Financial KPIs Body Shop

Question 1

Labor GP Goal

Answer 1

45%+ BC

Question 2

Parts GP Goal

Answer 2

35% goal BC

Question 3

Paint and Materials GP goal?

Answer 3

11% BC

10%+ total sales. If they average less than 10% sales in any quarter, your estimators need some more training.

Question 4

Overall GP Goal, Why?

Answer 4

45%+ BC
You need to be in the low forties to have enough for sufficient retained earnings to strengthen the business. Top shops at 45%+ fender bender

Question 5

Total Overhead/Expenses Goal

Answer 5

40% or less Ben Clymer’s

35% max fender bender, 28-32% top performing shops

Question 6

Net profit Goal

Answer 6

10%+

Question 7

Gross Sales goal, all stores total

Answer 7

$1.4M per month gross sales

Question 8

Rent as a % of sales goal

Answer 8

5% unless you own the building.

Question 9

AR as a percent of sales goals per fender bender

Answer 9

2% over 15 days BC

3-5% 30 days per Fender Bender

Question 10

How do you target/forecast scheduling?

Answer 10

1. Revenue Goal divided by average RO at that shop = car count needed.
2. Divide needed car count by number of working days, gives you cars needed per day to meet revenue goals.

Example: if an average RO is $3K, and the goal is $400K, you’d need 133 cars. If there are 21 working days, then 133/21=6.3 or 6 cars per day

Question 11

How to plan a discount offer?

Answer 11

discount only the labor rate, only up to 60% GP or better.

If the billable rate is $50/hour and the techs labor rate is $20/hour, then there is no room for a discount because that is 60% GP. 20/50=40% cost or 60% GP.

if the billable rate is $55 and techs make $20, you can use the $5 spread for a discount/referral fee

Question 12

Cycle Time/ Touch Time Goal DRP

Answer 12

9/4

Question 13

Cycle time/ Touch Time goal overall

Answer 13

11/3

Question 14

revenue goals by shop

Answer 14

Riv & MV: $400

Y: $250

Question 14

Per fender bender survey, the KPI most essential to profitability across the board was

Answer 14

paint hours per RO, should be above 10 on average

Question 15

CSI goal

Answer 15

95%

Question 16

What leads to high AR per Jason?

7 thoughts

Answer 16

• estimate or photos are not current
• check in process
• issue contacting insurance
• delivering cars after closing invoice previous month
• not on top of paperwork
• improper teardown, too many supplements
• getting POs late from dealers

Question 17

if your not using the space for parts, you can use it for: ___________

Answer 17

production.

Question 18

Techs should get all of their parts: ____________

Answer 18

at one time on a part cart so they don’t have to forage for them, productivity loss when they forage.

Question 19

why is touch time more important than cycle time?

Answer 19

cycle time is too dependent on vehicle mix, job type and job time. Touch time is a true reflection of how productive your team is.

Question 20

what do low touch times generally mean?

Answer 20

You’re wasting valuable labor resources.

Question 21

what 8 expenses are built into overhead?

Answer 21

Wages
Advertising and Marketing
Professional Fees
Computers
Office materials
Building Rent
Utilities and Telephones  
Shop vehicles

Question 22

What are 3 pieces of Paint GP?

Answer 22

Materials
Hours
Labor Hours/Repair

Question 23

EBITDA is also known as

Answer 23

Earnings before insurance, taxes, depreciation and amortization.

subtract all expenses except interest, taxes, depreciation, and amortization from net incomeAKA: Operating profit

Question 24

Too much inventory can lead to…

Answer 24

having cash flow, but not cash on hand because it’s tied up in accounts receivables.

Question 25

how are COGS calculated?

Answer 25

Gross revenue subtract business expenses

Question 26

common cost trap for shops

Answer 26

not evaluating vendors on a regular basis. make sure still receiving agreed upon discounts and that it’s competitive

Question 27

if paint materials costs spike, it pays to stand around and watch over the material cabinet for a few hours to observe technician’s use of products. what can happen?

Answer 27

open and half used undercoat can sit a while and then become useless waste if not sealed and returned to the cabinet.

Question 28

what 6 items are included in sales on a P and L

Answer 28

labor, parts, paint materials, sublet, storage, and glass

Question 29

what items are included in operating costs

Answer 29

fixed costs - utilities and insurance

direct costs - change based on sales and production.

Question 30

how is GP calculated and what comes out after it?

Answer 30

sales minus direct costs equals gross profit
sales 100% - direct costs 52% = 48% gross profit
that 48% gross profit now needs to pay for your fixed or operating costs

Question 31

how is net profit calculated?

Answer 31

net profit is gross profit minus your operating costs

Question 32

comebacks can increase ______ costs

Answer 32

increased usage of paint materials and a drop in gross profit on paint materials because of a redo.

Question 33

customer mix and vehicle mix impact profitability how?

Answer 33

lower margins on DRP work

Question 34

growth does not equate to profits unless ______

Answer 34

costs are controlled

Question 35

what percent of profit should you make on every job sold?

Answer 35

40%+

Question 36

tracking and increasing _______and __________in a day can make a huge difference in revenue.

How do you increase it?

Answer 36

gross dollars produced per tech, per hour and increasing hours sold.

get paid for everything you do at the right amount of money. make sure the shop is not giving work away that should be charging for.

Question 37

what sells everything else?

Answer 37

labor

paint can’t sell labor. Labor should be highest sales and highest GP