142 - "Ask Me Anything" with Cecil Bullard & Lucas Underwood: Profit, Pricing & People
September 3, 2025 - 00:54:39

Show Summary:

Lucas Underwood hosts an open AMA with industry veteran Cecil Bullard, digging into how macro “yellow flags” (rising delinquencies) typically boost repair demand, and why cash flow and reserves determine who survives slowdowns. They unpack practical pricing: when to use a parts matrix, target tire margins, and why some items belong outside the matrix. The duo stresses hospitality-driven experiences, disciplined shop-supplies billing, and charging properly for diesel and specialty work. They outline a hiring sequence for growth, the productivity pitfalls that kill profit, and a simple framework for net cash flow after taxes and distributions. Throughout, they challenge discount mindsets and make the case for sustainable, unapologetic profitability.

 

Host(s):

Lucas Underwood, Shop Owner of L&N Performance Auto Repair and Changing the Industry Podcast

 

Guest(s):

Cecil Bullard, Founder of The Institute

 

Show Highlights:

[00:01:00 ] - Economic “yellow lights” often push savvy consumers to fix, not replace; repair demand typically rises in these cycles.

[00:02:41 ] - Cash is oxygen—without 3–6 months of operating reserves, a short dip can shutter a shop.

[00:05:27 ] - Use separate strategies for items like tires, batteries, wipers, and fluids; some don’t belong in the standard parts matrix.

[00:09:28 ] - Thoughtful hospitality (even small freebies) wins loyalty—fund it by protecting margins elsewhere.

[00:14:01 ] - Compete on experience and trust, not price; most customers aren’t comparison-shopping 15 quotes.

[00:17:40 ] - Target ~35–40% gross margin on tires and price installation to hit labor GP goals; kits (TPMS, weights) lift the job’s GP.

[00:23:28 ] - Shop supplies like brake cleaner, bolts, clamps, and zip ties are parts—track and bill them, don’t give them away.

[00:29:40 ] - Diesel and fleet uptime are high stakes; charge your standard matrix and prioritize speed and correctness.

[00:36:32 ] - Hiring order for growth: add tech → second tech → third tech + service advisor; long-term, 5–6 techs to 2 advisors runs smoothly.

[00:49:14 ] - Aim for ~20% net; expect ~⅓ taxes, ~⅓ reinvestment, ~⅓ distributions—build real cash flow, not vanity revenue.

 

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Episode Transcript Disclaimer

This transcript was generated using artificial intelligence and may contain errors. If you notice any inaccuracies, please contact us at marketing@wearetheinstitute.com.

 

Episode Transcript:

 

Lucas Underwood: What is up everybody? My name is Lucas Underwood. I'm the owner of l and n Performance Automotive Repair, out here in Blowing Rock, North Carolina, and I'm one of the hosts of the Changing the Industry podcast. And today I have with me the Almighty Cecil Bullard. Cecil, how you doing, buddy?

Cecil Bullard: I'm doing great buddy.

Cecil Bullard: I don't know about Almighty. Some days it's like almost mighty or something. I don't know.

Lucas Underwood: Maybe just almost right?

Cecil Bullard: Almost is probably better. I'm great, Lucas. I'm great.

Lucas Underwood: Very good. Thank you for being here. I'm gonna jump right into some questions. We have, uh, some great questions over here on the side. Got some folks.

Lucas Underwood: I know Craig's in here, lots of folks asking questions already, but one of the things that came up in the changing the industry podcast group, first thing this morning is I posted something about some credit card debt delinquencies and posted some stuff about commercial delinquencies Now. I should, I should admit there's a caveat to this because when you put this out over the max span, that they've collected these numbers and have the data for this, we can see that these numbers aren't too high.

Lucas Underwood: Right now they're about 1.5, five to 2%, somewhere in there. Back in 2008, they were in the seven and 8% range, so they're not that high, but we are starting to kind of see those go up. Now what I said in the group was, is typically this is a good thing for auto repair because you're really financially savvy consumers.

Lucas Underwood: The ones that our shops typically work for are watching these warning signs. They're not flashing red, they're flashing yellow, and they're saying, Hey. Maybe I better back up a little bit. Maybe I don't buy that brand new Denali. Maybe I fix the one that I have now. Cecil, what does this mean for auto repair?

Lucas Underwood: When we start seeing some of these yellow warning signs flash,

Cecil Bullard: I think in, in every instance so far, um, auto repair, uh, succeeds, uh, greatly. And I think that's why you see venture capital really taking a serious look after 2020, uh, in every, you know, uh, when the. Gas crisis hit, uh, people kept their cars and spent money on them.

Cecil Bullard: When, uh, uh, the housing crisis hit 2008, 2009, same thing, uh, Enron before that, uh, same thing. Uh, during COVID, uh, we were an essential service. And while the restaurants were losing money and closing down and, and all of the other services, the hotels, uh, automotive was, uh, hitting record, uh, record pace. I also would tell you from what I can tell, uh, um, our industry is actually shrinking a little bit, uh, which is the first time that you really kind of see that in a long time, and which means that there are going to be fewer shops out there.

Cecil Bullard: So I, I think this is good for us, but we need, we, we need to remember, I don't, I, I need cash. Cash, cash and cash flow are, are important. And so it, it's really important that I understand my business and how to generate that, those profits. If I don't have any cash in the bank and another trauma hits. Uh, where people tighten up for a month or two, I think.

Cecil Bullard: I think we're gonna see a lot of businesses, automotive businesses, close. For sure. 'cause they don't have cash and they're, and they're on the edge all the time. And,

Lucas Underwood: and, and I've, I've been there, right? Like I have absolutely been there and, and I see a lot of businesses when we talk to 'em about, Hey, you need at least six months of operating expenses in the bank.

Lucas Underwood: They say, that's unattainable. That's crazy. How could you ever do that? And, and you're exactly right though. And, and cashflow is king. Right. Because I see so many businesses, they go out and they finance all of this stuff and all of their cash flow is committed before they even get the first dime in the door.

Cecil Bullard: And then you have a, a really dangerous spot to be in. Yeah. And then you have a bad week or a bad month because of the, you know, the weather or the whatever, and all of a sudden you're behind a month with all of your vendors and everything. And it, yeah. That's a really tough place to be. So, um, be smart. Um.

Cecil Bullard: Profit, understand what you have to mark things up, understand you know what profit you need to make and, and hold the line and you'll be fine. And I would say, you know, let's have at least a minimum of three months worth operating capital in the bank. And the way to start that is start, if you can't put 500 bucks a, a week aside, put uh, 200, whatever.

Cecil Bullard: Can put 200. Put a hundred. Yeah. Just get a habit of writing yourself that check first. Right. Yes. And putting that in that account and that account is not, Cecil gets to go buy a new truck account or a boat or that account is that money doesn't get touched unless the world is on fire. Right.

Lucas Underwood: Absolutely.

Lucas Underwood: And I, I learned something years ago. Um, I, I did shop supplies for a long time. I made an adjustment to that. But when I took those shop supplies, those shop supplies were a percentage of income, and I just took that money and that went into that account no matter what. And so that was. Started building that kind of nest egg, that that protection blanket there started putting