How to Make Your Auto Repair Shop More Profitable: 10 Tips
Face it, drivers rely on us to keep them on the road so they can safely travel with their families. However, we cannot do that if we cannot keep the doors of our shops open and staff loving their work. How do you make your auto repair shop profitable?
Ratchet+Wrench just published its Industry Survey, showing the most common type of auto repair shop looks like this:
- independent general repair shop (a whopping 84%)
- $1 million to $2.5 million in annual revenue
- 2,000 to 4,999 shop square footage
- staff of 3 to 6 employees, including the owner
- 5 to 6 bays
- 3 to 4 lifts
The percentage of shops making more than $1 million has grown by more than 5% from the previous year. We hear from the shops using our shop management software that profits grow when they invest strategically in their businesses.
How profitable are auto repair shops?
We looked further at the revenue and see this breakdown:
Would you like to know the secrets of those who are earning more than $1 million a year? Well, you may be delighted to hear that they often share their advice with other shop owners.
Here are the top 10 tips arising from their experiences so you can also:
- earn more profit
- pay your staff better
- keep more cars on the road for longer
How to make your auto repair shop more profitable
No shop can succeed without seeing and measuring the numbers that change how many dollars go into your bank account. So, you need to start there.
1. Identify the numbers that boost your auto repair profit margins
The Automotive Training Institute recommends that auto repair shops focus primarily on:
- Car count
- Average repair order
- Productivity by tech and team
- Gross sales and profit
Getting a handle on your auto repair profit margins will set you up for success. When you earn more money per client visit, that multiplies day after day.
However, flooding your shop with more cars does not result in profit. You need to work out the right numbers for your business, using the advice and formulas in this free guide: Four Numbers That Drive Profitability in Your Auto Repair Shop.
2. Set up your shop management software to track these numbers
Next, give up cumbersome spreadsheets and manual processes. Instead, tap into a software that allows you to set up reports to do this work for you.
You can slice and dice information by service, customer type, average ARO and many other factors with auto repair analytics. This gives you the insights you need to effortlessly make staffing and marketing decisions.
On top of that, you can track your daily balance with a single click to get an EOD Payment Summary. Now, you can see what auto repair profit margins you need tomorrow and go home with a clear mind.
3. Copy profitable shops that get the most out of their staff
To run a shop smoothly, you need to get the most out of each staff member. Yet you don’t want to spend your day spying on each bay to see what each tech is doing.
Instead, you can set up the Capacity dashboard and see how each tech fills each hour of the day with a green dot. What could be more simple?
Now, your service advisors can see who can take on a new repair while they wait for parts to come in. Every hour gets used by fixing more cars and creating more profits.
4. Tap into your team’s talents to make more auto shop profits
While every hour counts, so does the outlook of your team. Do they want to learn new skills? Do they work with you when you bring in a new process?
When you make changes easier, staff open up sooner and you see profits arising from that change faster. Therefore, you want to adopt a shop management software that makes onboarding simple and offers ongoing support.
When you work with Shop-Ware, we help you draw on the expertise of your team as you adapt. Together, you build new habits that pay off with smoother processes and bigger revenues.
5. Offer your customers a great digital vehicle experience
You’ve heard about the value of a digital vehicle experience. Now, put that on steroids and deliver a digital vehicle experience.
For starters, send messages via live chat right in the repair order. Send photos and videos to show the work’s value then have them approve a menu of repairs.
6. Easy ecommerce makes your auto repair shop more profitable
The next generation of shoppers doesn’t want to write you a check or show up at your shop before 5 p.m. to pay you. As you evolve with other trends, this one truly drives convenience.
Just as you make it seamless to say ‘yes’ to work, wrap up the bill with a list of work done.
7. Make the most profit off every automotive part
Are you still in the Dark Ages of using a parts matrix? Ditch the matrix and use the Parts GP Optimizer for auto parts pricing to boost your profits immediately.
This calculation makes Shop-Ware shops more money more quickly than any other feature. Its algorithm adjusts throughout the month so you NEVER miss your target.
8. Market like the most profitable auto repair shops
Are you still throwing money away for newspaper and TV ads? Instead, you can engage in digital marketing that tells you how much each dollar generates in new and repeat business.
When you pair up your auto repair CRM with marketing apps, you get the most bang for your buck. However, you need to find a shop management system that works with this type of program. Once you get started, you’ll wonder what took you so long.
9. Invest in the best shop management system
Of course, you need the best shop management software that brings all these first eight ingredients together. Shop-Ware was created by an innovative shop owner who started repairing EVs long before her peers did.
Carolyn Coquillette kept getting frustrated by software that slowed her down and made it hard to run her business. As a result, she wrote her own and keeps adapting it to make more auto repair shops more profitable.
10. Add the right mix of auto repair apps
Yes, you need smart and adaptable auto repair software. However, it must work with your business’s accounting, diagnostic, communications and marketing.
Shop-Ware offers more integrations and innovative partners than any other automotive shop software, saving you time and money. Stop worrying about how to click or write code to get apps to accept your data. If it’s not part of our system, simply use Zapier to connect those dots.
Now that you know how to make your auto repair shop profitable, you have no excuse to put up with old systems and ideas. Soon, you’ll set a shining example on how to increase auto repair profit margins and end your day smiling.
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