Proudly serving the industry for which it was named for more than 50 years, Outdoor Power Equipment provides dealers who sell and service outdoor power equipment with valuable information to succeed in a competitive market.
Issue link: http://read.dmtmag.com/i/61712
COVER STORY By Jim Yount after year the bottom line is at best break even and losses are deemed acceptable. While traveling throughout the United States and Canada and other places in the world, I've been told many, many times, "A service department is necessary to my business, but you can't turn a profit." My answer is always the same: "I meet dealers everywhere we travel who operate a successful service department." What I mean by successful is the service department is expected to produce its share of gross-profit dollars and is managed as a profit center. It is not uncommon for a service department staffed with two to three technicians to earn as much as 25 to 30 percent of the total gross-profit dollars earned by the company. This does not include profit earned on the sales of parts and accessories required to complete the work order. We're speaking about labor income only. Here's an example of what I'm talking about. From our files, one such customer produced an annual gross profit margin of $640,000. Of that amount, the service department earned $186,000. That's 29.06 percent of the company's total gross profit dollars earned. Mark Twain, a noted author, once said: "It's not what we don't know that hurts us. It's what we believe to be true." Too many dealers/retailers believe it's impossible to earn a profit in the service department. And that's just not a true statement. The truth is if one dealer can take the time to learn how to earn a profit in the service department, you can too. In the past three to four decades, Turning your SERVICE DEPARTMENT from cost center to profit center First article in a series have learned that in certain circumstances it may not be possible, or cost effective, to invest time trying to persuade everybody who operates a service department they I 16 can earn a profit. Instead, this series of articles is designed for the dealer/ retailer or manager of the service department who is not satisfied with the department's performance because year Americans have drastically changed the way they live their lives. During the 1940s, '50s and '60s, a majority of the population would not have hired someone to maintain their lawn and take care of their shrubs and trees. Many folks changed oil, spark plugs and air filters and even rebuilt engines in their automobiles. Remodeling the home was a favorite pastime. By the '70s, moms were taking full-time jobs. The pace of life increased five-fold. Today, the family eats more meals away from the home than at home. Quick-change oil and lubrication shops and take-out restaurants are big business. There has been an explosive growth in handyman home repairs, plumbing and OUTDOOR POWER EQUIPMENT www.outdoorpowerequipment.com Image ©istockphoto.com/ugurhan