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I am working with a local business consultant on the financial side to my business plan and I would like a bit of input from you seasoned professionals out there.

 

I have 5 main products/services that will be generating income for me, and for each my consultant would like an average answer to the # of sales, average unit price, average unit cost, service hours, and hourly service rate for each product/service.

 

In order to get a good estimate I would really appreciate all the help I can get from you professionals out there, if you could take just a minute or two to fill in the table I have below it would put me light-years ahead of the game.

 

# of Sales per Average Unit Average Unit Service Hours Hourly

day/week/mo Price Cost day/week/mo Service Rate

  • Labor
  • Parts
  • Tire Services
  • Alignment
  • Quick Lube Services

 

Also if you could let me know which months of the year are the busiest and slowest in terms of these 5 products/services in your area.

 

 

THANKS IN ADVANCE!!!

Edited by ncsvoboda7
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I don't understand what your asking, sorry mate. # of sales? You mean car count?

 

Average unit sold .....you mean ARO?

 

Average cost?...you mean my GP?

 

Service hours? You mean hours/RO?

 

Hourly rate? You need to figure that out based off what you need to take home. COGS,loaded labor cost, fixed overhead, YOUR SALARY, investing back into shop, rainy day fund, health insurance, ect is what you base your hourly rate off of, not what anyone else is charging.

 

Let me know if that's what your asking and I'd be happy to help.

 

Cheers,

 

Don

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  • 2 weeks later...

I would figure out your fixed expenses then divide by # of bays will give you the cost of bay/day to just hit the light switch and be there 8 hours. Now you know how much you need to produce per bay to cover the overhead, then add how much profit you want, divide by working hours and you have your hourly labor rate. Add in your parts/labor ratio to figure gross sales. Assuming all bays will be 100% productive 100% of the time is unreasonable. Maybe adjust to 50% productivity to be much more conservative or some target you set. You can also figure the maximum amount of tires and brakes you can pump out in a day and profit per job and go by that.

 

National averages are 1.2-1.4m gross sales for a tire/alignment/general repair 6-8 bay shop. Average Net profit is 5% so for every $1000 in receipts the business keeps $50 to pay income tax on while $950 disappears to pay people (your officer salary included) This bleak figure is reality for the vast majority.

 

A couple places to look are annual reports for public companies like Monro muffler (Google it and prepare to read awhile) or ask your parts store manager the expected parts $$$/bay/day in your area, they know how much you should be spending with them.

 

If you simply want some #s call me during the week and I can give you car count per month and average RO dollars.

 

The slowest month is the one when gas prices spike and the stock market plummets. Tire sales for us are highest September through December and slow down considerably the rest of the year. When people can't make it up their icy driveway they buy tires. Alignments spike in May after the snowplow ruined the roads all winter. Oil changes spike in June and before all major holidays in preparation for travel. Mechanical breakdowns spike the first hot days in spring and the first cold days in the fall. We are in a college town so August is a big month as 10,000 new cars arrive in town. Come May they all go home. January is pretty slow for us for preventative maintenance as Xmas credit card bills and property taxes drain the pocketbook. Tax refund time in March makes everyone rich again.

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I don't understand what your asking, sorry mate. # of sales? You mean car count?

 

Average unit sold .....you mean ARO?

 

Average cost?...you mean my GP?

 

Service hours? You mean hours/RO?

 

Hourly rate? You need to figure that out based off what you need to take home. COGS,loaded labor cost, fixed overhead, YOUR SALARY, investing back into shop, rainy day fund, health insurance, ect is what you base your hourly rate off of, not what anyone else is charging.

 

Let me know if that's what your asking and I'd be happy to help.

 

Cheers,

 

Don

Essentially you got it maybe I can simplify the chart a little better.

 

How many labor hours can I count on per week? With a 4 bay garage.

 

What would be my COGS per week on parts and what kind of markup could I expect?

 

How many alignments a week can I expect and what would my gross revenue be off of each of those.

 

What would my cogs on tires be per week and what would my average markup be on them?

 

Lastly how many oil changes would I be looking at per week and what can I expect for a gross revenue from them?

