"Oh yeah! I have a peayanelle!"

Webinar Transcript:

So this is super awesome. Thank you everybody for joining. We're gonna have a great conversation, especially when it comes to talking about those numbers, the numbers that are your business. And there's so many that feel like, oh, yeah.

The numbers the numbers are good. I'm sure they're good.

And and thank you to KUKUI for sponsoring this webinar. KUKUI helps with those numbers. We help with the marketing, and, we are the best of the best when it comes to software in the aftermarket, the automotive aftermarket. Our software is the best of the best to prove what marketing works and what doesn't. So we bring that together to bring to you a proving ground, a platform that allows you to see what's working and what's not. And so there's many shops, many shop owners that feel, oh, you know, my numbers, my p and l, it's good. As long as the numbers aren't red, well, then I'm doing just fine.

Oh my gosh. Well, yes and no. There's so much more that goes into that, and that's where it comes into understanding the profit and loss, the p and l of your business. So my name is Jimmy Lee.

I am Kukui. I'll be here to be the voice for you as we welcome our guest, mister Travis Troy of Honest Wrenches. Travis, thank you for being here this morning. How are you?

Not too bad. How are you, Jimmy?

Fabulous. Thank you very much. And by the way, I am in afternoon now. So I'm so rote in saying good morning that I'm in afternoon now. So I'll say good afternoon to you as well because, Travis, you are also afternoon. Right?

Yes. Yes. I am. I just just clicked twelve o five.

So Twelve o five.

Well, with that, Travis, I'm super excited to have this conversation about profit and loss, about shops and shop owners.

The slide deck is yours. I believe you have control.

Let's talk about what it is we can do to help shop owners understand their p and l so they know what's working and what's not.

Absolutely. So I think, you know, one of the biggest things that we gotta start off with is is understanding KPIs and benchmarks, what they should be and and why.

I hear all the time that, you know, a lot of people are always wondering what to track in their business. There's so many different, I guess, ideas and and benchmarks, and and what do you actually track. So little bit about myself. I am Travis Troy. I have, two shops in the Des Moines metro area with my business partner, Josh.

While attending college and working a full time job, at night as a diesel mechanic.

We graduated in twenty twelve and opened the shop full time, while still working our full time jobs, at night. And then in twenty fourteen, we both threw everything in, quit our full time jobs, and went, full in with honest wrenches.

Fast forward to twenty twenty two, we've got, twenty seven team members, and we'll do roughly four point three million in annual revenue between our two locations.

So as we get, get rolling in here, what is a KPI?

A lot of people always, you know, wanna know what what KPIs do you track? What truly is a KPI?

So a a KPI is I I guess, to to make it easy, it's it just enables the team the ability to make smarter business decisions as well as track their performance based on the key performance indicators that were actually set.

And then we talk a little bit about benchmarks.

A benchmark is a standard or a point of reference against which things can be compared to or assessed within your industry or company. So we have industry benchmarks, and then we also have benchmarks that we set with inside our organization.

So your benchmark in another person's shop might be slightly different than mine depending on what our goals and aspirations are of our actual organization.

So we've got a ton of different KPIs, and it's crazy to think as I was putting this together, the amount of KPIs that are out there in the industry.

And I know Kukui does an absolutely outstanding job with our dashboard that we get to use to be able to it does a lot of this math for us.

One thing that I always like to know is is how does it get to that math in case of for some reason, I didn't have that in front of me right away. So as you can see, all of the all of the different KPIs that are that are continuing to drop in, it can become extremely overwhelming.

So let's go into the meeting and and how to calculate some of the KPIs.

So some of them may seem basic to some but advanced to others. So we're just gonna roll through them. So average repair order, it's your total sales divided by your number of ROs.

Hours per RO, it's your total build hours divided by your number of repair orders.

And then effective labor rate is your total labor sales divided by your total billed hours. And, obviously, we've got our total repair orders and then our total build hours and our GP percentage. So that would be your profit divided by your sale times a hundred gets you your GP percentage.

Any questions so far, Jimmy?

Yes. In fact, here's a question.

And the question is about the average repair order. Do you include, the zero dollar invoices on your average repair order when you look at this?

In my organization, absolutely.

Every ticket is calculated within, everything that we do.

Now depending on your situation and depending on your organization, you may wanna back some of that out in order to be able to see, I guess, a a different number. But for our organization, we we throw everything in, whether it's a zero dollar ticket, a warranty ticket, a set of wiper blades they just dropped in for. All of that we throw in. Now, I've heard shops that do in our state, we don't have, state inspections. Okay? So, you know, states that have that, you may wanna back that out and be able to track that two different ways, in order to be able to get a slightly more realistic number because you're almost kinda running two businesses with inside one management system. Does that make sense?

Yeah. Yeah. So what would be the advantage or disadvantage of not including a zero dollar invoice? Maybe somebody just came and had their tires checked for air or, like you said, the windshield wipers.

Why would a shop not include zero dollar invoices?

Yeah. I mean, if it just depends on what you wanna look at.

If it's a ticket, it's a ticket in my opinion. Whether it's zero dollars or ten thousand dollars, a ticket's a ticket, and we wanna take all of that into consideration.

