How To Make A Profit – Auto Repair Shop | Capital One

How To Make A Profit – Auto Repair Shop | Capital One

I’ve been historically
tracking data and performance data
on businesses, and what I’ve identified
is that labor gross margin, which is basically the crux of the business profit
in a collision center, that profit level has been
declining for 15 years. I’ve got more businesses making less than 50% on gross margin on labor than I have businesses making over 50%. That’s just not something
that’s gonna be sustainable with some of these new costs
coming on board. In order for a business
to be sustainable, you have to have
a 75% margin on labor, because 75% provides you
enough profit to be able to create
a safe, constantly maintained, and improving work environment
for the employees. Figuring out your real cost of delivering
that labor-capable resource, which it isn’t just their wage, it isn’t just their benefits
and taxes; it’s what do I have to invest
in that labor resource to make that labor resource
capable. The best strategy
for people going forward is to recognize
this is gonna happen and start pricing in a way to create enough
of a profit margin to absolutely assume that you’re gonna be
investing in labor. One of the single secrets to the businesses
that I’ve worked with that transforms them
from somebody getting by to becoming a business
that accelerates their growth and truly understands
the business is when they grasp
the concept of job costing, truly understanding
what it costs completely to deliver that car
back to the customer so that they know that
they made enough money to cover those costs completely
in an ongoing way, right? ‘Cause if you do a job
and you go, “Wait a second. I didn’t make any money
on this one,” so stop fixing
those kind of jobs.

You May Also Like

About the Author: Oren Garnes

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *