Marconi: There’s No One Size Fits All Repair Shop Business Model

The year was 1973 and, like many from my era, I started my career working as a technician in a gas station. The typical gas station had two to three bays, and at least two to four gas pumps. Part of my job description was to pump gas if needed. Self-serve was not yet the norm. By the way, we were open seven days a week, with half days on Christmas, New Year's, Easter and Thanksgiving.   

The automotive repair industry has changed dramatically over the past few decades. There aren’t many gas station/repair shop business models these days. Today, there are franchises, tire stores, off-road shops, specialty shops and other niche businesses. In many markets, the independent general auto repair shop model dominates the typical modern-day model. No matter what business type, it seems shop owners crave benchmarks and guidelines. While there is merit to this, there’s no one size that fits all business model. And there shouldn’t be.  

Numbers Vary Between Shops

The reason why I bring this up is that there are a lot of discussions these days about certain standards that auto repair shops should aspire to. Perhaps the most popular is setting a standard for the right KPIs and profit margins. Also, many industry people are promoting the five-day workweek as the standard, with some saying that a four-day work has benefits that outweigh the five- or six-day work model. Additionally, it’s common to hear that technician production and efficiency standards need to fit into a certain range to determine the overall success of the company.

We all understand the value of benchmarking as a way of analyzing what we are doing compared to other similar businesses. However, auto repair shops are like fingerprints; no two are alike. And from my experience as a former repair shop owner and now a business coach, trying to fit your repair shop into a neatly formed benchmark-based model may be more detrimental than beneficial.  

If we look at KPIs and margins, for example, it’s typical for a general repair shop to strive for 70% or better on labor profit and a 50% part margin. But everyone reading this understands that percentages and dollars are not the same. Some shops do not fall into the typical percentage range, but their business model produces remarkable results to their bottom line in terms of “profit dollars.”  

Customers Trump Trends

Let’s talk about the four and five-day workweek. As I mentioned earlier, back in the '70s, the gas station I worked at was open seven days a week, with half days on holidays. When I started my own business in 1980, I was not about to be open seven days a week, and holidays were out of the question altogether. But being open six days a week was something I felt I needed to do. I had to be there for my customers. Through the years we tried to close on Saturdays, but it just didn’t work for us. This is not to say you must be open six days a week or even five days a week, which is the point I’m making. Some point to employee morale and increased production by not working a five- or six-day workweek. This may be true and probably is for many shops. But can anyone say that this is true for every repair shop, in every area of the country?  

Know Your Shop

Here's the bottom line. While there is a benefit to having standards and benchmarks, every repair shop is different. Learn what others are doing but understand your business model and the KPIs that drive dollars to your bottom line. Then decide for yourself what makes the most sense for your business, not someone else’s.