12 Deadly Sins: 12 Mistakes Killing Profit & Lifelong Success for Auto Shops: Part 1 of 3

By working with automotive repair and collision shops all across the country, we have a unique perspective of the inner workings of most shops. Our clients have taught us a lot about what it takes to become a successful shop, but we also see a number of things that are hurting some. The following is a list that we have put together of the 12 Deadly Sins that are killing profit and lifelong success for auto shops.

Your Point of Sale Doesn’t Match Your Quickbooks

This is one of the first items that we check when we get a new client and we often find the two don’t jive. You are asking your service writer or your estimator to get a certain target gross profit percentage in different categories, but what if the numbers they are looking at are not correct? If your front counter person thinks they are getting an average of 50% GP on work, but Quickbooks is only showing 40%, which number is correct? The POS software is showing what you think you are making, versus Quickbooks showing what you actually received and actually paid out to vendors or employees. The major differences that we see for labor margins are that most POS do not factor in inefficiencies of techs or added costs to their hourly rates or bonuses. The major differences that we see for parts margins is cores and credits not being received or sent back, parts going on customer cars and not getting billed, and even parts walking out the back door. Unless you can get both softwares to match and be accurate, how can you ask your service advisor or estimator to improve the margins?

Your Portal Doesn’t Match Your Quickbooks

A lot of our clients use coaching companies to help them improve their processes, procedures and profitability. All of these coaching companies use a Portal where our clients enter their metrics so that their coach can help them improve. As mentioned above, if your Quickbooks doesn’t match your POS, it isn’t going to match your Portal because the majority of the information is coming right out of your POS. If your coach isn’t seeing what the actual numbers are, how are they supposed to help you improve them?

You Aren’t Looking at Your Financials Often, or Ever

Over the years one thing that we hear a lot is that our clients do not like looking at their financials. They say, “That is why we have an accountant!” However, at the end of the day, accountants come and go, and this is your business. You need to take responsibility for your business and look at the numbers to see where it went right or wrong. This is even more important when you have a shop owner that wants to take a lesser role in the day-to-day operations. The financials will be your lifeline to see how the shop is doing when you are not there. If you feel that you don’t understand what to look for or where to look, that leads us to our next sin…

You Aren’t Questioning What You Don’t Understand About Your Financials

Don’t understand how you had a great month sales-wise, but the bank account looks worse than when you started? Don’t understand even where to look to get this information? Ask your accountant! Accountants are unlike shop owners as we do not have a product to sell. We are selling our expertise, our knowledge, and our guidance. If you are not questioning your accountant to better understand your numbers, then you are not getting the value of their services. An accountant should be able to tell you three things: how much you made, where that money went, and how to keep more of that money in your pocket. A good accountant will give you the financials, but a GREAT accountant will educate you on the financials. A GREAT accountant is invested in their clients’ business because we succeed when our clients succeed.

Stay tuned next week for more Deadly Sins potentially hurting your shop!

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