved because, know, they've worked with, ⁓ Jasper and Mellon and so forth. actually have a product that that's legal.

carb certified you can learn all about that how you can go in and you ⁓ get so you don't have a mill light that stays on and then you can actually use this HP tuners device is a really really good scan tool so ⁓ you sign for an account and they're gonna they're gonna speak to that stuff so ⁓ that's pretty you got you know Dan Bakley is going to speak Jasper's got their presentation Mark Maulberg.

Yeah, we're looking forward to a great event there.

Rob Munro: No, excellent. And if any of the listeners want any more information, I know we've got that on our website. So you can go to aere.org. We've got the regionals tab there. You'll be able to pull out all that information. We do ask that if you could sign up beforehand just so we can get a head count, because there's food involved and that kind of stuff. yeah, that's going to be kind of our first one and really looking forward to that. That's going to be good for sure.

Chuck: Right, right. That makes us ⁓ feel like we've, you know, got the season is starting to kick off again and get out there and meet greet folks. And, you know, that's one of the things that is super pleasant ⁓ these events just getting people connected ⁓ and meeting that that you've talked to on the phone, ⁓ you know, put you know, a face ⁓ and a name a handshake together and So yeah, love those. great events.

Rob Munro: And being a two-day event, I've heard you promise 90 degree weather, you know, it's going to be everybody will be just picture perfect. Bring your suntan lotion. Is that what you can expect in your area in April? Okay. Okay.

Chuck: ⁓ yeah, yeah, for sure. No rain on this, you know, gonna be coming, nothing, it's gonna be beautiful.

Rob Munro: Nice, perfect. Well Chuck, we're in for a real treat today. We're gonna be talking about... pricing and how to set your prices and that kind of stuff. And this is a pretty hot topic for us.

We get a lot of calls ⁓ on our tech line about folks trying to figure out a baseline as to how they can establish pricing. And we kind of pooled together some really good guests today. We've got David Arcee.

David is the mastermind behind Phytron software. And that's an engine machine shop software that a lot of our members are using. We have Dave Arcee, who's David's father, and he's got a shop in the San Diego area, been in business for very long time.

So this topic can also be, very passionate about it. I've spoke to Dave quite a bit at the different shows and stuff, and we've had really good conversation about ⁓ to establish a baseline for machine shop pricing and that kind of stuff.

And then we have Chris Hammond, and Chris Hammond is from Lakeland Auto Marine. ⁓ You might recognize Chris with some of our other webinars and stuff. Chris is our diagnostic guy, but Chris also owns a machine shop as well as a service tech center in the Ohio area.

And guys, like I mentioned, this is going to be a treat today. It's ⁓ great conversation getter. It's something that we're all very passionate about. There's a lot of machine shops out there that really just don't quite understand where to start.

They literally are struggling with the fact that, know, ⁓ know, the competition charges this much, so I should probably charge a little less, you know, just to kind of make sure I get the job on the door.

Chuck: Yeah, think I'd maybe... Yeah, welcome gentlemen, welcome. ⁓ Yeah, you know, with that Rob, with that intro, I think and David, you know well on social media that these questions are flying all the time too. But so is there a machine shop labor guide available? We take that call because there used to be some that were posted in some magazines and so forth.

Chuck: And as we move to a digital world, oftentimes we, you know, I'm not going to say we're going to deflect, but we're going to defer those folks to you. So tell us what you can about pricing.

David Arce (Fytron): Yeah, so we do have a built-in labor guide into our system. And more so for a baseline for those exact questions. It's not for the people who know what they should be charging. It's when it's something they haven't done before, or maybe they're a new shop owner or they're taking over ⁓ someone business.

That's where it really shines, right? And then they start, as they're doing the processes, they start to understand how long it takes to do some of these things. And then they adjust it themselves. I mean, a lot of the times you have places that already have an established guide, but it's really for those places that don't, or they're questioning everything that they already have.

So it's nice to be able to look at something and be like, well, how am I doing compared to what the standard is telling me? And so we've got some people that are lower and some people that are higher in terms of labor hours.

Rob Munro: that makes sense and so how did you guys like Dave and Chris, how did you guys even begin to establish a price list? know like what kind of got the, do you even start there?

Chris Hamann: How we started is when we got in the machine shop business in 1993 There was a guy that used to go around his name was Carl Brown And he was a traveling sales guy here in Ohio and southeastern Michigan and one of the things he had was he had a cardboard sheet and and it was a suggested price guide and you know sometimes we looked at some of those prices we kind of laughed like oh my god, and this is back in 93 94 like oh my god, we can't get $500 to bore a Chevy 350 block or you we can't get you know X number of dollars to do this or that and it was a guide so we kind of use that but how I come up with how I do it is you know if you want to bring an employee in your business let's say it's you know a machinist or whatever I mean everybody wants to make money So to me, gotta take what you got invested in the company, excuse me, in the employee, you gotta factor in building.

I got some fixed asset costs, and so forth, and I gotta factor in what the machine costs and the machine replacement value. And you gotta divide that out. ⁓ it's not worth doing the job. I I know it sounds crazy, a lot of people think they can't do that, but ⁓ have to.

⁓ If the guy down the street is boring blocks and let's say he's born a 350 block for $150 like it's 1976 I mean, he's not gonna be he's not gonna be in business long doing that You know not not not putting out quality work, of course But obviously a lot of us machine shops we fight people who do stuff in the garage and stuff now We have a lot of guys that have a boring bar in the service or maybe in their garage just kind of doing it at night, know, kind of competing against the shop fryer, I guess, so to speak.

I mean, I don't know about Dave, but that's how we kind of start is with we have to take that into effect. I mean, I have a number that when we put the key in the door every morning, you know, if we got to, if I'm going to lock that door, we got to do a specific number.

mean, if we don't do that number, at least average that, I might as well stay home. I mean, it's not worth it.

Rob Munro: And what do you see, Dave? Do you think, like, is it really area specific? You know, do you see pricing changing around the country? how did you figure things out?

Dave Arce (Fytron): Well, you know, this whole thing's got some history behind it, Rob, probably before you were around, but know, way back when, AERA came to me and had me fill out a sheet on what I was charging for cylinder head work and block work and that type of thing.

And I didn't realize how complicated it was until, you know, ⁓ kind of asked for some data backs to say, are we making progress on ⁓ ⁓ it just became so ⁓ different for every part of the United States that nothing really ever happened with it.

So, you know, we were all just kind of fumbling around and and really not making much progress on really coming up with an hourly type rate and how long it took to do some things, you know. And I'll be honest with you, that's kind of what ⁓ what David and I got going on and ⁓ was labor guide.

Now, my shop Originally I had bays and so you know I had all data Mitchell on demand and even with as much effort that was put into those it was never really perfect and we always wind up even charging more than what they what they had to offer you know I would just conversate with my technicians over that and say hey what do you think it's really going to take well the book says 12 I think I can do it in either 9 or I it's going to take me 14 it could be either or so you know our technicians are really valuable for getting that information back to them and then you start, you know, building a list of what things cost and you start getting better and better.

And as you build your shop and people get used to this and you have guys keeping track of time and that type of thing, you start, you know, putting that down on paper and start building something. And so off the top of my head, ⁓ always have some numbers in my mind about, you know, boring blocks and hot tanking and, you know, even jobs that ⁓ in ⁓ ⁓ say we ⁓ was doing a mag and it was cracked.

And it's like, well, how do we charge this customer? So kind of how it all started. And it is a very complicated thing, but I'll be honest with you. I think we're starting to get a grasp of it. And ⁓ of the things that I've been preaching out there at the PRI show and some of the other shows that I go to and so forth is, hey, how are the plumbing people doing it?

How are the AC people doing it? You know, how are the electrical people doing it? And you know, they got it. They actually got a pretty darn good system going on and we kind of I'm trying to take that and mimic it in our industry so we can come just as professional as they are.

Chuck: Yeah, and that's a good point. You know, it'll kind of lead into the next question, but going back to the price guide and a little bit of what Chris said is are weird industry and the fact that we don't do everything by a book or something.

So you go to a motor's manual and you're going to change a heater core. Well, it's pretty basic set of tools, but an automotive engine machine shop can have a vastly different set of tools that hugely impact the throughput time.

