Understanding The Costs Of Doing Business

Understanding The Costs Of Doing Business

Being busy and being profitable are not the same thing.

There are days that seem to be so hectic that by the time the clock ticks 7 p.m., I realize I didn’t actually get anything done. My to-do list has somehow gotten a lot more added to it than checked off as completed.

It’s a fact – being busy does not necessarily mean being productive.

Of course, there are times that I just can’t say no. Many of us are like that – when something comes up that needs to be done, we drop what we’re doing to help out. It can make us feel good to move those deck chairs around, but, realistically, it’s not going to keep the Titanic from sinking.

Is it like that in your shop? Lots and lots of cars are keeping you busy, but are you really being productive? 

“It might make us feel good to move the deck chairs around, but it won’t keep the Titanic from sinking.“

It’s called the car count myth. You can have vehicles and customers lined up out the door – your advisors are churning and burning, your techs are filling every hour with activity…but are you making money? Being busy and being profitable are not the same thing.

Many shops saw significant declines in customer visits during 2020. According to Babcox Media Research and the Office of Highway Policy Information at the U.S. Department of Transportation, the cumulative miles driven for 2020 was down around 15 percent compared to 2019. It’s expected that shops facing potential shortfalls would be taking on every job possible in an effort to keep employees active.

But, when things pick back up and your shop is faced with the need to schedule service based on wear and tear, not just preventive maintenance, do you know how to determine what is being productive and what is just being busy?

Conversely, do you understand the costs associated with your empty bays? How often have you looked at that empty lift in your shop and wondered how much profit you are losing? 

Everyone would agree that it costs something to have an empty and non-productive stall in your shop, but few have done the math to actually learn that answer. 

Knowing what the true cost can be very informative in helping determine what you are going to do about the situation, and to review your choices based on economic impact. Here are some factors that play a part:

Shop Traffic – If your shop does not currently have the workload to support an additional tech, it may not be wise to hire one. 

Space Use – Sometimes an empty bay may not actually be empty. Does the space get used by other technicians when the work justifies it? Is there another way to make money out of that square footage?

Seasonality – Depending on your type of work and location, workflow into the shop can vary. If you are approaching a busy season, it might be wise to hire a good tech now.

As we navigate the new landscape that is 2021, ShopOwner and its partners promise this: we will help you work smarter, not harder, so that the costs of running your business don’t outweigh the benefits.

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