That's, an opinionated it can go either way. And and I'm not saying one way or the other is wrong, but it's something that as long as you know which way you're tracking it and you track it the same way every time and stay consistent, that's really what matters.

So then we've got technician efficiency, technician productivity, shop efficiency, and shop productivity, And I've got in here all of the different ways that you're able to, perform those calculations and calculate them. Now what I will say is a lot of our management systems nowadays are going to calculate a lot of this for you.

Me personally, I still think it's extremely important that you have the ability and and the know how in order to calculate this in case if for some reason we don't actually have that, in our management system that that calculates it or if we wanna trust and verify.

Maybe we think that the management system's off a little bit, so this gives us the ability in order to be able to do that.

And then different types of of profits. You hear a lot of people talk about, net income, net profit, net operating profit, net operating income. You've got EBITDA, SDE.

So I just wanted to touch on a little bit of different ways on how to actually calculate your profits.

So net operating profit is the profit after subtracting all of the operating expenses from the revenue generated. Net income is profit after subtracting all of the operating expenses, interest payments, and taxes.

And then EBITDA is earnings before interest, taxes, and amortization.

So it's pretty similar to SDE, but seller's discretionary earnings is gonna allow if an owner's got, you know, their boat in there, their airplane, and all that other stuff, and they wanna back some of that in, that would more or less be sellers' discretionary earnings, and that's how you calculate those.

Okay. Travis, question for you, if you go back one slide. Mhmm. And and and this is a question for me.

Why why would we calculate our profit at these different levels? Why not just go all the way down to the earnings before taxes and interest amortization? Why not go all the way to e EBITDA? Why do we why do we have these different levels?

Why would we track that?

A a lot of it's gonna be based on your institution of whether you're trying to get a loan or, you're looking at business evaluations.

There's a lot of different reasons on why you would look at it differently.

For me, I'm big on just looking at net. I don't leverage my business on a personal level a ton.

So net is is is pretty net's probably the most common, but I think it's important that everybody knows and understands that there's other ways to be able to look at it.

Okay. Okay. Cool. Thank you.

Yeah. Absolutely.

So we've learned a little bit about KPIs, and, I guess the next thing is is how do we use the KPIs to set benchmarks for our business?

And I think this is extremely important that all of us know and understand is that we can have a good average repair order. We can have a good hours per hour, a good gross profit, an amazing car count, an awesome average written repair order, outstanding technician efficiency, productivity, etcetera, and and we can still lose money.

So if we don't look at the big picture and figure out truly what our breakeven is and set those benchmarks, we can look at a dashboard and think that we're doing really good, but but at the end of the day, we're not putting any money in the bank. We've got more going out than we do coming in. I think that's really important.

So one thing that I utilize that I think is extremely important is a breakeven sales calculator.

And what a breakeven sales calculator is is this allows you to take data from your profit and loss and, for me, also your balance sheet and perform some calculations to determine what sales are needed in order to break even. There's a few different ways that we can do this calculation based on your current expenses, current GP percentage in order to determine what you currently need. Or if you're looking to bring on a new expense or loan, you can add this into your calculation in order to determine what your new breakeven sales number would be.

So in order to calculate your required sales in order to break even, you're gonna want to follow the formula listed here. So I personally like to take no less than six months worth of data.

So take six months worth of your monthly expenses and divide that out by six, and then you'll take that divided by your gross profit percentage.

So what are your monthly expenses? I wanna make sure that everybody knows what a monthly expense truly is.

You're gonna wanna add up anything any monthly expense, cell phone, car payment, fuel, management systems, all of that.



In my shop, I exclude service adviser sales cost, parts cost, sublet cost, tire cost, and technician cost. Some people are gonna put, service adviser cost below the line as an expense.

There's no right or wrong way. Just make sure that you stay consistent whichever way that you do it.

Add all of that up, divide it out for the number of months that you're calculating it by. Like I said, I like to really do from a six month window.

The most important thing here that we have to make sure that we identify is any debt payments. So any payments that you have that's debt comes off of your balance sheet. So that's not gonna come out of your p and l. You're gonna have to look at your balance sheet or go through and look, okay. What debt payments do I have? So you're gonna wanna add your monthly expenses and your debt payments up in order to get yourself an accurate number of what your true monthly expenses are.

So let's talk about gross profit. So in order to calculate your gross profit percentage, you need to make sure that your p and l is accurate and that it has all of your cost of goods sold in there.

Parts, tires, technicians, labor costs. I touched on service adviser costs a little bit.

That can go one way or the other. You can either put it above or below the line.

Sublet costs, shop supply costs. Once you have all of that completed and and laid out nicely in your p and l, it makes this calculation extremely easy.

So what you'll do is you're just gonna take your gross profit dollars divided by your total sales, and that's gonna give you your gross profit percentage.

So we've been able to now figure out what our average months monthly costs are. We've just now we're able to calculate what our gross profit percentage is.

So now we're gonna be able to go through and really start doing some math and figuring some stuff out.

I just threw some numbers together for an example.

This is actually my numbers from a while back when I first did this years ago.

But this data is taken from six months of expenses, add it up, and divide it by six.