So even if you factor out even, you know, the cost of operation and so forth, if it comes just to the process, we're vastly, vastly different from shop to shop. So it's really hard to write, okay, to bore connecting rod pin bushings 45 minutes because okay, am I going to do it on a bridgeport?

Do I have a dedicated machine for doing that? Do I have no ability to bore? So I put them in there and hone them only. How do I control, you know, center to center dimension? It so it it's definitely a different animal that other industries where some of the tools ⁓ more standardized.

So emulating another industry. isn't easy, but ⁓ that apply in regards to ⁓ you still have to know what it cost, as Chris said, to put the key in the lock, turn that key and open that business. So that said, how do I even plan for adding equipment?

You know, how do you How do you look at your efficiencies and justify a capital expenditure? know, CapEx is always on somebody's mind. Well, how do I justify that?

Dave Arce (Fytron): Yeah, well, I'm not sure that I really answered your guys's question about the time actually coming up with it. But there's a lot of conversation in my shop where we're building that. Obviously, had some to put it on Phytron to get a start. And at least it gave guys something because a lot of them had nothing. And, you know, it is very complicated. But there's a lot of conversation between me, my technicians and my front office manager, which is my wife.

Dave Arce (Fytron): And you know, we all talk about this stuff and we making adjustments. I think we got our hourly rate squared away, but the actual times on certain things, and it seems like every one of these things that we're doing changes just a little bit on every customer.

And so we kind of keep track of it and we're doing the best that we can. Is it perfect? Absolutely not. But we're working harder and harder to keep get that documentation. And now with Phytron, we're actually getting information back.

And at some point in time, we're going to take that information and sort it and come up with some type of standard. So we're getting there. It's really happening. And this is something that just doesn't happen overnight.

But that's what my shop is actually doing. And we're constantly adjusting and trying to get it as right as we can. And it will never probably be perfect, but we're making great progress, to be honest with you.

Chuck: So quick question in regards to that. So if you're going to build some average time, so means you're getting information back, you create a data table and then you can sort highs and lows and say, okay, here's mid ground. At least we have something to offer. Does that happen automatically if you become a phytron client? ⁓ then ⁓ you keep your, are you getting that data back or is it a collaboration between you and a particular shop who is a member of yours ⁓ provide you that data.

David Arce (Fytron): So what's happening there is they're submitting the data to us. And so we go through an update occasionally. We're not constantly adjusting all of the times, you know, all the time.

So at least that there's some expectation of what it should be over time, not, ⁓ this was 3.1 hours last week. Now it's 3.3. I mean, you don't, you know, you don't want to constantly be doing it. So we just go through cycles and yeah.

As you guys probably know, you really got to scrutinize the information that you get. And that's actually the hardest part. And then also how they name things, what their tooling is. I mean, in I think eventually you get to a point where you have all of the situations that you talked about, Chuck.

The problem is, is nobody's had it in a digital format that we can collect. Now we're getting to that kind of point where we see all those different tooling situations and they have a timing associated with it.

And they can track how long, you know, someone was clocked in on that. So now we're starting to get some idea of how long each of these situations are taking. It's just not something you can do overnight.

Chris Hamann: That's a good point Dave because I think a lot of times depends on experience too because you if I've got a guy that's got 45 years of experience you know he can go knock out those John Deere pin pushings in no time. Well let's say I've got a younger gentleman that can't do that. Chances are I'm probably paying him a little bit less okay but it's gonna take him longer to do that same job you know and I think

Chris Hamann: And I think that's where the adjustments come in. I think a lot of shop owners struggle with that too. Where you have, we have this legacy, we have this talent erosion, I like to call it, starting to happen where we're starting to lose a lot of this talent.

We have young folks that don't know to grind cranks or put pin bushings. Obviously if you haven't grown a lot of cranks, your first crank you're gonna have all day in it. And that's if your machine doesn't need any work, which all these machines need work, let's face it.

I mean, you look at that, like, ⁓ my God, can't charge for that because I've got eight hours of incentive getting my wheel straight and getting ready to grind stuff. But that's where gotta kind of average that out.

Maybe that's a process you don't do, maybe you farm that out.

Dave Arce (Fytron): Right. So one of the good things about Phytron is if you're on with us, it's really simple for our users to be able to, if what we've delivered to them as a baseline, if it's not what they really truly need, the system has made it very simple for them to do a change.

So the next time they click on it and it comes right up and they got the numbers. So that's kind of cool. And ⁓ can add to their own list as much as they want. So that regards, it makes it very universal.

And I think that's what's really helping us and helping them make more money.

Chris Hamann: Yeah, that's a good point and I'll make this comment too. I think most of us like myself, right, I just have a high school education. A lot of us, we're not businessmen, we're men with a business.

And we don't understand sometimes how to make money. We have a passion, we like fixing engines, we like machining stuff, but then we forget the other aspect and this is where the software management system comes in.

That helps you, everybody wants to do, know, fix this 1928, you do everything on a ledger. You well, you can't do that anymore. It's too hard.

Dave Arce (Fytron): I hope I actually hope that we have a little bit of conversation about that. I'm glad you brought that up, Chris, is, you know, we need to talk a little bit about that. So, you know how, you know, we I'll say just real quick, we have guys that are trying to be financial people when in reality they're a machinist and they can actually make more money back in the shop instead of trying to figure out the relationship between QuickBooks and our software.

And they could just hand that paperwork to an accountant. that's going to be far less expensive than them losing their time to the shop. So we can talk a little bit about that too.

Chris Hamann: Yeah, I agree. And I think there's a couple of reasons maybe people might be afraid of software. Number one, they think that stuff's gonna get, ⁓ it's on the cloud, we can't do that, somebody's gonna see, my competition's gonna see my numbers, or there's some kind of glob that's gonna come in and steal all my information. Do you realize you're banking information's online? I mean, come on.

Chris Hamann: I don't think so. And the other thing too is, and I'm just going to be point blank, know, lot of people like to cook the books and they feel they can't cook the books if it's online. And I will tell you, if you're cooking books, that's not a good thing because you're just stealing from yourself.

You know, when you go to sell your business, you need a bank loan, something like that. You need your books to be right. A lot of us don't do that. And this is why some of the reason a lot of ownership and stuff, we spend the money ourselves.

Chris Hamann: and don't put anything back in the business. We want to know why we're boring blocks with a 777 Van Norman, or we're using brake lathe cutter bits to cut. It's because we haven't invested in anything.

Dave Arce (Fytron): There's something that you're absolutely right, Chris. I think we had some conversation about that at PRI. Yeah, yeah.

Chris Hamann: I mean, it's true. mean, a lot of us, and a lot of it's just because of how we've been brought up. Most of us got our knowledge from osmosis. You we watched somebody else in the shop, okay?

And we watched them and we took their techniques from 1972 and 1985, which were great techniques. And some of them are still great techniques. I'm not saying just because you came from then that you can't do it.

I'm not suggesting that. But you have to adapt. It's no different than Walmart. If Walmart didn't start selling online, Amazon would kill them. Every business has to be able to adapt. And you have to have some trust.

And I do believe software is a huge factor. I mean, can tell you from what my grandma used to do the books here, OK, with freaking ledger. I mean, it was almost like Ben Franklin. He had to dip the feather in the ink and all that.

I mean, it seems like it was that long ago. But where you come today with electronics, you get all this data out, like you said.

Chris Hamann: I can get data out that says, hey, how much has Bobby been spending grinding cranks? How long has my teardown guy been doing this? And this is how you kind of help formulate your labor rate.

Just like you said, this is not a perfect situation. don't expect anybody to come in here and bet $1,000 and go, yeah, you know what? I'm 100 % efficient. I got the right labor rate for the right. No, this is a work in progress.

You've got to take this stuff, when we take all these labor operations, and you tweak it, OK? Once we get going, ⁓ this is how it's supposed to work. And I think a lot of us forget some of that in the house.

Chuck: Yeah, that's good point. And I think we have to make a decision and pick a lane, right? So you've done, Chris, you're like, your just happens to be a four lane super highway. Cause you do automotive, you do Marine, you do, have a machine shop, you know, you're doing a lot of the, like, municipality fleet type service and support.

