As the shop owner, you carry the responsibility for the safety, health, and financial well-being of your team and yourself — and most of the time, you are not compensated enough for that responsibility (and liability, if things go wrong). It’s time we changed that.
What is profit? Your accountant might tell you that you made $$$ last year, but you are looking at your bank account and wondering where that money is. Let’s keep this simple — profit is how much money you get to keep as the owner. You can choose to keep it all or share it with the team. You can choose to give it away. But you have to have profit first. When I say “reclaim your profits,” I am talking about expenses in your business that you are paying too much for or losing a portion of your rightful profit on.
Here are my top 5 areas to review and change to reclaim your profits and give yourself a raise.
Non-ATI Members: Still looking for ways to optimize every dollar and reclaim profits? Discover more strategies on how to give yourself a raise in ATI’s latest non-member webinar.
I am talking about Business Liability/Garagekeepers policies and your worker’s comp insurance. Most shop owners don’t look at their policies, don’t know what coverage they have, and don’t know their current rates. It is likely that when you first opened your auto repair shop, you were charged a premium rate because you didn’t have a claim history to base the rate on. Now that you’ve been in business several years — without a claim — did your rates go down? No! You are still paying the same amount and possibly more. By shopping your policies annually, you will reclaim some of your profits by getting more favorable rates. That’s more money in your pocket.
2. Inventory Control
Are you constantly needing to resupply your shop supplies? Are there oil filters and air filters on the shelf with an inch of dust on them? Both of these are inventory control problems. One may mean certain items are going home with your techs or being used in excess. Tracking your order history will help you address this. The other indicates that we have stock that we don’t need and won’t use. Talk to your vendor about returning these unused items, and if you are not on a consignment program, find out what your options are. Again, reducing unnecessary inventory and keeping an eye on usage will reduce spending and put more profit back to you.
3. Tell Your Customers About everything You Do
Your faithful oil change customer may not know you also do repair work, or sell tires, or can fix their window regulator. I know, I know — maybe it seems obvious to you, but we can’t assume they know unless we tell them. Making recommendations and letting your customers know you can take care of ALL of those recommended services or repairs is vital to increasing sales, which means — yep — more profits for you!
4. Credit Card Merchant Fees
Just like the insurances, chances are you are paying much higher fees than you should be, so shop your rates. Many shops and retailers are now charging it to the customer as well. We can thank the gasoline industry for the practice of having a cash price and a credit card price. Make sure this is legal in your state, and find a merchant services vendor who can set this up for you. Tell your customers why you are doing it (ex. “we can offer our employees benefits we couldn’t before”) at the drop-off so they can decide what payment method they want to use. With merchant fees often costing shops tens of thousands of dollars each year, this again is money back in your pocket.
5. Payment Options
By offering various payment options, including payment plans (aka outside financing with 90 days same as cash), your customers can say yes more often. Research your options; some are free to the shop and pay your full invoice amount, and some charge a small fee. In any case, having another option for customers will increase your average repair order, increase sales, and result in that raise you’ve been wanting!
At ATI, we help our members make great business decisions and build strong teams, both of which allow them to achieve their dreams. Want to learn more? Start by registering for a shop owner event at www.atievent.com.