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By Joe Marconi in Joe's BlogMost shop owners would agree that the independent auto repair industry has been too cheap for too long regarding its pricing and labor rates. However, can we keep raising our labor rates and prices until we achieve the profit we desire and need? Is it that simple?
The first step in achieving your required gross and net profit is understanding your numbers and establishing the correct labor and part margins. The next step is to find your business's inefficiencies that impact high production levels.
Here are a few things to consider. First, do you have the workflow processes in place that is conducive to high production? What about your shop layout? Do you have all the right tools and equipment? Do you have a continuous training program in place? Are technicians waiting to use a particular scanner or waiting to access information from the shop's workstation computer?
And lastly, are all the estimates written correctly? Is the labor correct for each job? Are you allowing extra time for rust, older vehicles, labor jobs with no parts included, and the fact that many published labor times are wrong? Let's not forget that perhaps the most significant labor loss is not charging enough labor time for testing, electrical work, and other complicated repairs.
Once you have determined the correct labor rate and pricing, review your entire operation. Then, tighten up on all those labor leaks and inefficiencies. Improving production and paying close attention to the labor on each job will add much-needed dollars to your bottom line.
By Joe Marconi
Joe Marconi will be speaking at the upcoming virtual conference Amplify 2023, hosted by AutoLeap, with an exciting session to help shop owners be prepared with their business! Joe's session is titled "You Can & Will Survive an Economic Downturn". For most repair shops, the recent years have been smooth sailing for business. Although it's impossible to predict our economic future, does that mean you shouldn't always be prepared for what's next? The COVID pandemic brought a variety of challenges, and while it didn't bring significant negative impact to the repair industry, it does offer the opportunity to reflect and properly prepare for a time when an economic event could. Join Joe in this live session to dive deeper into this topic, happening at Amplify 2023 on March 24th, 1:00pm ET! Book your complimentary, virtual ticket today. https://bit.ly/3XSdY8b
Erich and Lauralee Schmidt went to a 4 day work week during COVID and haven't looked back. They also have an app for their shop with benefits to customers.
Erich and Lauralee Schmidt, Schmidt Auto Care, Springboro, OH Show Notes:
4 day work week- exhaustion during COVID, started cutting Fridays with three day weekends. Prefaced it as summer hours and would go back to 5 days in the fall. They never went back to 5 day work week. Revenue, productivity, and efficiency increased. 8-7 pm work hours. The check-in process includes 4 day work week schedule. 40 hours of training a year minimum- observing efficiency, open communication, partnering with employees with their training. Training is a requirement when hiring employees. “Where are your interests?” Service Advisor=Serice Specialist Free Schmidt Auto Care App- started 6 years, App Fueled is a customizable garage for clients and a bevy of services outside of just communication. Special pricing, birthday specials, loyalty touch points. 30% of the customer base has the app. Had ADAS for 3 years, one of the first in the area to get it. Program and calibration.
Thanks to our Partner, Dorman Products. Dorman gives people greater freedom to fix vehicles by constantly developing new repair solutions that put owners and technicians first. Take the Dorman Virtual Tour at www.DormanProducts.com/Tour
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By Joe Marconi
When I was in business, each year for 41 years, we experienced a slow down in February. The reasons are many, but by the second week of March, things went back to normal.
However, from what I am hearing from some shop owners, they are concerned. They point to riding this wave of business since coming out of COVID, and fear that the wave may become a trickle.
What is your opinion? Good times are still here? Should we be concerned?
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