Where’s the Money? Four Reasons Your Auto Repair Shop Isn’t Profitable

On a daily basis, I go over financial reports with auto repair shop owners and find a negative number at the bottom of their annual report. Sales are not where they need to be. They don’t have enough money at the end of the month. The owner is living paycheck to paycheck—if there’s enough money to deposit their paycheck after they pay their employees.

Is this right? No. Is this common? Yes. But it doesn’t have to be for your shop. Let’s dig into the top four reasons an auto repair shop isn’t profitable.

Ideas to grow your businessNon-ATI Members: Looking for more ways to optimize every dollar and reclaim profits? Discover more strategies on how to find all the money in ATI’s latest non-member webinar.

1. Your Prices Are Too Low

We live in a world where the skill and technology required to work on modern vehicles demands high expertise. Stop looking at your competition to set your prices. Do you do excellent work? Do you provide a great parts and labor warranty? Are your technicians experts in their field? Then charge for it. Justify your pricing with exceptional service and benefits. Price your services to get great people on your team and take care of them.

2. You Don’t Market Your Shop the Right Way

You always need to be marketing to new customers (this is called acquisition marketing). If you don’t know how to keep your shop’s name at the top of the search engine results, you need to learn how. Don’t simply rely on a service provider to do this for you. They don’t know your customers and your community like you do. The more you know what works, the more you can take advantage of the internet to meet your new customers.

3. You Spend Too Much Money on Stuff You Don’t Need

You haven’t shopped your insurance policies in years. You pay for monthly subscription services you don’t use. You fill your spouse’s gas tank and pay for lunch on the company credit card several times a week. You only review your expenses when you meet with your accountant once a year—when they tell you that you owe taxes for money you can’t see, right? Maybe you feel you can justify your kid’s cellphone as part of the shop’s bill because multiple lines are cheaper, and your new car payment because you shuttle customers home in it.

The bottom line is, you are eating your profits and not paying attention to how much it’s hurting your bottom line.

4. You Don’t Know What Your Numbers are Telling You—So You Can’t Fix It

If I asked what your GPM is right now, could you tell me? Would you know what that meant and how it was calculated? What is your tax and benefit load per employee? What is your ELR?

Key Performance Indicators (KPI) are the diagnostic tests of your business. They help you pinpoint what is going well and what needs to be corrected. If you don’t know how to “read” the tests, you can’t diagnose your business and create a strategy to get profitable fast.

Being an auto repair shop owner takes a different set of skills than being an automotive technician. That’s where a coach can help you. At ATI, we help our members make great business decisions, increase profit, and build strong teams, all of which allow them to achieve their dreams.

Want to learn more? Start by registering for a shop owner event at www.atievent.com.