⁓ So you a team and ⁓ you to across all your business models, you have to use this model to make sure you can put your team in the right place on the right projects and so forth. And then some people make the decision that I'm going to be a one-man shop.

And you know, as Dave said earlier, okay, then he has somebody else to pay attention to the business side of it for him, hopefully. And you know, he's not taking all the money out of the business of himself and always looking broke.

You know, it looks like you make two bucks an hour and you know, in your business is not worth anything. yeah, there's...

Chris Hamann: That's a big problem. It's a big problem, Chuck. We see these guys, you know, they're retired. I'll tell you, my accountant told me something that resonates to me to this day. He says, Chris, don't you dare make your sale of your business your retirement plan.

And think so many of us do that is we think, ⁓ my God, we got this blue sky. There's this big, ⁓ my God, I've got, ⁓ I all this money on this equipment. I got the brand new Rottler, you know, ⁓ H85.

Chris Hamann: And you know what, I paid 100 and whatever grand for that. And you know what, my business is worth $1.6 million because you know what, on paper it says right here that I made $101.6 million last year.

And issue is you do that. A lot of these guys, they hit so much money and it really burns them. in the end. Like I say, when you want to give that business over to somebody and they got to go to the bank, chances are they don't have the cash in the bank.

When they take that to their banker and you show them that sheet that the business made $11 and you want $1.6 million for it, the bank's going laugh at you.

Dave Arce (Fytron): That's correct. That is correct.

David Arce (Fytron): You know, kind of to attack on... Sorry, kind of to attack on...

Rob Munro: But the, yeah, I was just gonna say, but the person selling the business has got two big pockets full of cash. You know, you're like, well, honest, it makes money, trust me, it really does, it really does. Right. Yeah.

Chris Hamann: Had. Had. He had because he blew it, right? He's got a new race car, he's got a new, and that's the other thing, you you never in your shop.

Dave Arce (Fytron): Had, yeah, had. Yeah, yeah. Whoa, easy guy, easy.

Chris Hamann: the last thing as a business owner, in my opinion, you want to do. You shouldn't have your personal items in the shop. Because when somebody walks in the front door, and I can tell you in our shop, anytime there's a nice car or something, people automatically assume it's mine.

Hey Chris, is that yours? No, no, it's customer. Oh, okay. You know why? Because they form an opinion, and they think you're making too much money. or something like that. And they're like, well, you want $170 an hour to turn, to machine this.

All of sudden they think that money's going right in your pocket. Sure, right. I'm just going down there. I'm going to the bar. I'm blowing every ounce of it. No. We have to have a rainy day fund. We have to train.

That's another thing. We don't do well in this industry. We don't save money for training and equipment, as we talked about. But that's a big deal. You shouldn't have any of that stuff in there. Chris's opinion.

Chuck: Yeah, there's well, have a society that ⁓ if you had a radio flyer wagon and you had a lemonade stand in it and you pulled it down the street, but it said Chris's lemonade stand or David's lemonade stand. Someone would think you're rich because you have something that has your name on it. So, I mean, that's always it's a problem. I think it must maybe they teach that and.

Chuck: elementary school or something, but it's a true issue. If your name is on something, automatically assume you're rich. And, so that's something that the, the global world needs to understand. That doesn't mean that it just means that you take more risk and, putting effort out.

David Arce (Fytron): You know, something to tack on to everything Chris was saying, that's kind of like, you know, behind the doors and you don't realize this until you get to the point of trying to retire or sell is mostly shops.

The owner is, is the shop. He's, they are the one that's worth that 1.6 million or the 300,000 there. That's what makes the business turn a lot of machinists there. mean, they're machinists, but they don't know how to.

eliminate the things that they need to do and pass it on to someone else. Now mind you, obviously hiring is another issue, but I mean, a lot of the knowledge that's stored is not getting passed on. And that's a huge problem.

Chris Hamann: Yeah, that's true, and I think there's two reasons for that. Number one, we have selfishness, okay? A lot of people don't want to the information to all. He'll never understand, he'll never do that.

And the other is the candidate, you know, he's not willing to start out at a lower rate. Everybody wants to come into a shop, they want to make top dollar, you know? You go on TV and they're like, ⁓ you know what, you can make $200,000 machine array, right?

They go to Joe Gibbs Racing or Hendrick or something like that. Right away, they think they're go right into a big time shop like that. Well, it takes time. gotta put your work in. A lot of times you're behind someone else.

I read a nice article about Mike Tirico, where he got hired by NBC as ESPN for years, but there was always somebody ahead of him, whether it was Bob Costas, right? Nobody's gonna outdo Bob Costas, but he just played the long game and he waited.

And he's prospering right now. And I think a lot of mechanics and or machinists.

Chris Hamann: know, right away we think we're 18 years old, we want to be on the guy on the dyno. work that way, you know. I mean, you got to start on the ground floor and put your time in. If you work hard, put your time in and you can retain ⁓ ⁓ three is actually the most important, I think. You will be successful. End of story.

Chuck: Yeah, because you have a capacity to learn. So that's the knowledge part of it. But how do you get the wisdom? You have to have experience. So, you know, I can, can know all the math, but if I don't have the pitfalls and the troubles and ⁓ experience, okay, you walk away at 82 casting cracks here, here, here and here. I mean, you don't teach you that in school. It's experience.

Chris Hamann: Exactly. And every shop's different. know, like we do a lot of Marines. Some shops do a lot of farm industrial. You know, I could walk into a farm industrial shop, I would probably struggle. You know, if I'm doing, you know, 12 cylinder mans or something or whatever, you know, something I'm not familiar with, you know, there's a learning curve there. You know, I mean, that's very true. That's what goes.

Chuck: So speaking of that, you know, not so could be a marathon Quite you know, there's ⁓ there's so meat on the bone here, but you know, so those specific things that that we know were problematic that are maybe hard to get paid for, you know, like if for your for instance, Chris, if ⁓ you do Diag, and you have to sell the dyke first.

When the machine shop, you have situations where if you pressure test, a guy may not want to pay you for it now you just identified that it's junk. Well, why do I want to put money into junk? So how do you get paid for a situation where they don't like the result and ultimately the it's junk, the car's junk, the cylinder head's junk, the block's junk.

Chris Hamann: Well, I'll be honest with you, we're prejudiced. If I don't know the person, we charge up front. If they're very good customer and we know they use this all the time, we don't do that. But if somebody walks in off the street and they come in and they say, hey, want to know if this exhaust manifold in this boat's good, or I want to know if this head's pressure test good, bam, we charge them an hour.

And our hourly rate, and I'm not going lie to you, right now our hourly rate's $155 an hour in a machine shop. all right and we charge that rate if we if it's a two second deal you know sometimes we leave it alone sometimes we don't depends on the situation I can remember back in the day when we used to get these 2.2 2.5 cylinder heads and Chrysler's and these dealership technicians would bring them in and they'd have the carburetor on the exhaust manifold the oxygen sensor hanging off them all this stuff and how do you supposed to pressure test that you know we did we build and remove that stuff okay we get guys that call us up all the time say hey Chris how much the pressure test ahead of where

Chris Hamann: My first question, is it clean? Okay, because it's not clean, I gotta wash it. I'm not putting that dirty ass nasty ⁓ my pressure tester, okay, and get all that stuff nasty, and that takes time.

I have to charge you to clean it, you know? Are there any broken bolts in it? Any exhaust studs that I gotta drill out or any easy outs you got snapped off half crooked? You know, I mean, all this stuff ⁓ is on top of it, you know?

And I know we're kinda laughing, but it's true, I mean. ⁓

Dave Arce (Fytron): Chris, you're 100 % right. And we manage just the way you just described, 100%. We see all the step ahead of time. And if we see it after the fact, my wife will make a phone call to the customer and say, you have a broken bolt that we gotta get out. Do you wanna get it out or do you want us to get it out? Things as simple as that. A phone call was very helpful to let them know. That way it happens.

Chris Hamann: And I think that... Absolutely. Communication is the key on anything. If you communicate well, you're going to be successful. Obviously, if this guy brings in this head, and you think I'm thinking years ago, we used to pressure test that for like $40.

