Episode 040 marked the return of Do It For A Living after a five-month break. Host Reid Lunde interviewed Kevin Dubois, owner of Evolution Dynamics in Texas and co-founder of My Shop Assist, in 2015. Kevin and his MSA partner Todd Earsley were taking over the podcast, and Kevin was also teaching shop management classes with Ben Strader at EFI University.
Evolution Dynamics tuned, built and raced Mitsubishi Evos. Kevin had run it for years and lost money doing it before he started tracking where his time and parts went. My Shop Assist grew out of that problem.
This episode is about job costing and tracking your builds accurately. Kevin shared the roll cage he was underpricing by thousands of dollars, the parts he gave away without knowing it, his shop's labor efficiency numbers, and how a two-person shop out-earned a five-person one.
An engineer who came to cars late
Kevin did not grow up wrenching on cars. He raced mountain and road bikes and his first job was as a bike shop mechanic. In his first year of college a friend gave him a water-damaged 1984 Volkswagen Rabbit GTI, and he rewired it with parts from the local pick-and-pull. A Porsche 944 Turbo came next, along with a lot of trial and error.
He studied at Hope College in Michigan, switched from chemistry to mechanical engineering, and was turned down for an engine controls job at Bosch. He believed his lack of Formula SAE experience was the reason. So when he moved to Texas to work at Lockheed Martin, he started a master's in controls at UT Arlington and joined its Formula SAE team, which he captained in 2006. He spent seven years at Lockheed while tuning Evos on the side.
The side business grew until the city told him to clear the Evos out of his driveway. He moved into a shop of about 1,500 square feet, doubled it within a month, then moved to 4,000 square feet with a full-time employee, all while still working at Lockheed. With a baby at home and his wife no longer working, they decided he would quit and run the shop full time.
What it costs to guess
Kevin admitted he badly misjudged how profitable the shop was. After he quit, he hired a second and then a third full-time employee to get through all the cars. He said he was not a good manager, and the family savings drained almost immediately.
Two other hits came around the same time. A nearby shop on a different platform offered to merge with his. They never brought in lawyers, both sides made assumptions, and within about two months they could not stand each other and Kevin moved back out. His lesson was simple. Any time a deal touches your business, get lawyers involved.
Then at the 2012 Pikes Peak Hill Climb, his Evo 8 race car went off a corner at about 60 miles an hour and rolled roughly 400 feet down the mountain. The driver, Jeremy Foley, and navigator Yuri both walked away, with Yuri's dislocated shoulder the worst injury. The video went viral. Kevin estimated he had about $100,000 of money and time in the car, including three months designing an aero package that paid none of the bills.
The $2,500 roll cage that took 80 hours
Kevin loved building roll cages and used to charge about $2,500 for a full cage. Materials ran $600 to $800, so he figured he was making close to $2,000 in labor and thought that was a lot of money. Then he tracked the time on one cage. It took 80 hours. At about $100 an hour, which he said a shop needs to keep the doors open, that cage should have cost $8,000 before materials.
Reid asked what customer would spend $8,000 on a roll cage. Kevin's answer was the right customer. By 2015 his cages started around $6,000, and with stripping the interior, removing sound deadener and cutting the doors, a job came closer to $8,000 to $10,000. He let anyone with a $2,500 budget walk out the door. He said the shops that build $2,500 cages will not make money doing it, and when they disappear another one pops up to take their place.
His advice to new shops was to find the work that makes you money and price it properly. A new shop may have to do some work cheaply to prove itself, but you cannot keep paying your dues for 40 years.
Parts you forget to charge for
The first thing Kevin and Todd built into the software was parts tracking. Kevin estimated he had given away about $50,000 in parts over the life of the shop. A car would run out of fuel on the dyno, he would spend two minutes installing an $80 fuel pump, and then forget it was ever on the car.
By 2015 he added every part over about $10 to the job as he installed it. He kept an iPad on his rolling cart and a computer in the shop so the job was always in front of him. He said that if the system is not right in front of you, you will not use it. He would still give a $5 fitting to a customer spending $10,000, but now he knew he was doing it.
Reid estimated that most shops give away at least 10 hours of labor a month without realizing it. Kevin agreed.
Labor efficiency and the 10% that pays
For the shop management course he built with Ben Strader, Kevin worked out his shop's labor efficiency, which compares billed hours to hours actually spent. In 2013, one of the first full years using the software, Evolution Dynamics was at 47%. For every 10 hours worked, the shop billed 4.7. By early 2015 he had pushed that to roughly 55% to 57%.
His shop did close to $300,000 in labor a year, so a 10-point improvement was worth about $30,000 with no extra work. The results showed. Kevin and his business partner Richard, working alone, brought in more revenue than the shop had with three full-time employees plus the two of them. He worked from about 9:30 to 7, took six to eight weeks a year away from the shop, and said 2014 was the most income he had ever reported, more than in his Lockheed years.
I was doing it so wrong that I can have less than half the manpower and actually do more revenue.
He said the first year with the software was still a struggle, because you have to build it into how the shop works before it pays off.
Tune your shop like you tune a car
Kevin said racers spend hours chasing five horsepower and a tenth of a second, yet rarely put that effort into their own business. Every month or two, he, Richard and Todd picked one thing to improve, from shop organization to equipment purchases.
You should be tuning your own shop.
The dyno was his example. He had street tuned about 90% of his cars for close to 10 years and rented dyno time for many of the rest. Before buying one, he used his own records of how many cars he tuned and what he charged to prove the shop could make the payments on the work it already had. He guessed half the shops that buy a dyno have no idea how to make the finances work.
His action item for listeners was to write down the areas where the shop could get more efficient, make a one-year plan, and put one change in place each month. If you are already busy, more customers only make it worse. He warned against waiting for the right time, because you will always be too busy.
Key takeaways
- Track the actual hours on every job. A job you think pays well may be earning a fraction of your shop rate.
- Add every part to the job as you install it, and keep the system within reach of the tech.
- Measure billed hours against spent hours. A 10-point gain on $300,000 of labor is about $30,000.
- Let customers with the wrong budget walk. The shops that do the cheap version do not last.
- Run the numbers on big equipment before you buy, using the work you already have.
- Pick one improvement a month and start now.
Tracking your builds with My Shop Assist today
The habits Kevin described in 2015 are still the core of My Shop Assist. Techs clock time to each task on a job, so you can compare quoted hours to actual hours and see your real labor efficiency. Parts go on the job as they are used, and purchase orders track what you ordered and received. Progress billing handles long builds like cages and full race cars, zones and a kanban board with QR codes show where every car is, and jobs export to QuickBooks. Browse the full list of My Shop Assist shop management features.
If you want to find out what your roll cage really costs, start a free 30-day trial.
