September 16, 2016

Know Your Numbers – Business Intelligence Is The Key To Repair Shop Success

In any business, setting financial goals and measuring progress is critical to identifying the path to success. Auto repair shops are no exception. While every shop owner has honed their skills repairing vehicles, many still struggle with the “business” side of their business. To meet those goals, shops need accurate reporting and the tools to understand how best to put this intelligence to use, and I’m not talking about collating receipts and invoices in a mad dash at month’s end.

Wouldn’t it be great to be able to view your daily, weekly, or monthly sales figures with just one click?  How about knowing which vehicle makes and models you service most so that you can stock parts that sell, not gather dust? Answers to these questions will allow you to better understand where to channel your activities and make the most of your hard earned dollars.

So, which reports, metrics and KPIs (key performance indicators) are most important for shop owners? Here are few to keep an eye on:

1. Daily gross sales – basic, but nevertheless important. Set a goal and watch your revenue totals day in and day out. Drastic downward trends or less than estimated work for the day should be examined closer for cause.

2. Daily billable hours – how many hours do you want to bill per day? How many hours did you end up billing today, or the day before? Set a goal, start tracking and remember that for every hour your Technician is on the floor you should expect an hour of productivity.

3. Labor cost as a percentage of sales – the benchmark should be somewhere in the 17-21% range. Do your best to keep your labor cost at or below this range.

4. Technician efficiency – this one is important, and you can’t calculate item three without it. Measuring a Technician’s efficiency comes down to their billable hours/time required. Businesses should always aim for 100% efficiency. Here’s an example: you bill four hours on one repair order but your Technician completes the task in three hours. Your Tech is working at 125% efficiency.However, the opposite can also happen -underquoting and/or an inefficient tech is a repair shop profit killer.

To sum up, the key to your shop’s success relies on you knowing your numbers. Do you have the right shop management system to give you the business intelligence you need?

For more shop management best practices and tips check out our blog.

Josh Burwick, Director of Sales