We ain't touching that for less than three digits today, in no way. And it depends what it is. If it's a big, heavy diesel head, it's more. Because I might have to have a helper get in the pressure tester.

Chris Hamann: So, you know, there's issues, there's issues there too, but no, I, I, agree. You know, I mean, you got it. I tell people you can't be afraid to charge, you know, the race to the bottom is an easy waste of rent. You know, you don't to do that.

Dave Arce (Fytron): Yeah. You know, our worst... Go ahead.

David Arce (Fytron): You're charging for the process, not the outcome. And like Chuck said, this is the diagnosis portion of the machine shop industry. You go to the auto repair shop and yeah, you could get your own scanner and stuff, but there's more experience behind the diagnosis just because you get some codes up on the screen doesn't necessarily, know, what's going on, right? And so the diagnosis is really what you're charging for.

David Arce (Fytron): when you come into a machine shop and having that pressure tested or cleaned or magged and all of these things. So.

Chris Hamann: I agree and we fight that in the car repair industry because all these big box stores like Zone and Irish store, O'Reilly's all this stuff. What do they do? They advertise free diagnostics, right?

It covers the whole window, you know, free. And that's what people think. think, you know, and I tell them, sir, there's a difference here. All they're doing is pulling codes. I can pull codes. You want codes pulled?

No problem. I'll pull your codes. You know, you want it diagnosed. ⁓ that's different.

Chris Hamann: It's no different when you walk in an emergency room. know, hey, I got chest pains. know, you think he's gonna look at it go, hey, you know what, I'm gonna give you three aspirin. You know, if it kind of subsides, maybe you got high blood pressure.

I don't know. He's gonna check your blood pressure. He's gonna give you an EKG. There's a fee for all that, okay? And even if he's wrong in the diagnostics, he has a process. least we hope he has a process.

I can't stress how important a routine and a process is, and that helps you get paid because if you have a routine,

Chris Hamann: that makes it easier to charge for that routine because you know what, step one is we gotta clean it. Step two is we gotta, it's aluminum, we gotta put it in the pressure tester. And I know that's gonna take me least a half hour by the time I figure out all the leaks and all the adapters and move all the rubber pieces around so they don't hiss air and all that.

I mean, we got a lot of time in that. But you gotta get paid for that because I don't care if I'm pressure testing ahead, I don't care if I'm drilling out a freakin' broken EZ out in a freakin' exhaust manifold, or I'm putting a crankshaft together, or I'm diagnosing a car.

I have to get paid similar money. Otherwise, it's not worth doing that process. mean, we can talk about crank grinding because it seems like everybody loves to give that away, which is the most complicated, tedious process in a machine shop.

And we give it away because we feel, the guy can go buy a new crank from a big box store or whatever. Fine, go buy it. Go buy it. If you can buy it, buy it. And that's where you charge.

David Arce (Fytron): There's a lot of cranks you can't buy too. That's the other issue. And the technicality comes in because how many of those cranks are left? So you don't want to crash it then you got to get a new crank. Where are you going to get one if you can't? Right. So.

Dave Arce (Fytron): Yeah, Yeah. And we're taking, we're taking, we're taking advantage of that right now with our crankshaft process. You know, when you come into my shop, first off, if we don't know you just like what Chris said, and the first thing that we're going to do is we're going to clean it and wet mag it because I don't put no crack cranks in my crankshaft machine.

Cause if that thing comes apart, it's extremely dangerous. Anyway, so the process is, is that, you know, you get a clean, you get a wet mag, then it goes on the straightener. And then we check to see a straightener and then we check the size.

Dave Arce (Fytron): By the time you're done with all this, this guy's got two hours into it. We're charging like $350 now and it's finally starting to rise. It's a big process to do that, especially if you have all the equipment there to do it properly and that's what we want to do. We always get shunned at it because we charge too much, but I don't care. I'm just like Chris, you got to get paid for it.

Chris Hamann: That's right, because I tell you what, when you and I are in the poorhouse sitting out there because we were given crankshafts, we're gonna be poor anyway. So what's the difference? Why operate at a loss?

I mean, that's what lot of us don't understand. I think we think like, ⁓ my God, I can't do that. I had a shop a number of years ago came to me and says, hey Chris, I want you to start turning my cranks.

And he says, well, I'm paying 150, $175 to get a V8 crank. I said, good, keep paying it.

Dave Arce (Fytron): You're right. Yeah. All right, 100%. Yep.

Chris Hamann: I can't, number one, I'm not the best crank grinder operator, not gonna lie, okay? So it takes me a lot of time to do this, all right? So if you're coming to me, it's because you're just 10 miles down the road, it's a convenience. And anytime there's a convenience, you pay. You ever see on a bill a convenience fee? Okay, that's why it's there, because it's convenient and you gotta pay for it.

David Arce (Fytron): Hahaha. I mean, that's what the credit card charge is, ⁓ right? It's convenience for you, right?

Dave Arce (Fytron): You know, I want to I want to just say right here with all that I'm seeing right here. This attitude right here is and this is not greed. This is about staying in business, making enough money to buy the next piece of equipment.

What we're talking about here is is so good for us. And this is what we've got to get out there. to start charging properly. Don't let anything slip through. We always have a little bit, but we don't want that stuff to slip through a lot.

So. I think this is really good. I just hope we can get a lot of people on here and really feeling this and really get our industry rising up. I think it'll be a great thing.

Chris Hamann: I agree. You know, I think, Dave, think a lot of us, since a lot of us don't have a lot of education, I'm not ripping on people, I'm not saying we're stupid, I'm just saying we don't have that business background. Most of us aren't MIT grads, we're not Harvard, okay? We're not some Ivy League guy, you know? I don't know how many Ivy League guys run a machine shops, you know? But my point is, is we have to understand that we have to be profitable.

Chris Hamann: And the customer will probably understand that too. They may not understand that, but that's fine. Take it somewhere else. Because I can't operate, I might as just close the shop. If we can't be profitable, as just close the shop. You can't do that.

Dave Arce (Fytron): And I'm not gonna lie, I mean, it's getting a little bit easier and a little bit easier to get things up because there's not as many shops as we used to have. And I don't necessarily like that, but hey, this is maybe what was given to us to get us in the right position to really truly make a good living at this and be able to pay the people that are coming in and pay them a proper wage and they can make more than the people that are doing hamburgers and the simple, you know, non-career places, you know.

Chris Hamann: Exactly. I was going to make that point too.

Chris Hamann: And we have to have benefits too. How many times, this has happened too, is a lot of times the women have great jobs and have health insurance, right, take care of the kids and stuff. And the husband had a job, he trimmed trees or he worked at a machine shop or something. And a lot of us shop owners were just paying these guys with no benefits. I'm giving them $27 an hour, no pennies. That don't fly anymore.

Chris Hamann: We as an industry, you want good people and you want to grow from within, you have to supply benefits. mean, this is not 1976. I mean, cannot get away with this. Health insurance is big deal.

It's very expensive. ⁓ You to have a retirement plan. This is how you attract good people. can't afford that. Well, ⁓ you to change your business plan a little bit. you got to have a niche okay you got you got it there's got to be a demand and there's you got to have the supply if you're the supply for the demand that helps you charge for your jobs too.

Dave Arce (Fytron): Chuck, does this answer some of the questions you think?

Rob Munro: How are you guys handling the old, know, my competition does it for less. That's the old, you you hear, can't charge $160 an hour because the shop down the street is only 130. What is some of your guys' responses when you have customers that are kind of, you know, giving you that line?

Chris Hamann: Well, you know, typically what I'll do is like, let's say, and this kind of goes into like maybe a little bit of a parts discussion too is, you know, guy will say, well, hey, Chris, how much to rebuild this 350 Marine engine?

All right. And I'm going to say, well, you know what? Give me $15,000 when I'm done, I'll give you the change back. Okay. Now the problem is, is that that's kind of an arrogant response, but you know, the issue is, is I'm probably not that far off because we like to do everything.

Chris Hamann: Well the guy will say, hey, I can go to such and such engines and buy a long block or I can buy a used engine. I'll say, okay, does it have a warranty? Are they gonna seat trial it with you?

