Growing Pains and How to Prevent Them

All businesses experience growing pains.  Usually growing pains are a good thing indicating that your business is growing and that you are ready for the next stage.  This of course depends on how these growing pains are handled.  In other words, how scalable is your business?

Most common areas of growing pains:

• Insufficient technicians for amount of work
• Insufficient support staff (clerical, service advisor)
• Insufficient space for work and/or personnel
• Insufficient capital

So, how do we avoid being caught with our torque wrenches down?

Step 1. Determine your benchmarks

When we first open our shops and begin repairing vehicles, we might be doing $5-10k per month and find it difficult to conceive of doing $50-100k of business or more.  Nonetheless, conceive it and plan for it.  Here are a few steps to plan for the future:

1. First, determine how much total revenue each technician can generate per month.  So, let's make a few assumptions (modify the numbers to suit your shop).  If your average Repair Order is $320.00 and it takes an average of 2.5 labor hours at $75.00 per flat rate hour to achieve this average and your technician can perform 9.5 labor hours per day, how many technicians will it take to perform $50k per month.  I know this sounds like a word math problem and that is exactly what it is.  So here is the formula to answer this question.
• 1 technician = 3.8 jobs per day (9.5 hours per day divided by 2.5 labor hours per job)
• 1 technician = $1216.00 per day (3.8 jobs per day times $320 average RO)
• 1 technician = $30,400.00 per month ($1216 per day times 25 work days per month)
2. Next, determine how many support staff you will need to support the technician to accomplish his best numbers.
• How many service advisors do you need to write 3.8 jobs per day?  A good general rule of thumb is 1 hour for a service advisor to write one repair order (including parts ordering time, customer support time, data entry etc.).
• 1 service advisor = 8 jobs per day at $320 per repair order
3. Last, determine how much space you need.  In order for 1 technician to complete 9.5 hours per day, how much workspace does he need?
• Can some work be done on the ground instead of a lift?
• Can you fit 1.5 - 2 vehicles in each bay?
• Can you add an external lift to expand beyond the walls of your shop?

Step 2. Plan for achieving your benchmarks

Once you have determined your benchmarks, plan for achieving those benchmarks and prepare in advance for that day.  Here are some less costly ways to support additional growth without breaking the bank.

1. Outsource some clerical tasks.
• Use a bookkeepping service for run of the mill accounting
• Hire a part-time receptionist/clerical.  High school or college students working after school are an excellent source.
2. Part-time technician support. 
• Hire a part-time individual to clean, remove wheels, run parts or restock shelves
• Begin training this person to be ready to step in to small jobs (brakes, oil changes, tune-ups, etc)
3. Help staff to be as efficient as possible
• Utilize a good software program (like Shop Boss Pro) to make advisors and technicians as efficient as possible.  Shop Boss Pro allows technicians and advisors to enter information into the program with no additional fees.  This means a technician can enter his "story" into the program without first writing it out on paper and then passing it to the advisor.  This makes both more productive.
• Use contemporary computers that don't crash every 5 minutes.  Time wasted waiting for a computer to reboot is time lost to productivity.  Dont step over dimes to pick up pennies.

With proper planning, growing pains can be looked forward to and not run from.  This will help you move from stage to stage in your growth pattern.

Good Luck and Keep the Wheel Spinning!

Chris Boshaw is the owner of Boss Software, the makers of Shop Boss Pro, one of the first web-based Shop Management Systems. To do their part, Boss Software offers a very low cost version of their program for small shops and prices the software to help keep a shop in business.