Quantcast
Jump to content

busy not profitable


Recommended Posts

Guy I need help. We just celebrated 1 year of being in business and I am not happy with the shop profit. I feel like we are busy. We pay the bills and salaries but nothing extra to go to bank.

Our spec:

$65 pre hour

average 35% on parts

15% on tires plus $2.00 dispsal per tire and $12.99 mount/ balance per tire

brake specials at $109.99

2 bay shop. 2 techs, 1 office manager

Any ideas that could help the bottom line or % on parts that may help?

Link to comment
Share on other sites

Guy I need help. We just celebrated 1 year of being in business and I am not happy with the shop profit. I feel like we are busy. We pay the bills and salaries but nothing extra to go to bank.

Our spec:

$65 pre hour

average 35% on parts

15% on tires plus $2.00 dispsal per tire and $12.99 mount/ balance per tire

brake specials at $109.99

2 bay shop. 2 techs, 1 office manager

Any ideas that could help the bottom line or % on parts that may help?

 

First off, this is a VERY touchy topic due to anti-trust laws. But I will put in my $.02. Your labor rate and parts mark-up must be competitive to your market, not mine or other members, your market. With that said, I agree about maybe moving your labor up, but you will have to survey your competition.

 

I don't know about the mark up on tires since I do not sell tires.

 

You say you are busy, how busy? What is your efficiency rate? That means how many hours are you selling for the number of hours you are open? Here's where it gets tricky, if you are open 9 hours a day but only average 6 hours of available work, you will never reach 80-90% efficiency that most consider a highly efficient shop. But if you are scheduling only 6 hours because that is all you can finish in a day then you are losing money due to inefficiencies. These can be your parts ordering method, your technicians are simply too slow and need an incentive or replacement, or maybe your shop layout? Believe it or not I talked to one shop owner who, by simply putting up two additional identically stocked supply cabinets (you know brake clean, penetrating oil, silicone spray. etc.) and taking the doors off the cabinets he gained 2% efficiency. Doesn't seem like much, but some management gurus will tell you just a 5% shift in efficiency will yield thousands in additional profit. Think about it, you are paying the bills and making a living. Assuming you are running 100K (parts & labor, just an example) per tech, that 2% translates into an additional $4000.00 per year, just for two more cabinets and taking the doors off. Easy money. Now some shops are just not set up to meet maximum technician efficiency. Assuming yours is and you are busy every minute of every day, are you booked out a week or two in advance? If so your prices are too low. I suspect being a two tech, two bay shop that you are not highly efficient. You need at least one more bay for two techs. Think about, you've got a brake inspection done and waiting for the office manager to finish the quote and sell the job, what does that tech do? Put tires back on and move on only to rack it back up and pull the tires to do the job later, or wait for approval? Or how about the u-joint job where your tech has pulled the driveshaft only to find out there are four different u-joints available and you got the wrong one and have to wait 1/2 hour for the parts delivery of the right one? Wasted time and highly inefficient. He should be able to move on and utilize a second hoist for the next car, unless you always have flat bay work four seasons.

 

And how are you selling brake specials for $110.00? Again here, please be careful of anti-trust laws if you reply. But a decent set of pads will run you half of that. If you compete on price guess what you will get? Price shoppers and you will never make any money on them. All they want is cheap. I am currently trying to break that trend at my shop. I still offer specials and coupons, but I am trying to move them upscale to the point where I will make money and they have broad appeal, not just a cheap price. But back to the brakes, if you are just slapping in another set of pads and scratching the rotors sure 45 minutes may be enough. I checked book time on every brake job my first year and do you know what I found? Some really scalped you on pad replacement at .6-.7 but most were 1.0 plus .2-.3 each for machining the rotors. So that is an average of 1.5 hours, at your labor rate you are only charging 12.49 for pads and brake clean, no wonder you aren't making money. And what about the brake complaints from a poorly done job? Again, survey your competition, not from your shop phone, and get a feel for their pricing. You will never be able to compete on price because someone will always be advertising a cheaper deal to get them in the door only to upsell the devil out of them. Sure you will feel like you're losing a lot of work, but if you aren't making any money on it, what's the point? You will provide your customer clients much better value if you use a quality part and do a thorough job than if you do it cheap. Or maybe that's the reputation you want.