Okay. Is all that important? know? ⁓ because God forbid if you have a problem, you know where I'm at. Okay. You know, if you buy something from there, you don't know what you're getting. You know, I mean, and most these remap places are great places.

I'm not trying to bash any remap place compared to a machine shop. All I'm saying is... is a custom job done by one person, you sometimes has a benefit over a job or 300 people touched it. if you want that, it's just like Henry Ford, right?

He figured out ⁓ using the assembly line, he could get stuff done faster. Well, ⁓ that opens up the quality issue sometimes. So if you had one guy doing it, you're gonna have to pay more for one guy to do it.

It's gonna take longer, you know, but ⁓ think that's part of it. you I think a lot of us in the machine shop business, We feel we have to buy direct, or we have to buy everything at the cheapest price.

We spend time on the phone calling engine supplier A, and then we call engine supplier B. Who's got the cheapest rod bearings for a 8.1 GM? Okay, you know what, so and so's got those cheaper. I'm gonna buy the rod bearings from them, I'm buying the main bearings from this guy, I'm direct from the gasket manufacturer, so I'm gonna do this, okay?

You just spent an hour on the phone screwing around, trying to find the cheapest price, so you think... to make you feel better. All that is is like a self, what's the word I'm looking for here? Like a self-worth thing.

Like you know what, I'm saving. If I wasn't here, we'd be paying too much for these prices. How many times you heard that? Well, I don't care where I buy this stuff from. You know why? Because I put my mark up on it no matter what it is.

And you know what, if I pay a little bit more and get it from that guy, ⁓ I pay a little bit more money. And if someone or JEGS has got it cheaper, that's fine.

Chris Hamann: let someone jakes come install it on your boat or your engine. I don't have a problem with that.

Dave Arce (Fytron): And this is the attitude we have to have.

Chris Hamann: And these guys, but to answer your question, how do you deal with that? I think that's where you just gotta have like a five minute heart to heart with the customer and you say, listen, sir, I understand that.

Or you know what, I can buy the engine kit from so and so and you put it together, which is a whole nother discussion. Okay, because now you have a warranty situation, hey, let's say it leaks oil. Well, that's your rear main seal, that wasn't mine.

So it also gives you an easy cop out for the shop too. And I trade that kind of interesting. You know, I don't typically let people bring their own parts in to save money. I try to have the parts come from here, because it's the old adage, right?

When you go to a restaurant, you don't take your own steak and potato and ask them to cook it, do you? I mean, what restaurant can you do that? I might be able to do that in Florida with my fish, OK, but that's just a rare instance.

so I a lot of customers, know, a lot of shops say, you know what, you just get the parts. I'm not going to mess with the parts, OK? But I think they need to be relationship driven, you know. If you have a sales guy at a specific parts warehouse, you need to deal with him.

All these guys think they gotta buy direct. Oh, I gotta buy Mali Direct, I gotta buy FeltPro Direct. I can't make any money unless I buy direct. That is the easiest way to put you out of business because you've got minimums and now all of a sudden you're buying all this stuff.

I have friends in the parts business that will not sign up with a distributor such as an AutoValue or a Federated or a Big A or a Parts Plus or something like that. And they're in that medium zone. where they think they gotta buy direct to be competitive against in an auto zone or an advance or a rock auto or something like that.

And your service needs to sell it. And that's what you need to sell when it comes back to this guy that says, this guy can do it cheaper. You know what? You're providing a service. It's no different than you want a knee surgery done, okay?

When you walk in a knee surgery, do you want the guy that's done 25,000 knee surgeries or the guy that's doing a second one, okay? And that's where comes into something like this. You're paying for this, this tribal knowledge.

I think that's what you've got to try to sell. If the customer doesn't agree and says, hey, I want to take it to ShopBit, that's fine. That's OK. We'll live to fight another day.

Chuck: Right. Sometimes you got to have, you have to fire customers. They're, not meant to be your partner.

David Arce (Fytron): Yeah. There's like three main topics Chris went through there that I think are extremely important. No, they really are. One is, ⁓ back communication with your customer, establishing that relationship, using your knowledge to explain to them the problems that you're seeing with their job and ⁓ all this knowledge that comes out that makes you worth more.

It doesn't really matter what the competitor's charging. In a of cases we see it, ⁓ well, they're charging $90 an hour because they don't have

David Arce (Fytron): They don't have, you know, property to pay for anymore because it's all paid off and they're, you know, they're, to go out, out of business at some point anyways, because they're going to retire. Right. And that's fine. There's nothing wrong with that. But you need to maintain this level moving forward so that you can be profitable.

Chris Hamann: Hey Dave, I'd like to add something to that, because you brought up something that just popped in my head. Here's another thing I see a lot of shop owners do in my opinion, is we get to that age, again, I don't care if it's late 50s, early 60s, where owners start to pull the horns back.

You know what, I'm not gonna invest any more money, I only have five more years to work. I'm not gonna be here that long. I'm not gonna go ahead and do this, crazy. Then what are you doing? You might as well just shut the door now.

mean. Because if you're not willing to keep investing in your business, how are going to attract somebody to buy it? Let's say you got somebody from within that maybe is interested in buying the business.

And you stop because you're like, you know what, I'm not investing any money because you're going to start pulling money out. You might as well just pull out of your retirement. I mean, I see a lot of mistakes with that too, Chris's opinion.

Dave Arce (Fytron): You know, you guys, you guys... Go ahead.

David Arce (Fytron): On the parts side, mean, the calling and contacting, I mean, you're totally right. mean, time in the shop is more valuable than making your $10 profit margin. Even if you took just a no loss situation on all the parts, if you could just spend five minutes to get all the parts you need and then get back to work, making labor in the shop, making those man hours, that's way more valuable.

Now, like one thing with our system, you know, not to plug it, but we're going to be allowing our users to order parts right on the invoice or at least see the stock. So they don't got to call, you know, five different places or log into 10 different portals to find the stock and then order it, you know, that's, ⁓ a huge time sink during the cold COVID area era.

And it still is. ⁓ not a solution that's being solved. I think we're the closest to really being solved. closest to solving that. And that's a big issue is really it's just pass along the cost to the customer.

And if the customer doesn't like it, then you know, they can go somewhere else, they can bring in their own parts. But if they want to bring in their own parts, then it's 30 % more on the waiver and you get no warranty.

So you know, pick your poison, right? Do you want it done right?

Chris Hamann: Yeah, exactly. And to add on to that, that's why I typically have, I have my first, I deal with a place that I like. I like the guys that work there and I try to order everything online because it's quicker.

Anytime you pick up the phone talk to somebody, you've got more chances for things to go wrong. They could transpose the number wrong, things like that. Now you've got UPS, you're sending stuff back, that costs money.

So you know what, when I call, like I'm doing an 8.1 GM engine,

Chris Hamann: I just made a phone call before I came on here and I said, listen, I said, here's what I got. I said, I got a standard crank. I got 40 over pistons. I want your Delphi lifters, blah, blah, blah, blah.

And just go ahead and send it. Click. I might've been on the phone for 45 seconds. Okay. And, and, and I see so many guys where he spent, you know, they spent so much time, you know, just getting on, you know, just trying to find the cheapest place.

It's like, you know what, you know where I make money is in that shop. I don't typically make money in the office. Okay.

Dave Arce (Fytron): That's the answer, You're 100 % right.

Chris Hamann: And that's personally what I'm better at. I am not a bookkeeper, okay? That's not my, am I the bookkeeper here? Yes, okay. But is that my strong suit? No, okay. So my strong suit is working with our technicians, working with our guys, and doing the machine work. So that's where I like to focus my time, okay? Because I feel like we're more profitable.

Rob Munro: And that's where management software is. mean, I'm dating myself a little bit here, but I mean, back when I had first purchased management software, I'm talking, I could have bought a brand new balancer for the same price.

I mean, I paid tens of thousands of dollars for our first sort of, know, but the salesperson said, it's going to make you money. He goes, this is just like a piece of equipment in your shop. This management software is going to make you money.

I mean, think of it, how many, look how much time you guys probably spend on doing estimates.

