When I visit shops, many of them say that they’re doing well, they understand their financials, and they’re happy with their growth. If they want to start off working with me through monthly bookkeeping and financial advisor services, they quickly find out just what happens to all the money, and want to start talking about where they’re missing out.
Your shop has the potential to be more efficient, more profitable, and bring both you and your team more money while helping more customers.
Want to find out your shop’s highest earning potential? Here is a formula for how to figure it out.
1. Draw a map of your shop and identify every space that makes money
Then, use that map to answer the following questions:
2. How much money do you make a month from each space?
3. How much money do you make from each type of job you do in each space?
4. How many hours/days of hands-on work does it take you to do each type of job?
Here are some examples of real answers from shop owners:
I have two lifts and one space in front of the lifts. Sometimes we work on cars in that space, so in total I have three spaces that make money. The left side lift is for long-term projects. I do full restorations and engine swaps on that lift. A full restoration makes me $25,000, but I can’t do more than one a month. An engine swap makes me $10,000, and I can do it in a week, once all the parts show up. Right now, the lift makes me $20,000 per month. The right side lift is for suspension and exhaust work. We do roughly one job a day for $1,500 per job, and the lift makes me $30,000 per month, including the price of the parts we install.
My shop does PPF, tints, and wraps. We have four spots for PPF or wraps with quick jacks, and two spots by the garage door for in and out tints. Each quick jack space makes us $15,000 per month, and each tint space makes us $18,000 per month in the summer, $12,000 per month in the winter. It takes one person 6 days to do a color change wrap for $4,500, 2 days to do a front end PPF for $1,200, and 5 days to do a full car PPF for $6,000. We can do 3 full car tints per day, including windshield.
In each of these examples, there is major potential for higher earnings, but it might take some investment. For the restoration/performance shop, how often do cars sit on the lift without getting touched? Is it because parts haven’t arrived, or is it because there aren’t enough hands to work on the car? If parts haven’t arrived, what is your policy with long-term jobs and massive parts orders? Here are my suggestions. If you don’t have enough people, do you have a budget for hiring? Do you have a job description advertised? Are you refreshing it regularly? Are you really doing a restoration every month if your lift is bringing you $20,000 but a restoration makes you $25,000? What do you mean by “roughly” one job a day?
How can the tint spaces be used differently in the winter? Should you focus on PPF instead of wraps, since it takes you less time and make you more money? If you like doing the color change wraps, how can you justify higher prices or get more efficient, or both?
Ask yourself good questions, as I have illustrated above, using the data you discover from the initial formula. Hiring more people, getting more efficient with better tools and training, and raising your prices are all great ways to make more money and serve more customers, if done correctly.
Have you considered whether you’re reaching your financial potential? If you’re stressed, your team complains about money, you can’t make your bills, or your bank account isn’t growing, use this formula and start building the path to higher earnings.
Driven Performance Advisors
Driven Performance Advisors creates profitable, efficient, and stress-free $5M automotive aftermarket shops. Schedule a consultation at drivenperformanceadvisors.com. Subscribe to DPA Weekly at drivenperformanceadvisors.com/dpaweekly.