Running a Shop Finance Operations

The Value of Proper Measurement

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It’s been proven through sophisticated mathematical analysis that 17.3 percent of all statistics are completely fabricated. That’s true; I swear. I read it somewhere—maybe on Facebook? Someone linked an article to another article that spoke about this one study that followed up research by this one mathematician who “studied at university” (I assume that’s the way mathematicians say it, right?) under the professor who found unequivocally that most people make things up, at least 17.3 percent of the time.

And if 17.3 percent isn’t accurate, just pick another number. Any number. No matter what, you prove this study correct.

Anyway, I bring up this prodigious examination of statistics because of what you’ll find in this issue of Ratchet+Wrench. This is the third straight year we have released the findings of our annual Shop Performance Survey, and each year, there are clear—yet somewhat different—takeaways from the numbers we present.

Let’s get this out of the way quickly: This is not a scientifically valid study; it’s a snapshot of the industry. But we are very confident in the accuracy of our results, our method, our reporting and the connections Associate Editor Travis Bean makes in his article. When you read Travis’ piece, you’ll see a jarring note right in the intro: The number of shop operators who “routinely” track key performance indicators (KPIs) has gone down fairly dramatically each year of our study.

Why would this be? Why, as operating an independent repair business becomes increasingly more difficult, would people turn their backs on something that can provide crucial, necessary information on which to base decisions? Well, the clear answer is that they wouldn’t, and despite that number, we don’t believe shop operators are tracking less frequently.

But we also believe that this statistic we present is accurate.

So, what’s the catch? I posed that question to a handful of the industry’s top leaders recently, and here’s the theory: For the vast majority of shops, routinely tracking KPIs is a fairly recent trend, particularly when it comes to tracking far more detailed metrics like hours per ARO or sales closing ratios broken down by job type within a ticket. But, when we originally asked that question in 2015, people overwhelmingly felt they were tracking … because some had yet to realize the metrics they weren’t tracking. As they’ve taken a more head-on approach to KPIs over the last three years, more have come to realize where their tracking may fall short.

To summarize: Because more people are focused on tracking, more people realize they aren’t tracking as routinely as they thought three years ago.

Again, this isn’t just my theory, but I do stand behind it. You can draw your own conclusion, and you should. The important thing is to look at these numbers—and those from your business—with a critical eye; not just in the validity of the data presented to you in both cases, but also in what it truly means for your business. What’s the saying, garbage in, garbage out? Without the proper information, it’s impossible to make the proper decision. That’s a fact—at least 17.3 percent of the time.

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