Understanding Financial Statements As A Service Manager

So I always like to kind of explain this as they are driving a car without a steering wheel. Because if you don't understand the financials, you don't understand why you're in business. And if you don't understand why you're in business, I always use this analogy. It's like driving a car without a steering wheel. Yeah, I know, I just went full circle there. But you don't understand the financials. Somebody asked me yesterday.

They said, chris, what made you get into reading so many books and learning? Like.

What was it that happened? And I thought about it for a couple minutes and I came up with three things kind of in my life that were pivotal in the sense that I did something to learn more. And then from that I had success and my world opened up and I, you know, I increased my, you know, my results, my productivity, my success dramatically improved in what I was doing. So the, the first time was when I was in a, in a band in Seattle and I think I'm like 17. And our band was doing pretty good. We were playing bigger shows, we were getting popular, and we signed with a management company, a manager, and record companies were kind of starting to look at us and everything became very important. Like all the little things became important. And one thing that came out of that is that I should probably have some drum lessons because I was self taught, but I didn't know how to play to a metronome. Like, I was pretty raw in a, in a sense. And so they actually paid for me to take lessons from this, this teacher. His name was Steve Smith. Incredible drummer, very talented, played in big, you know, big stuff. And I remember.

Right away, like the, the technique that he taught me and the actual like playing of the drums was incredible. Like I dramatically improved just in like I was holding my sticks wrong and it was just very inefficient in the way that, you know, I was hitting the drums, but I wasn't letting the sticks kind of do the work. I wasn't using the bounce. You know, it was very inconsistent in the way I was doing it. The things to practice that made me better. All that was amazing. But what I really learned from him was how he treated himself, how he thought about the day that he played a show, how he would take his own money and pay somebody to help him carry his gear and set it up so he could worry about the perform. Just the thought process of seeing yourself as somebody that's more important and that, that thing you're doing is really, really important. And you have to show up your best and how you, how you think about it, you know, influences how you approach it and then has a, you know, a huge impact on the outcome. So I just remember thinking, like, what I'm learning from this guy is amazing. But really the mental part is the part that's giving me the edge. And so I got way better. Like, I improved dramatically in a very short period of time. So that was the first time I ever. And I'd taken lessons before and all that, but not from somebody of that, that quality. Then the next time was in my early 20s. I knew that understanding the financial statements was crucial to becoming a dealer or doing whatever it was that I wanted. And this, this is, is my point about service managers not understanding the financials is I started doing advisor training for this consulting company, but in order for me to actually be a consultant in that company and be able to turn departments or businesses around, I had to go through their training. And part of the training was, was the, you know, learning the financial statements. And this guy, his name was Rob Butts, the late Rob Butts, he passed away not that long ago. He spent, like, I want to say, four months in a room with me, and he taught me Excel and financials because he would make me build these incredibly complicated spreadsheets where, if, you know, you, if you wanted to add sales, how many technicians did you have to add? What would have to happen to your effective labor rate, your gross profit, where would your expenses go? Like, very complicated. What would happen with part sales? And all these sheets were connected, and at the end of it, there was a test and he gave me a financial and kind of an outline of the business and said, you know, tell me what's wrong? And I found more things wrong with it than what, what he had on his list. But I remember coming out of. Of that, and even in the process of learning financials, I was like, oh, that's why they do things this way. Oh. And my perspective completely changed from being somebody working in a department to actually understanding the finances and why things are the way that they are. And you understand the customer experience and, and the employees experience the production, the, the pricing, your value in the marketplace. All of those things are a snapshot on the financial. When, when I look at a financial today, a lot of times I will do a strategy session and I am talking to somebody about their business. I already know what's wrong with the business by looking at the financial statement. It's pretty clear. You can tell, you know, by, by the margins, by the average, per. By how many employees they have by their personnel expense, by their profitability. Like most of the time I can tell one thing right away is that the service manager doesn't understand financials. And that's sadly about 80% of the time service managers understand gross profit and that's about it. They don't understand the financials. And you can tell because, and I tell this to dealers all the time.

Your best friend is the service manager understanding the financials because they'll do a good job. They're not, they're not ignoring the financial because they want to. They're ignoring it because nobody's ever taken the time to one, create a safe place where they can ask stupid questions because they feel like, oh well I've been doing this for 10 years and, and I'm supposed to understand this, right? Yeah. So creating a safe place where they, where they can ask stupid questions and then teaching it to them in a way that isn't confusing. You know these, these companies like nada. A lot of people come back from that more confused about the financials than they were before they went in. And so that really is the, the key and a big one is you're going to make decisions about the business that aren't rooted in the actual financial well being of the business. That's right. So that's number four. That was a long one. The third one in that was the book how to Win Friends and Influence People. Dramatically changed my perspective. And you talk about, I felt like, oh this is cheating. Like there's books out there that have knowledge that you assume being a poor kid, you know, without great mentors that, you know, they teach that in college or whatever and you can find it in books. So that was the third one that you know because I took those things and implemented them and it worked. And I always say that about our trading too is if we don't give the, the people taking our training early wins that they can implement and get a result then we're going to lose them. Because if we're not building up their self confidence they're not going to be excited about learning more stuff. Like I really think that's true about our advisor training in a sense where the comment will be like even our veteran advisors liked it because they think, well, they know it and they're not going to want to learn something. But we're considering that when we're creating the training is like if you're a veteran advisor, what, what in here is going to, you know, is going to spark some ideas that you're like, oh, well, that worked, or hey, I like that I tried it and it worked. So that, you know, that's.

In a sense, like, I was lucky that some things really impacted me and I got results because that's what made me want to learn more. Yeah, if you, if you did it and it didn't work, then you'd kind of be like, ah, yeah, you wouldn't have the inspiration. Thanks so much for watching this clip of Service Driver 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.