In the episode 139 of Business by the Numbers, Hunt Demarest, CPA with Paar Melis Associates, dives into the complexities of KPIs and the overwhelming nature of analyzing profit and loss statements for auto repair shop owners. If you’ve ever found yourself drowning in numbers, this post will simplify the process by breaking down the 50/30/20 profit model that Hunt swears by.
Streamlining KPIs for Greater Clarity Understanding how to properly analyze profit and loss statements is crucial for any successful shop. But what KPIs should you be looking at? In this episode, we explore how many KPIs are too many and what happens when owners get bogged down in unnecessary data.
Hurricane Relief Tax Extensions If your business was affected by the recent hurricanes, the IRS has extended tax deadlines for impacted areas. While taxes might be the last thing on your mind, staying updated on these extensions is crucial to avoid unnecessary stress later.
The 50/30/20 Profit Model: Breaking It Down The main focus is a deep dive into the 50/30/20 profit model:
- 50% Gross Profit: After covering direct costs like parts and labor, your shop should aim to retain 50% of sales as gross profit.
- 30% Overhead: Keep your overhead costs—utilities, rent, payroll—under 30% to stay efficient.
- 20% Net Profit: The ultimate goal is to retain 20% of your revenue as profit.
If you’re looking for more insights or need help interpreting your P&L, reach out to Hunt at podcast@paarmelis.com.