 

And the last item I can quickly think of is do you need all of this staff? If your efficiency is not there then maybe you need to reevaluate your staffing needs. For two bays you really need top efficiency to support that many paychecks. I suspect you are simply overstaffed for the shop you have. Moving a business sucks but unless there is additional space available to you, I'd be looking at a bigger shop, nearby. That extra bay probably won't cost you as much per year as the lost efficiency of your techs standing around. It won't take an extra 15 minutes a day of productivity per tech to make you able to afford $500 a month higher rent. If you have mortgage then maybe look into adding a bay. Of course you will have to evaluate your specific situation but I'll bet having that extra bay will increase your per tech productivity greatly.

 

And yes this was easier to write than it is to implement, but you asked for advice.

 

And if you want, I have a system for more efficient communications between the techs and the front office. Make it as non-verbal as possible. It really works and saves time. Contact me for more details.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Have you checked out Joe's Latest Blog?

         3 comments
      Got your attention? Good. The truth is, there is no such thing as the perfect technician pay plan. There are countless ways to create any pay plan. I’ve heard all the claims and opinions, and to be honest, it’s getting a little frustrating. Claims that an hourly paid pay plan cannot motivate. That flat rate is the only way to truly get the most production from your technicians. And then there’s the hybrid performance-based pay plan that many claim is the best.
      At a recent industry event, a shop owner from the Midwest boasted about his flat-rate techs and insisted that this pay plan should be adopted by all shops across the country. When I informed him that in states like New York, you cannot pay flat-rate, he was shocked. “Then how do you motivate your techs” he asked me.
      I remember the day in 1986 when I hired the best technician who ever worked for me in my 41 years as an automotive shop owner. We’ll call him Hal. When Hal reviewed my pay plan for him, and the incentive bonus document, he stared at it for a minute, looked up, and said, “Joe, this looks good, but here’s what I want.” He then wrote on top of the document the weekly salary he wanted. It was a BIG number. He went on to say, “Joe, I need to take home a certain amount of money. I have a home, a wife, two kids, and my Harly Davidson. I will work hard and produce for you. I don’t need an incentive bonus to do my work.” And he did, for the next 30 years, until the day he retired.
      Everyone is entitled to their opinion. So, here’s mine. Money is a motivator, but not the only motivator, and not the best motivator either. We have all heard this scenario, “She quit ABC Auto Center, to get a job at XYZ Auto Repair, and she’s making less money now at XYZ!” We all know that people don’t leave companies, they leave the people they work for or work with.
      With all this said, I do believe that an incentive-based pay plan can work. However, I also believe that a technician must be paid a very good base wage that is commensurate with their ability, experience, and certifications. I also believe that in addition to money, there needs to be a great benefits package. But the icing on the cake in any pay plan is the culture, mission, and vision of the company, which takes strong leadership. And let’s not forget that motivation also comes from praise, recognition, respect, and when technicians know that their work matters.
      Rather than looking for that elusive perfect pay plan, sit down with your technician. Find out what motivates them. What their goals are. Why do they get out of bed in the morning? When you tie their goals with your goals, you will have one powerful pay plan.
  • Similar Topics