So our average monthly expenses plus our balance sheet items was sixty two thousand five sixty three, and we are carrying a fifty four percent overall gross profit percentage, for that same time frame.

So if I take those numbers, divide it by point five four, our required monthly sales to breakeven was a hundred and fifteen thousand eight fifty seven.

Do we have any questions so far, Jimmy?

Yeah. Another question here about the, average gross profit percentage. What's Yeah. What's normal? What's usual? What's healthy?

What's Yeah.

Absolutely.

Awesome and amazing?

Yeah. I mean, fifty five to sixty percent is going to be your your benchmark that you're really gonna wanna set.

Now there's some variables within that. If you're a high performance shop, if you're doing, you know, exotic cars, that might drop a little bit.

But realistic numbers for a general automotive repair shop, you're really gonna wanna be in that fifty five to sixty percent range. It was a really good question.

Okay. So if somebody's operating at a average GP percentage and they're up north of seventy percent, what would that say?

I would ask what they all actually have calculated in their gross profit numbers.

So if they're north of seventy percent, they probably don't have, service adviser costs involved in that. They may possibly also not have their technician costs involved in that.

Okay.

Okay. Cranking and or they're just cranking and doing really, really well.

But one thing that we'll do is is let's say that somebody was was less than this fifty four percent. Okay?

And let's say that they were running forty eight percent. Okay. So if you did the math, the sixty two five sixty three, and took that divided by point four eight, that changes their monthly required sales to break even to a hundred and thirty thousand dollars.

So a very small change in your gross profit determines what your monthly required sales are, and that's a staggering number. So the better gross profit percentage that you can carry, really the less sales that it takes to to make everything happen.

Oh, yeah. Everybody would love to do more with less, and I think that's what you're getting at here with a healthy GP percentage at a hundred and fifteen as your breakeven. So if you're going up and you're you are cracking the nut at one thirty, you're doing that much better because you're you're holding that GP percentage.

Absolutely. Yeah. I guess my point was is if you were only carrying a forty eight percent GP, it would require a hundred and thirty thousand dollars in sales in order to break in order to break even. Now let's say that you were carrying a sixty percent GP, that drops that one fifteen down to a hundred and four thousand.

So a six percent increase in your GP drops you about ten thousand dollars a month in sales required.

Oh, that's great.

That's great.

Pretty awesome. Pretty staggering numbers for sure.

Yeah. Sobering for sure. And to see that, oh, gosh. All we'd have to do is just tweak this little lever here just a little bit on our GP percentage, and it makes a world of difference.

You hit the nail on the head. It's it's pulling levers and knowing what levers to pull, and not, not pulling them too hard. I mean, we can certainly, stiffen ourselves up a little bit too much and and cause the the exact opposite of what we're wanting. So you've really gotta find that happy medium for your location, your organization, and, what your, you know, market will bear.

Nice.

So, I guess the question that I always ask when I go through this is is are we in the business to break even? Because we shouldn't be.

So if we're only focusing on what it takes to break even, and we set that as our as our goal or our benchmark, we're always just gonna break even. So I don't think that we should be in business to to break even. So I think it's important that now once we figure out what that true break even is, and this was extremely important for a lot of people in in the COVID years, making sure that they were able to manage our expenses and and know exactly where they had to be.

Now we can take our monthly expenses, loan payments, and desired profit. So you've got our monthly expenses and debt payments, which was sixty two thousand five hundred and sixty three, and now we say that we wanna make an additional twenty three thousand dollars a month in net profit, that puts our expenses at eighty five thousand five hundred and sixty three.

If you take that divided by your fifty four percent, your now required sales, okay, is a hundred and fifty eight thousand four fifty, and that gets you profit for your business so you can continue to grow.

And I think that's that's really important that we now know that range. Okay? So in my business, what I'm gonna do, I'm a the absolute minimum we can be in order to keep the lights on is a hundred and fifteen thousand. And in order to keep the business healthy, we need to do a hundred and fifty eight thousand. So we need to be able to put those with inside and and have our ranges, of where we need to be.

As you can see here on this illustration down below, I've created a sheet that I use, and I do this, in my business. I do it once a quarter, and I go back six months each time just to make sure that I run a current breakeven number, and I run a proposed if we were to change or add anything. So you'll see over here on the right, it says monthly expense average, new expense.

That's where you're gonna add in that new expense. If you're looking to add something or take on a new debt, or, you know, maybe possibly hire some admin help, an office person to help you and you know how much that person's gonna cost a month, you put that in there and it gives you your new breakeven sales number.

I wish I woulda had that years ago when we just didn't have any direction. We didn't know what to do, and we didn't know if we could afford anything or what we had to do.

Super powerful, information to be able to just kinda lay it out and and run your numbers.

So Travis.

Yep.

Question there on that that new expense.

Is this also the exercise that you would do, say, for, equipment if you were gonna get a a new alignment machine or new tire machines?

Would you add that as that new, monthly payment expense?

Absolutely. Yeah. So you've got your current total monthly expenses right now, and you're looking to add a eighty, ninety thousand dollar alignment rack and and machine, and your payment's gonna be, you know, fifteen hundred a month. You throw that fifteen hundred dollars in there, add those two back together, and then you'll get your total new proposed expenses.

