If you accomplish this, you WILL hit your Million Dollars! (It’s simply math).
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Now that you have an understanding of what numbers you’ll need and where to find them, it’s time to put you on the map. After all, how can you possibly get to where you’re going if you don’t know precisely where you are? At my consulting company, we’ve designed some proprietary software which amasses a tremendous amount of data, all based upon this simple little query. Gather these numbers up. (See Chart 1)
|SHOP NAME||Shop labor rate $93.87|
|Bob's Garage||How many production techs? 12.0|
|ADDRESS||Business hours Mon-Fri M-F 8-6|
|CITY||How long Sat. lunch? 1.00|
|STATE||Number of working bays 12|
|ZIP CODE||How are techs pad? Check one|
|PRIMARY PHONE||On flat rate X|
|OTHER PHONE/CELL||Hourly X|
Let’s begin by studying the apparently simple Chart 2 Annual Forecast. (Reader’s note: the charts provided here are NOT all from the same shop or time frame. They are merely for illustrative purposes).
|Time period for financial review (months)||Jan 1 thru Jun 20, 2012|
|Which is how many months?||6|
|Number of repair orders for this time period||4832|
|Total labor sales||$1,054,445|
|Total labor costs||$399,969|
|Total parts sales||$982,006|
|Total parts costs||$593,860|
|Total sublet or tire sales||$7,058|
|Total sublet cost||$5,352|
|Total shop supplies/hazmat/other sales||$36,748|
|Total shop supplies/hazmat/other costs||$4,668|
I’m very strict on using accuracy in working with numbers (unless of course you use rounding in certain instances, i.e. reading a P&L).
You can begin by pulling your P & L for 2015 (the full year). Write down the number next to “Gross Sales”. I would prefer that you add somewhere between 10-15% to this number. Standard business growth formulas are in this vicinity. This will be your annual sales target, which you should then break down to a daily target, and make certain your sales staff knows this number! From there, using your available data, fill in the remanding numbers. The last number, Billable Hrs. Per Day, you will need to calculate.
Understand what your shop is capable of — i.e. number of bays, techs, billable hour production, etc. A reality check here is needed. If you only have 5-bays, trying to hit $2M/yr. is not likely to happen. (2nd location time?)
Marketing and advertising strategies should then align with your goals. Let me take a moment to explain the difference between this two commonly used words – “Marketing” is basically the various services you provide. If you open a custom wheel shop within your existing business, this would be considered a new market. “Advertising” would be the call-out to folks that you are now selling custom wheels. See the difference?