Dave Arce (Fytron): Hit. It's more than any of us. If you were to track that Rob, it is more than you really truly think. Just like what Chris is talking about, ordering a part takes him 45 seconds. There's guys that will spend a half an hour doing that. Over 10 bucks. It's like why?

Rob Munro: Great. And if you've got a, like I say, if you've got all that stuff pre-populated in a good management software that you can just bang those estimates out. mean, again, how much is your time worth in? Yeah, it's.

Chris Hamann: Well, to add on to that, to me for common stuff, okay? And I don't care if you're working on a run of the mill diesel that's popular or a gas engine or marine engines like I'm typically working on, I should not spend that much time looking for parts.

Now, if I'm working on a 1932 Chrysler Crown and a Matthews Playboy Vogue or something like that, and it's gonna take me some time to find some bearings, I have to charge for all that because I'm gonna have some time.

you know, trying to research all this stuff. know, hey, I didn't buy it, make it, or break it. I'm just asked to fix it, okay? So, just because you brought me a 1932 or you brought me a 2007 in here, okay, it's gonna take me a lot more time to do that little 1932 six-owner than it's gonna take me to do this 81, because 81's kind of more revelant and parts are rarely available.

You know. and some of that stuff, the guy that's got that old engine, he's probably gonna be willing to pay for that anyway. So don't give it away. This is where the niche comes in. If you have a niche, whether it's drag racing, marine, or a roundy round, or something like that, that's why the people are coming to you.

They're coming to you because you know. They're not coming to you because you use a cleavage bearing or whatever. They're coming to because they want this.

Dave Arce (Fytron): Chris, do you have that as a line item on your invoice, or is that just embedded in what you're doing?

Chris Hamann: I'll add it to the labor. So what I do is, yeah, that'll start an argument. If I put a line on there, hey, 1.5 hours looking for parts, I go like, well, I could have done that. My wife's a professional Googler. We could have done that. That's not, don't, yeah, yeah. Absolutely.

Dave Arce (Fytron): Yeah, that's why I'm asking. Yeah, yeah, that's why I'm asking. That's why I'm asking. So you you hide it in there, you hide it in the labor somewhere. And that's what I do. I do the same thing. And that's what some of these guys have got to learn. They've got to learn.

Chris Hamann: ⁓ And typically the easiest place to hide it is in the assembly charge. Okay. So, you know, if I have 16 hours assembly engine, maybe I got 17 and half. Is the customer there with a stopwatch? Is this like Olympic swim thing? You know, no, you know, I mean, they don't, they don't know that, you know.

David Arce (Fytron): In assembly, I mean, that's one of the most variable jobs. And a lot say that's not even worth doing because it takes so much time.

Dave Arce (Fytron): Yeah, right. Absolutely, yeah.

Chris Hamann: A lot of people, because that's the liability, whoever put the engine together, if it ticks, has 10 pounds less oil pressure than it did, if it hesitates, if it's anything, it's the guy who put it together. Always.

Chuck: Yeah, the more you own, the more you own. you take responsibility for all of that, the responsibility doesn't go away. ⁓

David Arce (Fytron): Yeah. You know, when it comes to like having a software and it doesn't have to necessarily be ours, just ours is geared towards the industry you know, there's a lot of things that guys are missing.

⁓ this, you it could be from, you know, building estimates, not being able to easily add that onto your invoice, your specifications, you know, all of your clearances, your surface finishes, everything about that, what you could charge to give them their their specification on the engine you built for them.

You're balancing your EPA or waste disposal fees that you got to charge for taking waste out anytime you're doing tear down and that stuff. Your credit card fees, you know, all of those things get missed all the time, along with just parts.

I mean, if you're not, if you're not ⁓ tracking that your handwritten notepad, which most of these guys are doing, you're gonna miss it and you're gonna lose money. So then your whole pricing model of what you're charging per hour, you're losing money.

Chris Hamann: And I like to add on to that too David is you know in the old days when we did everything by pencil and paper you know is I can't say how many times we put camberings in for free You know because you forget you know you're like ⁓ yeah Or you get the phone rings or this happens right and you're sitting here writing everything down You got to remember everything and nobody can remember everything okay? Not everybody's got a I agree

David Arce (Fytron): Yeah. It's almost an ego thing in the industry. It really is. know everything that's in the shop and it's like, no, you don't. Be honest with yourself.

Chris Hamann: Yeah, I mean, I bet you there's probably 20 engines that got free camberings installed by Lakeland Auto Marine, know, thanks. I didn't even get a kiss, but hey.

Chuck: Exactly. what is what is go ahead and go ahead Chris.

Chris Hamann: All I was just going to say is this is where the shop management system comes in, where you have basically you open up a new ticket and bam, bam, bam, bam, bam, bam, bam. All these line items are there and it's easier to remove a line item than it is to add a line item.

So you know what? This is overhead cam. I'm not putting gamberings in it. Click. Okay. Out of here. And it reminds you to do that because how many times do I handwrite an invoice? Do you forget something?

I forgot to charge, put the freeze plugs in. Oh crap. I forgot to forgot the bill for the freeze plugs in the first place. Oh crap. I forgot to do this.

Chris Hamann: And this is, you add that up over time and I'm telling you, it's scary on what you gave away. We are the biggest reason, we engine builders, we love to give stuff away. I mean, it's like buy one, get one. That's us. ⁓

Chuck: So what does every pilot have before they take off?

Chuck: Yeah, you have a preflight checklist. So you go, you do this, this, this, this, and this. So that's what software kind of gives you. You can establish a checklist and Rob and I talked about auditing as we first come into this. You know, my background is a lot of quality auditing. So you have a process. Well, a process is usually got some parameters in there that you have to make sure that you hit.

Chuck: So by getting these softwares, okay, you start to go down through there and you know, you don't know what you don't know and you get educated about it and then you realize you know nothing, right?

⁓ as you're going through this software and like, ⁓ this guy's got this for me to check and this for the ⁓ by being engaged in that you're going to educate yourself in being a better businessman instead of a man with a business.

because you have some checkpoints, you have some waypoints. I can audit myself again and again, and then it makes it easier that you don't forget about charging for the cut plugs or the cam bearing install or whatnot.

So, you know, that's the whole, I have a process, a process needs to be repeatable. And then ultimately I build something that's reproducible. So David, you came from Dave's shop. So you learn these things.

So what Dave taught you, hopefully you could reproduce. You couldn't, you didn't just repeat it. You could get the same results. So with these processes, you could both make the same amount of money on the same class of engine time and again.

Dad can do it. Son can do it because I have repeatable and reproducible processes. And I think these, software's help with that. Even, you know, printing off your process spec sheet and just going down through check, check, check.

That's you can start there, but you really need something that's going to help you tabulate data. And then you can put quantitative numbers to dollars and cents because at the end of the day, right, we're going to be in the business.

That's the only thing that really matters. don't think anybody's doing this because it's a charity.

Dave Arce (Fytron): Yeah, back in 1995, we had four copies of an invoice that we were handwriting, the back one being a hard copy, because it made it easier for filing. In the year 2000, I used Microsoft Works to write a little program so I could get away from handwritten. And part of the reason that irritated me with handwritten is I actually had these shops

Chris Hamann: Like I say, we give. Go ahead, guys.

Dave Arce (Fytron): that were saying, hey, what is this charge? What is this charge? Why are you charging me, me EPA? know, EPA was really big back then when they were first getting started. And let me tell you, when I wrote that little program that carried me for probably what, 10 years, David, I think, was amazing that after we started printing professional looking invoices, all those questions stopped.

It was absolutely amazing. I just couldn't believe it. It's like, why didn't I do this sooner? It was just, it was wonderful. It was wonderful. And it didn't do, it didn't do nothing, but getting even better from when David developed this software to what we got now.

It's just really taken a lot of irritations both sides out of the way. So it's been really nice, really, really nice.

Chris Hamann: I think most of it Dave is people are scared. Most of our engine builder industry is the older crowd and they didn't go through school with computers. When I went through school in the 1980s and early 90s, we had an Apple IIe, right? I played Oregon Trail. Well, a of these guys didn't even do any of that. So they're afraid of computing and they're afraid of that stuff. And it's just like when I do training with oscilloscope training.

