Most workshops are busy for a couple of simple reasons – the average motorist is paying more attention to their vehicles, and there’s a shortage of new cars.
Workshop operators need to ask themselves the question: how do we manage our time, to ensure that when we are busy, we are also profitable?
In this environment, it usually means that many workshops put in long hours and stress levels go through the roof. It might be difficult to ignore the long line of cars waiting for service and repair, but workshop owners and operators really must stay focused on profitable work. How many workshop owners have actually worked out if the long hours or the stress translate to more money in the till?
Imagine your workshop handles five cars a day, each one generating a profit of $200. Bump that up to eight cars a day, which is a 60 percent increase. In the rush to get all eight cars fixed, the profit per car is likely to drop to $125. The team has worked extra hard and long hours for less profit, and we know from experience that this is what happens. So the first step to improving profitability in busy times is to acknowledge that this is happening in your workshop.
It happens because when everyone is flat out, the aim is to get the cars out the door with a minimum of fuss, and that usually means a minimum of work. But it’s the work, or the labour that you buy from yourself and your staff, that you are on-selling to your customers. Adding to the problem is the tendency to charge less because the labour time spent on individual jobs may not be as high as usual. So now you have a lower profit per job.
Most workshops feel obligated to serve every customer who drives in the door. Hiring extra help is out of the question, because there’s not enough money in it. Besides, where do you find extra help at short notice?
For these overwhelmed business owners, the solution is surprisingly simple: perhaps consider raising your prices. We don't mean raise prices for the sheer hell of it. Rather it is about taking the opportunity to increase prices to the right level.
The right level is the price you believe the job is worth and the money you deserve for the experience and knowledge you provide. It has nothing whatsoever to do with what you think the customer will pay.
These busy times might also be a great time to analyse the type of work that the workshop does, and identify the work that delivers the highest profit with the least amount of effort. These are jobs which normally have a high perceived value from the customer’s point of view.
It’s during busy times that you could suggest these additional, high-value services to your customers to increase your profits. The TaT experience has been that during the busy times, customers are much more likely to give the go-ahead for high-value but essential jobs, for a whole range of reasons.
Additional services can be easily found in a variety of things, such as battery and charging systems, drive and timing belts, suspension, air conditioning, cooling system flushing, brakes, wheel balances, fuel injection and throttle body clean – the list is endless.
But don’t get the wrong idea – this is not about making extra money on work which does not need doing. Workshops have a responsibility and a duty of care that every vehicle which leaves the workshop is safe and capable of running to the next service without failing or faltering.
There’s an unfortunate perception that modern vehicles need no attention between the long service intervals. This is simply not true. The modern vehicle still has parts which wear and systems that need maintaining and checking, just like the good old days. Nothing has really changed, despite the hype from car makers that their technologies are world-class.
There are vehicle systems and components which should be checked as a matter of course and repaired, cleaned or replaced. This should not happen ‘as required’, but well before an ultimate failure.
That’s what we mean by a duty of care to return a vehicle to your customer that you are satisfied is safe, and that you have anticipated and corrected anything which is under stress and likely to cause problems.
Maximising your returns in busy times is not as silly as it sounds. The small extra effort it takes to talk to your customer and suggest these maintenance services can repay you handsomely by a good return on each vehicle.
With this mindset, it is possible to maximise your returns during busy times. The task is made a lot easier if you take the time to figure out which of your services generate the higher profit margin.
Every clothing store, toy shop and holiday destination is doing exactly the same thing during these busy times. Haven’t you noticed, everything seems to cost more now? Isn’t it about time you caught up?