HOW WOULD YOU RESPOND IF SOMEONE GAVE YOU AN EASY OPPORTUNITY TO INCREASE PROFITS? What if they told you that the reason is behind an overlooked opportunity? At Industrial Finishes & Systems, we pride ourselves on being partners in profit. One of the many ways we do this is partnering with you, the customer, to help better your business and to help you succeed. This article will dive into some business principles that if implemented could help your company take lost opportunity and turn it into profit.
KPI and ROI
KPI (Key performance Indicators) and ROI (Return on Investment) are two hand-in-hand abbreviations that can change a company’s bottom line over time. KPIs’ are the small intricate details of a company that help define how efficient they are in their daily processes.
For instance, take the shop that has to deal with a tough insurance agent. You want to make the most bang for your buck, but just like a tax payer you have to keep records of what you used for your work. Time spent on projects, materials used on projects, and the estimate of what you will charge your customer all factor into the KPI for that particular job. The higher the KPI of your shop, the better negotiation power you have with insurance agencies.
But how do you get there? What type of investment should you make that will get you a return profit in the end? (ROI).
Let’s start with your shops estimates and billing processes. As a shop owner, can you think of any specific products that you give away for free? How about clips and fasteners. How often do you bill your customers for the clips that you use on a day to day basis? Some clips at cost may be only 57 cents a piece… but when you calculate all of the cars you work on, the bumpers that you replace, and the amount of clips that you use… it all adds up.
Now lets put this theory to the test and create an example of how much money could be lost by not billing clips. Lets fix this example taking variances, inconsistency in costs, and situations out of the picture. Say you consistently have 15 cars a week coming into your shop. Of those, only 6 of them have 1 bumper to repair. You are open all seven days a week. Now let’s say every car is the same and uses 6 total 57 cent bumper cover clips to hold it up, totaling $3.42. You bill the clips at $3.65 on your R.O. In other words, you just turned a profit on an item that you may not have otherwise billed for at all!
You’re now being paid more thoroughly for the materials you use. Better yet, you’ve billed insurance at a level that allows you to maintain a profit margin on the materials. The Au-ve-co system as provided by Industrial Finishes & Systems helps you manage it all effectively. Give us a shout and we’ll help you get set up today!