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Wednesday, August 6, 2008

Repair Shops Getting the Squeeze

Repair Shops Getting the Squeeze

by Mike Olson, Director of WTI Business Management Solutions

In 2009, things will get even more interesting for all businesses. No business is more confusing than the auto repair and service industry. Ask yourself; is my business ready for change? Can I make the changes necessary to compete, and grow?

I speak to hundreds of shop owners every month and it is pretty easy to tell who is ready and who is not. We talk about fuel prices (up or down?), the election (who will win), less miles driven by consumers (declining the last 2 years), how vehicles do not break down nearly as often, and of course, dealers offing competitive prices and longer warranties - not to mention the lack of new vehicle sales the last couple of years. How does that affect the independent? These factors will determine your car counts in the next three or four years.

How do you meet this head on as a shop owner? WE all know how important it is to keep our technicians trained and up on the latest vehicles and equipment. Most owners have been technicians so this is something they are comfortable with. But what about managing your business? Is this something you are comfortable with? How much of your time is split between running the business and managing the business? Most owners consider talking to customers, managing technicians and dealing with vendors as managing the business. Wrong! This is running the business. This is a manager’s job, not an owner’s job.

Here are the questions I ask a shop owners to determine if they are a manager or an owner . . . see if you can answer them without looking for the information:

  • How many repair orders do you write a month?

  • What is your average dollar per repair order?

  • What is your gross profit on labor?

  • What is your gross profit on parts (Not mark up?)

  • What are your parts to labor sales?

  • What is your overall gross profit?

  • What are your monthly expenses (not including technicians)

  • What is your shop productivity?

  • What is your effective labor rate
    (in 90% of repair shops it is not the hourly rate, which you charge)
As an owner, if you don't know most of these answers about your business make it your top priority to obtain some management training. Some owners receive training and learn all of this information and implement it - some only implement parts of it. Other owners understand what they need to do but cannot find the time to do it, and others do not know how to apply any of this information. Our WTI training will help you understand and prepare you to compete.

Our WTI Performance Groups will help you with the management of your business on a monthly basis and put you in the position to grow through all of the turmoil of the market place.

Most of all, do not forget to train your staff. The national average dollars spent each year per employee is $1,340. Train your people to be the best, so your company continues to grow.

For more training opportunities visit the WORLDPAC Training Institute or contact Mike directly at

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