7/25/2023 0 Comments Auto repair shop monthly expenses![]() It may be possible to get less expensive coverage by becoming part of a larger group, through one of the regional or national collision repair associations, the local chamber of commerce, or a small business association. Increasing your deductibles can reduce coverage cost, although it will put a strain on already cash-strapped employees. This is another tough one to swallow, but along with payroll health insurance is typically one of the largest expenses on the balance sheet. “I don’t agree that you should be penalizing your whole staff if you can pinpoint where the problem is and fix it,” he adds. “Without understanding that, how do you adjust salaries? If you can identify the weak links in your shop, you can often improve your returns just by changing which techs get which jobs.” “Most owners don’t know what any given technician is producing for them,” says Lou DiLisio, president of Automotive Industry Consulting. You should also evaluate whether current salaries are justified by the output of specific technicians. With unemployment high, many employees would rather take a cut now than risk taking their chances on the job market.Īnd if you are lucky enough to be hiring, there’s a large pool of talent entering the job market from recently closed dealerships, putting owners in a better position to negotiate salaries. You can also ask every employee (including the owners) to take a temporary pay cut or commission reduction. But there are other ways to save cash in the short-term, while keeping valuable employees on the roster.įirst, eliminate any overtime until business picks back up. ![]() ![]() Payroll is a significant cost center, and when times are tough owners usually find themselves in the unenviable position of having to potentially lay off long-time employees. Here are eight areas shop owners should evaluate for potential cost savings: “What I find more often than not is that costs are not in line, and they really need to reevaluate things on a regular basis.” “They often think the solution is on the sales side and they believe the costs are in control,” Passwater says. ![]() “If you just cut investment capital either in human resources or equipment, that’s going to create some problems in terms of future growth.”īut according to Tony Passwater, president of consulting firm AEII, if shop owners take a closer look at their operations they will usually find some potential areas of savings. “Before anybody starts whacking numbers and headcount, they have to understand that they are spending money now for a reason,” says Tim Ronak, services consultant at AkzoNobel. “You have ongoing operating costs, dues and subscriptions that have to be maintained, and you may carry debt that has to be serviced.”īefore looking for cost cutting opportunities, though, owners should understand exactly where their break-even point is, and how cuts will impact profitability. “It can be very difficult to find areas to reduce costs,” says Teresa Kostick, owner of All Line CARSTAR Auto Body in Bollingbrook, Ill. Many body shops, though, feel they’ve already shaved expenses down to the bone, and have struggled to find ways to keep costs down without laying off employees. As more collision shops feel the affects of the sluggish economy, owners have had to make difficult decisions about where to cut expenses. ![]()
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