Make Your Month, Every Day!
Do you run your shop or does it run you? I spend many hours in collision repair businesses and unfortunately what I see is usually the latter. The collision repair businesses that are really getting it done these days take a systematic approach to success. Today’s article focuses on how successful shops own their days, their months, and financial future through the use of a simple daily system.
Why is it that so many collision repairers wait until the last few days of the month to take notice of whether or not they are on track to reach their monthly sales goal? Usually they are way behind where they want to be, and out comes the bull whip! Guess who suffers now? That’s right, everybody! The employees have to work extra hours under pressure, and the customers often have to deal with the quality issues that ensue. Much of this nonsense can be alleviated by adopting a different mindset that focuses on what I like to call “WIN.” What’s Important Now?
WIN gets the team to focus on making the right plays every day whether it’s July 1st or July 25th. The overarching idea is to design your future and purposefully go out and get it! A simple method I like to use involves 1. Knowing what you want 2. Making a game plan 3. Measuring the progress and making adjustments every day. When you follow these three steps you WIN!
Step One – Knowing what you want
Set up an achievable budget or sales forecast for your company that will positively push your people but is still realistic. This step is crucial and sets the stage for you retaining control of your company. The way I like to do this is based on taking the daily sales capacity average and multiplying it by the number of working days in the month. I then do this for all the remaining months of the year.
Monthly goal = Daily Sales Capacity (What my shop is capable of producing each day) X number of working days in the month.
Ex. $5,000 X 21 days = $105,000 Monthly Sales
Step Two – Making a game plan
So based on our sample month, you are projecting $105,000 as your goal which means that EVERY DAY your crew needs to produce $5,000. I repeat, EVERY DAY, including the first day of the month, and the second day of the month and so on. Far too many shops close ROs and book sales for cars that are not delivered or in some cases aren’t even completed in order to “make the month.” This is a mistake and contributes to the problem of starting out the next month in the hole.
Prior to the beginning of each month, you must think about how your month will play out just like you are making a game plan for a football game. You should ask yourself questions such as, “is anyone going to be on vacation this month?” When things like employee vacations are a factor, make plans in advance on how you will stay on track. You can’t possibly know how everything will play out in the future, but you can at least make a plan and do your best to stick to it.
Step Three – Measure the progress and make adjustments
Each day it is very important to know your numbers and share them with your team. You must know every day what your sales are compared to where they should be in order to hit the monthly goal. With our sample month, if it is the third day of the month and the actual sales are $10,000 and the goal for day three is $15,000 (3 days X $5,000) you now know you are tracking $5,000 below target.
If the reason you are below your target is production related, you now will need to make adjustments to get caught up. The way I would approach this situation is by addressing the staff during the morning production meeting and asking the guys to put in a couple extra hours to get us back on track. If the problem is related to sales coming to the door, then you will obviously need to address the problem by figuring out how to get some more work coming in quickly. Either way, it is a lot easier to make small adjustments early in the month, than waiting until there are only a few days left to make your miraculous recovery!
Conclusion
The important take-away here is that you have got to know your numbers every day in order to make the course corrections that will keep you on target towards success. If you are using a computer management system, keeping track is very simple. You can run a vehicles delivered report every morning (be sure to not include sales tax.)
If you would like free assistance creating a routine to keep you on track, please contact me.
david.luehr@elitebodyshopsolution.com
From Vehicle In to Start
Use this segment to measure how long it takes to get a vehicle from drop-off to production ready. “Production ready” is your shop’s definition of when the vehicle is ready to flow seamlessly through the body work and refinish stages of production. For most shops that means blueprinting has been completed, full approval from the customer and insurance company has been obtained and all critical parts are on hand. Once this criteria has been met and there is an available technician to work on it, enter the start date. For most shops this time segment averages 1 day (same day) for jobs under $1500, 2 days for $1500-$4000, and 5 days for the heavy hit $4000+ jobs. The overall goal is 3 days on average for all jobs.
From Repairs Started to Repairs Completed
This is the most important segment of time because it is the only segment where anybody makes any money! For that reason, you clearly want to measure this segment of time. You can measure this segment in either days or in hours per day. Things that have the biggest effect on your success or failure while vehicles are in production are things like blueprint accuracy, parts correctness, etc. Top shops will typically produce between 4.0 to 6.0 Hours per day while the vehicle is in the Started to Completed segment.
From Repairs Completed to Vehicle Out
This time segment is probably the most overlooked area of cycle time opportunity. How long does it take you to get rid of the cars when you get them finished? Your management system cycle time reports will also show you how you are performing in this time segment, assuming you are diligent about your date management.
Take control of your cycle time performance by taking a deeper look into the individual areas that affect the overall cycle time performance. As you have heard, you cannot improve what you don’t measure. By viewing your computerized management system’s cycle time report, you can analyze this information, but you have to first be diligent with your date management.
If you would like more information about how you can apply this date management strategy at your shop, please contact me at david.luehr@elitebodyshopsolutions.com
