From Mechanic to Consultant: Turning Heavy Duty Repair Shops into Profitable Businesses

In this episode of Know to Grow: A Light to Heavy Duty Podcast, host Chandler Kohn sits down with Peter Cooper, founder of Ascend Consulting, to discuss why so many heavy duty repair shops struggle with profitability despite solid revenue. They break down the financial and operational metrics that truly drive EBITDA, common pricing and workflow mistakes, and practical steps owners can take to improve efficiency, margins, and long-term enterprise value—whether they plan to grow for decades or prepare for an exit.

Chandler Kohn: All right, everybody, welcome back to Know to Grow, a Light to Heavy duty podcast hosted by your host, Chandler Kohn with Focus Investment Banking. It is Monday, February 23rd. Today I have on Peter Cooper, founder of Ascend Consulting. Peter, tell the audience a little bit about yourself and we’ll get into it.

Peter Cooper: Yeah, thanks for having me on. So my background is as a mechanic by trade. Went to school to be a mechanic, got a degree to be a mechanic, spent 25 years in the industry in different aspects of it everywhere, from being a mechanic at a union shop to starting my own shop, to now what I do is after selling my shop and moving on to other things, I decided that I really wanted to help other shop owners because I’ve, you know, being in the industry, you talk to so many different people and you see the things that they struggle with. And I realized that there’s a lot of owners out there that need a lot of help, specifically in business. They, they know how to fix a truck, they know how to fix cars. Very few of them know how to fix a business, though.

Chandler Kohn: Excellent. Well, great. And I’m really looking forward to having you on, you know, your boots on the ground from a slightly different angle than me. You know, I really help shop owners exit their businesses, consolidate with private equity and other investors. And you’re kind of on the, the forefront here, really helping them grow no matter what their future plans are down the road. So let’s, let’s kind of. We’ll start with a statistic here that you threw out to me. You said 41% of shop owners don’t take a regular paycheck, and those who do only take an average salary of 74,000, roughly. Tell me a little bit about this. I see a lot of shop owners, whether they’re clients or prospects of mine, you know, all across the country. And what we see, quite honestly, varies in terms of performance. So tell me about this statistic, who you see, who you work with, and then we’ll go from there.

Peter Cooper: So really what this statistic is, is it’s about whether they take a regular paycheck, meaning you’re. You have enough cash to actually pay yourself regularly. And what I’m seeing with this statistic is the majority of shop owners, to be blatantly honest, would be better off if they closed their shop and went to work for their competitor. I can guarantee you that the majority of these shop owners could go to work at any one of the giant dealership networks in town, and, and they would pay them more than $74,000 a year to be a technician.

Chandler Kohn: Yeah. Now you have a, probably a certain sample pool. Right. That you’re looking at. Obviously your clients need your help kind of on a, kind of on a broad national level. Obviously there’s different shops that are performing well. Some utilize technology better than others. Do you have any sense for those statistics? Kind of nationwide.

Peter Cooper: So I think one thing you have to understand in this statistic, and this has been what I’ve found historically with shop owners is they take a W2 wage. So a lot of them go ahead and pay themselves and they’re doing it through whatever, you know, QuickBooks or whatever their payroll is and they don’t know what they’re taking out of the business. They have no idea because their books are such a mess. You know, I, I go high, evaluate businesses and the owner will tell me we’re not making any money. And I look at their balance sheet and I’m like, why does the shop own a boat? You know, and, and so it’s one of those things that I work with a lot of shop owners and say we really need to be precise here. If you own a three quarter ton diesel truck, the shop owns it and you drive that truck every day back and forth to work and that truck is not delivering parts all day, every day and it’s needed for the business. That is not what you think it is. That is actually an owner buyback or it’s, you know what I’m saying. So people, meaning owners don’t really understand fully what they’re taking out of it. And I think so that data actually came from, it’s called the State of Heavy Duty Repair Report from Full Bay, publishes every year where they do surveys and they look at data and honestly in this industry it’s probably the most accurate thing we have because there just isn’t a lot of hard data that talk about the numbers in this industry.

Chandler Kohn: Yeah. And you know, I, I, I see it, you know, my client base, you know, you know, I see their financials through and through, you know, income statement, P and L balance sheet, cash flow statement, most of them, you know, there’s, there’s generally issues in there that, that most don’t have their heads wrapped around. I have one client that’s really doing a great job with it and has that detail. But yeah, that’s true. I mean on my end I see even folks that are ready to exit the financials aren’t clean. So I want to hop into this a little bit. Your role as founder of Ascend Consulting is to fix the Operation. It may not necessarily be a turnaround operation, it just may be an operation that needs to become more profitable. Maybe they’re looking to enhance their ebitda, capture some of the low hanging fruit, you know, when it comes to M and A and just general kind of shop level, you know, detail around performance. Like let’s just say you’re a GM looking at various locations. You know, a lot of what we see that folks are interested is seeing, you know, revenue per technician, revenue per day, technician utilization, technician efficiency. So those four, you’re really looking at something else. You’re really looking at cost of parts, cost of direct labor with parts operating overhead with managers and cost of service providers. So those four are different than the four I mentioned. There’s no overlap. Seemingly. Tell the listeners why you’re looking at what you’re looking at versus these other four KPIs.

