A lot of shop owners worked through tough times back in 2008 when the economy collapsed. And many have had problems finding new technicians in recent years. But Thom Paget, the owner of The House of Automatic Transmissions in Sacramento, California
, met those problems in a different way than most shop owners: He rebuilt his business himself: He’s the only fulltime employee in his shop!
“I currently have a part-time R&R tech who works three or four hours a day,” explains Thom. “My rebuilder retired November 1st, and I’m currently looking for a replacement.” For now, Thom handles all the in-house rebuilding and diagnosis.
According to Thom, the arrangement is working pretty well for now. “My R&R tech comes in and removes the transmissions, I take care of repairing or replacing them, and he comes in the next day and reinstalls them.”
Of course, this business plan isn’t for everyone. But for Thom it seems to work. “At one point I had five technicians. But even doing all that work, I wasn’t making that much more money than I am now.
“This gives me the ability to be more selective about the work I do. With five employees, you have to take everything that comes through the door just to pay the bills. With fewer employees there’s less headache, there’s less hassle, and less overhead. I don’t have to be a psychologist the way I did when I had five employees; I felt like Dr. Laura all day long.
“I found I was making as much money — or even more — by being more selective in what I take in. And I have less overhead and a lot less stress.”
That’s not to say he wouldn’t consider adding a technician to his staff if the right one came along.
HOAT History
The House of Automatic Transmissions first opened in the mid- 70s by a family named Pidilla. They built the current site in 1975: a 6-bay shop designed specifically for use as a transmission repair shop.
In 1990, they sold the business to Bill Bowman, who owned a transmission shop in Walnut Creek.
“I was working for Bill at his shop in Walnut Creek when he bought this shop, and he brought me over from there,” explains Thom. “But he wasn’t happy in Sacramento and his other shop wasn’t going well. He was planning to close the shop so I offered to buy it from him.” Thom bought the business in 1991.
Thom started in the transmission business in 1968, while he was in college, working toward a degree in psychology. “I started at a transmission shop in Concord, sweeping the floor, emptying the trash… whatever needed doing. One thing led to another and here I am.” He left college after a couple years and turned his part-time job into a career.
Thom worked his way through the shop, first cleaning parts, then learning R&R, getting into rebuilding, and finally learning how to run the business.
“I’d been rebuilding and running shops for a long time before I bought this one.”
Today, as his shop’s sole, fulltime employee, Thom still does whatever’s necessary, including answering phones, talking to customers, diagnosing cars, R&R, and rebuilding transmissions. No doubt about it: He stays pretty busy.
Transmission Only
The House of Automatic Transmissions is a transmission-only business. Sure, they diagnose computer systems and engine driveability issues, but they don’t repair anything that isn’t directly related to the transmission.
“I tried doing general repair twice, and I found that — if you’re going to be competitive, between the markup on the parts and the labor rate — you can’t make any money on it,” explains Thom. “Tying up a lift to do a brake job where you’re going to make very little, compared to a transmission job, it just wasn’t worthwhile.
“There are other transmission shops in the area that have almost completely switched to general repair, because they just don’t have any transmission business. They’re surviving strictly on general repair.”
And, while he generally identifies as a custom rebuild shop, he’s fine using remans when the situation warrants. That situation occurs more often these days, since he doesn’t have another rebuilder in house.
“When there are jobs I don’t have time to rebuild myself, I will use remans,” says Thom. But even when he had another rebuilder on staff, there were times when he’d order a reman.
“If it was something that was going to be too time-consuming, or something we knew just wasn’t going to be rebuildable because it had too much damage, we’d order a reman.”
Thom didn’t always think that way: “There was a time when I thought remans were going to destroy our industry. Over time, I learned that they added to our ability to improve our bottom line.
“It’s all about taking care of the customer: If we can get the job done quickly and efficiently and create a happy customer with a good product, it benefits us. Even if we don’t make as much on the job, we’ll make it back simply by creating a good, satisfied customer. They’ll be repeat customers or will refer other customers.” 
Marketing HOAT
Even a single-person shop needs to bring customers in the door. For the House of Automatic Transmissions, much of that comes from word-ofmouth referrals and their excellent Yelp reviews.
