I was going to write about selling for profit but decided most readers know all about how to make a profit.
I decided to write about why, more than in any other time in history, it’s imperative we understand WHY earning and investing our profit is crucial to the survival of the independent automotive sector.
The world is changing faster than anyone can control or keep up with. The future of the auto service and maintenance business is no different. The pace of change is accelerating as predicted and proven by Moore’s Law. In 1965, Gordon Moore predicted (I am generalizing) that the computing power of an integrated circuit would double every two years as the size of transistors became smaller, and the cost would decrease as computing power increased.
Many shop owners I speak with tell me finding good technicians is becoming the biggest challenge they face and the challenge is growing larger every day.
Today, new technology and cloud computing are making everything so much faster and less expensive—look at the low cost of 3D printing and of transferring and storing of information. Changes in automobile technology are happening faster than we realize.
Not long ago it would cost automobile manufacturers millions of dollars and take several months to take a new idea from the planning stage to the manufacturing/testing stage. Thanks to the rapid change in the cost of computing and manufacturing, new designs and components can be completed and fully tested in days.
Can you keep up?
We’re challenged to keep up with the fast pace of change and cost of keeping current as the result of the rapid changes. Other challenges are the rapidly shrinking pool of experienced technicians and decline of qualified young workers entering the trade.
Many shop owners I speak with tell me finding good technicians is becoming the biggest challenge they face, and the challenge is growing larger every day. The lack of available technicians will certainly increase the cost of labour in our industry.
The realities of the rapidly changing world we live in will quickly separate the shops generating profits to just survive from the shops that generate the needed profit to afford the new technologies and cost of attracting and keeping talented technicians.
Over the last few years, thousands of smaller, less profitable shops have closed and have caused many motorists to search for a new shop with staff, knowledge, and equipment to service their newer vehicles. Does your shop generate enough profit to afford the cost of new software, hardware, access to information and the rising cost of technician wages? Does it generate 45 percent to 55 percent gross profit on parts sales and 60 percent gross profit on labour sales? Do you charge for diagnostic work? Is your diagnostic labour rate higher than the mechanical repair labour rate? If the answer is no to any of these questions, then chances of your shop surviving and staying in business as long as you wish are poor.
The shops that understand how to earn the proper level of profit are going to get busier in the near future because the shops that do not, will not be in business much longer.
If you need help and guidance in understanding the importance of profit and the honest methods of achieving profit, there is great training available at reasonable cost. If you want to learn more about training programs, then send me an e-mail.