The Profit WIN Numbers Jim Silverman Automotive Training Institute

Transcription

1 The Profit WIN Numbers Jim Silverman Automotive Training Institute

2 Today's Agenda Determine how much money you need to make Pay your bills now Have enough for later Learn how to keep score Fix your accounting Learn how to make money Watch key metrics each week Learn how to create consistency and predictability Standardize your processes

3 Bills at work Bills at home Investment in your business Retirement assets Creating Wealth

4 How Long Do You Have?

5 Terms

6 Sales (Top Line)

7 Expenses Cost of Goods Sold Fixed Costs Personal Use

8 Profit (Bottom Line E.B.I.T.D.A.) Earnings Before Interest Taxes Depreciation Amortization

9 Sales Cost of Goods Sold = Gross Profit

10 Cost of Goods Sold - Auto Repair Parts Labor Tires

11 Can I Cash My Paycheck?

12 2 Things You Must Know Each Week Gross profit Fixed costs

13 $10,000 Sales $5,000 Cost Of Goods = $5,000 Gross Profit

14 $209,019 Fixed Costs

15 209,019 $209,019 Fixed Costs Per Year

16 52 Divided by 52 Weeks Per Year

17 4,019 = $4,019 Fixed Costs Per Week

18 $5,000 Gross Profit $4,019 Fixed Costs = $981 Cash How Much Cash?

19 $10,000 Sales $5,000 Cost Of Goods = $5,000 Gross Profit

20 $9,000 Sales $5,000 Cost Of Goods = $4,000 Gross Profit 10% Discount

21 $4,000 Gross Profit $4,019 Fixed Costs = $19 Cash How Much Cash?

22 Profit Model KPIs

23 Sales - Auto Repair Parts Sales 50% Labor Sales 50%

24 Sales Goal Per Hour Per Tech Labor Rate Labor % of Sales $85 labor rate 50% labor % of sales = $170 per hour $85 labor + $85 parts per hour

25 Sales Goal Per Hour Per Tech Labor Rate Labor % of Sales $85 labor rate 50% labor % of sales = $170 per hour $85 labor + $85 parts per hour $85 labor rate 60% labor % of sales = $142 per hour $85 labor + $57 parts per hour Requires 120% productivity rate

26 Parts Sales 50% Labor Sales 50% Maintaining Your 50% Parts / 50% Labor Mix

27 Gross Profit Margin - Auto Repair Margi n 60% Parts Cost 40% Labo SM r 0% 0% Margi n 60% Parts 0% Labor Cost 40% SM 0% Parts Margin Labor Margin Best Practices

