Now that we’re over halfway through 2026, are we on track for our planned net profit?
When it comes to being a business owner, we must have a return on investment. It’s no different than a shareholder investing in publicly traded stocks that pay dividends every quarter. For easy math, let’s say we own $100,000 of Verizon stock that of this writing pays a 6% ($6,000) annual dividend. Every quarter, we would receive $1,500.
Whether we invest in equities or body shops, on paper we own part of a business. Our day looks very different between the two. Let’s say I have $1,000,000 invested in stocks/bonds vs. a collision shop. My day is going to look very different between the two types of investments. With stocks/bonds, we could check accounts quarterly or monthly and probably be ok if we invested in financially stable well-run companies. The catch is, what if shop owners choose to only look at their shop metrics from a Caribbean Island once a quarter, month etc.? Most wouldn’t have a business left. The time commitment is different, so the ROI should be, too.
A single shop owner should be getting a return of a 20% net profit annually plus rent. And for those with two or more shops a 15% Net Profit, plus rent.
Let’s take an example shop of ABC Auto Body:
Gross Sales: $3,000,000
Gross Profit: $1,500,000 or 50%
Overhead: $900,000 or 30%
Net Profit: $600,000 or 20%
This means that the owner of ABC Auto Body SHOULD be receiving a quarterly dividend check of $150,000, or $50,000 monthly. Most here are saying to themselves, “this is impossible!” Is it? We must change our thinking of the brainwashing business formula we have received from CPAs and GAAP (generally accepted accounting principles). This is the formula we’ve been taught: Sales – Cost = Profit. Most businesses across the planet run this way, and this is just wrong!! The correct formula is this: Sales – Profit = Expenses. Many think, “If I take profit first, I won’t have enough to pay bills!!” If that is you, then here is why: You can’t afford your bills!!
According to the Small Business Administration, 83% of small businesses in the U.S. fail due to poor cashflow management. Taking net profit from our businesses should never be an event; it should be a scheduled habit. Why is this nearly impossible for the masses? It’s because of the lack of financial structure/discipline. Every incoming dollar must have a home. Just do this for starters: look at your trailing twelve months for July 2024-June 2025 in comparison to July 2025-June 2026. Are your gross sales flat and technician costs higher? If yes, “Houston, we have a problem!” How about marketing costs? If they’re higher and sales are flat or even down, study every marketing dollar; waste is somewhere. How about software? If you’re using CCC, request your contract and confirm what you’re paying for. Maybe you dropped your DRPs. You may still be paying; fix it. The same goes for utility bills.
I once found a charge for a security light removed years earlier.
Back to ABC Auto Body: Let’s say gross sales for TTM are down to $2,500,000 and gross profit is hopefully still at $1,250,000 or 50% (Note: Below 45%, the insurers have enslaved you), then we only have $750,000 or 30% for overhead costs. Some may be saying, “Greg, my overhead costs are still $900,000.” Here is your battle plan:
- Stay hyper-focusedon your marketing.
- Take estimating classes to maximize each RO.
- Lower your overhead costs.
Example of how to weekly or bi-weekly allocate every $100 of income into specific buckets for an S-corp:
Paint, Parts, Sublet: $35.50
Sales tax (depends on whether your states taxes labor etc.): $5
Owner’s dividend for profit: $14
Owner’s dividend for personal estimated taxes: $5
Owner’s paycheck and, say, personal credit card expenses: $3
Operational expenses (payroll, marketing, rent, utilities etc.): $35.50
New equipment: $2
$100
