9/1/2001
Improved Productivity and Profit Are ‘Musts’
By Dave Wooldridge
Do you set daily, weekly or monthly sales goals for your shop? Do you set profit targets so you’ll be able to invest in your business to ensure its ability to grow in a changing market? If you don’t, you’re probably flying your business by the seat of your pants. Not good!
Financing a successful engine building business today really demands that a shop owner take an active role in setting profit goals. In most cases reaching those goals translates into either improving productivity, raising prices or both.
I would bet, for example, that half of the surface grinders in most shops are obsolete in terms of their capability to produce a high quality finish quickly and consistently. Yet, there is growing demand for repair of late model cylinder heads that many shops could profit from if they had more efficient, productive equipment.
Clarence Clark writes our "Learning Curve" column, and is a former engine rebuilder who today travels across the country putting on technical and business management seminars for machine shops. He recently told me that most shops should have 10 to 20 exchange cylinder heads on hand depending on the markets that they do business in.
In his travels Clarence has found that, at least as it pertains to late model passenger car and light truck engines, it’s the cylinder heads, not the lower end of engines, where both demand and profit lie today.
It’s one example, but it’s typical of a market that requires shop owners to quickly identify what’s in demand and then equip their shops and price their work to profit from it. It’s an example of the need to work smarter not harder.
Take a look at the actual net profit you make on each labor dollar. I’ll bet you’ll want to make some changes!