Stop Chasing Gross & Start Chasing Profits

Stop chasing gross and start chasing profits. So you have been lied to in our industry that gross is how you get fixed absorption. And I have a video up on Chris CollinsInc.com if you go to Chris CollinsInc.com and wait for like 30 seconds, there'll be a pop up. Opt into that and I'll send you a video explaining why fixed absorption is a house of cards. But for you to understand it right now is most of the time what happens is you're chasing gross and to chase gross you chase traffic. And to chase traffic you discount. And so you end up making less per hour of labor that you sell. And the secret is to understand how much profit you make for every hour of labor you sell, not to just have gross. And I speak to 20 group meetings and groups all the time and most of the time their gross will be up a little bit and their expenses will be up more. Like the last group I spoke to, their gross was up 3% for this year and their expenses were up 15. So your expenses go up.

More than your gross goes up. And so stop chasing gross and start chasing profits and get educated on how you do that and how you, you know, the effective labor rate matters more than anything else. Learn pricing strategies and you know how to do that. But that's the first one.

Well, I think it's important for everybody to understand as well that we live in an age that you can drive whatever you want to your service base. So for instance, last weekend we, I made a comment in one of my classes that I don't do three o' clock oil changes. Just my shop's not set up for that. Right. So for me to staff to do 3pm Oil changes doesn't work for us. It's not my business model. We're a repair shop. And so what I want is a broken car. I'd rather a customer come in at 3pm with a check engine line on that they want to resolve rather than an oil change. Now you can yell at me all you want about, well, Jeremy doesn't do oil changes at 3 o'. Clock. Well, it just doesn't work for me. It might work for your business, but for me to staff that the numbers just didn't work right to have the space and take bay capability out when I can make 10 times the amount of money that during that one hour doing a repair versus an oil change. So I think a lot of people don't, whether it's a dealership or independent, I think a lot of times we're just Looking at the car count game. Right. We need so many cars. Well, what kind of cars do you want? What's the demographic of the car that you want? What years are your sweet spot? What repairs are your sweet spot? For instance, if you work on BMWs, doing the bushings and the suspension on that is probably a really profitable job. Well, how do you identify how to get that job in and duplicate it more? Right. So, yeah, stop chasing the gross and start chasing profits. Find the profitable jobs, find the profitable cars and target market those and get those in because we have the technology to do it these days. Right.

Yeah. Now, I would say. So you're saying that from the independent shop side of things. Because in a dealership, I think if somebody wanted to come in at 3 o' clock for an oil change, we would have the resources and that's something that we should do. I think it's a little different business model, if that makes sense. I also think it's important for independent shops to know their lane.

Of course. Yes, absolutely.

Right. Like if you're a tire shop and it's tires and oil changes, know your lane. If you're a repair shop, know your lane.

Yeah. And I guess I should set the stage. You know, my shop is set up for. We have, you know, three technicians and basically five bays. So if we're doing repairs and we're doing a transmission in one and we're doing an engine in another and we have our diagnostic work going on, realistically, I'm not going to pull one of my technicians off of a job at 3 o' clock to have him do an oil change. The. The solution for me to do that.

I agree completely. I don't want to turn customers away, but at the same time, yeah, in a dealership, I wrote service all day long. If a car came in, write the ticket. You've got the resources to get it done. So you just got to find the mix and balance of what is your business model and how do you cater to that? Because if I made a promise on a repair that it's going to be done by five and I don't have the resources to do that oil change on my full. Pull my guy off of that job. I'm breaking a promise, so just got to be careful with that.

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. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com I'm Chris Collins and I'll see you in the next video.