Setting ambitious yet achievable goals is like tuning up an engine—it ensures everything runs smoothly. For automotive industry entrepreneurs (aka Shop Owners), forecasting long-term business objectives isn’t just a visionary exercise; it’s integral to staying competitive and profitable.
Whether you’re aiming to increase car count, boost labor productivity, or improve gross profit margins, forecasting equips you with the tools to turn ideas into actionable plans. By the time you finish reading this guide, you’ll be armed with practical steps to forecast for 2025 and set your business on the road to success. To listen to an in-depth version of this blog, check out the Business by the Numbers podcast episode it was based on by clicking here.
Why Forecasting Business Goals Matters
“Why bother forecasting?” This is a question Hunt Demarest, CPA, often hears from auto repair shop owners as host of the “Business by the Numbers” podcast. The answer is simple yet profound. Forecasting is about aiming for measurable targets and creating a crystal-clear roadmap of how to achieve them.
For the automotive industry, forecasting provides several key benefits:
- Improved Financial Clarity: Identify where you’re currently excelling and where you’re falling short.
- Resource Allocation: Know if you need to hire more staff, adjust your budget, or increase advertising to reach your goals.
- Proactive Problem Solving: Address bottlenecks before they affect your bottom line.
- Strategic Decision-Making: Stay ahead of industry changes instead of reacting to them.
Remember, you can’t monitor what you don’t measure—and forecasting bridges that gap.
Key Goals to Forecast for 2025
Forecasting looks different depending on your business focus. Start by identifying the key performance indicators (KPIs) that indicate the health of your business. Here are some common goals for automotive businesses to consider forecasting:
- Revenue Growth
Set a goal for an increase in annual or monthly revenues. For instance, you might aim for a 10-15% increase in revenue based on historical growth trends or demand forecasts.
- Gross Profit Margin
Track product and labor costs to ensure strong profitability. For instance, if your gross profit margin is 50% in 2024, aim to optimize this figure while balancing operational costs.
- Customer Acquisition and Retention
Will your marketing plan prioritize attracting new customers, improving repeat business, or both?
- Car Count per Month
Establish targets for the volume of vehicles serviced each month. This can help inform labor and supply chain needs.
- Average Repair Order (ARO)
Optimize your customer service skills and upselling strategies to increase revenue per visit.
Steps to Forecast Your Automotive Business Goals
Forecasting doesn’t need to be overwhelming. Below is a framework to get you started.
1. Analyze Your Current Metrics
Start by looking at your financial reports, which can be exported from tools like QuickBooks or financial management software like Fathom.
Ask yourself these questions:
- How did your revenue, gross profit, and net income perform in 2024?
- What areas had the largest year-over-year improvements or declines?
You can’t plan for next year if you’re not fully aware of where you stand now.
2. Set SMART Goals
Your goals should be Specific, Measurable, Achievable, Relevant, and Time-bound.
Example:
- Non-SMART goal: “I want to increase revenue.”
- SMART goal: “I want to increase monthly revenue by 10% from $50,000 to $55,000 by December 2025.”
SMART goals create accountability and clarity for you and your team.
3. Break Down Goals By KPIs
Once you know your overall targets, break them down into actionable metrics. For example:
- Sales Growth: Break revenue targets into monthly or even weekly goals.
- Labor Productivity: Forecast hours sold per technician and analyze labor rates.
- Car Count: Identify how many new customers and repeat visits are needed to meet goals.
This data-driven approach allows you to pinpoint exactly where to focus your efforts.
4. Adjust for Industry Trends
The automotive industry in 2025 is evolving. Consider these factors when forecasting:
- Demand for Electric Vehicles (EV) services and repairs.
- Rising costs of parts due to supply chain disruptions.
- Increased consumer focus on sustainability.
Adjust your business model proactively based on industry trends.
5. Develop a Resource Plan
Once your goals are set, assess what’s needed to achieve them:
- Staffing: Do you need to hire additional technicians or service advisors?
- Marketing: Will additional advertising campaigns or partnerships be required?
- Equipment: Are current tools and machinery sufficient to handle increased demand?
Proactively addressing these needs prevents bottlenecks and ensures smooth operations.
6. Choose Your Forecasting Method
Hunt Demarest emphasizes that your forecasting method doesn’t have to be complicated. Use what works best for you:
- Pen and Paper: Simple for basic sales projections.
- Spreadsheet Software (e.g., Excel or Google Sheets): Great for beginners looking to track sales, expenses, and profits.
- AI-Powered Tools (e.g., Fathom): Ideal for detailed financial reports and projections.
The key is to invest in a system you’ll actually use consistently.
7. Monitor and Adapt
Your forecast isn’t static—it’s a living document. Periodically review your performance against your goals, updating projections when necessary.
For example, if your car count target is off pace in Q1, adjust your marketing strategies for Q2 to bring in more customers.
Remember, you can’t monitor what you don’t measure—and forecasting bridges that gap.
Challenges in Forecasting
Forecasting isn’t foolproof. Here are some common pitfalls to avoid:
- Overly Ambitious Goals
Setting goals that are unrealistic will demoralize your team. Set targets that push you without feeling impossible.
- Neglecting Financial Records
Accurate forecasting requires detailed financial data. Rely on precise bookkeeping and accounting to make informed predictions.
- Not Including Your Team
Invite feedback from your technicians, advisors, or marketing team—they’re on the ground and can offer insights you might miss.
Take Charge to Master Your Business
Forecasting business goals for 2025 gives you a competitive advantage. It helps turn abstract desires into actionable steps, ensuring your automotive business remains resilient and prepared to face challenges head-on.
If you feel overwhelmed or are unsure where to start, you don’t have to go it alone. Tune into the “Business by the Numbers” Podcast, where Hunt Demarest, CPA, offers detailed insights that can transform your shop. Or reach out to Paar, Melis & Associates for tailored financial planning that suits automotive repair shops.
Set your sights high, and stay on track by monitoring your forecasting roadmap every step of the way. Here’s to accelerating your success in 2025 and beyond!