Peter Cooper: Well, because I think, you know, honestly I’m a real big believer in let’s keep things super simple, the KISS philosophy. And with that we have to look at what drives ebitda. Well, what drives that? Profits. Well, how do you make profit? Well, I learned a long time ago one of the fastest way to fix cash flow issues is, is make more profit. And so most operations that we go into, for example, you mentioned tech efficiency. The average shop in the United States, and we’re talking independent, operates at about 50% efficiency. Now even their own data will lie and say that it’s higher. And I’ve been able to prove that wrong because here’s an example of it. A lot of times the owner will go out into the shop and help and he will do work and it gets billed, but it gets billed under no tech. So when we look at the hard stats, the efficiency looks high, but it’s actually not. And if we talk about that, you know, rough numbers, say you look at an average shop in the US three or four million dollars in revenue, we’re talking average independent. If you’re running 50 efficient, you can take a four million dollar shop, making an eight million dollar shop overnight without increasing one penny of overhead or expense by just fixing efficiency. And even efficiency we have to be careful with. Right. Efficiency is a vanity metric. And what do I mean by that? If you have, you know, Joe Smith, mechanic, and he works 10 hours a week and bills 10 hours a week, he’s 100 efficient. But last time I checked, none of us can pay the bills on 10 hours of labor. It just doesn’t work. So the thing I focused on is build hours, for example, It’s a very simple metric. How many hours did you build this week? And do we have standards about that? And if we can get a technician billing over 80%, there’s this magic thing that happens in this industry. Once your efficiency, your tech efficiency breaks 80%, almost every bit that you get above 80% is almost 100 profit.

Chandler Kohn: Interesting. Yeah, good point there. Now, some of these, some of these, you know, I guess the KPIs that you look at, yeah. They look on the kind of, on surface level, they look like any shop owner could diagnose and kind of think, fix this. Right. It’s not as complicated as kind of utilization or efficiency. Tell me, tell me about that. You know, how can you come in here and diagnose an issue when, you know, maybe a shop owner can’t? Is it bandwidth? Is it something else?

Peter Cooper: I think a lot of it is the outside looking in. There’s two. There’s two phenomenons that happen with human psychology, and that is that we all become immune to our own stink or mess or confusion, whatever you want to call. But it’s this phenomenon where we get used. This is what normal is. And we have a skewed reality of, well, that’s normal because the guy down the street’s only charging 160 an hour. That’s all I can charge. Well, no, you can charge more than that. The other thing is we’ll talk about cost of parts. Why is that so expensive or such an important thing? The majority of general repair truck shops, so most of your aftermarket independent truck shops are what you consider general repair. They work on the whole truck. A lot of them look at parts as a necessary evil. They need to look at parts as a revenue source. And the reason why is, is about 50 of your sales are parts, and yet nobody makes any money selling parts. Why, why do you devote half of your sales to one thing that you give zero amount of strategy and zero thought? So, you know, a perfect example, I had a shop that in a lot of managers, they manage from a place of fear. I can’t raise my rates. They will leave. Yeah. And I usually start small and say, okay, let’s just raise the margins on parts below $5. And I actually did this as an experiment with the shop. And it was a fairly small shop, only about $3 million in revenue. And I got the owner to agree to it in 90 days. He picked up $42,000 in additional revenue just by bumping up the margin on parts under five bucks, which, let’s be honest, most people don’t Even pay attention to that little stuff. Yes. If you get a customer, they’re going to call the dealer and find out what an air compressor costs. But no one ever calls the dealer and says, how much is the mounting o ring or any of the gaskets? You know what I mean? The ancillary little stuff is actually where you can make the most profit margin.

Chandler Kohn: Yeah. Interesting. And did you. And just so the listeners understand, how much did you bump up those profit margins on average for. For parts under $5, 20%.

Peter Cooper: We took them. Roughly speaking. I tell people that if you have parts under $5, you should have a 300 margin on them. Well, excuse me, 300 markup, which correlates for margin, which. That’s another really common misconception. Even I mess it up sometimes talking to people. Markup and margin are two totally different things and they get really confused. So owners have to be very careful that they understand the difference and how that affects the bottom line. Because a lot of shop owners, they think that if they have a 25% markup on parts, they’re doing good. And I’ll be honest with you, that’s not good. That’s. That’s a quick way to go broke.

Chandler Kohn: Yeah, you know, I see a lot of, you know, folks in the equipment supply industry that are able to mark up equipment for shops or, you know, paint booth equipment, whatever it is, you know, by those margins, you know, 200, 100, 200, 300% seems to be pretty standard in the equipment industry, just not necessarily in the parts industry. But. Interesting point you made.