Chris Hamann: you we get the older guys in there they're struggling with the computer more than the younger guys. Well we have we have a shift in the industry happening where we're going to have some younger people.

Well younger people are automatically computer savvy. mean my daughter you know senior in high school right they give her a chrome tough book chrome tough book yeah a chrome thinkpad whatever it is and a chrome book yeah.

So this chrome book and a lot of her schoolwork is done on that you know they don't use chalkboards anymore. We used to have the chores, had to clap the erasers and get all the dust out. That stuff's all gone, you know?

And I think that we have a shift, we have a lot of guys that they're just afraid of a computer system. They're afraid. They're afraid. You can't do, it's too easy to miss stuff. Paint, that's another thing I miss all the time.

know, two cans of paint, right? There's 20 bucks here. We gave the can brings away, that's 50 bucks. Right there, we just lost $75 on the job. Gone. And you add that over.

David Arce (Fytron): Yeah, ⁓ yeah, paints, big one.

Dave Arce (Fytron): Some of that stuff they don't even miss. say, I don't have time to put it on there. They don't put it on there. If you got a system, you click one button and it fills it for you. It makes it simple. And now you're not losing this money. Yeah, keep track of how much of that loss you have between all those little items. You'd be amazed at what comes up.

David Arce (Fytron): Yeah. You know, there's. ⁓ There's a huge thing. ⁓ yeah. There's a huge thing when it comes to software. Why use software, right? At all. ⁓ two aspects to it. The one is that software allows you to make more complex jobs easier. And that into the second aspect, which this means that you don't need to have a lot of training. Now, that doesn't necessarily apply for a lot of our ⁓

Chris Hamann: and pay for the software in a hurry. ⁓

David Arce (Fytron): machine shop stuff, especially if you got manual equipment, but look at all of the new CNC equipment. You program it once on something, you click a button and it runs, right? And so now you can either have a person that's less skilled clicking that button.

They don't need to know all the ins and outs necessarily. Same thing applies when you're building invoices. When you're doing your handwriting, you know, your person answering the phones or whatever, they gotta know everything about what's going on or they gotta come back and ask you, okay?

Well, if you've got all this information built into templates and your software system of common things that you do, maybe you got the oddball here and there, but now it eliminates a lot of those situations.

you know, ⁓ many cylinders does it have? They can just start asking these simple questions and then they go down the items of each labor operation without having to necessarily, you know, understand everything about that labor operation.

Chris Hamann: Well, and I like to add David that most of these folks are doing, know, they're especially shop of some sort, whether they do a bunch of race. And once you have that job in that system, you've already got it predetermined in there.

Yeah. I already know I'm using these parts of this and that. And it just makes it, it just makes it so much easier, you know, and, just like the reports, you know, I mean, if you want to report or something and look, I mean, I look at this stuff all the time.

You know, I mean, I'll be honest with you. QuickBooks made me a bookkeeper. All right.

Chris Hamann: But you know what, we used to get QuickBooks, let's give you a for instance, and I'm sure you guys are gonna agree with me on this, is you QuickBooks started out, bought QuickBooks, you had to buy it every three or four years.

Now it's a subscription. Now it's $1,000 a year. Okay? And I got a shop management system that I use by using QuickBooks too. Now, they've got the market cornered into it, God bless them, know, but they have taken something that has started out small, and now, they're a juggernaut and kind of like a must-have.

your to me if you've got a real accountant, mean, he's ⁓ not stuff in stone like Moses. I mean, he's got to have a computer system. ⁓ He's doing that. exactly, exactly. ⁓

David Arce (Fytron): Yep. Everyone's got a computer system at this time. And to some extent, all the big companies are partial tech companies at this point because you have to be in order to compete.

Chuck: Yeah, you know Chris going back to what you said or go Rob.

Rob Munro: How many times did you guys? Yeah, I was gonna say, how many times have you guys get the phone call from, let's say the dealer or someone you did work for at the end of the month saying, can you send me a copy of invoice number, such and such, such and such, and such and such? Well, you think about how much time that would have normally taken, but right from your computer, you can just do do do do, boom, email done. Right.

Chris Hamann: very, you know, our point of sale system for our parts store. I can't tell you how many times at the end of the month, Rob, we get calls so and so, because what happens is somebody come get something, construction companies were the worst, okay?

They come in because they got a job down, they grab the slip, right? They go to McDonald's or whatever, want to open the two guys, get out of the truck, the invoices blew out the door, okay? And now the office lady gets here and she's got 22 invoices and she wants to know what's this for or what's that for?

Now, when you come into our store, as soon as that person signs for it, it's got a signature pad,

Chris Hamann: and just like the shop management system here, okay? Sometimes the work you're doing for is not the person who's actually paying the bill, okay? Because you guys as business owners know that. How many times we get a bill and it's like, okay, we got that, what is that? What's that for? Okay? So, you're sending that invoice over and now you've got all these copies, you've got the paper trail.

Chuck: So Chris, I'm going to jump backwards a little bit and go with something that you had mentioned and you said about people being scared. I was recently involved in an ASE test writing deal and a gentleman on the panel said, you know, oftentimes ⁓ do people respond when they don't understand something?

When they're scared of it? They react negatively and they attack it and I kind of jokingly said, yeah, you know, if we everybody always says, is there Sasquatch? Is there a Bigfoot? Well, yeah, I do really do exist now.

But if there was a Sasquatch, what would we do? We would attack it and kill it because we don't understand it. And that's that's our nature. So a lot of the folks that older folks that aren't familiar with CNC machines or.

Chuck: computers and so forth. They act what they don't understand. And I'm guilty of that stuff too. You know, at my age, I attack things that I don't understand instead of trying to seek out more knowledge and use it as a tool to help me.

Like CNC machines, you know, we talk about canned cycles. Well, now it's go plug and play. Well, I want to, I want to circle interpolate. You know, it used to be it was lines and lines of code to do something of that nature.

Now you just pull cycle over, you give some offsets, you give some tool dimensions and I drop it in there. I take this can and I load it in that to that block and makes it really easy. You know, Rottler's done things so you don't even have to know that language.

You know, I pick this and this. So again, I think we all have to think about, hey, don't attack it. Just try to better understand it and then I can maybe use it because they're all tools in your toolbox.

you know, going back to that list earlier, if we have those checkpoints, then they're probably going to educate us because, okay, I have to check the box. I don't understand the box. So I ask a question.

Now I understand the box. No different than going to the doctor, we've mentioned a few times. They give you this sheet about your family. You know, what's your family history of disease and so forth. Well, ⁓ don't know this, this and this.

And then you come to find out, well, you know, their genetic issues, heart problems, blah, blah, blah. Well, you only know when you start asking questions.

David Arce (Fytron): Yeah. What's nice about software is even if you, even if you click a button, I mean, it's not like you have some sort of consequence that's going to carry with you. It can always be undone, right?

Even if it does something you don't expect, then you can call and say, yeah, I clicked this. What, what's going on? You know, that's, that's also a very nice thing is allows that interactivity, you know, without having to be necessarily, you know, scared to do things as well, even when you're using it.

David Arce (Fytron): I've seen a major adoption of just like, you know, I'll get a call either they'll be from after they talked with you guys, ARA, or it'll just be someone I've talked to in the past or emailed like, Hey, I'm not good with computers.

You know, I've got, you know, a few years left in me and I want to get on the system. I mean, it's really changed in the last few years. I've had a lot more of the older demographic wanting to hop on board, even though they don't know how to use computers.

mean, ⁓ gentleman I talked to last week, he's working off of ⁓ from like 2008. I mean, he's like, I barely know how to use this stuff. ⁓ mean, ⁓ ⁓ able to use it and you know, he's had a couple of questions, but he's off to the races already.

Chuck: think the older crowd picking up smartphones has probably helped that.

Dave Arce (Fytron): Yeah, yeah, yeah, it really has.

Chris Hamann: Well yeah, because all these apps, you know, if you want to go to a football game or something, it's all mobile ticketing. Your force, your doctor, right? He's giving you, there's an app for your medical app or whatever. I mean, it's right there. I mean, it is right in front of you. You have to. And like I said earlier, you know, what accountant are you dropping off a fricking ledger from 1985 to? These accounts don't want it. You know, exactly what you did.

