Get out of a downward sales spiral
Here are three tips concerning profitability and efficiency that can help you improve operations at your detail shop, courtesy of www.AutomotiveManagementNetwork.com.
Why am I in a downward sales spiral?
For many shops, the reason is within. It starts with a sales drop that is often due to market conditions. So, the techs figure that if few folks are buying their services, why bother to look very hard for other work?
The problem grows when the service advisors observe an increased sales resistance. Why should they waste time estimating and presenting all of those services that won't be sold anyway? We'll just wait until things get busier and then we'll get back to doing a thorough job of inspecting, estimating and presenting. That makes everyone’s life easier, right?
Of course, just the opposite is true. Unless your goal is to decrease sales even further, now is the time to present all of your possible services and to look for additional work and accounts. If there was ever a time to look harder, estimate better, and take more time in presenting services; slow times are it. What are you doing at your shop to crank up efforts in these areas?
How to greatly decrease profits when business is slow
It's really quite simple, and many shops have mastered the practice. Kill the gross profit (GP).
In an effort to make customers happy, many shops drop the GP on their services. They do the same for labor, thinking this will lure in more business.
But if you add a decreased GP to the already decreased sales, you have a sure fire way to destroy your already sagging profits. Do not give in to this temptation like so many shops do when the going gets rough.
There are many creative ways to offer attractive pricing and options without decreasing your GP. Remember, when business slows, getting your proper GP becomes even more critical.
Closely monitor the way your GP is trending in both parts and labor so that your profits are not wiped out.
Overstaffed or understaffed?
Here's a simple way to calculate if you are under or overstaffed. Spend some time investigating sales at other shops in your area. Then take the total number of detail techs and service advisors (added together) at each shop and divide it into their sales.
Now, compare the findings to the number at your shop. Odds are that you will find a very wide range of results and get a fairly good handle on how your shop measures up. Too many or too few employees will prevent you from maximizing your potential, something that is especially critical in a tough economy.
Tom and Deb Ham are the owners of Automotive Management Network, an online forum to exchange information about the management of all types of vehicle service facilities, independent auto repair shops, car and truck dealers, franchises, fleets, body shops and more. More information can be found at www.AutomotiveManagementNetwork.com.