Peter Cooper: Well, here’s an example. It all comes to psychology. Let me give you an example of this. So I had the air conditioner fixed on my house and the H Vac technician, the H Vac company charged me 582% markup on Freon. And I called him out on it. We had a conversation about it. He said, absolutely I did. And that’s what the market is. And he’s absolutely right. That is what the market is charging. Now my question is, is why is it that in the automotive and truck repair industry can we not charge that markup on mar. On Freon? Why is it that one industry gets it and we don’t? And I think a lot of it comes down to owners don’t think they can and they don’t have a parts strategy. Like they. How do you know how much you could charge if you have never tried? Like, if you don’t push the limit and, and track your nose, how do you know what people are willing to pay.

Chandler Kohn: So, yeah, this is kind of spurred two questions on my end, right. One, you can kind of, you know, I think a business in general can kind of position themselves as kind of a value provider, right? And then you can kind of position yourself as a, as a premium provider of service, right? Premium means, you know, you have deep relationships. Uptime matters. You know, the truck’s not going to break. People want good service. Value is just kind of, you know, more of a cost focus. If you’re looking at parts above $5 and you want to raise your margins, right? And you’re trying to figure out, hey, do I want to be a value provider? Do I want to be a premium provider? If you keep going up, you may eventually piss your customers off. They may leave, they may, they may say, hey, this is ridiculous. We don’t want to have 582% markup. How do you incrementally kind of test what your customers are willing to play? How do you implement that?

Peter Cooper: So it’s actually very simple. It’s the how do you boil a frog? Philosophy. And it’s, you do it slowly. You, you keep track of what people care about. You have to use some strategy. So dealing with some of these big operators, there is a little bit of difference between the automotive field and the heavy duty. Perfect example. Yes, Soccer mom can take apart and look it up and find out what a battery costs. They can. But when you’re dealing with a fleet manager that operates 150 trucks, they know what a battery costs. So you have certain parts that are commodity parts that you can’t charge. Just the industry won’t bear it. The problem comes in is, what can you charge more for? And going back to air conditioning, I had this epiphany one day. I was actually playing technician that day, working in the shop, working on a truck, fixing the air conditioning. The driver of the truck did not care that his steer tires were so bald that the cords were poking me in the leg as I’m working on the air conditioning. But he absolutely refused to drive that truck. The air conditioning didn’t work. Now think about that for a minute. If we understand human psychology and we know what people are willing to pay for, then we know we can charge more for that. Part of that all comes down to tracking the nose. If you do not have a mechanism in your business to track lost sales, then you need to start it. And what’s a lost sale? If the phone rings and that person is not looking for the Pizza Hut, they’re looking for what you do if that vehicle does not show up, that is a lost sale, period.

Chandler Kohn: Yeah. Now I think where this can get confusing is at kind of at scale. You know, a lot of people carry a decent amount of parts, some more than others. What, what’s your typical SKU count that you see with your clients? And, and how do you, how do you scale all this across a variety of, of parts numbers?

Peter Cooper: Well, part of it comes down to the, the same thing. You got to track it. You, you got to track what’s stopping your, your truck from getting fixed. And honestly, the majority of the time it’s not availability of parts as much as it is. You have a very inefficient system of quoting and acquiring parts. I see it every day in shops. You get a technician who. Well, I asked for that part. Where did you ask for it? Well, I walked up the park counter and asked for it. That’s not how you need to be doing it. If it’s not writing, it’s not real. The other thing is, when it comes to what skus do you do you need to stock? This is where it gets really hard. It’s almost a science or an art form you could call it. So perfect example. I managed shops that were in inner city Chicago. I could get any part imaginable in 15 or 20 minutes. Why stock parts? Why stock a clutch that takes 10 hour to change if I can have it in 20 minutes, I don’t care how many of them I change a month. What I care about is can I get it now? One of my shops that I started from scratch was in a little tiny two street town on the complete opposite side of every truck repair shop in the greater Des Moines area. It was an hour, one way for me to go get parts. It was two hours round trip. So I had to stock parts that I could change in under two hours. That was my philosophy. So my philosophy on stocking parts has more to do with time than it has to do with inventory, turn and all the other things that we really care about. Because you have to understand, a lot of the parts philosophies that people try to adopt are philosophies from a retail setting. You are not in a retail setting when you are fixing trucks and you’re pulling from your own stock. Totally different philosophy.

Chandler Kohn: Yep. And you’re Talking about retail versus kind of B2B wholesale, kind of like a whole.

Peter Cooper: Yeah. If you’re not, if you’re not selling parts across the counter, that’s what I call retail. So that’s a Retail sale where somebody shows up and says, I want a brake chamber. You sell them a brake chamber. And a lot of this is also a really common point of perception versus reality. Owners will tell me, well, we sell parts across the counter. I said, oh, really? Well, which percentage of parts do you sell? You know, they’ve had this beautiful showroom. They. They stock some chrome and all this fancy stuff. And we look their P. L and it’s 4%. It’s 4% of their gross revenue is part sales. And I said, I think we’re focusing on the wrong thing.

Chandler Kohn: Yeah, I would agree with that. So let me help. Or help me wrap my head around some of these other. Your three other kind of metrics. So we got cost of parts out of the way. Talk about cost of direct labor with parts.

