Did You Know? July 12th, 2021
From the Desk of Mike Anderson: Use Tech to Kick ‘Timesuckers’ Out of Your Collision Repair Shop
I am sure you are all familiar with Mike Anderson and if you click on the blue text above it will link you to Mike’s latest article in Auto Body E News.
In this article Mike explains how the administrative load has been shifted to bodyshops by the insurance companies. At one time the cost of support staff was around 10% of gross sales and today it is in the 13% to 14% range. In a shop that sells $1 million annually that is an extra $30,000 to $40,000 in overhead! Can you afford to lose that much cash from your bottom line?
In a time where insurance companies are making record profits, paying back premiums and dividends we are witnessing a significant decline in profitability for body shops.
SAAR is working to address this shortfall with SGI but that takes time and patience – what can you do to mitigate these extra administration costs?
It is interesting to note that 90% of the shops that Mike works with have a computerized shop management system whereas we in Saskatchewan only have about 20% of our shops that have a computer management system. The other challenge is that many of our shops do not understand their management system so they do not use it!
Folks, SGI has just made you up your game in the back shop to become a high-tech production area, now you have to look at making your administrative tasks high tech and efficient.
I know that I harp on this fact all the time but if you are spending an extra $30,000 to $40,000 on admin tasks you cannot afford to be without a shop management system.
The cool thing is that many of these body shop management systems even work with dealership PBS software systems. If you are managing a dealership body shop, can you imagine how much time you would save if you could simply push the information to your dealership software?
While we wait for SGI and other insurance companies to come to the realization that they need to compensate shops for all of the extra administration processes, you need to help yourself by at least looking at computerized shop management systems.
Our friends at SCRS are at it again! Their Executive Aaron Schulenburg sent me an email with details on a database called Spot Within Survival Kit – 2021 Edition. Clicking on this link will take you to a website where you can download the Survival Kit in ZIP form. Click on the ZIP file and it will take several minutes to download all of the documents that can help you to find the resources to back up your repair procedure requests. Here is a sample of what you will get:
I received the chart below from SGI last week and it shows the average turn-around time for a file submitted to image review, in hours. Basically, on average submissions in their work queue are not older than 4-6 hours over the last 18 months.
What is your experience? Are you seeing faster turnaround times? Is communication improving? Go to the SAAR Facebook Forum and share your comments.
How many of you do a budget each year? Do you take the time to review past income statements and formulate a financial plan for the coming year? Going back to the concept of scorekeeping, by doing a budget you are literally setting a target to aim for and it is much easier to hit a target that you can see as opposed to one that is based on hazy expectations.
The easiest way to create a budget is to use your financial accounting system – if you have one in house – to help you put your plan together. I have used Quickbooks for many years and it has the ability to create a budget based on historical data on a month-to-month basis. Every year I look at increasing my gross sales by a certain percentage, then I look to the bottom of the income statement and I look for areas where I can cut costs. Interestingly it is the bottom end of the statement (costs of doing business) where you have the most control over your budget. If you think like an accountant, you will realize that if your business makes a 10% net profit then every dollar your save in costs is = to selling $10 worth of goods and services.
Taking the time to put together a budget is initially a little daunting but once you have done one it is considerably easier. The benefits to you and your business are immense – a feeling of being in control and a better bottom line. If you would like a spreadsheet to help you create a budget send me an email to firstname.lastname@example.org.