Continued from page 17 COVER STORY
bill customers 4,590 hours at $70 per hour earns:
*By changing shop hourly labor rate to $80 per hour, billing efficiency remaining at 4,590 hours, shop earnings increase to: Difference between cost and earnings going to the bottom line: Service departments operating
$321,300
$367,200 $143,200
at 85-percent efficiency and billing at $80 per hour will earn in gross profit dollars:
$367,200
*THE GOOD NEWS: There is no cost of goods associated with these earnings. It's all gross profit dollars. That's right: 100 percent can be used to pay suppliers. Here's a very good question: How much of this could be added to your pretax net profit dollars? Take a look at these real (rounded)
numbers from our consulting files. This customer's annual sales were $3,800,000. The service department was responsible for generating 10.52 percent of total sales, or $399,760. That dollar figure ($399,760) is 29.17 percent of $1,370,000 total gross profit dollars earned. These numbers represent a technical
service department's earning power when service managers and technicians are held accountable for overall operations and billing efficiencies.
ADVERTISER
Basic Software Systems Billy Goat Industries Briggs & Stratton Corp. c-Systems Software, Inc. Dixie Chopper Dosko
efco/Emak USA, Inc. Eureka Chemical Co. GE Capital
GE Capital Commercial Distribution Finance
Green Industry & Equipment Expo (GIE+EXPO)
Honda Generators Jrco, Inc.
Kipor Power Systems Masport Limited nizeX, Inc.
Oregon | Blount, Inc.
Pathfinder Computer Systems, Inc. Pressure-Pro RapidBuyr Rotary Corp.
Servantage Dixie Sales TD Retail Card Services
Worldlawn Power Equipment 38
Remember, technicians' wages and
benefits are accounted for in payroll. Total employment is a critical number used to measure company overall operating efficiency.
My closing thought on establishing a
fair market hourly labor rate: The objective is to work the numbers until the following happens: • Department efficiency forecast is
realistic. • You can establish an hourly labor rate
that's fair for the customer and equitable for your business.
If you have more than three technicians, simply do the math using your number of technicians. Most shops we know need to increase hourly labor to a more equitable cost of doing business ratio. In the past 12 months, every product or service we have purchased has risen sharply. And it is evident all pricing policies will continue to be challenged. Shed your fears and doubts and begin working at a higher efficiency rate. I promise, when your service department is managed for overall operating efficiency, profits will increase. You might say or think, "Because I own
a service business, I speak with a voice of experience. Sometimes, it takes all the courage I can gather to overcome internal struggles with raising fees."
ADVERTISERS' INDEX
PAGE # WEB ADDRESS 34
25 3
10 14 31
DR Power Equipment, a division of Country Home Products, Inc. 27 Ecolawn
34 31 32
Cover 2 Cover 3
www.basic-software.com www.billygoat.com
www.briggsandstratton.com csystems.co
www.dixiechopper.com www.dosko.com/d9/
www.DRdealer.com
www.ecolawnapplicator.com www.efcopower.com www.fluid-film.com www.gogecapital.com
www.gecdf.com
Between 12 and 13 www.gie-expo.com 11 33 33 24 21
gen.honda.com www.jrcoinc.com
www.kiporpowersystems.com www.masport.com www.nizex.com
Cover 1, 9 34 7 5
30, 34, Cover 4 32 15 23
www.oregonproducts.com/logsplitters www.pathfindercs.biz www.pressure-pro.com
http://greenmediaonline.rapidbuyr.com/deal www.rotarycorp.com www.DixieSales.com www.TDRCS.com/OPE
www.worldlawnpowerequipment.com OUTDOOR POWER EQUIPMENT www.outdoorpowerequipment.com
Walk past fear and doubt, and raise your hourly rate. A few customers may not return, but additional earnings will soon cause you to prosper. Memories of a cheaper hourly rate and a lost customer or two, will soon fade, if you stick to the policy of zero defects and no returns. Become the proud owner of the best shop in your market. Remember the following profit policies
and rules: • Target technician operating efficiency
(TOER) should be 50%. • Never spend more than 50 percent of tech time to pay department operating cost. • Don't pay overtime, unless there is an
equitable return in gross profit dollars. • Stop interrupting technicians. They could
be earning up to $85 per hour in department revenue. • Assign your best technicians to work on customer equipment only. • Hire an assistant to set up equipment for the sales department. • Typically, a service manager is not
affordable until the shop has five technicians. • Assign a lead tech to be a working
shop supervisor, and adjust that tech's wages accordingly. • Take time to do the mathematics.
Earnings and efficiency are revealed by numbers. • Take time to sell your service department
with every sale you complete. • Invest time making outside sales calls to
grow and expand. • Never stop training technicians. • Increase customer care by putting
customers first. OPE
Jim Yount is the founder and chief executive officer of Jim Yount Success Dynamics LLC. For more than 30 years, he has hired, trained, managed, sold, marketed, and motivated. Extensive
real-world experience in retailing, distribution and working with manufacturers, both domestic and international, has earned Jim the reputation as a trustworthy and knowledgeable professional in his field. As a results-oriented speaker, he is dedicated to inspiring groups of 30 to 3,000 to develop their talents and realize their full potential. As a business consultant, teacher and coach, Jim is experienced at challenging leaders to explore their operational procedures and change unacceptable practices that are producing poor results. For more information, contact Jim at jimyount@hughes. net or (903) 796-3094 or visit his website at www.jimyountsuccessdynamics.com.