Peter Cooper: So that’s. With parts person. So what that means is if you. If you have a. So have you. You have a $10,000 invoice. On a $10,000 invoice, you can only afford to spend 17% of that ticket. So $17,000 on labor. Now, a lot of people argue with me and say, I can’t, I can. You’re right. You can do whatever you want as an owner, but ultimately understand that every percentage that you pay over that, that’s a percentage of profit you’re not taking.

Chandler Kohn: Now, how do you. How do you. How do you kind of. You work with owners to. To get down to this number, right? If they don’t think you’re able to, or they don’t think you’re able to do this, how do you practically implement that?

Peter Cooper: So the easiest way to do it is how are your people motivated? If your people are not motivated to hit a metric, meaning you don’t share the metric, they don’t know the metric. They’re not going to hit it. And I have this saying in my industry that I say this constantly. If you don’t know what good is and you don’t know what bad is, how do you know where you stand? And a perfect example that is, is as owners, we would never imagine that we would ask a technician, rebuild an engine and not tell them the specifications for. For reuse of the cam lobe. So camshaft. But we ask technicians to go out and perform their job, and we give them no specifications of what good is and what bad is, and they have no idea how they’re doing. And I think that’s a really. We’ve really missed the mark in this industry about sharing data and KPIs. So we. A technician knows what you expect of them, you don’t have to spend very much time managing them. The other thing is motivation. Whether we admit it or not, whether. And this has really become a huge thing in this industry. You know, people just in this generation talk about work, life balance and things like that. Yeah, it still doesn’t matter as much as people think because let’s face it, we all have to make money to survive. And so a lot of people say, well, I’m not motivated by money. Well, you’re not here doing it for free either. So you really are motivated by money. And I think we also have the wrong conversations with our employees. You know, during an interview, a lot of people, they try to get out of somebody, well, how much are you making? What’s somebody going to offer you down the street instead of looking at as a value proposition and ask the real question, how much money do you want to make? And owners don’t usually have a career path. And what does that mean? If a technician came into you right now and sat down in your office and said, I want to make $120,000 next year, do you have it on pen and paper that’s published in your organization? This is what you have to do to make that much money.

Chandler Kohn: Interesting. Very interesting. Operating overhead with managers.

Peter Cooper: So that’s everything else, that’s everything else that we haven’t talked about. So that’s the price of all your overhead employees. And what’s an overhead employee? It’s someone that doesn’t produce work. So in a shop setting, that’s going to be your. All your back office people, or we would call them front office in this industry because usually people think of the back of the shop as the production floor. But it’s your owner, your manager and owner. When I say owner, it’s if you take a W2 wage, managers, electric bill, insurance, all of that. And generally speaking, what we find is the majority of businesses, and here’s a really crazy fact, most offices in a repair shop are running at about 30% efficiency, meaning that they are way overstaffed, they have way too many people. I mean, I’ve seen shops that. It’s a 50, it’s a 50, 50 ratio. So if they have 10 technicians, they have 10 support staff. That’s a really inefficient operation.

Chandler Kohn: That’s one I haven’t looked at before. Yeah, that’s, that’s quite interesting. And then the calls to the service providers advisor.

Peter Cooper: So those are your sales staff. So you could also throw in there if you have outside sales People, which a lot of shops do. Now you would throw them into that metric and it’s pretty straightforward. It’s the amount of money you pay to service advisors or service advisor plus outside sales. Now the thing about these numbers that I have and we can share them is it doesn’t matter if you’re a little over here and a little over there. All that comes down to the bottom line, which is net profit. And that’s what we use this for as a diagnostic. Because if we look at it and all the numbers are good, but the overhead is really, really high, well now we know where to look. And that’s why I like to dive at it that way. I like to look at it as a diagnostic procedure.

Chandler Kohn: Single shop doing 10 million. I just want you to throw a couple numbers out there. Heavy duty shop. What do you look at in terms of gross profit? What’s a good number kind of gross

Peter Cooper: profit on a ticket? 62%.

Chandler Kohn: 62%. So overall business, whether it’s a ticket basis or you have a hundred tickets over a month, you’re saying 62%.

Peter Cooper: Correct. And what we found is, is that that is about what the market will bear. Now everybody has unique situations, the type of work they do. If you’re big job heavy, meaning you’re like a body shop that’s doing 80, $90,000 jobs, you’re probably not going to get that. But for a general repair mixed type of work, we’re doing some engine overhauls, we’re doing clutches, we’re doing other things. 62% is an obtainable goal.

Chandler Kohn: Now what if you’re a specialist, right? What if you just do steering and suspension, which is challenging still actually you can get higher.