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I would figure out your fixed expenses then divide by # of bays will give you the cost of bay/day to just hit the light switch and be there 8 hours. Now you know how much you need to produce per bay to cover the overhead, then add how much profit you want, divide by working hours and you have your hourly labor rate. Add in your parts/labor ratio to figure gross sales. Assuming all bays will be 100% productive 100% of the time is unreasonable. Maybe adjust to 50% productivity to be much more conservative or some target you set. You can also figure the maximum amount of tires and brakes you can pump out in a day and profit per job and go by that.

 

National averages are 1.2-1.4m gross sales for a tire/alignment/general repair 6-8 bay shop. Average Net profit is 5% so for every $1000 in receipts the business keeps $50 to pay income tax on while $950 disappears to pay people (your officer salary included) This bleak figure is reality for the vast majority.

 

A couple places to look are annual reports for public companies like Monro muffler (Google it and prepare to read awhile) or ask your parts store manager the expected parts $$$/bay/day in your area, they know how much you should be spending with them.

 

If you simply want some #s call me during the week and I can give you car count per month and average RO dollars.

 

The slowest month is the one when gas prices spike and the stock market plummets. Tire sales for us are highest September through December and slow down considerably the rest of the year. When people can't make it up their icy driveway they buy tires. Alignments spike in May after the snowplow ruined the roads all winter. Oil changes spike in June and before all major holidays in preparation for travel. Mechanical breakdowns spike the first hot days in spring and the first cold days in the fall. We are in a college town so August is a big month as 10,000 new cars arrive in town. Come May they all go home. January is pretty slow for us for preventative maintenance as Xmas credit card bills and property taxes drain the pocketbook. Tax refund time in March makes everyone rich again.

Thanks, some very useful info I appreciate it!

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A tire shop is easier to do a business plan for. 4 bays 4 tire techs can do 150 tires a day x $25 gross profit per tire and there's the magic number. Payroll is cogs on tires. That said if you can sell and install 150 tires a day change your name to les schwab or Mavis because they will buy you out or set up shop next door fast! We do a lot of tires, advertise, really strive to do tires all day every day and sell 2000 a year if we are lucky, nobody gets turned away. That's 10 tires a day every working day. Theoretically you can do 1 alignment for every 4 tires. Alignment can be $75 minus $20 for the guy to do it, 10 a day is about the max for a human. $550 a day alignment profit minus the loan payment. Might be better off having the alignment guy do 40 more tires instead at $1000 profit. Add in 1 oil change for every 12 tires (about 1/3 will need it ) oil change profit is single digit unless you upsell, gets people in the door that's about it. $19.99 oil change gets you 4 tires, that's better. Now to do 500 tires a week you'll need 5 counter sales persons plus 4 full time tire guys maybe 4 or 5 part timers as well as a full time cashier and one guy to just unload the truck and take out the scrap tires. Probably 15 people on payroll. You should read "six tires no plan" it's a good book.

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Essentially you got it maybe I can simplify the chart a little better.

 

How many labor hours can I count on per week? With a 4 bay garage.

 

Are you trying to forecast to get a loan?

You can't count on any hours. Unless you can see into the future lol.

 

Now of you wanna figure out what you should be able to produce, that's a little different. Do you have any data of what the shops done/doing? Then the whole productivity/efficiency comes into play.

 

Now with my set up and business model,I am more efficient and my techs are more productive if I have 2 master techs working out of 4 bays. They can produce more, their efficiency isn't messed up when waiting for parts because of a dead lift (they can start working on the other lift), and they can pump out work.

 

I target/know they can put out 80-120 hrs/week. Life doesn't always allow that to happen, but it's my job to make sure any road blocks, time wasters, inefficiency are not there.

 

Again, you have to figure out what your techs can produce and hoe much available work is there. I don't expect my C tech to produce like that, he is there so my others can make me more money and I'm not paying someone$39/hr to do oil changes.

 

What do you have in terms of data so far?

 

What would be my COGS per week on parts and what kind of markup could I expect?

 

Again COGS is relative to hoe many hours your selling. Personally,I try to work at a minimum 60% gp on parts and my COGS is 20% over all. On dealer parts I shot for a 40_45% gp. Not always going to hit that, but hey they are goals for a reason.

 

 

How many alignments a week can I expect and what would my gross revenue be off of each of those.