Divide that out by your gross profit percentage, and then I'll tell you where you need to be on on sales.

Nice.

And and that's assuming you don't change anything.

Now if you made some increases on some other things, maybe you bumped some parts margins a little bit or maybe some labor rate adjustments, none of that will really reflect in this. This is assuming you change absolutely nothing in your business.

Correct. Right. Yeah. And so when you're running this for six months, you're doing it month by month. Correct?

No. I you wanna have a six month window. You don't wanna take a window too small.

So it's a six month window, but you're averaging all of that out for a month. Correct. So I'm taking six months of expenses and and basically dividing whatever that total is by six to to run monthly numbers.

Oh, okay. So you you've got a rolling six month average. That's what you're calculating?

Yeah. It's important that you know, I mean, there's times where, you know, maybe we had to go out and buy all new computers, one month or so. We wanna spread those out as far as we can. And for me, a six month window is is fair enough that I think, you know like, for us personally, you know, we just signed, you know, our entire team up for vision, at the beginning of this month. So if I looked at it just in the month of November, it would it would look pretty painful, You know? But it's it's all good stuff. So that's why we wanna keep that six month window, in mind, to help average out some of those onetime costs that we have throughout the year.

Got it. Got it. Very cool.

So this is kinda where it starts getting fun, and this is where I always got lost. Once I figured out the the breakeven number, I didn't know what to do next.

I'm like, okay. I gotta breakeven. Now what do I do? Here's where I gotta be. So our needed sales is a hundred and fifty eight thousand four fifty. That's what we need in order for us to be able to have a healthy business.

The questions that I ask myself, well, how many cars do we need? How many hours do we need? What does our ARO need to be? And how do we break this down so everybody inside our organization can utilize these benchmarks to help steer the ship. And it's not just me pointing fingers at them telling them, hey. Here's what we have to do.

So if we break this down, we start by breaking it down into a week. So we take the one fifty eight four fifty divided by four point three weeks in a month gives us thirty six thousand eight hundred and forty three point eight three dollars a week in sales.

Our benchmark that we created in our shop is seven hundred and fifty dollars for an average repair order, so that gives us a starting point of figuring out how many cars we're gonna need. So we take that thirty six thousand eight hundred and forty eight eighty three divided by a seven hundred fifty dollar ARO, that's forty nine cars a week.

So here's what we know so far. We've got to do one hundred and fifty eight thousand dollars a month, which is thirty six thousand eight hundred and forty eight dollars a week, and we need to carry a seven fifty dollars ARO with forty nine cars a week. We're starting to break this down into some more bite sized pieces that are easier to understand and easier for our team to be able to understand. You look at a hundred and fifty eight thousand dollars for a service adviser, and they're already stressed out, stressed to the max, and they don't know what to do, and it just it just totally derails them. But if you break it down to it's forty nine cars a week at a seven hundred fifty dollar ARO, it just makes so much more sense to them.

So we've been able to make some benchmarks that our service advisers are able to track and manage, but we're leaving somebody pretty integral out of the equation.

We have technicians with goals. So how do we make this make sense for them?

They don't really care how much the business does in sales. They care about what they have to get in hours, and that's what we've gotta start figuring out. So we've gotta figure out what our effective labor rate is and our parts to labor ratio. So for this example, we're gonna assume that we're at a hundred and twenty five dollar effective labor rate, and we've got a one to one parts to labor ratio for an x set of math. So if we assume that, we can recap. We've got the one fifty eight four fifty, the thirty six eight forty eight eighty three with a seven hundred fifty dollar ARO at forty nine cars a week, and our effective labor rate's one twenty five with a one to one parts labor ratio.

So if all of that is accurate, we'll take our needed sales per week, which is thirty six eight forty eight eighty three divided by two. We now know we need eighteen thousand four hundred and twenty four dollars in labor sales needed.

If we take that divided by our effective labor rate, we now know that we need a hundred and forty seven hours a week needed. Now this is where it starts to get kinda tricky depending on your current shop layout and stuff like that. Do you have the staff in order to be able to do that?

So we've got everything, and it's all kinda starting to fall in into place. So for this example, I'm gonna say that we have four technicians. Okay? So technician one, our goal is forty five, tech two is forty, tech three is thirty five, and tech four is twenty seven.

His general service helps clean up the shop, stuff like that. So he bills about half the hours that he's there. Now if your shop doesn't have four technicians and maybe you only have two technicians, now we've got to start looking at what we're what it's gonna take and what we truly need in order to make our breakeven make sense and start putting those people in place. So if you only had two technicians, do you think you're really gonna be able to, you know, crank out a hundred and fifty hours?

It's roughly seventy five hours a week per technician. It's probably not realistic.

So once you start figuring the breakeven out, then the puzzle pieces and everything start coming together, and you're able to say, okay. Now I maybe need to add another technician, or maybe you've got eight technicians, and your breakeven's only that and you've got a hundred and forty seven hours. Maybe you're a little overstaffed, or maybe you've got the capacity to be able to do more. So once you start getting some of these numbers together, everything really just starts falling into place.

So, Jimmy, I'm gonna put you on the spot here.

