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Numbers are the Boss

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Numbers are the Boss
Better understand your business and you’ll improve it.

OK, for the first few months of this column, we’ve hit on a lot of intangible topics—self-belief, decision-making, etc. It’s great; all of it. These are things you must have nailed down. But this month, I want to shift to something more tangible.

Numbers.

I know for most of you this isn’t your favorite topic. If we all loved numbers (and analyzing the numbers in our businesses), I wouldn’t need to have a column about it, right? So, here’s the fact that we need to come to grips with: We all ignore the numbers instead of realizing they are the boss and they will bite us in the butt if we continue to ignore them.

It’s that simple.

Every decision you make in your business is always—always—reflected in the numbers. If you have a subpar advisor, sales will drop off. If you have a subpar tech, sales will drop off. If you have great advisors and techs, sales (or other numbers) could still drop off because of bad processes, or good processes not being followed correctly.

Whatever the case, the issue will reveal itself in your P&L. We don’t always know the cause, but we’ll see the symptom. The cause is there, though, and we just have to understand the numbers to be able to find it.

Here’s a very basic example: You look at your numbers and your average sales have dropped. It doesn’t make sense, right? You have a great service advisor—a great salesman—up front, and great techs in the back. Your shop’s busy. So, what gives? You dig deeper, and you see that the back of the shop is getting backed up. Vehicles are sitting idle, and it’s taking four, five, even six hours until your advisor can call a customer with the needs of her vehicle. You wait until that late in the day, and most customer won’t buy as much—many won’t buy at all. It hurts your purchase percentage, which derails your sales.

If you didn’t pay attention, and just saw that your shop was “busy,” you’d be in a tough spot. Maybe you don’t have enough to pay your taxes, your parts bill, your wages.

You cannot ignore what the numbers tell you, and you cannot make up excuses for why issues occur. Excuses take the edge off the information. If there’s no response by you, as the owner, or your team, then you lose all power that knowing the numbers gives you.

First, you have to understand and analyze the information. Then, you make decisions and adjustments based on the information. It’s that simple.

Remember this: You’re only as good as your last month. Be honest with yourself, and drive your business forward.

That said, there are a handful of numbers you must have a handle on:

  • Gross sales per hour: Total sales divided by total hours sold

  • Gross profit dollars per hour: Total gross profit dollars divided by hours sold

  • Average ticket: Total dollars divided by total car count

  • Shop advisor closing ratio: Amount of work sold divided by amount of work presented

  • Customer satisfaction scores: Differs depending on your system, but even just analyzing reviews and Google is a must

  • Average hours per RO: Amount of hours sold divided by car count

  • Technician direct cost: Straight cost of your technician divided by total gross sales

  • Parts direct cost: Total parts dollars divided by total sales dollars of parts and labor

These are just a few examples of some of the things you need to track every single month. If you use these numbers plus the experience in the shop—watching how work is done, how fast customers are called back, how quickly the work is dispatched, if your team is QC-ing work, performing full inspections, etc.—all that would influence how well the shop performs in your numbers.

Every month you need to read your P&L and be honest with yourself. Say, “I did this; it’s my fault,” and look yourself in the mirror and tell yourself good job or bad job and figure out how to fix it. Don’t wait. If you have a negative month, you have to fight that whole next month to get back to where you were.

The numbers are the boss, and if you don’t listen, they’ll show you—the easy way or the hard way.

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