REPAIR SHOP MANAGEMENT: COMPARING YOUR SHOP’S NUMBERS TO WHAT?

By Terry Keller

Benchmarking

Most of us shop owners understand the process of comparing our numbers to a set of benchmarks or standards. I remember way back over 35 years ago, I had monthly meetings with my accountant where he showed me my shop’s financials with the percentages and ratios and then told me where they should be.

It was always a frustrating experience – not just because my numbers were off, but because I didn’t know how to fix most of them and neither did he.

A decade later, as my experimentation nudged some of my numbers to higher levels, I ended up believing it was impossible to improve them above a certain point. Looking back now, that level of performance was mediocre at best…and by today’s standards wouldn’t allow me to stay in business for more than a couple of months!

As uncontrollable overhead continues to go up, we shop owners must have our pencils very sharp and keep our production and profits at the right levels.

 

So What Are the Right Levels?

 

This is EXACTLY the age-old problem that every business owner has faced since products, services, and money first started changing hands thousands of years ago. Who is to say where sales, profitability, and production levels SHOULD BE? How much is enough? How much is too much? Can you try for too much?

If you set your prices high enough to make a good profit but don’t work hard to control your expenses, can you price yourself above the market and out of business?

The answer is YES! What if you don’t charge enough to make a reasonable profit…how long can you do that? How long will your family put up with not getting regular paychecks? What if your employees can’t produce an adequate quality or quantity of work? How is that working for you?

Needless to say, this stuff is way past important. With the lingering bad economy and higher inflation just around the corner, it is vital to know exactly where your numbers are and where they need to be.

But there’s something even more important than understanding some set of so-called benchmarks put forth by some so-called industry guru.

It’s this: do you BELIEVE THEM? Do you believe they are real? Have you seen first-hand evidence that they are being achieved AND SUSTAINED by other shops just like yours?

 

Is It Possible? Is It Real?

 

Is it possible to tap into a network of shops like yours and see their numbers? Even more importantly, can you know those numbers are real?

The “20 Group” concept was established with these two needs in mind. In theory, they address these two issues…but in reality they don’t work. Why?

From my first-hand experience and observation, some of this kind of group’s numbers are not accurate for a lot of reasons. Lack of accounting skills (unknown mistakes), monthly manual reporting (this kind of reporting is easily manipulated), lack of attention to details (sloppy inaccuracies), and big egos of shop owners (causing them to puff up certain numbers so they look good to their peers) are just a few of them.

Let’s just say we’ve seen a lot of these situations and the information is NOT reliable.

 

There Is An Answer

 

If one or two shops in the country WERE able to hit and sustain some particularly high numbers, would that mean anything to you or your shop? Probably not…because you might say there were special circumstances such as a great market, a pocket of low unemployment, local booming industry, exceptional staff, etc.

However, if dozens of shops with similar markets and average employees WERE able to hit and sustain some good numbers, would your belief level go up? Would it motivate you to find out what they know and to try to duplicate it? The answer is obviously YES for any owner who truly believes improvement is needed and is possible – AND has been done by other shops just like theirs!

I cannot emphasize enough how crucial this principle is and will become to us shop owners. We must tap into an accurate, realistic source for benchmarks, systems, solutions, and shop comparisons. Those who build this kind of infrastructure and institutional memory NOW will have a huge advantage in the near and long term.

Those who have this kind of collaborative resource NOW will be able to survive whatever the government and the economy will throw at us in the future. Fear of the unknown is our greatest enemy – not just of not knowing what the future will bring, but not knowing where we stand today so we can do something to fix it. You can overcome fear through proper preparation. Are you prepared? Do you want to be?

The good news is that this information already exists.  We’ve built it right into our RPM ToolKit™, and it means we give you the ability to see exactly how an average shop performs.  Not shops in incredible areas or shops in unique circumstances…just real numbers from real shops.

Of course, we’ve also included the Top 10% of shops, so you have something to aim for once you’re up to par in each category.

And best of all?  We’ve made it as simple as an app for your Mitchell or RO Writer shop software.  No extensive number entry.  No extra work to get it running properly.

Just plug it into your shop software and the app will do the rest.

So…what are you waiting for? Get out there and measure your shop to real, attainable benchmarks through real solutions that make money now, and establish the long-term stability you want!  Good luck!