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Disciplined financial measuring is a necessity for your shop's success

Wednesday, July 4, 2018 - 07:00
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As a shop owner, do you spend all your time working “in” their business or “on” the business?  There really is a difference. One method is well known as working hard, and the other method is known as working smart.

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Each month, a good operator will sit in his/her office and really analyze their business. This time spent will make the shop money if the information is prepared in a fashion so the owner/manager can compare the operation to targets set to maximize the net profit of the shop.

The question that many people are asking these days is what should I be measuring now in order to ensure I am maximizing productivity and profits of my shop? Times have changed and measurements have changed. So many measurements still being embraced by shop owners, quite frankly, just do not work anymore. They are outdated and the old business measurement method is broken. The new aftermarket requires specific measurements that allow management to focus in on the right area to grow the business and build net income.

The following is a start to an up-to-date list of items for consideration to be measured each week in some cases and definitely every month. Keep in mind what I have said many times before: if you can’t measure it, you can’t manage it. Get focused, measure your business properly so you can make competent management decisions to move forward and achieve what you want to achieve.

Total shop gross profit percentage (Monthly)
What total GP percent are you achieving for the shop when all commodities and all labor is accounted for? (Total Gross Profit dollars divided by Total Sales Dollars). Are you meeting the required standard?

Total labor sold to total wage package ratio (Weekly and Monthly)
What are you really achieving in your total labor sold to total wage package paid? The wage package includes management wages at a professional pay scale, all technicians, service advisors and administration wages, as well as state payroll taxes, workers compensation and staff benefits totals. Divide that total into total labor sold. Are you measuring “activity” or true “productivity” in your business?

Keys To A Profitable, Productive Shop

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Total maintenance hours billed per day and per month
Are you achieving the right number of billed hours per technician in your shop? Are all vehicle inspections being professionally done?

Total diagnostic hours billed per day and per month
Based on your vehicle mix are you capturing the right number of diagnostic hours available and billing it accurately?

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