7 Tips

7

TIPS FOR RUNNING A FINANCIALLY EFFICIENT WORKSHOP

When Capricorn’s State of the Nation asked Members about the biggest challenges they face in business, 21% said they struggled with efficiency.

So, we asked some of our team of automotive industry experts for their hacks for running an efficient business. We particularly wanted advice to help Members run more financially efficient workshops, because 28% of Members told us financial concerns were among their biggest challenges.

Here’s what they said.

Start measuring your efficiency

Workshop Whisperer Rachael Evans said when a workshop owner recognises they don’t have an efficient business, the number one thing they’re usually not doing is measuring efficiency.

“That’s where there’s this separation between blue-collar and white-collar thinking,” she said.

“There’s a distinct lack of recognition in the aftermarket of the fact that our workshops are essentially factories, and in those factories the product we’re producing is units of labour.

“If we were a Toyota factory or a CocaCola bottling plant, the metrics that would come out of that factory in a day would be how many units were manufactured, what time they were manufactured in, and what waste there was. But often workshop owners don’t know even if they have the ability to track that in their software.

“So, the way to start to turn that around is actually to pay attention to the things that you should be paying attention to. At any one time, I should be able to ask a business owner, what’s your shop’s proficiency today? What was it yesterday? What was it last month? And what are you tracking out for the quarter? They should be looking at those numbers so often that they don’t need to go and look at a report. They know where they’re at.”

Invest in a good management tool

Good management tools aren’t just for tracking your efficiency; they’re the way to unlock that efficiency. Jeff Smit, Technical Editor at The Automotive Technician, urges Members to invest in good workshop management tools.

These tools should include: • Finance and invoicing • Rosters and time sheets • Work scheduling and technician management • Inventory management • A customer booking portal • A customer database and customer relationship management • Reporting and business intelligence.

Learn how to read your financial statements

Financial statements and financial management tools can be confusing and difficult to understand. As a business owner, you need to overcome that challenge if you want to become more efficient.

Rachael recommends talking to your accountant and getting coached through how to read financial statements and reports. It’s a skill you’ll never regret learning.

Look at your financial statements regularly

Further to the above, Rachael said it’s vital to look at your financial statements regularly (and not just at the end of the month or at tax time).

Looking at your statements helps you understand your cash flow, helps you plan, and allows you to identify problems and inefficiencies early.

Only take on debt for assets that make profits

Efficient workshops do not accrue debts that don’t have an appreciable asset attached to them. You shouldn’t be putting your jet ski through the business!

Putting purchases through the business that aren’t going to contribute to your business profits puts unnecessary stress on the business.

Friction-free access to technical information

We know from State of the Nation that a quarter of Members struggle to get the technical information and diagnostics they require — leaving technicians Googling for answers or calling dealerships for advice.

Not having easy access to the technical information your technicians need to do their jobs is a massive opportunity for inefficiency. It can waste a lot of time. (And it’s completely unnecessary — Members can access Capricorn Service Data as a benefit of their membership. It gives you instant access to a comprehensive range of online service information covering thousands of vehicles, including manufacturers’ service schedules, service illustrations, repair times and an estimate calculator.)

Check your progress against clear goals and benchmarks

The most efficient workshop owners are clear about their goals for their business. They know how much money they need to make and how many customers and products need to come in and out the door each day to reach that threshold.

It’s also important to have benchmark metrics for your gross profit, net profit, effective labour rate and daily car count, to measure your progress against.

You should be able to see, at a glance, how you’re tracking in any particular week, Rachael said. Going above or being below those benchmarks may have a detrimental impact on your efficiency.

To read more about the challenges and opportunities facing automotive workshop owners across Australia and New Zealand, download your free copy of State of the Nation.

DEVESH’S ITALIAN BEAUTY SETS HEARTS RACING

Capricorn Member Devesh Mishra is a lover of all things Italian: food, wine, fashion – and, of course, cars. And when it comes to indulging this passion, Devesh certainly doesn’t seem to do things by halves.

This month’s Member Ride is Devesh’s 2018 Ferrari 488 Challenge car, built especially to take part in Ferrari’s famous one-make series of races that has been delighting motorsport fans since 1992.

It’s beautiful. But it’s not just for looking at. This is a real race car. In fact, it’s the only Ferrari Challenge car in Australia that has competed in an official round of the Asia Pacific Ferrari Challenge series. At that race, at Albert Park in 2019, it was driven by Irish driver Hector Lester.

The car has a 3.9 litre turbo V8 engine with maximum power of 670 hp and maximum torque of 760 Nm for a power-to-weight ratio of 2 kg/hp. It is managed for Devesh by Zagame Autosport, which is responsible for the storage, transport and preparation of the car between events, and who provides on-track support and driver coaching at monthly track days. Devesh’s 488 is in factory standard condition but for one modification: it has a Vbox video and data logging system which allows the Zagame Autosport racing team (led by driver coach Rod Wilson) to later review the footage and data collected from the car during each session. This information is then used to develop the driver’s skill level and lap times.

Devesh owns Cornell Diesel Systems – a group of three diesel mechanic workshops in Sunshine in Victoria, Wetherill Park in New South Wales, and Lega Lega in Fiji. He also owns diesel products distributor, CFI Australia.

His plans for the car include participating in future track day events, continuing the driver development work and, ultimately, taking part in the Ferrari Challenge series.