Peter Cooper: So perfect example, my shop really specialized. I have a firm belief that the riches are in the niches. So I hyper specialized in RVs. And everybody hates to work on RVs. I guarantee people are cringing right now if they listen to this. And that’s the thing to make money on. It’s like working on trash trucks and septic tanks. I know it’s a crappy job, but let’s face it, because of that you could charge more. We were charging almost double labor rate on RVs. And the great thing about things like RVs are is you can get by with making it a time and material job, meaning there are no quotes. We will give you a general idea of what it’s going to cost and if we run into problems, we’re going to stop and talk to you. But there is no book time that tells you how long it takes to change an injector in a C9 cat in a Freightliner chassis, motorhome, there isn’t. It doesn’t exist.

Chandler Kohn: I like it. Now, if you go up to, let’s just say every $10 million you go up, you. You add a new shop, right? So 20 million, you have two locations. 30 million, you have three, obviously your back office or your accounting. You may not have a person at every single shop. Right. You just have one person. What is, what does that kind of. Well, that, that’s kind of really the EBITDA question, because expenses are sitting below the cost of goods sold. So let me. I’ll get back to that in a minute. If you’re looking at a shop or various models where you have 100% labor and then you have something with like 50 labor, 50 parts, right. How do you diagnose those gross profit percentages? You know, I think the labor is going to be more expensive. I think if you’re flipping parts, it’s not going to be quite as high. Is that right?

Peter Cooper: Well, honestly, it’s the type of work you do. And that’s another example of if it’s not close to 50, 50, generally speaking, what’s going on is you’re doing more repairs. And instead of replacing parts, which actually we can dive into that, get into efficiencies, we’ll use it. We’ll use an absurd example, but it makes sense. Can I rebuild a starter? Yes. Are the parts available? Yes. Is it profitable? No. Engine overhauls are another example. And I will go to the ends of the earth arguing this with the, with an owner. It is not profitable in this day and age to overhaul an engine. I absolutely can buy an engine cheaper and swing a crate motor from Cummins. Then you can rebuild it? Yes. Can you rebuild it cheaper? Yes, you can. Can you do it more profitable? No. You can. And that’s the whole point is people look at the wrong thing. They look at gross sales instead of looking at profit. And honestly, let’s all be honest with ourselves, profit’s what you put in the bank. You don’t put gross sales in the bank.

Chandler Kohn: Yeah, it doesn’t matter. You know, we, you know, we have folks that we talk to quite a bit looking to exit their business. They come to us say, hey, you know, looking retire, My health’s not as great, looking to transition, don’t have a family to take over, et cetera, et cetera. We’ve been growing steadily. So you see the revenue going like that, which, you know, we get an initial give an initial thumbs up. That profit sometimes is flat, sometimes fairly increasing, which means your profit margin is getting smaller as you go forward, sometimes it’s decreasing. So revenue, yes, it’s a good top line metric but at the end of the day it, it doesn’t tell the true story. Let’s hop down to EBITDA and you know, a lot of folks are listening, know what that is? Earnings before interest, taxes, depreciation, amortization. It’s a metric for cash flow. So what goes in your pocke, retained earnings on your balance sheet, what you can invest in your business to keep growing it. If we’re looking for a 32% or 62% gross profit margin, right. Then you add in all your expenses. So your front office folks, any other overhead, your insurance expenses, etc, your rent, what EBITDA number, what EBITDA percentage rather are you looking to see on a shop? $10 million shop.

Peter Cooper: Where would we like to see it? We like to see it in the, in the 10 to 15 range. Yeah, if possible. Unfortunately, there’s too many outside factors for me to be able to change it quickly. Perfect example, I don’t know what kind of, of loans they have. There’s, there’s a lot of operators, I’ve seen that, that have taken loans that are not favorable because they perfect example, they do equipment leases, which we’ll call it a lease. It’s really a loan. The interest rates on those are pretty horrendous. So that affects all these numbers. But ultimately, you know, we want to try to deliver what, what private equity wants or what people buying it wants. And what we don’t want is we don’t want to show no profit because nobody wants to buy a job. Now me as a buyer when we were buying shops, I loved it like we bought a 5 million dollar facility. The guy was making 1% net. I love that. Like is in 30 days we increased the gross profit. We doubled it in 30 days.

Chandler Kohn: Well, I’ll come back to this because that’s a, that’s a good use case. I’ll come back to that in a minute. I know that part of what Ascend Consulting does is look at training deficiencies. I want to talk a little bit about this and kind of what you do on a day to day basis here.

Peter Cooper: Well, we do a lot of things and it all depends on what customers need. But I would say across the board one of the easiest, what I would call low hanging fruit is communication. People do not know how to communicate effectively. And what do I mean by that you’ve got mechanics that are leaving their workstation, walking six bays over, standing at the parts counter, waiting for the parts guy to get off the phone to ask him for a seal, when all he would have to have done was opened up the shop management software, requested the part, moved on with his day. That right there is the single easiest way to get efficiency back in the bay. And let’s face it, there’s only one position in your building that makes money and that’s the technician. So if everything that we do is not geared towards that person’s efficiency, you’re losing money.

Chandler Kohn: So that’s really a process thing. It’s not so much a skill or diagnosis thing or actual physical fix of the truck. Right. Process workflow. Tell us a little bit about workflow and technology. And you know, some shops are good. Some, some shops do a pretty good, well rounded job at this. Some are really lagging behind. Some are still paper based. Yes, talk about, talk about the, the process, some process implementation and use of technology to turn operations around.