28 60% Mark-up is only 37.5% Margin Common Mark-up Mistake

29 Getting to 60%

30 Cost x 2.5 Cost + 150% Cost 40% Getting to 60%

31 Cost x 2.5 Cost + 150% Cost 40% Getting to 60%

32 Cost x 2.5 Cost + 150% Cost 40% Getting to 60%

33 Cost x 2.5 Cost + 150% Cost 40% Getting to 60%

34 Gross Profit Margin - Auto Repair (Loaded) GP Margi n 60% Parts Cost 20% Labor Cost SM20% 0%

35 Adjusted Gross Margin Auto Repair AG Margi n 50% Parts Cost 20% Labor Cost 20% SM 10% $500,000 Retail Sales

36 Adjusted Gross Margin Auto Service AG Margi n 54% Parts Cost 19% Labor Cost 20% SM 7% $1,000,000 Retail Sales

37 Where s Your Money? Point Of Sale System Quick Books or Peach Tree

38 Income Statement-Auto Repair

39 Income Statement-Auto Repair Sales

40 Income Statement-Auto Repair Cost Of Goods

41 Income Statement-Auto Repair Expenses

42 Income Statement-Auto Repair Profit

43 Income Statement-Auto Repair 6.8% Net Profit

44 Gross Profit is Wrong-Auto Repair

45 Above the Line / Below the Gross Profit Line Accounting-Auto Repair

46 COGS Above the Line / Below the Gross Profit Line Accounting-Auto Repair

47 COGS Above the Line / Below the Gross Profit Line Accounting-Auto Repair

48 Parts Costs-Auto Repair

49 Labor Costs-Auto Repair

50 Income Statement (Corrected)-Auto Repair

51 True Cost Of Goods Above The Gross Profit Line

52 Fixed Costs Below The Gross Profit Line

53 Original Statement Says GP Is Good And Fixed Is Too High

54 Corrected Statement Shows GP Is Too Low And Fixed Is Good

55 Creating Your Winning Scenario

56 Creating Your Winning Scenario

57 Your Shop Is Open 5 Days Each Week

58 Your Writer Spends 0.9 Hours With Each Customer Each Day

59 Your Writer Works 9 Hours Each Day

60 Gross Profit You Need To Pay Your Fixed Cost Each Year

61 Gross Profit You Need To Pay Your Salary Each Year

62 Gross Profit You Need To Pay For Your Business Investments And Retirement Assets Each Year

63 Gross Profit You Need To Reach Your Financial Goals Each Year

64 At 54% Gross Profit Margin (Best Practices)

65 You Need $831,481 In Sales Each Year

66 At 2.5 Average Production Hours Per Repair Order (Best Practices)

67 You Need To Work On 38 Cars Each Week

68 And You Need 0.8 Service Writers

69 At $85 Per Hour Labor Rate

70 And 50% Labor % Of Sales (50/50 Parts To Labor Mix)

71 Each Production Hour Is Worth $170

72 And You Need To Sell 94.1 Hours Each Week

73 At 100% Technician Productivity

74 You Need 2.5 Technicians

75 Giving Each Technician 1 Bay

76 You Need 3 Bays

77 At 30% Gross Profit Margin (Industry Average After Correcting Income Statement)

78 You Need $1,496,667 In Sales Each Year

79 At 1.3 Average Production Hours Per Repair Order

80 You Need To Work On 136 Cars Each Week

81 And You Need 2.7 Service Writers

82 At $85 Per Hour Labor Rate

83 And 60% Labor % Of Sales (Typical For Shop Focusing On Diagnostics)

84 Each Production Hour Is Worth $141.67

85 And You Need To Sell Hours Each Week

86 At 53% Technician Productivity (62% Is Industry Average)

87 You Need 10 Technicians And 10 Bays

88 How Do You Fix This Mess?

89 Fix Your Gross Profit Margin

90 Which Dramatically Lowers The Sales You Need To Win

91 Fix Your ARO

92 Which Reduces The Number Of Cars You Need To Work On Each Week

93 And Reduces The Number Of Service Writers You Need

94 Fix Your Parts To Labor Mix

95 Which Makes Each Hour You Sell More Valuable (Increases True Sales Productivity)

96 Fix Your Productivity Rate

97 Which Reduces The Number Of Technicians And Bays You Need

98 Diagnosing With KPIs

99 Income Statement-Auto Repair 6.8% Net Profit

100 ATI Shop Analysis

101 Sales

102 Sales Goal Per Hour Per Tech Labor Rate Labor % of Sales $85 labor rate 50.9% labor % of sales = $167 per hour $85 labor + $82 parts per hour

103 Sales Goal Per Week Per Tech Sales Goal Per Hour Per Tech x hours worked weekly $167 hour x 40 hours = $6,680 week $85 (labor only) hour x 40 hours = $3,400 week

104 Average Repair Order

105 Average Upsell Per Repair Order $211 ARO $167 Sales Goal Per Hour = 1.26 hours per R.O hours 0.5 oil change = 0.75 average upsell per R.O.

106 Advertising Investment

107 Inspection Documentation Estimating Sales Skills

108 Courtesy Checks For a fee State inspection Pre-purchase vehicle inspection Free 30-point inspection 10-point quick check

109 Factory Scheduled Maintenance

110 Estimating Original request Prior recommendations Safety defects Maintenance

111 Sales Skills Create value Address objections Provide options Ask for the sale!

112 Sales Goal Per Month Per Tech Sales Goal Per Hour Per Tech x hours worked monthly $167 hour x 166 hours = $27,732 month

113 Technician Productivity

114 GP Margi n 54.0% Parts Cost 19.0% Labor Cost 20.0% SW 7% SW 7.7% GP Margi n 23.8 % Labor Cost 28.1 % Parts Cost 40.5 % Benchmark Reality Gross Profit % Of Sales

115 GP Margi n 54.0 % Parts Cost 19.0 %Labor Cost 20.0 SW % 7% GP Margi n SW 23.8% 7.7% Labor Cost 28.1% Parts Cost 40.5% Benchmark Reality Parts Cost % Of Sales

116 GP Margi n 54.0% Parts Cost 19.0% Labor Cost SW 20.0% 7% GP Margi n 23.8 SW% 7.7% Labo r Cost 28.1 % Parts Cost 40.5 % Benchmark Reality Labor Cost % Of Sales

117 GP Margi n 54.0% Parts Cost 19.0% Labor Cost 20.0% SW 7% SW 7.7% GP Margin 23.8% Labor Cost 28.1% Parts Cost 40.5% Benchmark Reality Labor Cost % Of Sales

118 Mar gin 60% Labo r Cost SM 40% 0% Mar gin 44.9 % Part s Cost 0.0% SM 0.0 % Labo r Cost 55.1 % Benchmark Reality Labor Margin

119 Mar gin 60% Part s Cost Labo SM 40% r 0% 0% Mar gin Lab SM 17.6 or 0% % 0% Part s Cost 82.4 % Benchmark Reality Parts Margin

120 Potential

121 Let s Review Determine how much money you need to make Pay your bills now Have enough for later Learn how to keep score Fix your accounting Learn how to make money Watch key metrics each week Learn how to create consistency and predictability Standardize your processes

122

123 Don t forget to watch your FIXED COST, and GROSS PROFIT. THANK YOU Thank You!