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Multiple Math Formulas Now in Our Industry Sector

Automotive & HD Business Management Articles.
Bob Greenwood. April 2, 2014. ( over 3 years ago ) 549 views

Now consider we’ve developed formulas over the study of independent shops for 25+ years. All formulas change as vehicle technology and complexity enter. Formulas from two years ago changed again this year. Our sector is that fluid that nothing is fixed in stone.

In the past five years we have new formulas we instruct in our management classes including:

- How to calculate the amount of available billable diagnostic hours

- How to calculate the true NET profit on your repair order BEFORE you close it (fact – over 65% of the work going through your bays doesn’t create $1 in NET profit, it only creates a sale activity and gross profit)

- How to calculate an inventory turn/earn index to ensure you’re stocking properly by line to have the right inventory turnover thereby utilizing your cash to maximum advantage

- How to calculate the right “SITE” efficiency number based on your TEAM and what it tells you about your business. This isn’t a “Proficiency” measurement; it’s a total “Site” Efficiency measurement.

Of course, other measurements remain in place that, as a business owner/manager, you must understand:

- How to calculate the true cost to open each morning therefore telling you how much gross profit you must achieve each day before you make $1 of net income

- How to calculate the total billed hours per month and compare it to the same month last year and what it tells you about your business

- How to calculate your average billed hours per invoice and what it’s telling you about your business and customer base

- How to determine how many billed hours per invoice YOUR shop should be achieving based on your vehicle mix

- How to calculate what you should be charging for each labour rate based on YOUR business facts (Fact: you require a minimum of 3 labour rates in today’s shop—some shops have 5)

- How to calculate your shop’s true net profit after tax of one billed hour

- How to calculate YOUR flat-line number each day (It’s not about just more car-count, it’s about the right car count for your business based on YOUR business facts)

- How to calculate and set up a professional profit sharing plan for your business (bonus concept is old thinking)

- How to calculate how much money you left on the table due to embracing old management philosophies and habits? I‘ll have a box of Kleenex ready for you!

Our sector of the industry has truly turned into a Profession. The Trade days are gone. How far are you in your transition to the new AUTOCARE Industry?

Bob Greenwood


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