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Road to Green: Is Your Business Too Big to Make Any Money?

Road to Green: Is Your Business Too Big to Make Any Money?

Posted By: Bob Greenwood.

One of the critical elements that independent heavy duty shop owners must realize is that there are times when the shop can be too busy to make any money.  It becomes dangerous when this is a constant.  Management seems to concentrate more on getting more clients rather than concentrating on making “profit” from the clients it already has.  Everyone in the shop is running around trying to get the repair in and get it out, to insure the needed cash flow hits the bank account “today”.  This is a sure signal that the business is heading for trouble.

The most important profit on a sale comes from the billed labor component, consequently ensuring the correct number of labor hours billed per vehicle service, based on the manufacturers recommendations is critical to the shop’s bottom line.

You are in the “knowledge” business, not the “commodity/volume” business therefore your responsibilities to your clients go a lot further than just “repairing what they ask for today”.

Consider that the average client really is unenlightened regarding proper service and maintenance of their current vehicle because they are too busy keeping their rig working.

Consider that to properly advise and educate the client, the front counter person should be aware of how many miles are driven each year, how the vehicle is used (are they stuck in gridlock areas a lot, northern climate, southern climate usage), whether the client owns or leases the vehicle, what the client’s expectations are regarding the vehicle, and the service history of the vehicle.

Consider how many labor hours billed a year the vehicle needs to insure it is in safe, reliable and operating efficiently, at all times, throughout the year, for the client.

It is the front counter person’s job to slow down and clearly communicate to the customer/client the needs for the vehicle based on the manufacturers recommendations. Your heavy duty shop is the messenger of the news, not the maker of the news.  When the shop is “too busy”, everyone says there is no time for this.  It sounds like the shop is working hard and not necessarily smart.

Do this test to see how you are faring out.

1).  Take a random 5 to 10 of your client base that you have had for at least three years, where they still have the same vehicle, and examine the past two years work done on each client’s vehicle. Add up the total number of labor hours from the work-orders/invoices that was billed on each vehicle during those two years.

2). Calculate the total miles driven by each client over that service period (ie. 235,000 miles which works out to 117,500 per year) and record what mileage interval was the vehicle at when the vehicle came into the shop.

3). For the same period of time, look up the service requirements that were recommended by the manufacturer for the same mileage driven and service interval, and add up the total minimum labor hours the manufacturer recommended that should have been spent to ensure that vehicle was properly looked after.

How did you make out?  If you are in the ball park, (10% difference) well done it looks like your system is working and you have a good relationship with your clients.  However, if you are severely short in billed time (you did not get all the work), it may be time to slow down and examine your internal system of how you are dealing with your client base.  Do you counsel them, or do you sell them? Do you have a trustworthy relationship with them?  Is there room for improvement?        

Now move on to the second phase of the test.

Take the same vehicles and examine what the manufacturer recommends for the next two years coming up based on the miles the client is going to drive. (Use the history here).  Calculate the available labor hours to be billed.   Now be very aware of your progress with these clients when they come in.   SLOW DOWN.     Take the time to educate the client.  Show them what the manufacturer recommends by printing out the appropriate service intervals.  You are the messenger here, that’s all. Based on your expertise, and understanding of the client, are these service recommendations a good investment for the client to make?  If so, point out how the relatively small investment to maintain the vehicle makes sound financial sense to the client rather than spending a substantial amount of money, or increasing their debt load, to buy a new vehicle.  If it is not a good investment, counsel the client that it is time to replace the vehicle, and you would be happy to advise them based on their needs.

Your clients are usually too busy to look after their own vehicle. Set up the system to manage these high-tech machines for them. Many HD vehicles are outright abused by the client because of ignorance of the vehicle service/maintenance requirements the manufacturer recommends. Take the responsibility to insure your client base gets an excellent return on their investment.  When you do, I’m confident you will also see the bottom line grow.

When you accomplish the right level of labor service with these clients, now carry on and make it a system of doing business with the rest of your client base.

It’s up to management to make things happen.  It’s up to management to make sure the right system is in place. Take your time, and be patient with yourself to see this through. Give yourself a year of thorough dedication to make this happen.  If it was easy everyone would do it, but the best thing is that your clients will notice the personal attention you are giving them, and that makes you distinctly different in this heavy duty industry.  Being distinctly different gets people talking positively about your business.

Some people dream of success, while others wake up and work at it each day.