Shop Operations: Setting Up a P&L Statement for Your Auto Body Shop
How do you feel about your business prospects in 2009?
Well, I can tell you how some of you feel based on a recent survey we conducted. Approximately 39.1 percent of you said that you feel your business will be equal to what it was in 2008. 32.3 percent of you said business will be better in 2009, and 28.6 percent said it would be worse. Since over 70 percent of you believe 2009 will be equal to or better than 2008, that tells me you’re a relatively optimistic bunch.
Most of you (42.9 percent) predicted that you will grow gross sales up to 5 percent in 2009, while 20.5 percent predicted 5 to 10 percent growth. However, 24.2 percent of you see a decline in 2009 which certainly tempers some of that optimism.
The majority of you (41.0 percent) said that you feel your net profit margins will remain unchanged from 2008 to 2009. 32.9 percent said net margins will decrease, while only 26.1 percent said they will be greater than 2008. This tells me that while most shop owners are confident they can grow sales slightly in 2009, they feel that the tough economy and increasing costs will continue to eat away at their bottom lines.
The response to the final question on the survey was telling, too. 62.1 percent of you said you feel the credit crunch or banks’ tightening of loan requirements will have an impact on your business in 2009. Funny, though, I talked to a shop owner the other day who’s embarking on an ambitious growth plan this year. I asked if he felt it might be tough to get a loan right now for such a move, and he said he has no worries at all because he has a very good relationship with his bank. So it might just depend on your individual situation.
The weather has been kind to shops so far this year, and healthy backlogs might be the reason repairers feel 2009 may not be so bad. But that story might change when gas prices go back up this summer and miles driven go back down. This is why I felt for certain that some shops might look at doing more mechanical work, since it has been widely reported that people are hanging on to their vehicles longer instead of buying new and plowing money into them to keep them running. But then I talked to one repairer who said his shop isn’t focusing on diversifying but rather continuing its marketing efforts to stay in the forefront of consumers’ minds when it comes to collision. Still, I don’t think it’s a bad idea to be looking at alternative revenue streams. After all, it’s never a good thing to put all your eggs in one basket.
With so many people out of work and money tight, I think “cash-outs” people electing to not fix their cars but instead take the insurance money and run will hit an all-time high this year. Couple that with more total losses due to lower vehicle values and you have even fewer cars available to fix. Adding more desperation are those repairers who have been trying to get on DRPs but are still hearing, “Sorry, but we are not adding any shops at this time.” All of these factors might make it more likely for more repairers to be willing to do just about anything to get work which is never a good thing.
Here are some of the things you said would have the biggest impact on business in 2009:
Fewer qualified workers.
Less people with insurance coverage.
Taxes and regulations.
Desperate shop owners.
Rise in used car sales vs. new.
What do you need to do to counter all of these things? It’s more like what you should have been doing reducing waste in your repair processes, improving customer service, investing in training and modern tooling, focusing on innovative employee retention and recruitment strategies, and maintaining a strong marketing effort. Those who have never looked farther than tomorrow will have the roughest go this year. Those who saw the market changing some time ago and came up with a plan and heeded the advice in this very magazine will be best positioned for success.
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