Calculations, processes go hand in hand

Many shop owners are now seeking out courses that mathematically prove a great deal of net income is available in each business from their current business coming through the door. We know that the average five- to six-bay shop is missing $80,000 to $90,000 in net income from their current business. This is proven in every class. They are also learning the processes to achieve the desired results to capture that untapped income.

My concern is simple; are we prepared each day to address things when they fall short? This is a management responsibility and the discipline required to keep driving things forward is a necessity in order to keep the shop on track to achieve the budgeted objectives and guidelines that are set up every year.

These five questions should be verified and acted upon each day at the shop.

Are the KPIs being captured daily?
Daily KPIs must include total maintenance invoices completed today, total labor sold today, total value of deferred work today, number of vehicle inspections completed today, total billed hours and average billed hours per invoice.

Are you discussing the KPIs daily with the team?
It does not make sense to overwhelm the staff with sales dollars from every revenue category. The most important number is the labor number and what becomes of it. Labor dollars and billed hours are the team’s life.

Does the team clearly understand daily KPI objectives?
The team must be let into the inner circle of the business and understand the KPIs and the processes as to how they are achieved, as well as their importance to the business, their future income and their career.

What are you doing daily when your flat-line number of vehicles is not reached?  
Your flat-line number is the maximum number of vehicles you should be booking per day based on your business facts. Too many shop owners don’t understand what it does to their business when a shop is over booked or under booked. Taking on any work that just walks through the door compared to properly managing your clients’ vehicle(s) is a road to buying yourself a lousy job. What if you don’t reach the flat-line number each day?

Are you reviewing your calendar as to who is supposed to be getting their vehicle serviced based on their service intervals, which are set based on the way they are driving that vehicle? This is called managing the service intervals of every client. That is the way we are suppose to be doing business as our professional responsibility to our clients.

What are you doing daily when the hours billed per invoice falls below the shop objective?  In basic automotive maintenance, the shop should be averaging 2.5 billed hours per invoice. Unfortunately way too many shops are in the 1.2 to 1.6 billed hours. They have never looked at their vehicle inspection process and the managing of the service intervals of that vehicle. They just think they should have more car count and get busier. They are not looking after the business coming through the door in the first place. Why do they want more?

It is important to have a daily management routine. Addressing the above questions each day keeps managements focused in the right direction.  It is management’s responsibility to ensure the team clearly understands the accountability that is required from them by ensuring they understand the math and the processes to achieve the goals, which in turn keeps the team heading in the right direction.

To achieve this understanding, I recommend a daily morning scrum of 10 to 15 minutes maximum before the shop opens to review the previous day’s KPIs and the month-to-date trend. The scrum is held in the service bays with everyone standing in a circle and coffee/juice in hand. Management reports to the team. The morning scrum is to be positive, pointing out what we did well the previous day and discuss what we have on our plate today. Get the staff involved in the business, and stop leaving them in the dark. Quality staff are team players, want to contribute to the success of the business and are prepared to be accountable.

When the objectives and guidelines that are set in the budget are achieved consistently, peaks and valleys disappear, the business will be financially successful and the team will achieve above-average industry incomes.  

Truly, we know that is the outcome everyone wants from our daily time spent working on our career.