Grow or Die: Do You Have the Revenue to Survive? Can You Hit the Million Dollar Mark?

Grow or Die: Do You Have the Revenue to Survive? Can You Hit the Million Dollar Mark?

It has been postulated by some shop owners and industry consultants that for a shop to survive today and in the future it will require an annual revenue of at least $1 million with a growth rate of 4-5% annually. The rational for this high revenue figure is that shops will need this revenue to support tools and training expenditures so they can repair late-model vehicles profitably. Being able to do this will allow a shop to retain current customers and gain new customers.

Not being able or unwilling to invest in new tools and training will result in you or your staff saying, “Sorry, you are going to have to take it to the dealer.” Every time this phase is uttered to a customer, a little bit of your business dies with little chance of returning.

Don’t blame OEMs or say “they don’t make’em like they used to,” because 98% of the time the training and tools are available, it is just the shop did not invest. It is a fact that every referral to the dealer or lost productivity due to not having the right tools or training costs your shop today and in the future.    

Technology has always been on the march since the Model-T. But in the past few years,  technology has been on a “run” and is threatening to break out into an “all out sprint” in order to meet the 35 mpg CAFE fuel economy numbers for  2020.

You may think your local vehicle population will not change much in five or 10 years. But, when you consider that on average 13 million vehicles are scraped every year and are replaced by at least 11 million new vehicles (2009 sales), it is easy to see that more complex vehicles are heading your way, even if you are off the beaten path.

You might think the undercar specialist is safe, but you are wrong. It is my prediction that the undercar niche of $99 brake jobs and $49.99 alignments will be gone in 10 years. Sure, the fundamentals of pad replacement, rotor service and toe adjustment will still be part of the job. But, these services will require the new tools and training to complete the job the right way.

In the case of pad replacement, new stability control systems will need to be disabled so the technician can push back the pistons on the caliper. Also, more emergency brakes will be actuated electronically. Don’t even get me started on dealing with regenerative braking systems.

Even alignments will not be the same. More sensitive stability control systems are going to need recalibration for the steering position sensor. This will require an advanced scan tool. Also, as these sensors become more sensitive, more automakers are going towards scan tool calibrations instead or self-calibration procedures.

It gets even worse when you start looking at basic parts swapping. More parts are starting to come with embedded electronic controllers. It started with power windows and is moving to EGR valves, fuel injectors and even steering racks.

Shops may be able to replace the components, but they can not get them to work because they can not initiate, calibrate or program the new part due to the fact they do not have the most current update for their scan tool.

A million dollars sounds like a lot of money to some shop owners that may have started their shops with a floor jack, tool box and a dream. Sure the dream is the same, but the vehicles have changed.

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