 

You should see 4,329.38 alignments per week at a minimum. Crazy right? That's because it is. How many tires do you sell/week. I'm sure there is a formula,I don't do tires, not enough money or space for my liking. It all depends on what% of your business is tires. I average 3-4 aligns a week but I work on mostly Asian which don't require alignments as often due to lower suspension sales.

 

What would my cogs on tires be per week and what would my average markup be on them?

 

Are you a tire store or repair shop? My local tire store has an average of $120k / month in rotating stock. They are a tire store that does basic grease monkey work and then tries to do diag and loses their shirt and pocket book. Stick to what you good at.

 

I'm not good at tires, hence why I don't do them, but I'm really good at diag and smog and maint, and I make more on it.

 

Lastly how many oil changes would I be looking at per week and what can I expect for a gross revenue from them?

Are you a quick lube or service facility? I sell service so lof makes me money. They take an average of .75_1 hr, because I do a complete inspection. So I try to limit it to only 7/day.

 

There is an average $1200 in needed repairs per car that come in.I focus on doing more with less. My average oil change is 76_83$/ car with a cost of$31/ car.

 

My loaded labor cost is 25% my aro is usually around $585 with a normal car count of 245/ month.

 

These are AVERAGES. I don't hit them all the time. Give some data and I'd be happy to give you my humble opinion on what"should" be hastening.

 

What's your trainer saying you should be doing? I haven't personally seen a trainer coach ask the questions your asking but I'd be happy to try and help.

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A tire shop is easier to do a business plan for. 4 bays 4 tire techs can do 150 tires a day x $25 gross profit per tire and there's the magic number. Payroll is cogs on tires. That said if you can sell and install 150 tires a day change your name to les schwab or Mavis because they will buy you out or set up shop next door fast! We do a lot of tires, advertise, really strive to do tires all day every day and sell 2000 a year if we are lucky, nobody gets turned away. That's 10 tires a day every working day. Theoretically you can do 1 alignment for every 4 tires. Alignment can be $75 minus $20 for the guy to do it, 10 a day is about the max for a human. $550 a day alignment profit minus the loan payment. Might be better off having the alignment guy do 40 more tires instead at $1000 profit. Add in 1 oil change for every 12 tires (about 1/3 will need it ) oil change profit is single digit unless you upsell, gets people in the door that's about it. $19.99 oil change gets you 4 tires, that's better. Now to do 500 tires a week you'll need 5 counter sales persons plus 4 full time tire guys maybe 4 or 5 part timers as well as a full time cashier and one guy to just unload the truck and take out the scrap tires. Probably 15 people on payroll. You should read "six tires no plan" it's a good book.

What would you say your average markup is tho on tires because although you are correct that you just have labor involved with the tire you still have to mark up the tire price correct? so what could i expect from markups on tires if i am doing an average of 2000 a year as you are? thanks for the numbers this is helping a lot.

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Essentially you got it maybe I can simplify the chart a little better.

 

How many labor hours can I count on per week? With a 4 bay garage.

 

What would be my COGS per week on parts and what kind of markup could I expect?

 

How many alignments a week can I expect and what would my gross revenue be off of each of those.

 

What would my cogs on tires be per week and what would my average markup be on them?

 

Lastly how many oil changes would I be looking at per week and what can I expect for a gross revenue from them?

We are a full service Automotive repair shop with tires, alignments and lube as an obvious added service, my main focus will be on the repair side of things but I don't want to turn people away just because i don't have a tire machine or don't call myself a quick lube. I realize I can't be all things to all people but i can have a focus with additional services as well.

 

I am simply working on the financials of my business plan, I have all of our one time capital expenses pinned down as well as all of our recurring (monthly) fixed and variable expenses worked out. We will have one master mechanic, another tech that is fresh out of tech school and then me doing the service advising and running the business side of things while helping out in the shop every once in a while.

 

We will most likely start with a 2-bay garage but plan to quickly move up into a 4-bay garage and hire on more seasoned mechanics.

 

Currently I guess i am just looking for rough estimates on what i can expect for revenues when we start that is where most of these questions are coming from, so unfortunately I don't have any data to go off of except what i get from you guys and other market research. We are opening up here in central kansas so that gives you guys a little better idea of the market we are located in.

 

These numbers are helping a bunch tho, i appreciate all the help!

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