Rob Munro: Yeah, you should take your shoe box in, you know, like that's exactly how you did it. You took your shoe box in. Yeah.

Chris Hamann: Here's my accounts payable. Here's my accounts receivable. You figured out Mr. Accountant, you know. And.

Dave Arce (Fytron): That's the way we do it. You save your purchases and you save your sales and you say, here you go, let me know when my books are ready. It's better than spending a bunch of time on it when you're not an accountant.

Chris Hamann: But you know, to your point, you hired a professional to do that, right? And you're comfortable with that professional. It's no different than a machine shop, okay? You your goal as a business owner is to get people to drop their keys off and drop their parts off and say, you know what, call me when it's done.

Just like you do with your accountant. You know what? The bill might be five grand, it might be $2,600, might be $1,100. I don't know. But you know what, I trust him, he knows my business, and you have a relationship with him or her.

Dave Arce (Fytron): Absolutely. Yeah. Yeah. Yeah. ⁓ Yeah. Yeah. That's what I do. Simple. Yeah. There you go. Yeah, 30 years. 30 years we've been doing it that way. We don't get in the details. they are.

⁓ us know at the end of the month. We'll take a look at them. You know, ⁓ want to spend my time in the shop and my wife is equally as valuable. Yeah. Yeah, that's what we do. know, we get David, David, we get several calls of guys trying to link up to us with and trying to do their QuickBooks and they truly I think.

Chris Hamann: Exactly. know, do what you're good at.

David Arce (Fytron): I, it really is a dicey situation. Cause I mean, if you're already, you know, been hazed into using an accounting system, it's fine because you know how to use it already and linking it up.

It's not going to be any different, right? It's just going to benefit you. when Chris, I mean, you, you, you already know how to use yours. You've got a systematic way to do it. But for the guys, I'll get a call back.

Okay. We want to move to your system and then we're going to get QuickBooks accounting or QuickBooks online as well. like, okay, hold on.

David Arce (Fytron): First of all, you should move software at a time because it's gonna be a lot for you. And then two, have you used it before? Because if you haven't used QuickBooks Online before or even QuickBooks Desktop, it's gonna be a lot.

I really don't think that you should reassess this after you get one software down. And we've people on ⁓ all ends the spectrum, some that just hand in their printed invoices, some that use QuickBooks Online, some that use QuickBooks Desktop.

And then, you know, I guess there's the occasional that doesn't really have an accounting system. ⁓

Chris Hamann: Well, and paper's expensive. Look at when you buy a ream of paper now. I mean, to me, it's just like we have probably about 300 accounts here that I still, we have accounts receivable for a parts store and stuff. And I let certain people, if you have an account and you're good standing, I'll let you charge an engine, because we have marinas and stuff that we let them do that. Okay, but typically engines, I make sure they're paid before they leave the door. But.

Chris Hamann: But what I'll do is instead of printing that invoice and hand it to them, we email it to them. I cut down, know, hell, used to get a Christmas card from Staples last year I didn't get a Christmas card because we don't use that much paper, right?

Because we didn't make all that. So I'm off their Christmas card list, see? ⁓ the paper costs a lot of money and a lot of guys, you can actually find little bits and pieces by that. Email it. I mean, who in this world today does not have an email address?

David Arce (Fytron): have to because everything that you do digitally requires an email everything so they got an email nowadays

Dave Arce (Fytron): Yeah, everything requires it. Yeah.

Rob Munro: Right. Well guys, don't mean to kind of copy off or wrap this up, but I think this is a conversation we could probably just, you know, this would be a case of beer and an afternoon we could keep going with this one for sure. we do exactly.

Chris Hamann: You're right. This is the VIP party extended is what this is.

Rob Munro: Right? But hopefully we've kind of put some ideas in everybody's head, you know, like, because again, these are, these are all, you everybody's got lots of questions, but we don't necessarily have all the answers.

And I don't necessarily, just because you listen to this podcast, you may not still have the answers, but at least you maybe could start asking the right questions. You know, that that's kind of the, and, ⁓ I think we've tried to basically, you know, I think we would all agree that for sure a management software definitely makes you money.

Rob Munro: It's a huge tool in the toolbox. So, yep, for sure.

Chris Hamann: It can't hurt you. It can't hurt you.

David Arce (Fytron): And it's so inexpensive nowadays that you can pretty much pay for it with one labor hour in the shop or, you know, not missing the things that you usually are missing on the the invoice. mean, it's so inexpensive now.

Chuck: right. You know, Rob, think if I were ⁓ to say, you a title for this, you know, because like Mike always says, always as you know, before we land the plane, we're going to listen, take something that we heard in the conversation and try make it the title of our of our podcast or something.

And we don't necessarily, we don't really do that. ⁓ But if you to think about that, I think we could walk away from ⁓ something that Chris said and that's are you a man with a business or you a businessman?

I think we need to be you kind of straddling that line especially for some of ⁓ the smaller owners you know one to three man shops you got to be somewhere there.

Rob Munro: Well guys, I really appreciate your time. ⁓ it's, you know, all of you all have regular things to do. know Dave, you're running your shop. You know, David, you got software to write and Chris, same thing. You're running your shop. So really appreciate your time today and coming on and ⁓ to us about it. And yeah, I just.

Chris Hamann: problem. Thanks for having us. This is a great conversation. had a great time.

Dave Arce (Fytron): Yeah, it's wonderful. It was really good, guys. I think this thing's going to probably open some eyes with some guys out there and at least encourage them to take that next step forward in trying to improve themselves in this area.

David Arce (Fytron): Yeah. Yeah, same. Even if it influences them to come talk to any of us, know, at any of the shows. And so I think it's good to talk about.

Chris Hamann: Anybody. It's investing in your business. mean these guys are still a lot of people still run off neb's invoices you know.

Rob Munro: Agreed. And if anybody's got any questions, you know, for Dave, David or Chris, I mean, we do have a podcast email. ⁓ eppodcast at aere.org. So if you have any questions about our podcast or anything on the podcast or the topic that we talked about today, by all means, we can forward both Dave and David and Chris, any of your questions so we get them over to you.

Guys, I appreciate your time. Like you you got... ⁓ It's just a wealth of knowledge and like I say I'm looking forward to seeing you all again here at the next regional or wherever we happen to meet up so I appreciate your time.

Dave Arce (Fytron): Thank very much for having us. Thanks, Chris. Thanks, David.

Chris Hamann: Absolutely, thank you guys. Appreciate it.

David Arce (Fytron): Yeah, thank you for having us. Yeah, thanks Chris. Thanks Dan.

Rob Munro: Well, Chuck, I say, it's a topic we get a lot. And ⁓ I was really happy with how things went today. I we covered a lot of ground. I got a lot of questions there, I'm pretty sure.

Chuck: Yeah, and from folks that are energetic and passionate about it. Dave Arcee, it's been his life. It's been Chris's life. You know, his dad started the business. He's, you know, he was the kid running around in the shop probably underfoot ⁓ ⁓ he owns the place and, and know, he's just, he loves it and he's passionate.

He teaches. ⁓ In addition to that, you know, so you got a guy that has a marine shop, automotive repair shop, engine machine shop, a parts store. ⁓ and in a spare time, he teaches at a community college.

So anyway, those are some of the great people in our industry, right? We have, ⁓ not the only one.

Rob Munro: Right. And then you look at. Right. And you look at David, like David R.C., you know, he grew up in Dave's shop and, ⁓ you know, thought to himself, I think I can make a better mousetrap.

You know, I can, there's something I can contribute to this industry somehow, some way and help it do better, make money and prosper. And ⁓ yeah, it's like I say, we had three really good guests today.

It worked out really, really well. If you're not subscribed to our Engine Professional Podcast, we are on all the streaming platforms. So I would encourage you to subscribe to the podcast. That way you'll get notification as to when the next one's coming out.

Like I mentioned before, if you have any topics or anything that you want Chuck and I to cover, just ⁓ email us at thateppodcast at aera.org. And I really appreciate you, Chuck. As always, can't wait to see you at the next event.

Episode 36 – Are You A Man With A Business or A Business Man?

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