Peter Cooper: Well, I, I’m a firm believer that workflow is the magic bullet in almost every shop because every shop ultimately comes down to they have poor efficiency and the poor efficiency comes from the process, which is workflow. And a lot of that really dial down on it and make it to distill it down to. The most basic thing is how do you communicate? And when you’ve got four and five channels of communication, you have a very inefficient operation. The other thing we look for too in workflow is what I call workarounds. So if you have a shop management software, show me all the things that you’re doing outside of that software.

Chandler Kohn: Like what?

Peter Cooper: Requesting parts. I literally just talked to a shop owner today that is on, you know, he’s on one of the major softwares. The technician can ask the part for a part. It goes straight to the parts department. They don’t use that, they don’t use that functionality. And I said, why? And he said, well, I don’t know.

Chandler Kohn: Interesting. So going back, the, the shop that you bought, 5 million in revenue. Right, that’s what you said. How did you turn that around in 60 or 90 days?

Peter Cooper: The easiest thing to do was tackle fear. I walked into the facility and we had conversations about how we’re doing things and what we’re going to do moving forward. And every single time I would press something, I get a response of we can’t do that, we can’t do that. If we do that, the, the technicians will leave if we do that, the customers will leave. And I have a really big pet peeve about people to manage from a place of fear. That is the worst way to run a business. You have to run it on facts. And the facts are these things have to change or we’re not going to be profitable. And if we’re not profitable, we can’t exist. You don’t have a choice not to make the change. But it’s really hard in these properties. So what I always do is I just make an agreement with people anytime we implement something and they, they have a problem with it, I said, look, we’re going to try it for 30 days. Let’s keep track of the facts and let’s see how many no’s we get. And honestly, it’s like raising prices. You know, most shop owners right now could raise their labor rate $10 an hour. And I guarantee you that 90% of your customers would never even notice. And the ones that do notice, it just be like, that’s cost doing business. They understand.

Chandler Kohn: Yeah. Have you, have you ever presented the facts to an owner and they’re, they’re still overly fearful and don’t move forward? I mean, do you really see that or do you see most kind of acquiesce and agree?

Peter Cooper: I see it every day. I don’t see it as much as it happens because those type of people don’t work with me. But I talked to shop owners. I’ve got a shop owner I’ve been dealing with for almost two years now that absolutely is so devastated by fear he can’t make a change. And he technically doesn’t work with me. I just check in with him once in a while. The one thing, this is the one thing about human psychology that most people fail to recognize is that people will not change until the pain of being the way they are is more painful than the pain, the perceived pain of change. And so that’s actually what I have to work on a lot with owners is getting over this fear mindset of I can’t because I’m afraid of what might happen.

Chandler Kohn: Yeah. And, you know, we, you know, I’m aware of folks that, you know, don’t really want help and, you know, somebody kind of telling them what to do. Just, just various folks I know in the industry. How do you, how do you look at that? I mean, you know, somebody, if you’re, if you need to present the facts before they can make a decision, but they don’t want to see the facts, you know, how does the human psychology play into that. I mean, how can you convince somebody, hey, just give me the opportunity to look at the facts or maybe I can help you.

Peter Cooper: It depends on every person because a lot of people respond to different motivators. I’ll be honest. One of the biggest ways that I do it is I just ask them a simple question and that is I just try to understand what it is they’re trying to be when they grow up. And I know that sounds crazy to ask a 50 year old guy what does he want to be when he grows up, but it’s a valid question like, what are you doing? So I find that so many people in this industry have built a business with no plan. They were good at fixing trucks, so they just started fixing trucks. And the way I tell people, and it’s kind of like if you were a carpenter and you showed up with some boards and just started nailing them together with no plan, would you end up with a house or would you end up with a shack? And that’s kind of where we’re at in business with a lot of these owners is. So I try to show them the path of, you know, what we can do and where we can go. But honestly they are, a lot of guys are just afraid of change and it’s, it’s not rooted in anything other than fear. Like there’s really nothing stopping them from being where they’re at other than themselves.

Chandler Kohn: Yeah, it’s an interesting point. I appreciate you capturing that. I want to talk about the new age shop a little bit. New processes, new technologies coming to market, what’s here to stay and what’s coming as we kind of inch closer to 2030.

Peter Cooper: So here’s what my take is on. On the future, I believe. And you kind of hit on this. I believe there’s only two types of shops, okay? There’s relationship shops and there’s discount shops. And you have to make a decision, which one do you want to be? And for most of us it’s going to be, I want to be a relationship shop. Well, with the day, with the day and age of AI and all the things that it’s bringing in and all this massive shift in technology, the one thing that people are going to be wanting more and more is a genuine human connection. And so I tell shop owners every day, you need to focus on relationships. That is needs to be one of your number one things that you’re doing. So you need to go out and build relationships and keep relationships. Because say we get rid of service advisors and we go to Straight AI agents that answer phone and answer questions and all that. People aren’t dumb. They know they’re talking to an AI bot. Some accept it that reality, some don’t. But ultimately the end of the day, the thing that’s going to make you different from the dealership, which let’s all face it, in this world of aftermarket, it isn’t us versus our competitors. What we perceive as a competitor, which is the guy down the street that does the same thing we do. It’s us versus the dealers. And what is going to differentiate us from the dealers is going to be our how good we build relationships.

