By Joe Marconi
One of the lessons from COVID is for repair shops to have a strong cash reserve. Shop owners need to budget their money each week, and allocate money to different bank accounts, such as payroll, operating expenses, taxes, etc.
Another account I would recommend is to have a Cash Reserve account, where money is allocating each week, and not touched unless their is a emergency, such as an economic downturn and or if an economic emergency occurs in your area or with your company.
While no one could have predicted the affects from COVID 19, I think we can all agree that being cash strong is a viable strategy.
You should have anywhere from 3 to 6 months of covered expenses in a separate bank account. I know, I know....it's a lot of money. Start slow and build each week. Anything set aside is better than nothing.
Of course, to have a reserve means that you need to have the profit to put away. Right? Well, another reason to know your numbers, revisit your pricing and make sure your labor rate is enough to support your payroll, operating expenses and have enough left over to set aside money for the unexpected.
Trust me, you'll be glad you did.
By ASOG Podcast
ASOG Podcast LIVE from TOOLS 2021 - Adam Rath on Leadership
Tim Allbritten, Director, Business Development and Market Research at BG Products
John Hanighen, CEO at Cloyes Gear and Products
Paul McCarthy, AASA President. Paul has over 23 years of experience in the automotive industry. Prior to joining MEMA, Paul led the Automotive and Industrial Products Strategy Practice at PricewaterhouseCoopers (PwC). He consulted at dozens of automotive suppliers, eight of the top ten global automakers, and at private equity firms and financial institutions. His past leadership roles include heading PwC Germany’s Automotive Strategy advisory practice and leading global forecasting and analysis for a prominent vehicle forecast service, Autofacts. Paul has an MBA from Duke’s University’s Fuqua School of Business.
Find Paul’s other episodes HERE.
Key Talking Points
It started month 1 of the pandemic Brand names won’t risk quality Every day is a new challenge for manufacturers When is it back to normal? Recast the question “when does it get better?” Improving fill rates and collaboration up and down the supply chain Data planning is essential for forecasting and making better decisions Allocation- always have the “recipe” Pricing- packaging costs, inflation, supply/demand, raw material pricing by SKU. More questions are being asked which requires more pricing knowledge and transparency. Container pricing- $1,500 to 18,000. Airfreight has also increased. Economic trends- travel is increasing It’s a demand problem not a supply chain problem- it is a good problem, heavy dependence on the automotive industry. Connect with the show:
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This episode is brought to you by AAPEX, the Automotive Aftermarket Products Expo. AAPEX represents the $740 billion global automotive aftermarket industry and has everything you need to stay ahead of the curve. AAPEX 2021 is in the record books and lived up to presenting leading-technical and business management training from some of the industry’s best and brightest. Now set your sights on Las Vegas in 2022. Mark your calendar now … November 1-3, 2022, AAPEX - Now more than ever.
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By ASOG Podcast
ASOG Podcast LIVE from TOOLS 2021 - Bret Fadely & Adam Rath