7 tips for running a financially efficient workshop

7 tips for running a financially efficient workshop


Woman and man in workshop

We asked automotive industry experts for their hacks for running a financially efficient business. Here’s what they had to say.

When Capricorn’s State of the Nation asked Members about the biggest challenges they face in business, 21% said they struggled with efficiency.

So, we asked some of our team of automotive industry experts for their hacks for running an efficient business. We particularly wanted advice to help Members run more financially efficient workshops, because 28% of Members told us financial concerns were among their biggest challenges.

Here’s what they said.

Start measuring your efficiency

Workshop Whisperer Rachael Evans said when a workshop owner recognises they don’t have an efficient business, the number one thing they’re usually not doing is measuring efficiency.

“That’s where there’s this separation between blue-collar and white-collar thinking,” she said.

“There’s a distinct lack of recognition in the aftermarket of the fact that our workshops are essentially factories, and in those factories the product we’re producing is units of labour.

“If we were a Toyota factory or a Coca-Cola bottling plant, the metrics that would come out of that factory in a day would be how many units were manufactured, what time they were manufactured in, and what waste there was. But often workshop owners don’t know even if they have the ability to track that in their software.

“So, the way to start to turn that around is actually to pay attention to the things that you should be paying attention to. At any one time, I should be able to ask a business owner, what’s your shop’s proficiency today? What was it yesterday? What was it last month? And what are you tracking out for the quarter? They should be looking at those numbers so often that they don’t need to go and look at a report. They know where they’re at.”

Man and woman at desk

Invest in a good management tool

Good management tools aren’t just for tracking your efficiency; they’re the way to unlock that efficiency. Jeff Smit, Technical Editor at The Automotive Technician, urges Members to invest in good workshop management tools.

These tools should include:

  • Finance and invoicing
  • Rosters and time sheets
  • Work scheduling and technician management
  • Inventory management
  • A customer booking portal
  • A customer database and customer relationship management
  • Reporting and business intelligence.

Learn how to read your financial statements

Financial statements and financial management tools can be confusing and difficult to understand. As a business owner, you need to overcome that challenge if you want to become more efficient.

Rachael recommends talking to your accountant and getting coached through how to read financial statements and reports. It’s a skill you’ll never regret learning.

Look at your financial statements regularly

Further to the above, Rachael said it’s vital to look at your financial statements regularly (and not just at the end of the month or at tax time).

Looking at your statements helps you understand your cash flow, helps you plan, and allows you to identify problems and inefficiencies early.

Only take on debt for assets that make profits

Efficient workshops do not accrue debts that don’t have an appreciable asset attached to them. You shouldn’t be putting your jet ski through the business!

Putting purchases through the business that aren’t going to contribute to your business profits puts unnecessary stress on the business.

Two women and man in workshop

Friction-free access to technical information

We know from State of the Nation that a quarter of Members struggle to get the technical information and diagnostics they require — leaving technicians Googling for answers or calling dealerships for advice.

Not having easy access to the technical information your technicians need to do their jobs is a massive opportunity for inefficiency. It can waste a lot of time. (And it’s completely unnecessary — Members can access Capricorn Service Data for FREE. It gives you instant access to a comprehensive range of online service information covering thousands of vehicles, including manufacturers’ service schedules, service illustrations, repair times and an estimate calculator.)

Check your progress against clear goals and benchmarks

The most efficient workshop owners are clear about their goals for their business. They know how much money they need to make and how many customers and products need to come in and out the door each day to reach that threshold.

It’s also important to have benchmark metrics for your gross profit, net profit, effective labour rate and daily car count, to measure your progress against.

You should be able to see, at a glance, how you’re tracking in any particular week, Rachael said. Going above or being below those benchmarks may have a detrimental impact on your efficiency.

To read more about the challenges and opportunities facing automotive workshop owners across Australia and New Zealand, download your free copy of State of the Nation.

This article was published 10/06/2021 and the content is current as at the date of publication.