Chandler Kohn: Interesting. Let’s talk about AI, right. I’m trying to wrap my head around it. Trying to wrap my head around, you know, LLMs and agents and what can it do and what it’s not great at thus far. Where do you see AI coming into this in this business model?

Peter Cooper: Well, as of right now, it’s a glorified spell check. That’s what about 90% of shops are using it for. It’s just a glorified. Now what can it be? I don’t know because let’s face it, from a technician, let’s just look at a technician standpoint. I can put all the stuff into AI and ask a technician how do I diagnose Cummins code, blah, blah, blah. One of the problems we have with AI though is it only has access to open source information. So it’s, you know, it’s scrubbing the web for Reddit and different posts, which sometimes it’s right, sometimes it’s wrong. The unfortunate thing is in these very technical things, it doesn’t have access to the proprietary. It can’t log into Cummins Quick Serve, for example, and pull up what Cummins says to do. So from that standpoint, it’s pretty useless from a technician other than to use it as spell check. Now what’s it mean for the front office and your CRM program and marketing and how you answer the phone? Hey, it’s awesome. It’s an amazing tool. But like any other tool, if we don’t know how to use it, it’s not going to do us any good.

Chandler Kohn: I think there’s some upside too with it regarding being able to capture and notify you when customers are looking to, to purchase or when they’re ready. And you know that that’s something that’s kind of challenging to wrap your, your head around. But, but I think there’s from a sales and marketing standpoint, I think AI can kind of capture that and alert you on kind of trigger opportunities to help you grow your top line, which is something that I, I’m sure most folks aren’t looking at, but I think they’re. The future is, is probably bright in that regard in terms of diagnosis and text. Using, you know, Google Glasses I think is what it’s called and some of these other kind of technologies. Do you see AI playing into that?

Peter Cooper: Where maybe it plays into it a lot, but it’s really playing into it at the low level. So Penske has been doing this for years. Very few people know it, where they were wearing Google glasses with an AI agent in it. And you take a completely green tech off the street, put the glasses on them, it tells them to go look at the shock. That’s a shock. This is what we’re looking for. Go grab the shock, wiggle it. Does it, you know, is it loose? It’s great for stuff like that. I think we’re going to see it continue to advance, but there’s a lot of potential there for training. I think that’s probably one of the biggest things we’re not using AI for in this industry is training. And you know, AI can learn at a rate most humans can’t. So it can learn how an individual learns because we all learn differently. And you have to face it, most education is built for, built by and built for educators. It’s not built for the end user that consumes it. And us that are mechanically inclined have just a little different brain than, than other people do. So a lot of training stuff is not geared towards that technical area, competition and margin.

Chandler Kohn: Right. You know, you and I are seeing a lot of consolidation here. As I tell the audience, we’re five to six years behind tire and service collision consolidation. You have some larger private equity backed players acquiring businesses. Where do you see competition and margin pressure going in the future? Is it going up? Is it going sideways? Is it going down? Talk to me about that as the industry kind of changes.

Peter Cooper: You know, I haven’t seen private equity that’s been able to do what they say they’re going to do. A lot of these private equity firms say, well, we’re going to essentially attain critical mass and we’ll be able to have a vertical integration on parts, meaning that they’ll be able to buy direct from the manufacturer and they all have this great theory. I just haven’t seen it happen in practicality. Also, you know, if you look at what private equity is doing, they’re trying to push everybody to do more and more mobile Service, which is great. But any time you have a shift in the market like that, it opens up a possibility of potential to do the opposite of what they’re doing.

Chandler Kohn: Yeah.

Peter Cooper: Especially for small shops. So, you know, perfect example. If the entire market is going one way, if you do the exact opposite, you can make crazy money in and crazy margins. Now, are you going to do it on a macro scale and have 10 shops? Probably not. But that’s not what most, most shops are. If you look at how many shops are in the United States, they aren’t part of a 10shop network. They’re a small little independent mom and pop doing under $5 million a year in revenue.

Chandler Kohn: Yeah. You know, I talk with private equity two to three times a week and kind of maintain these relationships. But also, you know, we’re, you know, we run these professional processes for them and go to a variety of PE firms. Right. Try to run a competitive auction, get the highest price, best terms, that type of deal for our clients. But a lot like almost every private equity firm I’m talking with, interested in either, you know, buying a new platform in the space of buying a business and building off of that, or buying tuck in businesses to like Tree north for example, they’re going to tuck it there. A lot of them, most of them are looking for a mobile component.

Peter Cooper: Yes.

Chandler Kohn: Tell the listeners about kind of from that standpoint, how you perceive the state of the industry from a mobile standpoint. Why is that so hot right now versus kind of scalable house?

