Service Managers Need To See Financials

You have to understand as a manager that you're being graded on the owner of that asset's net worth.

Yep.

It's way deeper than just profit. It's actually their power when they go sit at the table to borrow money, to expand whatever it is they're they're trying to do. Now, oftentimes back to the equation of some of these accounting firms will bring us in because what happens is they have a client that hires us. They see that that client's now making way more money. And so they call us and they're like, hey, what did you guys do? Hey, I got some other clients for you. Or hey, I have a client that wants to get out. But they, you know, they want to increase the value. And so if we come in and add a million, I've thought about this many times because we get used to do this. I wish there was a way that we were getting a piece of that.

Like we were vesting the improvement.

Yeah. Because if they're gonna, you know, they're gonna pay us, not that much to do it and they're going to sell the thing for 8 million more or whatever it is. I would love to have an aspect of our company that we went in and did that on commission, almost, you know, almost setting it up. Now another thing that happens is people will come to us and they're doing okay, but they want to do better. And then somebody comes to the table and says, hey, I want to buy your dealership. And, and in their mind, they have their old numbers in their head and they're like, Ah, 8 million isn't worth. Well, no, we'll give you 20 million. And now all of a sudden they're like, oh, I actually have something here of tremendous value. And so in, in good times and in bad times, the smartest business owners are trying to maximize their profit and fixed stops because it's the, no matter what happens to the new and used car market, it is their leverage in the marketplace and the value of their asset in the easiest way to maintain that is through fixed ops profitability. Right.

It's good.

Why do you think most managers don't understand that? And they see it just from.

Gross profit point of view or a different.

Point of view, I think, because they're in the, they're in what we call that closed loop system. And they're, they're just doing what they told. Right? They're told.

Right.

So if somebody, if my GM tells me, go out, we got to make 500,000 in gross this month. And that's a number that I'm focusing on. I'm never even thinking about the end number because I'm just trying to get through the 30 days. I'm not thinking about the owner in terms of the business and everything that we do as an asset. I'm just thinking about, like, how do I keep my job? So I think that's probably the number one thing. And I think that maybe some service managers are afraid to ask a little bit because they think that they're not told information because the dealer's hiding stuff. But I would say that's more the exception than the rule.

I mean, we look at financials all the time and they're pretty.

Well, a lot of times when people come to our boot camp, it's the first time they've ever been given the financial.

Yeah. And they guess what, they figure it out pretty quickly, don't they? Yeah.

We've always said, like, giving them the information is the start because they're well intended. Like, how many times does somebody say, oh, I'm gonna bring you guys in as soon as I get rid of my manager. And I'm like, well, give us your manager. Don't get rid of them.

Give him a shot, please. Please give him a shot.

You're telling him to chase. Gross. You know, he doesn't see the financial. He's basically driving without a steering wheel.

Yeah, I was going to use a. Riding a bike with a blindfold on.

Yeah, same thing. Like you're. Yeah. So it's interesting. So I think that this is important for everybody to understand in the sense that business is about making a profit. It's not about just sales. If you're just selling, but you're giving it all away, then it's all for not. And now there's a lot of things that go into that equation that we. We help with or teach. One is just the availability to production. So hiring techs like we were talking about technician tree. You're. You're not going to.

Sell if you don't have the capacity in the shop to sell. Right. If you own a flower shop and you don't have any flowers to sell, you can't increase your sales. You have to have the product. And what we're selling is time. And technicians produce that time. So we need technicians. So that's the first thing in. In fixing profitability.

It's the biggest lever by far, I think, is production.

And it's hard for the advisors to perform if they can't get it done right, then the next thing is the pricing and then what we're selling and then the retention of the customers, the systems, the flow, all of that play into it. But it's a complicated puzzle piece and I would say most of the managers out there are chasing gross profit and they're doing things the same way we've always done them. When the industry has changed, the customers have changed, there's new ways to do things that are more efficient, but we're doing them the slow old way.

So what advice would you give that service manager that's never seen a financial before and is told to chase gross? How do you work out of that hole?

Get in our coaching group. Like I don't. It's not a one size fits all. I mean, it's, you know, the thing we're doing is we're teaching them how to fish. We're not giving them a fish.

That's right.

And everybody's market and brand is different and their situation and their skill set too at the end of the day. So just understanding how much leverage there is for somebody who owns a business. So the dealer or the group, whatever it is in the fixed ops, profitability and how much it means at the table when you go to expand, sell, get a loan, whatever it is, build a new building. The banks are looking at that. That's right. And then they're looking at you. And they never tell you that, but that's really what's happening behind the scenes.

Thanks so much for watching this clip of Service Driving Revolution. We're uploading new stuff every day, so make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. The that's 8333 Ask SDR. For special deals on our books and training, head over to offers Chris Collins Inc.com now that's offers.chriscollinsinc.com I'm Chris Collins and I'll see you in the next video.