Is your business idling, accelerating or stuck on the hard shoulder?

How’s the health of your business?

In my line of work I meet a lot of great garage owners. Dedicated men and women, all committed to repairing their clients vehicles to a high standard. They’re intelligent, hard working and persistent people many of which have been in business a good few years.

With all of this in their favour you would imagine that they would be spending their free time pondering the length of their next yacht, or whether they should winter in the Alps or Rockies? Unfortunately this is often not the case, and it’s not uncommon to be asked “How can I increase the financial success of my business?”.

Now…. We all know that an unfeasibly large income doesn’t buy you happiness, far from it. But I do know this. A healthy business is a profitable business, and a profitable business not only buys you less stress, it buys you choices and options on how you spend your days.  Would you like more options? If so read on.

Do you know where you are?

So back to that question ‘How can my business be more financially successful’.

‘More’ is a dangerous word and it’s often not attained. A better question would be “What’s the maximum revenue, profit and personal income that my business can generate in its current form?” It is something that a lot of business owners haven’t contemplated. But you really should! Only when you know this, can you decide if your current business is performing at it’s best, and is the vehicle to get you to where you need be financially.

The good news is you don’t need to be a an accountant to calculate your maximum labour revenue. Just using the available hours to sell your labour rate and the number of technicians your employ will get you a long way in the right direction.

Take an average hourly rate of £55,  (it could probably be higher but we’ll come to that in due course) this will yield a maximum net income of £422K a year from labour sales with four technicians. If your garage is reaching that level of income (£105K per tech) at that labour rate, then you should give yourself a rather large pat on the back. Nice one!

Not reaching that? That’s incredibly common. In fact if your garage has a net labour revenue of around 54% of your maximum, then you’ll not be alone as that’s the average for a business when we start to work with them on our  Business Development Program.

Why so low? Why are business owners leaving £50k per technician on the table? There are a plethora of reasons but I find the most common answer is one of focus. They’re just focusing on the wrong things.

Your most common thoughts?

It’s natural. In fact it’s perfectly understandable why a garage owner focuses on the technical aspect of their business. You know that if you don’t fix the cars in a timely manner to a high standard that your income will suffer and your customers won’t return. So of course you’re interested in technical tools and the latest workshop wizardry that’ll enable you to complete a job that you couldn’t without it, or the same job in less time. But let’s be honest (we’re friends after all) is this laser like focus healthy? Are you too focused on the next tool, the next gadget, the next BIG THING to the cost of your business? All too often I find that a garage owner is and it’s costing you BIG TIME!

If you’re not measuring it

All that’s required is a change of focus. The success of your business is in the data, and if you would like to claw back that £50k per technician (or at least a large chunk of it) then learning how to measure the right data and use it to your advantage is essential. After all…..

IF YOU’RE NOT MEASURING IT, YOU CAN’T IMPROVE IT.

So, you want to increase your income and profit, what should you be measuring? Here are a couple of metrics to get you started.

Technician efficiency – Are your techs completing the work in the allotted time?

Technician utilisation – Are you selling and using all their available hours at work?

The good news here is that you don’t need complex systems or expensive software to see some amazing gains in both these areas. With the aid of a piece of A4 paper (not sexy but VERY effective) we help many garage owners raise their net revenue north of 85%. This means that for no additional cost each tech will earn your business an additional £32K a year! What’s not to like about that? Not a lot!


Can I have “more” sir?

Still not enough? OK, I get it. You’re a business owner and naturally you want to make the most out of your investment. So where do you focus next?

How about increasing your labour rate? What do you mean ‘your customers won’t pay it?’

I often ask how busy a garage is, and I’m often proudly told that they’re booked up two weeks in advance. “Well done” I retort. I then ask “what is your hourly rate?” “£50” comes the reply, sometimes followed by “we’re the dearest in our area.” “Why don’t you raise it to £60, or £65, or £75” I ask? You know what’s coming don’t you? “Our customers won’t pay it”…

How do you know they won’t pay it? What data do you have? The ‘they won’t pay it’ card is often subjective. Here’s a question for you. How many times are you asked what your labour rate is? Not how much a repair costs, but how much your labour rate is? I’d guess not often. As an experiment ask your front of house team to make a note of how often they’re asked, measure it for a month and let me know how you get on.

Raising your labour rate by £10 will increase revenue (at 85%) by another £16K per technician each year. Certainly not to be sniffed at.

Do you have enough of the right customers?

Don’t get me wrong. I understand your hesitation. Raising your labour rate should be carried out with a systematic plan, and the first part being an increase in the number of customers, or more accurately, more of the right kind of customer.

If you’re in business then you’re in sales, and to make sales you need to find customers. That’s right. FIND customers. The whole ‘build it and they will come’ business model just won’t cut it in today’s world, so you’ll need to become a competent marketer to ensure you have a steady stream of the right kind of client through your doors.

Fish where the fish are!

Marketing should be considered to be a long term investment in your business that is carried out continually and increased when required. Definitely not a reactive ‘I’m short on work let’s do some flyers’ take on this critical element of your business.

Like every critical aspect of your business it’s a skill, and once honed will deliver consistent results. Just like angling though you need the right bait for the right fish, and this is where it often goes wrong for a garage owner. They can’t decide which fish they’re aiming to land.

A carefully crafted marketing campaign will have a very clear picture of the customer. With the customer at the forefront of your mind, a sales message can be crafted that ticks all of the customers boxes and leads to them lifting the phone and making a booking. Anything other than a planned campaign is akin to trying to catch tuna with maggots. You may get one or two that leap into the boat but that success will not be repeatable long term.

It’s almost upon us…

At the top of this article I asked “Is your business idling, accelerating or stuck on the hard shoulder?” and it’s an important question. Like the saying goes… If you’re not moving forwards then you’re going backwards. And it’s with this in mind that I urge you to consider what’ll you do to change this.

It doesn’t take much to change. Just one step in the right direction followed by another and another can have an unbelievable impact on your business. Regularly monitoring and improving the key metrics mentioned along with finding new clients is a pretty good place to start for many. Doing this for the rest of 2018 could well have you set to accelerate your business into 2019 and beyond!