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tyrguy

Ignoring the elephant in the room

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I've detailed on posts before about declining hours billed over the years. Brief summary: From 1979 to 2008 every year was a record year. From the late 80s thru 2008 we always billed around 97% of our 3 techs hours [avg 6150/6350 hrs/yr]. Didn't matter recessions or whatever we were never more than 50 hrs off those numbers. The recession hit and our numbers started to decline around 3% a year. We did have a few up years, but also a year or 2 when the hours took a 8-10% hit. From 2008, our last "good year" to 2015 we saw our hours billed drop 25% to 4610/6348 or 73% productivity. So for 8 years I've been looking at the numbers from every angle and kept coming back to my theory that it was all due to the recession and slow recovery, consumer confidence, etc. But I think I have been ignoring the elephant in the room. For the first 25 years or so in business, I always had the biggest shop in our little town. Started with 3 bays in 79 and grew it to 12 bays in my old shop. In 2006 we sold the land the old shop was on and built a new shop again with 12 bays. Prior to 2006 our town of about 15k population had by my estimate 40-45 bays in town so I accounted for 25% of that. Then there was a change that I have been ignoring when analyzing my business. Prior to that time we had no car dealers in town. We now have 5. Hyundai, Kia, Nissan, Honda and VW all within a 1/2 mile of my shop. So in our little town we have gone from 40-45 bays to easily double that. Being "old school" I just never considered them my competition. I now think I was in error. So what to do? Last year my very first employee retired to run a non automotive home business. Wished him well, told him to keep his key in case he ever needs to use the shop. I mean after 37 years he's like a brother. So now I'm trying to see if we can make it with the remaining 2 full service techs, 2 tire techs, 2 service advisers and myself. Because I pay my techs minimums no matter how slow we get, I've had a big savings in wages. I've been able to cut expenses in other places as well. Plus we upped out labor rate from $95 to $100 per hour. We're still making money, not as much as before but it just feels better without techs standing around. Maybe I'm getting lazy in my old age. Anyway, I just think we have over capacity in our town at this point that will hopefully get better as town grows, which it is. Thoughts?.

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