So we've got our monthly sales goal, our weekly sales goal, our ARO, our car count, our effective labor rate, and our labor sales goal, our build hours goal, and our technician hours goal. And maybe we can even ask the the audience that's out here watching, what is our hours per RO goal have to be based on these numbers?

Hours per RO, well, I would see the, one forty seven divided by the forty nine car count.

Absolutely. So roughly three point something hours per ticket?

Three hours per ticket, which is totally doable. Right?

So that's that's that's right in the wheelhouse of where we wanna be. So all of these numbers are matching up. It's passing the sniff test of a lot of different things.

Forty five hours, forty hours, thirty five, twenty seven, all those are realistic, easily obtainable numbers for a business, for a technician to even turn. You know? Possibly even a little a little under what what it could be.

So Yeah. One thing that you can do is you can take this deeper if you'd like.

Personally, we leave it into a week in our organization. You can take it down to daily goals, hourly.

If you take it down to hourly, it might make you sick, because you you figure out really what it takes per hour in order to make everything go.

We stop at a weekly goal. We have jobs that roll into several days.

So we just we run it that weekly, but you can totally continue to break this down, if you'd like. So we spent a ton of time on KPIs, benchmarks, breakeven numbers.

But, Jimmy, what are we completely missing out on?

I I think it's the, the the folding money in my pocket.

Does your four walls give you the ability to do what it takes to break even?

Is your shop capacity give you the ability to do what it takes in order to break even, to do what it takes in order to make a profit for the business? Do you, one, have the staff, and do you, too, have the amount of base that it requires in order to be able to do this?

And so this is something really cool that I'm able to do is is we run a shop capacity drill.

And with a shop capacity drill, it really kind of tells you it brings the rest of that in. So it rolls your shop capacity in, confirms that your staffing model works, and confirms all of that. So myself, I'm an ATI client.

We're alumni now, and so this is actually a spreadsheet that I get to utilize as an ATI client from them in my business that allows me to be able to run through and and determine this. So if you put your labor rate in, put your, mechanical sales, so we said we're one to one, so fifty percent, put the hours per day that you're open and the days per week that you're open, and then you also wanna put in how the shop hours. How long is the shop there versus how long is the technician there?

And the number of technicians that you have. Now for us, we're gonna consider any oil change guy, stuff like that as as a half a technician. We know that they really don't have the ability to bill forty hours, and then everybody else is gonna determine. So as you see in our previous slides where we had the three technicians and then we had that one guy that was around twenty hours, we put him in as a half hour. We've got five and a half bays in this example. So we put all of that in and it starts doing some math for us.

So what it does is it says that if we are ninety percent productive, we can do thirty six thousand dollars a week in sales with that current staff.

If we're a hundred percent productive, we can do thirty seven thousand eight hundred. Jimmy, do you remember what our needed sales were in order to be able to breakeven and have a profit for the business?

It was that the one fifty eight number?

Yep. What was that a week?

One fifty eight divided by four is thirty nine thousand something something.

Four point three would put us at thirty six thousand eight hundred.

So we've got we gotta be somewhere right between ninety five and a hundred percent productive in the shop with our current staff in order to achieve that goal.

So everything becomes fully realistic.

Point three instead of four.

Yep. So we've got, on average, four point three weeks in a month.

Got it. Got it. Got it. Okay. Thank you. Thank you.

Yeah. Absolutely.

So all of this makes sense, and it and it passes every sniff test that we've kinda put to it. And now we know that if we're somewhere in the ninety seven, ninety eight percent productivity with our three and a half technicians based on our current labor rate, based on our one to one parts to labor ratio, all of this is totally doable.

Now if we increase our productivity, we can do even more than that.

One thing that I did wanna hit on. So you'll see over here, it's got if your shop was a hundred percent efficient, you your shop annual capacity is three million eighty six thousand dollars. Now one thing that I wanna make sure that you know is if we go back to this, it's got number of bays at five and a half bays, but we've only got three and a half technicians.

So when you go to shop capacity, it's saying that if you had a technician in all five and a half of your bays, that is truly what you could do as a one hundred percent maximum capacity.

Now me, personally, I think that's a little bit of an inflated number. It is a real number, but it'd be be extremely difficult in order to be able to achieve that. I mean, you have really, really gotta be we we shoot for about eighty percent.

If we can really run eighty percent capacity of what the actual shop is, we are extremely happy at that point.

Does that make sense?

Yeah. Yeah. Absolutely. Yeah. I would think running it at ninety five, ninety seven, a hundred percent capacity.

Productivity? Productivity or yeah. Because I'm not thinking of it as productivity point of view. It it's like, if you're running at a hundred percent all the time, you can't last that long.

Right. Yeah.

I mean, it's And this is a little bit different.

It is. So on a productivity side, we're we're accounting for that technician to be a half. So we're not putting him as a full. So it kind of it makes the numbers a little bit more realistic.

So you you should be able to ride that ninety five percent productivity.

Now on the shop efficiency side at that one hundred percent efficient with every single bay, that makes it kinda tough because that's assuming that every bay is turning the same amount every minute of the day. And and we know that's not a hundred percent realistic in in our outside world. On paper, it looks really good. But if you can get somewhere around eighty percent of that number, you're you're doing very, very well. You should be proud of yourself.

