Greenwood showed attendees how to calculate the net profit on a work order before they close it.
“They all know their sales per work order, they may know their gross profit they made on a job, but how do you calculate what I’m actually going to net,” he says. “I’m very focused on building net profit in a company. Most businesses are focused on sales and activity. That doesn’t drive net income, that just keeps you busy.”
Attendees of the session, which continues in a part two today, received manuals with worksheets on calculating these measurements on a daily, weekly and monthly basis. They worked with Greenwood in the session on examples, and now can take the formats back to their shops. Shops received the proper guidelines on what they should be achieving whether they’re a two-bay operation or a 20- bay facility.
“You talk to 90 percent of the shops out there and they’ll tell you how much sales they’re doing in a year. They’re up X percent over the previous year or down. But it tells them nothing about how much net profit they’ve made,” Greenwood explains. “And if a shop doesn’t make net income, you can’t move forward because you have no money to invest. You bought yourself a job. We’ve got to change that mentality.”
That math then ties into building a strong team. Greenwood highlighted how to make sure owners can meet the net profit numbers by having a solid culture, its importance, what’s in it for the team, what’s in it for the business, but also how do we change the culture to be more professional so that the shop is thought of as the place to go to.
“The economy is so bad and clients and customers are so much under financial stress, we have got to understand our particular function on their behalf,” Greenwood says. “Our professional responsibility is to make sure that vehicle is safe and reliable for them. And we as a team have got to build that culture into our business.”
All of this, Greenwood explains, is different from how the aftermarket typically goes about not only crunching the numbers but also building a solid team. He notes that, “to me building that staff, a strong team is so critical to moving the business forward.”
He adds that these techniques will be especially critical as the aftermarket moves forward and faces more challenges like telematics. While vehicle repair no longer is the focus, even preventative maintenance is going to go by the wayside more as telematics comes into play by 2014 and 2015.
“We’re going to have opportunities to really build solid customer-client relationships. But we have got to have the format in place and the processes in place as to how to do that and what should they do,” Greenwood says.