Peter Cooper: It’s scalable. You can just buy a truck and put a guy in it. Yep. The problem with it is, is where do you get all the humans that you need to do this? And I think a lot of them are missing the mark that you need a different type of employee to be in a service truck, to be in a service bay. You know, if I take a green lube tech kid and put him in a truck all by himself and send him out into the wilderness, as I call it, and say go change oil and trucks. You see the quality degrade and we’re seeing this a lot. You know, you look at when Cox bought out Dickinson Fleet and Fleet Net, they had some pretty big operators and they dropped the ball pretty bad on a lot of them. And their market share has actually not been so good lately because they couldn’t keep up with the quality

Chandler Kohn: going back to gross profit. What we didn’t talk about in the beginning is you like to see 62% of the shop level. What do you like to see on a Pure play mobile business.

Peter Cooper: Honestly, it can be as high as 70 to 80% with the right pricing strategies. Now, a lot of this is going to depend on your blend. Right. Are you, are you. 80% of your business is one fleet, which I actually manage to shop that over 80% of the business is one fleet. The margins weren’t there as much, but ultimately at the end of the day, this is where people have to be very, very careful about only looking at margins. At the end of the day, what we care about is profit dollars. And the way I tell people to think about is think about when you sell tires, the margin on tires is really low. But when you’re selling $5,000 of the tires on one ticket, your profit dollars are there and that’s what matters.

Chandler Kohn: Yeah, good point. Well, let’s, let’s close it out with, you know, some wisdom. Right. You’re now a consultant, former business owner. You know, there’s probably a lot of shops that think they’re good at some things and maybe they don’t really know what they’re bad at. What if we bifurcate this between what shop owners can fix by themselves versus where it gets too burdensome and they need somebody like you to come in. What can they do themselves and where does it get complicated?

Peter Cooper: They can do everything themselves. You know, business owner can go do what I did. I was a fairly young person riding around in a service truck. In between each service call, instead of getting on the radio and talking on the phone, I was listening to business books and I chose to educate myself. One of the problems comes in is what owners tend to miss, is that as good as they are at what they do, most of them don’t can’t answer the question who are you accountable to? And when you don’t have someone you’re accountable to, it’s really hard to make progress because it’s so easy to convince yourself. Let’s face it, in psychology, human met beings, it’s, we are the easiest person to lie to is ourself. You know, we can self talk ourselves in anything. Like we’ll convince ourselves, oh, it’s okay. You know, I missed a sales goal last month or I didn’t get that thing done, it’s okay. But when you don’t have someone holding you accountable, it really is hard to hit your goals. And so that’s the one big burden that’s hard for a lot of shop owners is you can go out and get this knowledge. Part of it is how fast do you want it? Yeah, you know, do you want to take 10 years to fix your business or do you want to do it in six months? And that’s the difference between doing it yourself and working with a specialist is finding someone who’s been there and done that, who knows the easy way versus the let’s discover it blindly path.

Chandler Kohn: What is the typical outcome kind of on a six months and then go for, you know, the next year basis? What does that look like for a shop owner?

Peter Cooper: On average, generally speaking, as long as we have enough customers, which that will slow things down, you know, we can fix the operation as much. But if we don’t have a customer funnel that takes a little bit longer to build, but generally speaking, in six months we can get a shop that’s not profitable profitable. And within a year to two years, they’re sitting anywhere between 15 and 20% net. So net profit, it’s pretty, it’s not very hard to make that change.

Chandler Kohn: And then I’ll leave this with you. Is there anything that you want to give, any piece of wisdom, advice that you’d like to share with the shop owner looking to either turn around their business or improve their business, whether they want to grow it for the next 20 years, you know, whether they’re 30, 40 years old, want to work till 60 or 70, or whether they’re looking to exit in two to three years. What is, what is one piece of concrete advice that you would give, you know, our audience listening to this podcast.

Peter Cooper: The number one piece of advice I would give to shop owners is this. You are everything that is right with your business and you’re also everything that’s wrong with it. And if you can’t admit that to yourself and to others that you are the problem that’s stopping you from getting where you want to go, then you’ll never start down the path. It’s kind of like, you know, a 12 step program. If you can’t admit that there’s a problem, you’ll never fix it.

Chandler Kohn: Excellent. Peter Cooper, thank you so much for joining. Can’t wait to get this out. I think this is a very informative podcast and you actually host your own podcast. Tell us a little bit about that.

Peter Cooper: I do. So I have a podcast called beyond the Bay where I’m really passionate about education. So I want to be able to give back to the community as much as I can, whether I’m charging for it or not. I hope that people value what I do enough eventually that they want to use me as a consultant. But there’s a lot of good data on there. There’s a lot of hard numbers. I also do a monthly webinar where we do training that I give away for free. So we do service advisor training once a month. We do parts training once a month. So I’m a big believer in putting some information out there to try to help the community.

Chandler Kohn: Excellent. Thank you for joining, Peter. I look forward to having you on in the future. And we’ll be in touch.