Nice. Nice. Very cool.

So we've got our total repair orders, our average repair order, our hours per RO, our labor sales, all of this stuff that we went through, we've got all of our goals for everybody.

So this is gives us the opportunity to either add or adjust our benchmarks based on all of that. So we've got a ton of data. Now we've just gotta tweak and adjust, but we're we're right in line. We're right where we need to be.

And then it really kinda puts it all together for us, and this is what we utilize with our sales team, with our entire organization of all of our technicians and everything. This is what they get in order to be able to know what it takes to get where we have to go. So each technician has their hours goal.

We have the benchmarks set for the service adviser team. They know what we've gotta be on on an average repair order. They know what we've gotta be on an hours per hour. They know all of that stuff. And if we do all of that, they know about where we're gonna land.

So we put it all together and we present this to the team.

And and you it's broken down into bite sized pieces so that way they're not just looking at that hundred and fifty eight thousand dollar a month deal thinking I'm already we're only doing a hundred and thirty thousand a month now, and I'm already exhausted. I don't even see the the path on how to even get to a hundred and fifty eight thousand. We broke it down for them. And, hopefully, we did this with them together along the way so they get to have a better understanding and and a clear understanding of how some of that goes.

So here's one thing that, there's a lot of different management systems out there. So can you trust the numbers that you get from your management So So they are unable to account for things like employee vacations, lost parts, or unreturned cores, monthly expenses, debt payments, variable tax and benefit loads, which all of that has an effect on our gross profit and stuff like that, and those are the numbers that our management system is gonna spit out at us. But those numbers can be skewed. Hopefully not a lot, but they can be skewed depending on, you know, maybe tech a was on vacation all week and you had to pay them, but they didn't bill any hours. Your management system doesn't know that. So it's important that we utilize our management system as a guide, but we know that the truth is truly in our profit and loss, and we have to make sure that our profit and loss and our balance sheet is updated and accurate at all times.

So when we have a problem, how do we diagnose it? So first of all, in order to know that we have a problem, we've got to identify it. Somebody needs to identify that we have an issue by monitor monitoring our KPIs and benchmarks, whether that's our accountant coming to us and saying, look. You guys are not making any money at all, and you're just sitting here spinning your wheels.

We really gotta work on doing something. Or maybe your team and the technician brings it to the table and says, look. I'm not getting the hours that I want and need in order to be able to live the life that I wanna live and make the money that I wanna make. Somebody has to identify it.

Maybe you as the owner. You go through and do an RO audit or something like that, and you find out that, our average written estimate is not where it should be based on the mileage of the vehicles that are coming through our door.

So somebody's gotta be able to identify it. And then what we've gotta do is we've gotta start researching it. We can't just assume.

We've all assumed before we always get ourselves in trouble. So then we wanna research it. We wanna make sure that it's real and that the numbers that we're seeing are accurate.

Go back to our management system. We may see something in our management system that gives us a red flag. Okay. Let's go to the p and l and make sure that it's accurate. If it's not accurate, then we gotta figure out the difference between the two and why it's not accurate.

Did we fat finger something into, p into our p and l, or did back office maybe screw up if we're utilizing back office in our business? There's a lot of different variables that can happen then. And then we've got to, you know, investigate. Begin investigating on what's going on by pulling data on a broad range until we dive down and actually find that issue.

Once we find the issue, we wanna go in and evaluate it.

Dive deep. I mean, we have to we have to assume no fault, assume that it's all on us and dive deep to figure out is is it a single team member? Is it the whole team?

If you're running service adviser teams where you've got, like, a service adviser with a team of technicians, is it just one team that's seeing the issue, or is it both teams that are seeing the issue? What's going on? Nobody's at fault. We wanna use blameless problem solving when we're doing this, but we wanna we we've gotta be able to dive deep and be able to figure out truly what's going on with it.

So once we get that done, then we've got to present the findings to our team.

Once we get those findings, present them to your team, educate them on the findings, and teach them how to track, manage, and fix the issue before it's too late. What we're doing in this case is we're doing a a reactive investigation, basically. We found something that's an issue, and now we've gotta be reactive.

So if we go in and educate our team and teach them how to manage, fix, and track it, then we're then we can start taking a proactive approach, and they can take a proactive approach. They can start seeing whatever it is slip and be able to to make adjustments in order to be able to do that. The next thing that we wanna do after we educate them is we wanna follow-up on it.

This is something that I've been able to learn in our organization that's helped us out tremendously is I'm I'm big on set it and forget it, and that's the the most inaccurate and wrong way and wrong way to do things that, it's human nature that we've got to they've got a lot of stuff on their plate anyway. All day. Our entire team does. But then we throw something new at them.

You've gotta be able to follow-up on it. So follow-up on it in two weeks and then follow-up on it again in four weeks and make sure that everybody's still on the same page. Make sure everybody still knows how to manage it. Make sure everybody still knows how to track it, and make sure that they're able to to identify the issue.