    • By carmcapriotto
      As tax season 2024 unfolds, many entrepreneurs find themselves grappling with previous years' unpaid taxes, alongside the looming obligations for the current year. This episode gets into practical solutions for managing tax debt, with real-life advice and expert insights to navigate this challenging aspect of business ownership.
      • Understanding Your Options with the IRS: Setting up a payment plan with the IRS is the most common recourse for those unable to pay taxes in full. Learn about the prerequisites, process, and potential pitfalls. How does the IRS view income versus payroll tax debts? What are the crucial differences that could affect your business?
      • The Truth About Offers in Compromise: Offers in Compromise (OIC) might seem like a silver bullet for tax woes, but they're often misunderstood and not as easily attainable as advertised. I I try to demystify OICs, outlining the qualifications, processes, and the reality behind settling tax debts for "pennies on the dollar." Why are these offers rarely the best solution for most taxpayers?
      • Practical Tips and Real-World Strategies: Beyond understanding IRS mechanisms, this episode provides actionable advice for managing and potentially settling tax debts. From negotiating with state tax authorities to leveraging existing assets and income for a better outcome, learn strategies that could save your business significant amounts of money and stress.
      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
    • By Changing The Industry
      The Basics of Owning An Auto Repair Shop - Part 3
    • By carmcapriotto
      Get to know Darrin Barney, the family man, Jeep Enthusiast, multi-business owner, and friend to many. Take away some helpful tips, but a ton of inspiration from the owner of Barney Brothers Off Road and Repair and Elite Worldwide.
      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] 
      Lagniappe (Books, Links, Other Podcasts, etc)
      Barney Brothers Off Road and Repair
      Elite Worldwide
      [email protected]
      Click to go to the Podcast on Remarkable Results Radio
    • By Changing The Industry
      Episode 151 - A Shop Owner's Guide to Consolidation and Exit Strategies
    • By carmcapriotto
      The Weekly Blitz is brought to you by our friends over at Shop Marketing Pros. If you want to take your shop to the next level, you need great marketing. Shop Marketing Pros does top-tier marketing for top-tier shops.
      Click here to learn more about Top Tier Marketing by Shop Marketing Pros and schedule a demo:https://shopmarketingpros.com/chris/
      Check out their podcast here: https://autorepairmarketing.captivate.fm/
      If you would like to join their private facebook group go here: https://www.facebook.com/groups/autorepairmarketingmastermind
       
      In this podcast episode, Coach Chris Cotton from Auto Fix Auto Shop Coaching addresses the critical issue of technician shortages in the auto repair industry. He discusses how this shortage affects shop productivity and revenue, with shops struggling to keep up with the demand due to a lack of skilled technicians. Cotton cites a Tech Force Foundation report predicting a significant need for technicians by 2024. He explores reasons behind the shortage, such as retirements, low female representation, high turnover among young workers, and fewer automotive program graduates. Cotton concludes with strategies for attracting and retaining talent, including better work schedules, compensation, career development, and educaTechnician Productivity (00:01:11) Discussion on the impact of technician shortage on shop productivity and revenue.
       
      Vehicles per Bay (00:02:33) Explanation of the increase in vehicles per bay and its impact on repair orders. Attracting Technicians (00:03:52) Importance of attracting and retaining technicians to maximize shop capacity and revenue. Technician Supply and Demand (00:05:52) Insights from the 2022 Tech Force Foundation report on the shortage of technicians and its impact on the industry. Impact of Technician Shortage (00:08:15) Calculation of revenue loss due to technician shortage and its impact on service capacity. Challenges in Attracting Technicians (00:11:43) Discussion on the reasons for the shortage of technicians and the challenges in attracting new talent to the industry. Remedies for Technician Shortage (00:16:34) Suggestions for addressing the barriers in attracting and retaining technicians, including training and career development. Technicians' Work Schedule (00:20:59) Discussion about adjusting technicians' work schedules to attract and retain them. Outdated Mindset (00:21:30) Encouragement to adapt to the changing times and make necessary adjustments in the auto repair industry. Acknowledgment of Listeners and Sponsor (00:22:20) Expressing gratitude to the listeners and acknowledging the sponsor, Shop Marketing Pros, for their support.  
       
       
      Connect with Chris:
      [email protected]
      Phone: 940.400.1008
      www.autoshopcoaching.com
      Facebook: https://www.facebook.com/
      AutoFixAutoShopCoachingYoutube: https://bit.ly/3ClX0ae
       
      #autofixautoshopcoaching #autofixbeautofixing #autoshopprofits #autoshopprofit #autoshopprofitsfirst #autoshopleadership #autoshopmanagement #autorepairshopcoaching #autorepairshopconsulting #autorepairshoptraining #autorepairshop #autorepair #serviceadvisor #serviceadvisorefficiency #autorepairshopmarketing #theweeklyblitz #autofix #shopmarketingpros
      Click to go to the Podcast on Remarkable Results Radio


  • Our Sponsors










×
×
  • Create New...