What to Know: Section 179 for Auto Repair Businesses

Within an auto repair shop, data serves many functions: streamlining day-to-day operations, helping service advisors and tracking a shop’s cash flow. But you can also harness the power of data to plan for the future. In fact, strategically leveraging data can help you determine when it is time to open a new location. Think of it as your roadmap to multi-shop success. Data helps you every step of the way, from optimizing your existing business, to creating a plan for a new shop, to maximizing workflow across all locations.

Looking at the Big Picture: The New Location Roadmap

When you start planning for a new location, your strategy should prioritize the big picture of your business, allowing you to strategically determine the process for opening the next shop. Key metrics and analytics can help you monitor your business performance and plan for both the long- and short-term future. Whether you are expanding for the first time or the tenth, leveraging data can help make the process smooth, strategic and simple. It’s as straightforward as 1… 2…3: 

1. Getting Started: Make Your First Location the Best It Can Be

Before opening a new location, ensure your existing shop is optimized. Your goal is to maximize efficiency and productivity, so you can replicate the process at a new location. Take a good, hard look at your numbers, and be honest with yourself about your business performance. Some key questions to ask include:

• What are your ARO and car count, and can you increase them?
• How many repeat customers do you have versus new customers?
• How effective are your mechanics at completing their work? 
• Will adding another mechanic or bay be enough to support my current levels of business growth?
• How frequently are customers approving your full estimate or returning for follow-up work on previously declined jobs?

Once you have determined that your existing business is performing at the highest level possible, you are ready for the next step.

2. Creating a Plan: Determine Criteria for Your New Location 

As you look to add a location, it is important to identify your business needs and the assets you have available. Data from your existing location(s) is key to this step. Not only can you analyze business performance to determine your financial ability to open a new shop, but you can also identify opportunities with new customers to target or niche services to offer.   

For example, if your existing location is overwhelmed with customers seeking same day or next day service, another shop might be the solution. Or, if you are targeting customers in a different area of town, building or buying another location closer to the population you are targeting might draw them in. Here are some questions to ask when determining the criteria for a new location:

• Have I maximized the efficiency of my existing location(s)?
• Can I afford to build a brand-new shop, or should I buy an existing business?
• What is my close rate at my existing location(s)?
• What demographic am I targeting, and how can I meet their needs with this new location?

3. Setting Up for Success: Use Tekmetric Multi-Shop to Maximize Workflow 

Once you have multiple locations, it is critical that you maximize workflow between all locations. You can compare locations using Tekmetric Multi-Shop to monitor performance, track key metrics and determine each location’s strengths and weaknesses. A good question to ask yourself is: how can I leverage each location’s strengths to support continued business growth? 

First, ensure that you have replicated the optimized processes from your original location(s) at the new shop. You have worked hard to ensure your business was performing at the highest level possible before opening a new location – make sure to keep that momentum moving!

Second, play to the strengths of each location so they support each other. For example, determine which locations are high versus low volume to maximize your technicians’ time at all locations. If one shop is a high-volume location overwhelmed with work, you can leverage a lower volume location by moving some cars there for same-day repairs. Just don’t forget to move the cars back to the original location for the customer’s convenience! 

The idea of multiple auto repair shop locations can seem daunting, but by maximizing your data, you can simplify the process to ensure you are prepared for the next step. First, put all your efforts into running a top-tier business with your existing location(s). Once you are satisfied with your performance, utilize data to establish a clear plan for opening your next location. Finally, use tools like Tekmetric Multi-Shop to maximize workflow and leverage each location’s strengths to support the overall business. This approach will maximize your productivity and efficiency across all your locations, increasing your overall bottom line and keeping customers satisfied. 

Your auto repair labor revenue and parts margins are critical for enhancing your shop’s profitability. Adjusting your pricing on parts to make a profit is pretty straightforward.

But when it comes to labor times for auto repair shops…that’s where things can get a bit tricky. 

Yes, you need competitive labor rates, but you also need to keep those rates reasonable so you don’t scare off your customers with sky-high prices. 

3 ways your shop can make more money on labor: 

1. By using a labor matrix 
2. By creating custom labor rates 
3. By applying a labor guide markup 

Before we dive into the differences between these three methods for setting the best labor times at your shop, here’s a quick refresher on the one thing these methods have in common: the labor guide. 

What is a Labor Guide? 

A labor guide is like the gospel of labor times for auto repair shops. It tells you how long, on average, it takes to complete different types of repair work.

Remember that the times listed in auto repair labor guides are averages, so it’s best to treat them as a starting point.

When you think about what makes the holidays a wonderful time of the year, perhaps images of spending time with loved ones, playing in the snow, and sipping hot chocolate come to mind.

Those activities are all part of the holiday spirit. But goodwill and charity also make the holidays a wonderful time of the year. And as an auto repair shop owner, you’re in a unique position to give back to your community.

There are different ways you can pay it forward—and if you end up liking how things go, you can make giving back a year-round activity, rather than just something you do during the holidays.