It all starts with a dream. Maybe it’s a simple dream of giving quality car care and making a little money for your family. Or maybe it’s to be a multi-shop owner who retires with an expansive portfolio. But I bet somewhere in that dream, the figure of a million dollars came to mind, and just stuck there. I’m not sure what it is about a million dollars, but every business owner I speak with has, or has had, that goal. And I get it, because we did, too. And when we hit it, we were broke. How does one achieve a million-dollar business and come out broke, you may ask? Let me tell you.
In 2021, we grossed the first million dollars in our business. It took 12 years to achieve that because a million wasn’t the goal when my husband opened in 2009. The goal was to be a trusted auto shop that could help the surrounding area get good car care at a fair price and make a little money along the way. He never dreamed we would have what we have now. But when we realized the potential to grow, a million dollars was our goal. We put zero thought into it. It was just an arbitrary number we pulled from the sky and started chasing. While we made a path to get there, we did not really consider anything outside of bringing in cars and pushing them out. It was a simple plan that seemed achievable because the community was still living on extra COVID money, and the shop was flowing with cars. What the shop was not flowing with was proper leadership watching the numbers and the team.
Something is Wrong
By late August of that year, it was clear to me we had an issue. I was looking at numbers, and saw cars coming in and repair approval, but I did not see profits in the bank account. We seemed to be stagnant. I couldn’t quite put my finger on where the primary issue was, but we were on track to hit the million, so I ignored all the things I thought could be wrong and brushed it off. Do not be like me. If you smell smoke, there is fire. And fire needs quick attention.
We ended 2021 at $1.1 million in gross revenue and had nothing to show for it. We were making payroll each week, and paying bills, but we had no idea where the profits were. We hit a net of less than 5% that year, and that is not great. We worked extremely hard in 2021 to drive in new customers and give good care, and it meant nothing. We were not dead, but we were not thriving. We had customers on our schedule, cars coming in and out, and a slow bleed that just kept dripping no matter where we turned.
Fast forward to the end of 2022, our shop had closed right under the $1 million mark, and we were in even worse shape as a business. We were staring at our million-dollar business and considering filing bankruptcy and liquidating. We brought home a negative net, and that is not where you want to be as a business owner. The shop’s bank account was gone. While we had smoothed out some key issues, it was clear we still had a huge problem we did not see. We also began hearing stories that we did not want to hear from customers. By the time we uncovered it all in 2023, we had less than $1,000 in a bank account that needed roughly $30,000 to cover minimum monthly expenses. I didn’t understand how this was happening to such a great business.
As it turns out, thousands of dollars in unreturned parts, cheating parts margins, trading out free work, and endless warranty work was a perfect storm to suck all the profit away from both the owner’s bottom line and the shops savings. All of this could have been prevented had we been present as owners and looked at the entire picture and not just focused on a million-dollar finish line. I’ll spare you the rest of the story because this isn’t about our story. This is about a million dollars.
Get a Grip on Your Business
A million in sales means nothing if you have no net to show at the end. We all go into business to make a profit of some sort, so make sure you are doing that. Your net can be absorbed quickly inside an unbalanced team with poor behavior, weak leadership, and lack of processes. Your service team must hold the parts/labor margins in place, while delivering excellent and ethical customer service. If they do not, you will slowly start to bleed out financially and potentially cost yourself a PR nightmare. On the technician side, allowing your team to push out subpar work will result in warranty loss, eating profits swiftly. But all this chaos can be avoided if you, the owner, ensure the standards set forth are being followed to maintain the culture and needs of the shop.
Allowing our team to ignore processes cost us far more than a million dollars. A million may as well be zero if you ignore the day-to-day nuances that make your business move. However, a million can be such a momentous milestone goal if the business is in line and everyone knows how to get there. It is nothing to scoff at it. So, if a million is the goal, and the goal makes sense for what the business can achieve, then set that goal. But do not set it just to say you hit a million. Because it means nothing as a gross number if the net is not there.