And then from there on out, all you have to do is manage it. You've got your team that manages the issues for you, not you having to go in and be reactive finding the issues. Your team is now proactive, and they're managing it for you, which allows you to focus on the other side of the business that you really should be focusing on, which is the growth and the people and just taking care of of everything else, not having to sit there and and dive in and investigate stuff.

Any questions, Jimmy?

Yeah. A couple of questions.

Everybody's wondering about these slides. Can we get a copy of these slides? Are you okay sharing these?

Absolutely. I'd love to.

Yeah. So we'll we'll send this out. We'll make sure that we share with everybody. And to Billy's question, yes, it is recorded, and, you will be able to watch this again later.

So Mike has a question, and this kinda goes back a little ways in determining how many hours per technician.

Yeah. How do you determine that?

Yeah. So if I know your Internet's a little laggy, but, are you able to go back to that slide?

This one here?

Yeah. There you go. So the the the question was determining hours per technician?

Yes. How do you know that technician one is forty five, technician two is forty, thirty five, twenty seven? How did you come up with those?

Yeah. And who asked that question?

Mike.

Mike. Mike, thank you so much for asking that. I completely skipped over it. So one of the things that is extremely important as we're putting this together is you have a one on one with each of those technicians.

Okay? And what we wanna do is we wanna talk about what their goals and aspirations are that's part of this. So we sit down with tech one, and tech one says that I wanna hit fifty hours a week. Okay?

And we start doing the math with them, and we realize that fifty hours is an unrealistic number for what they're currently doing.

So then we dial that back a little bit, and we agree that forty five hours is now a realistic number. So it's something that we ask our technicians for, and we make sure we do the math together based on how many hours they're gonna have to turn per day, how many hours are actually in the building, what their current productivity and efficiencies are, and we make sure that it's a realistic number, and we do that with each technician. One on ones in our organization is extremely important. It's something that we do not miss out on. We do one every month with every single team member, and I know that you guys saw at the beginning of the slide, there's twenty seven of them. We do twenty seven of them a month every single month. We I mean, our team looks forward to it, and we really look forward to it.

That's how we stay on the same page when we make sure that we're continuing to achieve our technicians' goals. That was a great question.

Nice.

Awesome. Thank you, Mike.

Alright. Let's see if I can go forward here for you on the presentation.

Number eight, manage. I believe we are right here.

We're at we're at the recap, and we've got little bit little bit of time left for some more questions. But here's the good part about this. So we've been able to know what the KPIs are and how to calculate them. We know what our breakeven number is.

We we know that we need to build some benchmarks around our breakeven plus. You'll see that I put that plus there. You need to do both. Know what your breakeven is.

Know what your absolute minimum is, and then know what your plus is. Get yourself that range so that way you know what your sweet spot is. We need to know the capacity of our shop and the capacity of our shop and the capacity of the team that we have with inside of our shop and know that we have either have growth opportunity or maybe you're at eighty percent capacity of the of the four walls that you have, and now you've gotta start figuring out what your next steps are in your in your business. Are you gonna go to a second location?

Are you gonna add on? What do you want, and, truly, what does your team want?

And then we found out that we cannot trust everything in our in our management system.

You can trust a lot of things, just not everything. It's it's not an accounting software. And then when we have an issue, use your eight step diagnostic procedure in order to be able to dive in and figure out what's going on with it.

Nice. Okay. Another question. Question coming in from John. What is a good net profit percentage?

Yeah. Absolutely. So a good net profit percentage is gonna be between twenty and twenty five percent net profit.

Between twenty and twenty five percent, you said?

Yep. Absolutely.

Okay. Okay. Cool. Other questions, comments, concerns? Type in those questions and, oops, and we'll see. Oops.

Here's the here's one thing that that I wanna I wanna hit on if we, if we just go one more slide.

Uh-huh.

This is something that dawned on me. What does KPI stand for again, Jimmy?

Key performance indicators.

Keep people interested, keep them informed, keep them involved, and keep them inspired. And when I started living by that, the the the key performance indicators just show up. Okay?

If I try to hide stuff from my team, if I get worried about them knowing the numbers inside the organization and stuff like that, I'm I'm a firm believer. Keep them wanting to learn and know more. Don't be afraid of that. Feed them.

If they want fed, feed them, and keep them involved in it. Let them work on some of this. We've got our team members that are bringing this stuff to us now, and I think it's extremely important that if they wanna get involved, let them get involved and teach them along the way because they're gonna be able to run and manage your your business, in most cases and then even in our cases, much better than we could. We build some great people, and and then they start to do it.

And and that's that's the cool part about it. I love this slide. I actually saw it on LinkedIn, and and I knew I had to slide it in there because it's just it's so true. It is so true.

Dude, I love that. I love it. The the better you're informed, the better decisions that are made, the better direction that everyone takes. Yeah, man. That's super awesome.

Keep people informed.

And so now here's a question for you. Oh, Mike's asking a question. Mike is asking, who's your ATI coach?

Kevin Allen.

Kevin Allen. So shout out to Kevin Allen. Super Yes. And Mike, who's your ATI coach? We'll give them a shout out as well. Right. So for for the Travis Troy Kingdom, for your empire that you and your partner have been, building over the last quite a few years.

