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Managing Profit Daily - Do you do this?


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MotorAge published a training article and video from Jeremy O'Neal, AdvisorFix.    See this article here:  https://www.vehicleservicepros.com/shop-operations/service-repair/whitepaper/21253866/advisorfix-beyond-flat-rate-mastering-the-hidden-art-of-labor-profitability

It's definitely an interesting training session.  Jeremy explores some areas of thought that I've never considered.  My mind is a bit more basic in my approach.   I'd encourage you to check it out. 

What do you think of his approach to managing profitability? 

 

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I am a very big believer in what Jeremy is describing. The first attachment is my service techs performance for the past three years. I have always wondered how we do against shops in a similar business model and retail environment, especially on the items marked with red arrows.

The second attachment is what my techs fill out every day. The orange arrows are what they fill in daily, using two SMS reports. The rest populates based on those 4 columns.

We would fit somewhere between "Generalists" and "General Generalists", in the descriptions below. 

 

Specialized Specialists

Approx 70% or more of service dollars come from work on only certain aspects of automotive service, examples might be:

Diag specialists

Locksmiths

Hvac specialists

Electrical specialists

Transmission specialists

Brake Specialists

Adas specialists

Specialized vehicles(fire, rescue, motorhome, ect)

Oil change 

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis – High Likelihood

 

Specialists

Approx 70% or more of service dollars come from work on only one or two brands of vehicles

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis –Highest Likelihood

 

General specialists

Approx 70% or more of service dollars come from work typically only on cars from a certain part of the world, like euro or asian, or a specific range of services.

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis –High Likelihood

 

Generalists

Most of the automotive service facilities fit here. Most makes and models, most services.

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis –Low Likelihood

 
General Generalists

These will typically be small market generalists. (approx. <10k households in a 10 mile radius, or < 30 homes per sq. mile in a 10 mile radius)

There would typically be no specialists, beside oil change, in these markets, so these shops will likely

have a broader service offering,. May include mix of light, medium and heavy duty vehicles

and/or specialized vehicle service like fire, rescue, motorhomes, ect.

Average Opportunity for technicians working at shops in this category, to see similar issues and perform similar services on a repeating basis –Lowest Likelihood

 

 

tech performance 19 20 21.png

tech tracker example2021.png

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5 hours ago, rpllib said:

I am a very big believer in what Jeremy is describing. The first attachment is my service techs performance for the past three years. I have always wondered how we do against shops in a similar business model and retail environment, especially on the items marked with red arrows.

The second attachment is what my techs fill out every day. The orange arrows are what they fill in daily, using two SMS reports. The rest populates based on those 4 columns.

I'm curious...  Do you manage daily profitability on a job by job basis as he does?    I definitely get measuring and monitoring overall profitability.

I thought I was tracking lots of data, but I am humbled in seeing your charts. 

For your red arrows, I think your asking these questions (am I close?):

  1. Technician Hourly Pay (total pay / hours worked)
  2. Technician Effective Flat Rate (total pay / billed hours)
  3. Gross Profit per Technician Clock Hour (GP / hours worked)

It seems to me that these measurements are mostly comparing technicians against other technicians.   I guess #3 is a good way to normalize measurements across different sized businesses.    I track this data in aggregate monthly.   Not per technician.  I do keep an eye on individual Technician Efficiency (during payroll), but I'm not tracking (logging) it. I may need to do more.  So far, I've focused on startup survival over efficiency.  We are just now starting to look deeper and wider. 

For your daily technician tracking, I see hours worked and hours flagged and labor hours.  What happens for jobs that span multiple days?  What happens if they finished today and cashed out 4 days from now?   Are they logged on actual day completed or on the day it's invoiced?

 

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We have a pop graph in our SMS that we have set profitability goals on, so it is easy to look at profitability on a invoice basis. This assumes that you regularly update your cost of labor in your Sms, which we do, and that you are razor sharp on costing parts accurately. 

  1. Technician Hourly Pay (total pay / hours worked)  This is not tech hourly pay, if you pay hourly. This figure does not care how you pay on a week to week basis. It is total W2 wage "gross dollars" (paid in a period) to the tech divided by total hours worked in clock time (in the same period). This does count on accurate time records, but it does not care how the gross pay is accumulated. 
  2. Technician Effective Flat Rate (total pay / billed hours). This is correct, It is total W2 wage "gross dollars" (paid in a period) to the tech divided by total hours "billed" in labor time (in the same period).
  3. Gross Profit per Technician Clock Hour (GP / hours worked). This is correct. Accurate total GP$ generated by a technicians activities for a specific time period, divided by total clock hours worked in the same time period. 

The effort is aimed at trying to come up with some financial benchmarks, that are not affected by type of pay plan. We have techs on 2 different types of pay plans.

"So far, I've focused on startup survival over efficiency.  We are just now starting to look deeper and wider"  sounds like you are on the right track. I hope you are quicker then I am at picking up on this kind of stuff. I am 42 years in

 Jobs that span multiple days are accounted for on the day they are closed. It catches up over the course of weeks and month. 

I meet with my staff in groups (leadership, service techs, lube and tire techs)weekly, and the first 10 minutes is going over month to date goals and performance. We were guilty of what Jeremy describes in the video, for most of my career. We would get to the end of the month, and look back, and say "while that month sucked".  Now, our daily trackers play as a slide show on our screen savers (a dozen workstations in the shop and growing), as well as staying focused with the weekly meetings. 

It helps a lot, maybe more than any of us realize, if you are "digitally adept" when it comes to things like computers, networks, software, ect. Excel has been our close friend for decades

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  • Have you checked out Joe's Latest Blog?

         5 comments
      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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