But even the best customer referrals aren’t enough to keep a shop busy; for that you need to do a little marketing. Thom’s marketing begins with a web site — www.HouseofTransmissions. com — one of the many ATRA-hosted web sites.
In addition, Thom does a lot of radio advertising, which “brings them in the parking lot. From there, it’s up to me to get them in the door.
“We used to advertise on several radio stations at once,” explains Thom. “That became a little pricey, so I cut that back to one station.
“I discovered I got the best results from talk radio, rather than music stations. Music is something that people tend to hear, but they aren’t actively listening to it. People actively listen to talk radio, so our ads get noticed more.
“I also found that 15-second commercials tend to work better than 30- or 60-second commercials. As a typical consumer, when the commercials come on, a lot of times I change the station. But if it’s quick, they’ll put up with it.
“I started doing radio back in the ’90s, and I knew we’d need a hook, so I came up with the idea of the Transmission Nerds. It was something of a comedy routine between the two transmission nerds: Slip and Slide. They were 60-second ads, but they were entertaining.
“But after a number of years that got stale, so we cut back to the 15-second ads.” The new commercials are drier and quicker, but they’re working well for Thom.
Free Diagnosis
One thing that gets Thom a lot of attention is his policy for a free initial diagnosis. “Almost every other shop in town charges fifty bucks… a hundred bucks… a hundred and fifty dollars or more,” says Thom.
To be clear, we’re not talking about an in-depth computer system diagnosis or tracing down an electrical problem: “This is just to drive the car, scan the computer, and give the customer a preliminary diagnosis. I can’t tell you how many people we get in simply because we advertise that free diagnosis.
“Or we’ll get a cold call, asking what we charge for diagnosis. Let’s face it: You can’t get a job if you can’t get them to come into your parking lot because they don’t want to pay $150 for you to scan their cars. And you can’t make a living just scanning computers. You make a living doing transmission work.
“It’s amazing how many people come in for their free diagnosis and it turns out to have nothing to do with their transmission.
They’re pleased, and they put a glowing review on Google or Facebook or Yelp. In the end it pays off.”
The question of free diagnosis has been batted about in this industry for years. We’ve discussed it on these pages many times. But with Thom, we have a clear answer to the question from a business point of view: At least when it comes to the initial road test and computer check, free diagnosis brings in more customers.
Always an ATRA Member
The House of Automatic Transmissions has been an ATRA Member since the very beginning. “The original owners were Members and, when I took over the shop, I continued the Membership,” says Thom.
That Membership has been an important part of Thom’s business experience: “I started working for an ATRA Member back in 1968, and I try to attend ATRA seminars whenever I have the time. I was at Expo this year and was really happy with the seminar program.
“And this year’s trade show was exceptional, with a lot of smaller vendors who offered their own doodads or things they figured out that you could buy right there at the show.”
According to Thom, he gets the most value out of ATRA’s bulletins and the HotLine. And of course, there’s the ATRA Golden Rule Warranty: “The 3-year, 50,000-mile warranty is a big help. We’re probably the only shop in the Sacramento area that offers that warranty, and when customers see it, they’re surprised. And I’m proud to be able to offer it to my customers.
“Other shops in the area offer as little as 90 days on their transmission work. What does that say about their confidence in their work?” And, let’s face it: Who’d want to pay for a rebuild today and risk having to pay the same thing again a year from now?
Educating Consumers
One thing that Thom has found valuable for building his reputation is his willingness to educate the people who call or visit his shop. “If someone calls and I think I have a chance to educate them, I will.
“Too many customers call and all they know to ask about is price. Sometimes you know that’s all they care about — a few years ago, you’d hear the pages rustling in the background as they called from shop to shop. In that case, I don’t bother.
“But if the person sounds lost and all he can think to ask for is price, then I’ll take some time educating him about what we do and why we do it, why the price is what it is, and why the other guy is willing to do it for half the price. “If they’re educated, I’m more likely to get their business than if I simply give them a price and they hang up because my price was higher than the price from the shop down the street.”
Most importantly, Thom believes in the importance of treating his customers the way he’d like to be treated if he were in their shoes. With that kind of business ethic, it’s no wonder he manages to build a terrific reputation as a solo act.
