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Tom’s Trends – Margin & Inflation [CC 104]

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carmcapriotto Grand Master

carmcapriotto

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  • Price increases (inflation) are currently running about 7% year to year with no signs of letting up and plenty of reasons why it could go higher.
  • So, what. What does that mean for shops? It will kill some shops and damage others, some seriously. 70s average 7%, peaked at 14% 1980
  • Like the frog in the pot of boiling water, it can go unnoticed when not monitored carefully.
  • Shop A is on top of it, making sure to stay ever or slightly ahead as there seems to be no let-up in sight.
  • Total GP for 2022 61%
  • Shop B is kinda sorta aware but not watching the numbers as they should.
  • Total GP for 2022 56%
  • Shop C is oblivious. Not into numbers - not watching the news.
  • Total GP for 2022 51%
  • These shops all do about $1M in sales
  • At the end of the year, shop A has $50,000 more than shop B and $100,000 more than shop C. Trailing the inflation curve can be damaging or deadly to any business.
  • Monitor GP daily on every RO. Your software should make that a quick and easy process. If not, it may be time to go software shopping.
  • When an RO is below your goal line (typically in the 60% area), why? Find the answer. Does something need adjusting?
  • In an inflationary environment, checking numbers weekly or monthly is not enough. Set time aside every day to check every RO.
  • Then at the end of the month, look over your expenses thoroughly. Make sure they are separated into many lines so you can quickly see changes in individual items.


Put all your key numbers on a three-month rolling average – that is called TRENDING. It can save you a lot of money.  

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Tom Ham, with the help of his wife Deb, is the creator and owner of Automotive Management Network a 12,000 plus member website dedicated to the exchange of vehicle service management information. Tom got his start in the auto service industry pumping gas in the late ’60s. Tom and his wife operate Auto Centric, an import specialty shop in Grand Rapids, MI. Tom and Deb have five children including two sons and a daughter who served in the Iraq War as U.S. Marines.  He writes extensively on industry topics.  Discover Tom’s previous episodes HERE.

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Click to go to the Podcast on Remarkable Results Radio

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  • Have you checked out Joe's Latest Blog?

    • Joe Marconi
      The Toolbox is Last to Leave, First is the Heart
      By Joe Marconi in Joe's Blog
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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.

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    • carmcapriotto
      How Dating and Running a Shop Are Very Similar [E125] - Diagnosing the Aftermarket A to Z
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      Matt Fanslow explores the analogy between running a repair shop and the world of dating. He shares insights on first impressions, trust-building, and the value of substance over style in both customer relationships and shop management. Matt emphasizes the need for repair shops to maintain high standards of service and to view customer feedback as opportunities for growth.
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      Email Matt: [email protected]
      Diagnosing the Aftermarket A - Z YouTube Channel HERE
      Aftermarket Radio Network: https://aftermarketradionetwork.com/
       
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