To be profitable, you need to understand how your shop is performing on a regular basis.
Running the day-to-day operations of an Automotive Repair Shop, big or small, is no easy task. As an Owner/Operator of a third generation Automotive Repair Shop, growing up in the business has allowed me to see good and bad systems and procedures that directly affect profitability. Having the ability to measure those systems and procedures so you can make informed decisions is what separates a business in Debt and a business with Net Profit at year end.
I have the privilege of working with a great Automotive Business Management Software Company called GEM-CAR. I use GEM-CAR to run my business. The program gives me the ability to run the dayto- day operations and implement system procedures that can be measured on a daily basis. I am not naïve in thinking that GEM-CAR is the only good choice when it comes to shop management software. There are many systems out there, but which one is right for your business? What key indicators will give you the vital information to move your business forward? What will make your business more profitable? There’s a lot of information, numbers and reports in a good software program that helps a business owner or manager make an informed decision, but a few are vital to ensure profitability.
Sold Hours per Work Order, Average Work Order size, Parts Margin and Car Count are the four basic and vital numbers to any Automotive Repair Shop. Does your Shop Management System provide you with that vital information? If you can’t access that information quickly on a daily basis how can you make good, informed decisions about how your shop is being managed? If you don’t have the ability to access those numbers, then now is the time to invest in a software program that will allow you to move forward in your business today. Otherwise there may not be a tomorrow!
Set and forget
Having a good software management program will allow you to preset a parts margin to ensure you meet a minimum 45 percent gross parts profit. Your system of choice needs to allow you “to set it and forget it.” Most parts suppliers set suggested list pricing around 30 percent gross profit. That is not enough to allow you to maintain profitability and stay current in this fast paced industry that demands we invest in tools and training on a daily basis to efficiently maintain and repair the high tech vehicles of today.
The ability to analyze your Sold Hours per Work Order and Average Work Order size go hand-in-hand. Labour is just another part shop owners purchase daily to diagnose and repair a vehicle. If a shop has three technicians, we have 24 hours of labour that was purchased and needs to be sold every day. Not being able to analyze that on a daily basis directly affects the shop’s ability to become profitable. Not selling all labour inventory on any given day will affect Sold Hours per Work Order and Average Work Order size.
There are many things a shop owner or manager can’t control. Having the ability to control your Labour Inventory and Parts Margin today with a Shop Management System makes you profitable. Having the ability to measure your profitability, analyze your business, and make changes based on real data makes you profitable for many years down the road!