Ready for a sweet nugget of Fullbay wisdom? OK, here it is:
One of the keys to smart saving is smart spending.
Fullbay, you may be saying, I swear…
Wait, wait, hear us out. We know that you know that it’s important to spend smartly. We also know that with everything going on these days (including but not limited to inflation, the parts shortage, the tech shortage, and supply chain difficulties), some owners are at least thinking about taking a closer look at their spending, if only to avoid any surprises down the line.
We thought to ourselves, there’s an article in this line of thinking.
To help us out, we turned to Ryan Magnum, Executive Administrator of WorkForce Services. He wears several hats at that job, but he told us he was primarily hired to make sure the (large) operation had efficient processes and made money.
He helped take the shop from a loss to profitability. In short, he knows what he’s doing.
He spent a good chunk of time chatting with us, graciously answering our questions and offering his thoughts on potential cost-saving measures, even when we went way over our time.
So, are you ready to spend more efficiently? Let’s dive right in!
COST-SAVING MEASURES SHOPS CAN TAKE
Searching for cost-saving strategies inevitably leads you down a road littered with suggestions to cancel Netflix, cook meals at home, and throw your air conditioner out the window.
While a shop might save a few bucks by canceling the break room’s Netflix account, realistically, shop owners need to look elsewhere to not only save money, but also to spend wisely. Below you’ll find a number of levers you can pull.
INVESTIGATE YOUR PROCESSES
Before you make any moves, look at how your operation runs. Are there places you can improve? When Ryan performed this step, he worked for a company with multiple locations—but you can do this for a one-man shop, too.
Here’s what you should look at in your own shop:
- Inefficiencies in reporting and analytics (paper-based office)
- Lack of financial goals—or, as Ryan says, “just working to work”
We’ve said it before: if you don’t have financial goals to work toward, you have no way to measure your success (or lack thereof). You’re literally just working to work—and then you end up stagnating, or even losing your operation.
What areas can you spend more efficiently in? Here are some places to start looking at to bring your spending under control:
Vehicles. Ryan cited an example from his own company. They owned their vehicles, most of which were service trucks from the early 2000s. Realizing they were spending a lot on maintenance, they decided it was cheaper to lease these vehicles. “We made our own leasing company, and now we lease vehicles back to ourselves,” he says, “and every five years we can refresh our fleet.”
Often, when shop owners (or business owners in general) are looking for places to cut back, they make a beeline for employee hours or salaries. But that often doesn’t make quite the impact they’re hoping for. If you’re spending, say, $50,000-$100,000 on vehicle maintenance per year, cutting your techs back to 35 hours a week isn’t going to make much of a dent in that.
(We probably don’t need to say this, but your techs are the ones making your shop money. Reducing their hours might bring down costs a bit, but it also is likely to bring down your revenue, too.
Look at your employees. This isn’t a blog that encourages laying people off to save money. But you should take a look at your employees and make sure they’re the right fit. If you’re using paper time cards, you may have some employees who “bump” a few hours on those time cards. (Shameless Fullbay plug: we have digital time cards so audits are a breeze.) How would you know, if you don’t perform an audit? Even if you do catch it, you find out too late that your billable vs. what you’re paying doesn’t match.
Don’t just look at technicians in this case. Ryan has seen issues where managers were particularly inefficient: lying, or using employees for tasks outside their actual jobs. Performing an audit like this will not only save your shop money; it can also help you take care of a potential situation that is leaving your team unhappy and unproductive.
Invest your capital. This is a big one. “In business, what is capital?” Ryan asks. “Capital is bad, right? Because it’s taxable.” Is there a tool or piece of equipment you’ve been thinking about purchasing or upgrading? Do your techs need new certifications?
“A lot of people will just start spending their capital…on the wrong things,” he says. “But you’ve got to prepare for your tax burdens that come up.”
As an aside, Ryan recommends all business owners take some accounting classes. You should still have an accountant, but a basic education in how accounting (and taxes) works. Yes, it is a mystical world. But it’s a skill set that will benefit you immensely.
Check your equipment. Speaking of investments: workplace safety should be at the top of your list.
Make sure you’re checking out all the equipment in your shop on a regular basis. “I spent a lot of time looking at the condition of our lifts,” Ryan tells us, “even having yearly inspections on them…we realized a lot of them should have been decommissioned.”
This isn’t usually a high cost, but it can be. If a jack fails, that can injure a technician. That’s a life altered and possibly put on hold while they recover; it’s also a huge financial hit in terms of workers comp and possibly a lawsuit.
Beyond that, if you’re keeping all your equipment checked and maintained, you’re far less likely to see one piece of gear or another suffer unexpected downtime (thus setting you back). And we all know that properly maintained equipment helps your techs be more efficient, too. It’s a win-win!
Budget. We will continue to sing about how important budgeting is until the stars fall from the skies and dinosaurs once again roam the earth. (Hey, our co-founder is a former accounting guy—we can’t help it!) But creating a financial plan, and budgeting wisely, can protect you from unexpected expenditures.
(By unexpected, we mean that tax bill that deep down you knew was coming but just sort of forgot about.)
“You’re always budgeting a certain percent, say 10 for example, that will go to taxes,” Ryan says. “And whatever your insurance is—it’s usually based on your sales—if you say five percent of that is going to insurance, that’s already 15% of your income set aside for your tax and insurance burden. You already know what those costs are.”
A solid budget is basically cost control.
Vendors. In this strange new world of supply chain issues and parts shortages, your parts vendors are more important than ever. You’ll want to maintain good relationships with them so you’ll be the first ones they call when they get this or that part in.
Some parts suppliers have programs that will allow you to save a certain percentage when you order from them. That’s money saved, especially over time.
LOOK INTO TECHNOLOGY
One of the topics we lingered on with Ryan was technology, and how important it is to keep up.
It’s a generally accepted fact that the diesel industry is a wee bit behind the automotive industry in terms of available tech. We also have the added problem of some owners being resistant to the tech that is available.
This is usually where we’d plop in a shameless Fullbay plug and tell everyone about how much we can streamline shop management. But the right technology can certainly save you money—by cutting down on paper spend, by reducing inaccuracies, and by freeing up people so they can handle more important tasks.
And let’s not forget the right software can lead to more complete service orders and faster invoicing and…oh, yeah, now it’s a Fullbay plug. Feel like taking your shop to the next level and checking off the technology step? Give our free demo a try!