Separating Profit Centers in Financials - Business By The Numbers
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By Joe Marconi in Joe's Blog0 commentsAuto shop owners are always looking for ways to improve production levels. They focus their attention on their technicians and require certain expectations of performance in billable labor hours. While technicians must know what is expected of them, they have a limited amount of control over production levels. When all factors are considered, the only thing a well-trained technician has control over is his or her actual efficiency.
As a review, technician efficiency is the amount of labor time it takes a technician to complete a job compared to the labor time being billed to the customer. Productivity is the time the technician is billing labor hours compared to the time the technician is physically at the shop. The reality is that a technician can be very efficient, but not productive if the technician has a lot of downtime waiting for parts, waiting too long between jobs, or poor workflow systems.
But let’s go deeper into what affects production in the typical auto repair shop. As a business coach, one of the biggest reasons for low shop production is not charging the correct labor time. Labor for extensive jobs is often not being billed accurately. Rust, seized bolts, and wrong published labor times are just a few reasons for lost labor dollars.
Another common problem is not understanding how to bill for jobs that require extensive diagnostic testing, and complicated procedures to arrive at the root cause for an onboard computer problem, electrical issue, or drivability issue. These jobs usually take time to analyze, using sophisticated tools, and by the shop’s top technician. Typically, these jobs are billed at a standard menu labor charge, instead of at a higher labor rate. This results in less billed labor hours than the actual labor time spent. The amount of lost labor hours here can cripple a shop’s overall profit.
Many shop owners do a great job at calculating their labor rate but may not understand what their true effective labor is, which is their labor sales divided by the total labor hours sold. In many cases, I have seen a shop that has a shop labor rate of over $150.00 per hour, but the actual effective labor rate is around $100. Not good.
Lastly, technician production can suffer when the service advisors are too busy or not motivated to build relationships with customers, which results in a low sales closing ratio. And let’s not forget that to be productive, a shop needs to have the right systems, the right tools and equipment, an extensive information system, and of course, great leadership.
The bottom line is this; many factors need to be considered when looking to increase production levels. While it does start with the technician, it doesn’t end there. Consider all the factors above when looking for ways to improve your shop’s labor production.
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By Joe Marconi
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By carmcapriotto
"Do you have the strength to be honest with yourself?" Michael Smith discusses the importance of personal and company-wide SWOT analysis. He explores the need for continuous learning, development and the role of collaborative feedback in identifying blind spots. He emphasizes the importance of going beyond the initial analysis to consider future goals and potential obstacles. Michael Smith, Herzberg Smith and Co, Michael Smith’s previous episodes HERE Show Notes
The concept of doing a personal SWOT analysis (00:01:57) Exploration of the idea of doing a personal SWOT analysis and the importance of getting feedback from others. Starting a personal SWOT analysis with a company SWOT analysis (00:06:23) Suggestion to start the personal SWOT analysis by first conducting a company SWOT analysis and using the insights to inform the individual analysis. The SWOT Analysis and Leadership (00:08:03) Discussion on the importance of doing a SWOT analysis for businesses and the role of leaders in driving the future of the organization. The Importance of Self-Development for Leaders (00:09:31) Exploration of the need for leaders to participate in their own self-development and identify their strengths, weaknesses, opportunities, and threats. The Path to Mastery for Individuals and Organizations (00:14:54) Emphasis on the ongoing and evolving nature of the path to mastery for individuals and organizations, and the importance of continuous improvement. The importance of individualized learning and development (00:15:03) Discusses the concept of individualized learning and development programs, focusing on strengths and weaknesses. The need for continuous learning and development (00:16:25) Emphasizes the importance of continuous learning and development, including attending conferences and reading books. The importance of accountability and institutionalizing development (00:18:10) Highlights the need for leadership to walk the talk, institutionalize development, and hold people accountable for continuous learning and improvement. The SWOT Afternoon (00:22:08) Discussing the concept of doing a personal SWOT analysis with the team and the benefits of fostering a collaborative culture. Facilitating the Conversation (00:23:14) Exploring the art of facilitating a conversation and the importance of listening and not interrupting during discussions. 360 Reviews and Mentoring (00:25:11) Explaining the use of 360 reviews and the importance of selecting trusted individuals for feedback, as well as the benefits of mentoring relationships within the organization. Inviting Industry Guests (00:29:56) Carm and Michael express their interest in inviting industry professionals to share their experiences and discuss the effectiveness of implementing the discussed strategies.
Thanks to our Partner, NAPA Auto Care Learn more about NAPA Auto Care and the benefits of being part of the NAPA family by visiting https://www.napaonline.com/en/auto-care Connect with the Podcast: -Follow on Facebook: https://www.facebook.com/RemarkableResultsRadioPodcast/ -Follow on LinkedIn: https://www.linkedin.com/in/carmcapriotto/ -Follow on Instagram: https://www.instagram.com/remarkableresultsradiopodcast/ -Follow on Twitter: https://twitter.com/RResultsBiz -Join our Insider List: https://remarkableresults.biz/insider -All books mentioned on our podcasts: https://remarkableresults.biz/books -Our Classroom page for personal or team learning: https://remarkableresults.biz/classroom -Buy Me a Coffee: https://www.buymeacoffee.com/carm -The Aftermarket Radio Network: https://aftermarketradionetwork.com -Special episode collections: https://remarkableresults.biz/collections
Click to go to the Podcast on Remarkable Results Radio
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By Changing The Industry
Episode 141 - Embracing Change in the Automotive Repair Industry With Matt Ruffman
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By carmcapriotto
Thank you to RepairPal for sponsoring The Auto Repair Marketing Podcast. Learn more about RepairPal at https://repairpal.com/shops
How To Get In Touch
Group - Auto Repair Marketing Mastermind
Website - shopmarketingpros.com
Facebook - facebook.com/shopmarketingpros
Get the Book - shopmarketingpros.com/book
Instagram - @shopmarketingpros
Questions/Ideas - [email protected]
Click to go to the Podcast on Remarkable Results Radio
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By carmcapriotto
This week, Hunt sits down for an insightful Chat with Joelle Pollak to talk about how Promotive is tackling staffing shortages in the automotive aftermarket, offering innovative solutions for shop owners.
Expert Take on Recruitment Challenges: Dive into the complexities of hiring, focusing on the crucial balance of pay, benefits, and shop culture in attracting and retaining top talent. Promotive's Strategic Approach: Learn about Promotive’s unique strategies in talent retention and their collaboration with technical schools to address the technician shortage. Streamlined Staffing Solutions: Explore how Promotive’s comprehensive services simplify the recruitment process, saving time and efficiently matching shops with ideal candidates.
Thanks to our partners, NAPA TRACS and Promotive
Did you know that NAPA TRACS has onsite training plus six days a week support?
It all starts when a local representative meets with you to learn about your business and how you run it. After all, it's your shop, so it's your choice.
Let us prove to you that Tracs is the single best shop management system in the business. Find NAPA TRACS on the Web at NAPATRACS.com
It’s time to hire a superstar for your business; what a grind you have in front of you. Great news, you don’t have to go it alone. Introducing Promotive, a full-service staffing solution for your shop. Promotive has over 40 years of recruiting and automotive experience. If you need qualified technicians and service advisors and want to offload the heavy lifting, visit www.gopromotive.com.
Paar Melis and Associates – Accountants Specializing in Automotive Repair
Visit us Online: www.paarmelis.com
Email Hunt: [email protected]
Get a copy of my Book: Download Here
Aftermarket Radio Network
Click to go to the Podcast on Remarkable Results Radio
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