Have you ever wondered why your bank account always seems empty, but you and your team seem busy every minute of the day?
It’s a common problem, but by no means “normal”. If you leave this common problem unaddressed for long enough, your business will never produce the results you need to achieve business success. In fact, you’ll always struggle. Suppliers will always be paid late, and you’ll rely on the settlement of your EFTPOS machine on a Thursday to pay your team on Friday.
The answer to your conundrum will often lie in a quick to calculate equation called your Effective Labour Rate (ELR).
Your ELR is a representation of your advertised labour charge out rate, minus the dollars lost through hours not charged by each technician, each day.
To put this into context for you, let’s look at an example.
James owns and operates Millers Mechanical… his advertised labour charge out rate is $120 per hour, excl of GST.
James has two techs who are responsible for a 7.6 hour day, while James himself is responsible for a 4 hour day (he still answers phones and mans the front counter)…combined, they have 19.2 hours per day to sell.
But, they don’t sell 19.2 hours. They average just 10. So with labour sales averaging just $1200 per day, the actual hourly rate received for labour is just $62.50.
OUCH! $62.50 is a far cry from the advertised rate of $120 per hour, and a long way off what James needs to breakeven each hour, which is $145 excl GST. He does of course have parts income that will contribute to him achieving breakeven, or not, but that is a calculation for another day.
The story of James and his team is repeated in auto repair shops right across Australia and New Zealand. Just change the names, and the labour charge out rate.
The biggest problem is, most auto repair shop owners don’t know anything about these calculations, what they mean for their business, or how to make decisions based on them that will help them grow their auto repair shops into profit generating entities.
But, here is where we know we can help.
Being Australia and New Zealand’s number one automotive business coach, it’s our passion, and our commitment to you, to ensure that you come out of the financial wilderness.
We’ve seen first hand the results our clients achieve with our carefully implemented financial education and systems.
The Workshop Whisperer focuses on helping tired and disillusioned shop owners to turn their businesses around, and in many cases, help owners to finally win the lifestyle and profits they have always dreamed of.
And, The Workshop Whisperer only works with auto repair shops…We owned our own auto repair businesses…We know our stuff!
Don’t miss your chance to learn once and for all the numbers that matter to your auto repair shop, (Including how to interpret your P&L and Balance Sheet), how to drastically transform your profit results, as well as implement the role of Service Advisor to ensure you maximise every single opportunity that passes through your shop.
We are running Service Advisor Pro by Workshop Whisperer™ across two days in Melbourne on March 20 and 21! Don’t think that living outside of Victoria rules you out…auto repair shop owners from around the country are flying in to invest the time and effort in these two days to help change their financial outcome for 2020.
To be one of them, please click this link www.workshopwhisperer.com/events. We can’t wait to help you transform your auto repair business, helping you to live the life you deserve.
Have a great week in your auto repair business!