Automotive & HD Business Management Articles.
Bob Greenwood. January 13, 2016. ( over 3 years ago ) 501 views

2016 will be a challenging year for many shops in our industry due to so much uncertainty within the North American (World) economy.

Consumers listen to the negative news (i.e. stock market, oil prices, CDN dollar value) and that affects many of their purchase decisions. You can overcome the negative and still be very profitable but first you must know your own business numbers in much more detail than ever before. Consider the following steps:

  • Calculate your TRUE cost per billed hour for the last year. This involves your Accountant’s statement and your total hours billed for the last year
  • Analyze a random 15 completed R/O’s using the cost per billed hour determined in #1 and determine what the true net income or loss that was made on those invoices. This is very important exercise for any fleet accounts.
  • Review why the shop lost money on the invoices that worked out to a loss number!

Now you are starting to reflect on what the internal issues may be with the business rather than “blame”–the customer/client isn’t interested in getting work done. Fix your internal problems first so you know what specific work you will lose money on and where the processes must change in order to move the business forward on the average transaction and then you’re in a position to move on to the client’s issues.

You’ve heard me say it before, “You are in the relationship business” and it is our professional responsibility to ensure that the client’s vehicle is safe and reliable, so even in tough economic conditions, the conversations as to what is in the client’s best interest must still take place. Always document to the client what you’re recommending and make sure it’s based on their specific circumstances and needs.

Understanding your business and your client base can still produce a very profitable year, but don’t sit back and just think it will happen because it won’t. Management must know their job in every detail. If you’re uncertain, then get into the business classes that provide you the knowledge you require for YOUR situation.

Bob Greenwood

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