Yeah. So we've been in business, we've been in business for just over ten years, but really full time since twenty fourteen.

Right.

And so if we look at that kingdom, you've got two locations. Does it look like we're adding a third and a fourth and a fifth and a sixth, or does the two give you the the lifestyle that you and your partner are looking for?

Yeah. So it's really not about lifestyle for us. It's about the impact that we can have on other people.

So we are focusing heavily on on our people right now and pouring every resource that we can into them and giving them runway and a path for growth.

So as we grow our our team and we bust through the seams of two stores, if they're happy where they're at, then we're happy. If they wanna grow and add more levels of leadership to our organization, which would potentially require more stores, then at that point, by all means, absolutely. We have no issues going to three, four, five, six. I mean, as many as it takes, but we're not doing it or running it as a money aspect of I need this amount of money. We're running it as if I have this amount of people that wanna continue to grow and improve and change lives of others, then that's our motive to want to continue to grow. So two stores right now, we are absolutely happy.

We can pour a ton of resources into our team. We're growing some amazing leaders.

And when they get to that point where, you know, they just feel capped, at that point, that's when we'll have to start looking at, potentially a a third or a fourth store. And, you know, they always say two stores are okay. You go three, you gotta go four or five really quick. So, we'd have to make sure that structurally we're sound.

I mean, I know a lot of people I just had a podcast go out, with Ratchet and Wrench yesterday and about our culture. And when we went to two stores, our culture suffered immensely. I mean, it was it was bad. Our culture really went in the dumps because we're strong really thin.

And we were able to bring that back. Our team made us aware of it. We built it back up, and now we focus on building the leaders. And now the leaders and the culture and everything stays with inside the organization even when we're not there, and that's extremely powerful.

Anybody that's looking to go multilocation, if you cannot leave your business and and leave the culture there, if the culture leaves when you leave, it's not ready for a second location yet. Don't do it because you want a second store. Don't do it because you want more money. Do it because your team wants it, and it will be way more successful. If I woulda had just that little nugget when we went to two stores, holy smokes.

Yeah. Really, we could probably be at ten by now.

Oh, wow. At ten. Yeah. You know, I I saw it said the other day. And by the way here, everybody, this is, Travis's contact information if you wanna reach out and ask him any additional questions.

Please. Absolutely. I'm an open book.

Yeah. That's awesome. I I saw the other day on oh, it was just an inspirational thought that, this person was saying, I'm not here to be rich. I'm here to enrich.

Absolutely. I love that.

Yeah.

To enrich other people's lives Yeah.

Is more powerful than being rich.

Totally. To me, that is rich. Yeah. I'm I'm a rich man.

I am I am extremely rich because of what we do for our people. To me, money is wealth. Okay?

Yeah. And inside of me, I am rich, and and I teach my kids that.

My my daughter talks all the time about being rich, and I ask her what riches, and she says it's a lot of money. I said that's incorrect.

If you have a lot of money, you're wealthy. Be rich. Be rich with your life. Be rich with your family. Be rich with your team.

I am rich.

I am extremely rich.

I have an amazing team, an amazing family, and that's that's what makes me rich.

Oh, that's super cool. So we're gonna give a shout out to Eric Twiggs. Eric Twiggs is the coach for mister Mike.

Eric's good stuff.

That's awesome.

Eric Twiggs is also the coach for seventeenth Street Automotive, Billy.

Billy. Billy Kading Kading?

Billy Billy's the guy Billy is, like, here, like, super early every single time. I want you guys to know that. That's freaking awesome. Right?

Thank you, bud.

I want you to know that that is that's awesome.

You are hungry for knowledge, and I want you to know that that is gonna take you places. That is gonna take you places.

Be hungry for knowledge.

So true. Any other questions, comments, concerns, everybody?

Type them in. We've got Travis here for a few more minutes.

And Billy says, oh, yeah. Super hungry. Nom. Nom. Nom. Nom.

That's awesome. I love it.

I do too.

I do too. Hey. You've got your smartphone real close to you. That's my cell phone number. That is my email address.

Snap a picture. If you want a copy of this deck, text me over your email address, and I'll send you over a copy so you can, review it with your business partner, with your team, with your accountant, with your spouse so you can discover what is the optimum breakeven. What is the number that we need as a stretch goal because we wanna profit twenty three thousand a month? What what is our car count? What do we actually need to have here?

Just so so awesome that that this information is here and available. And, to everybody, thank you for being here. You guys are super awesome.

John Powell, you will be early next time. We know you're hungry for this knowledge and information as well. So thanks for being here and your excuse for being late.

Great information. Mike's giving you super props, Travis.

Thank you, Mike.

Yeah.

Oh, Mike, you're you're putting in email addresses in this chat. And, you know, as soon as I close it down, I don't know if I'm gonna be able to see this again. You might have to, text it to me.

Super awesome. Thank you so much, everybody. My name is Jimmy Lee.

I'm here to help you. We are Kukui. We're here to help enlighten you as to what's possible, what you can do in your shop. And to everyone, aloha.

Thank you very much. Merry Christmas. Hope you have a fabulous holiday season. A merry Christmas.

Happy New Year. Happy everything.

Thank you, Travis.