Do Auto Repair Shop Owners Know Where Their Profit Really Lives?

Where Profit Lives by Rick White, President 180BIZ

Today’s topic is Profit. There are too many people that think profit is in a line item on your income statement, your P&L, and it is absolutely incorrect. Please hear me say this. Profit does not live on your P&L. Profit is reported on your P&L. If you get nothing else this week, get that profit is reported on your P&L. It does not live there. I want to talk to you about where profit does live. Profit lives in that space between when you see what the vehicle needs and when you call the customer. Once you've looked at that vehicle, you write an estimate. And we're going to talk about estimates now for the next few weeks.

The first thing I want you to understand is profit lives on the estimate. The biggest mistake that I'm seeing shops make all the time is they're looking to make a quick estimate. They want to get an estimate written really fast, streamline it. The only time you can play with profit in your shop, in your business at any given time, and this is assuming that you're one of those honorable shops. Once you quote a price to your client, you stay firm on that price unless you revise the estimate. So, there's no surprises, right?

So, what I want you to understand this, the only time you can play with the profitability for your shop is when you're estimating.. I want you to slow down on the estimate. I want you to step back. Do you have the labor properly in there? Do you have all the add on operations in there? Have you matrix’d it? Do you have all the ancillary services with it? In other words, if you're going to replace calibers, let's say on a brake job, are you adding a brake fluid service? Are you thinking outside the box and thinking servicing the system, not fixing the problem? Okay. That's a really great thing to remember.

So, number one, do you have all the labor? Number two, do you have all the parts? You would be amazed at how many times I hear shop owners complain about parts not making it onto the estimate. This is where growth is right here in this estimating process. This is where profit lives. Slow down and give the profit the respect it deserves for you, your business, your team, and your family. You deserve this. Recognize that the only time you can be profitable is up until you call that customer. Slow down and then make sure you're profitable. It only takes a couple of minutes, just a couple of minutes. Now there's two ways to look at that. The old way was to look at gross profit percentage.

I like to look at gross profit per actual hour. It's a dollar amount instead of a percentage, which is a much better way and healthier way. And I'm actually going to talk a lot more about that when we do our next Pocket Business Genius webinar. Sp. slow down. That's the message. Slow down. Profit lives in that space between finding out what's going on with the vehicle and calling the customer. That's where profit lives. But I'm going to give you another secret. That's where most of your fear lives too. And we must do a dance between the fear and the profit and make sure that you can make it profitable. So, if this is something you really want to get into, please sign up for the PBG series. You're going to love it. You'll get some more next week. Have a great week, stay safe and go make some money.