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What do you think the payroll as a percentage of total sales should be?


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HI I'M NEW.

 

I KNOW MY PAYROLL IS WAY TOO HIGH WHEN I COMPARE TO INDUSTRY STANDARDS I FIND ONLINE.

 

LAST YEAR I WAS AT 22% SOME INFO I HAVE FOUND HAS SAID 12-14%. IT WOULD TAKE A LOT FOR ME TO GET IT DOWN THAT LOW.

 

READING NUMBERS ONLINE I THINK CAN BE UNREALISTIC SO I STUMBLED ON THIS FORUM WHILE LOOKING AT STUFF ONLINE.

 

I FIGURED I WOULD ASK...

 

THANKS

 

 

 

 

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If you are paying hourly that means that your payroll is a fixed cost and if it a high percentage of your gross sale then you need to increase sales.

 

Rule of thumb is to not go over 30-35% total payroll from your total sales. If you are at 22% your not in bad shape. Would have to know more about your numbers.

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  • 9 months later...

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  • Have you checked out Joe's Latest Blog?

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      I recently spoke with a friend of mine who owns a large general repair shop in the Midwest. His father founded the business in 1975. He was telling me that although he’s busy, he’s also very frustrated. When I probed him more about his frustrations, he said that it’s hard to find qualified technicians. My friend employs four technicians and is looking to hire two more. I then asked him, “How long does a technician last working for you.” He looked puzzled and replied, “I never really thought about that, but I can tell that except for one tech, most technicians don’t last working for me longer than a few years.”
      Judging from personal experience as a shop owner and from what I know about the auto repair industry, I can tell you that other than a few exceptions, the turnover rate for technicians in our industry is too high. This makes me think, do we have a technician shortage or a retention problem? Have we done the best we can over the decades to provide great pay plans, benefits packages, great work environments, and the right culture to ensure that the techs we have stay with us?
      Finding and hiring qualified automotive technicians is not a new phenomenon. This problem has been around for as long as I can remember. While we do need to attract people to our industry and provide the necessary training and mentorship, we also need to focus on retention. Having a revolving door and needing to hire techs every few years or so costs your company money. Big money! And that revolving door may be a sign of an even bigger issue: poor leadership, and poor employee management skills.
      Here’s one more thing to consider, for the most part, technicians don’t leave one job to start a new career, they leave one shop as a technician to become a technician at another shop. The reasons why they leave can be debated, but there is one fact that we cannot deny, people don’t quit the company they work for, they usually leave because of the boss or manager they work for.
      Put yourselves in the shoes of your employees. Do you have a workplace that communicates, “We appreciate you and want you to stay!”
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