The Basics You Need to Always be Profitable
This series includes 24 key numbers. If you work on getting all of them in the ranges mentioned, your shop should be solidly profitable. There is a fill in the blank form where you can automatically calculate many of these numbers for your shop in our Business Calculators area available to Premium Members.
This is a great learning and working tool for anyone in your shop who should know what the key numbers need to be.
Key #1 Payroll Cost
For this key number, we want to know what percent of total sales is spent on gross payroll for all employees of every type except the business owner.
Last month Acme Auto had total sales of $50,000.
Total gross payroll for everyone except the owner was $12,000.
$12,000 ÷ $50,000 = 0.24
So, our key number is 24%
When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between 22% and 27%.
Calculate for my shopDefinitions
Gross payroll:
Total regular pay before anything is deducted. Does not include any benefits or non-regular compensation.
Example: Joe works 40 hours at $15 per hour which equals $600. He also received $250 in incentive pay, so his gross pay is $850.
Total sales:
Includes sales of all parts, shop supplies, labor, sublet, and tires.
Key #2 Parts Cost
Key #3 Expenses
Key #4 True Net
Key #5 Marketing Expense
Key #6 Parts Gross Profit
Key #7 Tire Gross Profit
Key #8 Labor Gross Profit
Key #9 Total Gross Profit
Key #10 – New Customers Percentage
Key #11 – Oil Change Percentage
Key #12 Gross Profit Dollars per Sold Hour
Key #13, 14, 15 Labor Sales vs. Parts Sales
Key #16 Vehicles Per Tech Per Day
Key #17 – Non-techs vs. Techs Ratio
Key #18 – Average Hours per RO
Key #19 – Average Hours per Tech per Week
Key #20 – Sales Per Production Employee
Key #21 – Average RO
Key #22 – Sales Per Available Tech Hour
Key #23 – Effective Labor Rate
Key #24 – Sales vs. Same Month Last Year
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